Why Hasn't Another Product Disrupted and Replaced Craigslist?

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Craiglist has been disrupted, it's just not obvious yet. And the world will be a better place for it.

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Craigslist has fewer unique visitors today than it did at this time in 2009.

Bad sites with network effects show much slower decay in use than they should based on their absolute quality. (Think eBay.) Bad sites who price most of their product at free show incredibly slow decay in use. (Think Craigslist). But make no mistake, it is happening.

The evidence of their poor quality is so obvious it's hardly worth stating. Suffice it to say, if I'm looking to rent an apartment, it would be nice not to see the same listing reposted every day, and having to re-read it and figure out if I've called them before. It might be even nicer to view them on a map, or, God forbid, have new and relevant listings emailed to me.

Sites like Oodle have tried to take it head on with a superior interface but have been unable to displace them. Sites like Kijiji have been launched by eBay, or OLX, which is distributed on other people's platforms with large traffic, have tried to leverage other sources of traffic to combat the critical mass.

Generally speaking, Craigslist has been good enough to not be disrupted head-on. Nevertheless, the world moves on, and the gaps in their product (due to a stubborn obstinate refusal to invest in technology) grow wider and wider. As tablets, smartphones, etc., disrupt, and Craigslist doesn't invest in those platforms, the feature gap grows wider.

The disruption that has happened has occurred on a category-by-category basis, as this graphic by Andrew Parker shows:

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Stubhub, Airbnb and Etsy have built big businesses in some of these categories, and floods of new startups try to pry off pieces (Taskrabbit, for example).

I have derived a lot of utility out of Craigslist over the years, and it has all come free, so I am grateful for that. But the site reportedly pulls in more than $100M in revenue a year, has only a few dozen employees, continually under-invests in technology and does not innovate. I don't think Craig's a bad guy, but he's harvesting $50M a year and not improving the site. In ten years I think Craigslist will be an afterthought, whereas if he reinvested half of those profits into technology and product, it would have a real shot to be a category leader.


This post originally appeared on Quora and is republished here with the author's permission.

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Josh Hannah is a serial entrepreneur (Betfair, eHow, wikiHow) and venture capitalist with Matrix Partners. Follow him on Twitter @JDH.

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