The Rebundling of Craigslist

For the last 7 years, we’ve seen this classic picture of the attack on Craigslist.  Spark Capital analysts Andrew Parker and David Haber did a great job with this unbundling chart.  

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I’ve always had a bit of an issue with this chart because it implies that the right way to disrupt Craigslist is to pick off tiny pieces and build a vertical marketplace.  The problem is that vertical isn’t always the right solution and often doesn’t work well.  The issues are around frequency or size of transactions. See my thoughts on Horizontal vs Vertical marketplaces.  

With the benefit of 5-7 years of time since the first Craigslist unbundling charts, we can make a few minor updates to the chart:  

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Many of the vertical marketplaces that were featured originally have failed.  I know as a consumer, I don’t really want to go to 60 different sites or apps to get my shopping and gigs and other stuff done.  The narrow verticals have died off in favor of horizontal categories. Many of them lacked the frequency of usage (eg, Getable) to build a large sustainable network or they lacked the monetization potential of bigger ticket items to build a wildly profitable business (like an Airbnb).  

Here’s what the winning landscape looks like:  

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There will be some small winners from the original unbundling chart above, but the *really big* winner in each category is a horizontal platform for the whole category, eg, community, forums, personals, classifieds, etc.  This meets the needs of real people with limited attention units.  It also reflects the real world, where people might apply to jobs for several different functions (Indeed), be interested in selling both used furniture and used cars (OfferUp), hiring both a painter and a handyman for your house (Thumbtack), or simply discussing both tech and politics in online forums.  Each one of these categories can support just 1 or 2 mega-platform businesses that can scale to be multi-billion dollar companies. 

There are also a few cases like Airbnb where the single section of Craigslist is big enough to spawn a 10b+ company.

Our portfolio companies OfferUp and Upwork are both horizontal platforms for an entire category of local commerce (OfferUp) or remote jobs (Upwork).  They will continue to expand and scale and crowd out smaller vertical players that opted to just pick a narrow vertical.  The same will happen in every category.  

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