June 25th, 2012

A Stroll Through the Craigslist-Crusher Startup Graveyard

I’ve been thinking about hopeful Craigslist-crushing startups this weekend as a result of all the Padmapper drama over the past few days. Padmapper is my #1 site for apartment hunting and I really sincerely hope that Craig and Jim will at least consider coming to some sort of agreement that is beneficial to both. Even if they don’t come to an agreement, I am optimistic about Padmapper’s future because Eric is super talented and will figure it out.

This post isn’t about Padmapper though, it’s about all the startups you don’t read about that have struggled over the past however-many years because of this Craigslist-can-be-killed attitude that is pervasive in startupland. While I don’t doubt that perhaps the right person will come along someday, I also think that the formula for killing Craigslist will require so much beyond software alone (sorry nerdos) and will be a piecemeal game.

While a handful of companies like AirBNB and TaskRabbit have made some progress in their particular areas of focus, Craigslist is still incredibly dominant in the following 4 areas: selling used items, apartment search, roommate search, and jobs (other than the IRL task-focused jobs that TaskRabbit has cornered). Coincidentally these are also all the areas where craigslist makes their money.

Why do so many startups focused in the above four areas generally flounder? Here is my hypothesis: startups are failing most on the seller-side because of their inability to provide qualified buyers. Everyone has their own theory on 2-sided marketplaces and mine is as follows: if you provide a seller with a pool of qualified buyers, and a transaction happens, they will continue to sell through you. Otherwise, they will go elsewhere.

Over the past few years, I have done every one of those 4 things listed above as a seller. I have listed apartments, a roommate ad (that led me to one of the most awesome roommates ever), found several interns, and sold countless items – electronics, furniture, etc.

As a lover of startups, I will often list items on multiple platforms just to see if anyone is making a dent. C-list *ALWAYS* wins on pretty much all criteria: volume of responses, best price, best candidates, people who mostly reliably show up and always pay cash. Now look, I am not saying that Craigslist is free of sketchballs and criminals. That would be naive. What I am saying is that, from a seller’s perspective, I will take spammers, flakes, and weirdos any day of the week so long as you are bringing me legitimate buyers/options.

Nothing is worse than crickets. NOTHING.

If you are trying to compete with Craigslist in any of the above listed categories, you have to make life amazing for the seller. If that means driving a truck around “buying” couches and bookshelves and iphones for a year, consider it the cost of user acquisition.

I think we need to collectively get over the knee-jerk “problems” with craigslist:

1. that a new UI is the answer (it’s not…though maps on apartment listings would be <3 <3 <3)

2. that making the listing process “seamless” will make users switch (it won’t…the listing process is already seamless)

3. that sellers want better tools (this is party true. but what sellers really want is buyers, and they are not willing to sacrifice buyers for better tools)

4. that you can be competitive through software alone – you need SERIOUS community-building skills, potentially paid acquisition ($$$) and maybe even a logistics mastermind

I love startups and genuinely would love (and use!) a better solution.

But to be honest I kinda just want to sell my stuff and be done with it.

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  • Craigslist is really important. It helps me a lot in searching any
    classified ads website. Btw, there's no problem with your blog title. 

  • This is spot on. Sellers go where the buyers are.

    I'm amused by your statement that "everyone has their own theory on 2-sided marketplaces" because I wrote about mine a couple of years ago (and it's totally consistent with what you're saying here): http://jasoncrawford.org/2009/...

  • ADRjeffries

    I don't really get why people complain about Craigslist. Not enough rounded corners? It's a lowest common denominator and it's amazing. I think it will always be a piece of the market and agree with Amanda's assessment that a better UI or fancier listing process are "knee jerk problems" a.k.a. not really problems. 

  • As a buyer, it's okay (though, as is obvious from the fact that PadMapper ever existed, browsing listings on a map is a feature many people want and aren't getting).  

    As a seller, the posting process is quite tedious. Nothing to do with rounded corners, but the fact that in 2012 you can't create a post with a picture via your phone... it's at least frustrating.

  • Manuel Medina

    Great post Amanda.  I am going to extrapolate what you expose here and assert that the key to all marketplaces is liquidity - defined as the reasonable expectation that at seller will find a buyer and vice versa.  Getting there is a grind and one have to do all sorts schlep, but once you are there then marketplaces are almost hard to kill.  That is there CL fits, they have massive liquidity, hence killing it at this point will require a number of artifacts including forming liquidity in vertical markets (like only appartments or only jobs, etc.), wooing buyers with artificial demand, and whatever else may work.  This is a fascinating subject that a bunch people in the valley are studying and coming up with theories.

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