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Having observed people (on the Net, The WELL, and Usenet) helping one another in a friendly, social and trusting community way, Craigslist founder Craig Newmark decided to create something similar for local San Francisco events. Soon word-of-mouth and popular demand led to the addition of new categories, and "the list" became large enough to demand the use of a list server (majordomo), which required a name. Friends started calling it "Craig's List", and the name stuck. Craigslist was once renamed listfoundation.org for a brief period in 1999.

Newmark says that Craigslist works because it gives people a voice, a sense of community trust and even intimacy. Other factors he cites are consistency of down-to-earth values, customer service and simplicity. After first being approached about running banner ads, Newmark decided to keep Craigslist non-commercial. In 2002, Craigslist staff posted mock-banner ads throughout the site as an April Fools joke.