Lesson #3: When we see something that could be done better, we do it

The good thing about not having any venture capitalists backing him meant that Newmark was free to do what he wanted with his company; he was free to innovate, or to step back and let his users innovate for him.

One of those innovations came in the form of the "Best of Craigslist" blog, a daily roundup of the craziest, most hilarious postings that are left by users on the site. Newmark, who enjoys sifting through the online discussions on a daily basis, pulls out the funniest and most ludicrous postings from across the Craigslist network and compiles them into a daily blog. "Someone posted a job ad to take the CPA ethics test for them," Newmark once jokingly recalled.

The "Best of Craigslist" blog might make a mockery of the site, but Newmark saw the potential to increase readership and community loyalty by letting people have a little fun online. The community policing system works well for spam or inappropriate posts, but Newmark saw the popularity of humorous posts, and decided to capitalize on them.

The idea of kaizen that Newmark draws on also includes the notion of innovation being spurred by workers on the ground and in the field, instead of from upper level management. Newmark applies this principle to his community, letting users test new waters as they see fit, and providing the appropriate platform for them to do so.

One such instance came in 2005, when Hurricane Katrina overwhelmed the city of New Orleans, killing over 1,800 people and causing damages in excess of $81 billion. Almost immediately, survivors of the hurricane began turning to Craigslist, using Craigslist discussion boards to let their friends and family know they were still alive. In response, Craigslist began encouraging the use of its job and housing posting services for survivors in New Orleans, all the while refusing to charge any fees for what would surely have made the company millions of dollars.

"Sometimes you gotta be fast so you don't waste the time of others," says Newmark. By putting control in the hands of his users, Newmark has created a company that can respond to needs and innovate at the drop of a hat. Craigslist operates in real time, and is updated by millions of real people, making its speed at churning out new ideas one of its greatest virtues. This in contrast to newspapers, one of his major competitors, which lag in reaction time.

Part of that innovation, however, also means also knowing when it is best to stay the same. With its simple and easy to access user interface, and a structure of posting categories that its users are by now well familiar with, Newmark has resisted temptation to change, to modernize, to update.