There are strong similarities between Craigslist and reddit.
Both sites drive incredible amounts of web traffic, and rank highly in the Alexa rankings. Both are horizontal in nature, using a single set of interactions across a wide range of verticals. Both support openness, allowing use cases that are both savory and unsavory. And although both are very functional, they are among the ugliest websites on the Internet.
The unbundling of Craigslist.
Craigslist has remained remarkably successful through the years. Arguably, there hasn’t been a strong competitor since its founding in the 90’s. If anything, competition comes from an unbundling trend, with 100s of startups that are competing to provide a better user experience for specific verticals of Craigslist.
Years ago, Andrew Parker put together a great picture of all the startups competing within verticals of Craigslist. More recently, Chris Dixon has echoed a similar sentiment.
The same thing will happen to reddit.
Although it hasn’t been written about much, the unbundling trend is going to happen to reddit also. Actually, it has been happening for a while, and it will continue in the foreseeable future.
Here are a few examples:
- Hacker News :: /r/startups and /r/programming
- inbound.org :: /r/marketing
- Fitocracy :: /r/fitness
- Quibb :: /r/entrepreneur and /r/startups + /r/*work
- imgfave :: /r/Pics
- Quora :: /r/AskReddit
- 9gag :: /r/Funny
What else? I would love to build out a more comprehensive list here.
What makes a vertical startup viable?
Each startup within a vertical must satisfy two constraints.
First, there must be a compelling value proposition. It may be the community, the user experience, or whatever. But it must be enough to make users of horizontal company switch products.
Second, the market must be large enough. It doesn’t need to be large enough at the outset, but it must be large enough within a reasonable number of years such that a business can be sustained.
Surely, there are many verticals in which viable startups can be built. But, most likely, there are also many verticals that don’t satisfy these constraints. The horizontal companies will probably always survive, if not only to serve the many verticals that cannot be viable stand-alone businesses.
How would horizontal businesses respond?
The horizontal approaches usually have larger scale, and therefore larger network effects. To squash startups in a particular vertical, they must be nimble enough to observe what works, and improve their user experience for the particular vertical. This is asking a lot from a large company.
If that doesn’t work, they can acquire the company, or hope another company acquires them (since it seems most acquisitions kill a companies product either explicitly, out of neglect, or through mismanagement).
An interesting comparison.
Recently, Tom Tunguz wrote about how the unbundling trend may be the biggest challenge for Facebook, Twitter, and LinkedIn. Unbundling certainly is a threat, but social networks such as Facebook, Twitter, and LinkedIn have appeared more willing to be nimble with their product features and their user experience.
Facebook has changed dramatically since the early days. It’s “move fast, and break things” adage helps out here. Twitter continually tries new experiments, including the recent Twitter music. LinkedIn is in the midst of a drastic change with a new social feed, and with influencer blogs.
On top of that, these social networks have been more aggressive with acquisitions of startups that begin to show success.
One last similarity between Craigslist and reddit.
This brings us to one last similarity between Craigslist and reddit. Both of them don’t seem to move very fast. From a design and functionality standpoint, their user experiences have not changed much over the years. In fact, they almost seem stubborn, refusing to change with the times. Also, they don’t seem to acquire many competitors.
Why is this the case? I don’t know. But, my guess is that this leaves both Craigslist and reddit more vulnerable to unbundling effect, and this is a good sign for startups building within their verticals.
Any thoughts? What other companies are verticals of reddit? What are properties or strategies for successful companies within these verticals? And why do the social networks behave differently when compared to Craigslist and reddit? I would love to hear some different perspectives here.
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(P.S. I later wrote a post on the flip side of this argument)
I stopped reading after I saw you put 9gag as a successor to /r/funny
I pray someone unbundles EBAY
Interesting idea. I think reddit benefits from its loose structure, the various subreddits feed users and memes to each other, but still have their own specific communities. Reddit seems to have taken on the mantle of “Here comes everybody” in the Clay Shirky sense.
Big horizontal sites benefit from being “where everybody is,” so you’ll know you’ll find something interesting. I think there’s a parallel to broadcast channels and niche cable channels. As DFW said, “I’m not saying that television is vulgar and dumb because the people who compose the Audience are vulgar and dumb. Television is the way it is simply because people tend to be extremely similar in their vulgar and prurient and dumb interests and wildly different in their refined and aesthetic and noble interests.”
Great post! But I think the unbundling of Reddit is more challenging of the unbundling of Craigslist, because there is one fundamental difference: on Reddit there is no financial transaction (I mean between the users). 3 key success factors of platforms are: the network effect, the curation of content, and especially on platforms that involves financial risky transaction the curation of users and trust (see also http://thenextweb.com/insider/2013/05/26/platform-thinking-how-to-disrupt-craigslist/). A horizontal platform like Craigslist is weak on this 3rd point, allowing vertical competitors like Airbnb that can provide the trust for the transaction to grow. For a non transactional platform like Reddit, this trust factor could not be used by competing verticals for a competitive advantage. So the playing field is more even. Of course this does not mean that it’s impossible as the examples you wrote about show, just that it’s a little be more challenging.
Great comment Christian! I agree with you 100% — it possible to build startups in the verticals of Craigslist, but it will be challenging and (most likely, IMO) less monetizable. I just based my most recent blog post off of this comment 🙂
@Sam J Hill: Unfortunately, it’s not far from the truth. r/funny is becoming less and less funny everyday, frontpage posts sometimes are of 9gag quality.
I don’t think the simple design of Craigslist and Reddit leaves them more vulnerable to unbundling, and in fact I believe the opposite. By staying very feature light they have stayed use case agnostic and allowed their users to tune the experience themselves. Both Craigslist and Reddit have communities that have developed their own language of posting titles, community and moderation (to some extent). If the products spent more time building vertically they would be enforcing their version of how these communities should develop which would push out people who disagreed and lead them to another unbundled provider.
However, that flexibility is a double-edged sword. If the market changes fundamentally, like the rise of electronic tickets for events, vertical providers can find an advantage that the community NEEDS and Craigslist cannot react. In trying to compete with StubHub they would be moving away from exactly what makes them useful (flexibility) but not offering this new custom feature means they cannot retain the community.
However, their long term gamble is that the portfolio of communities is more valuable than any one community so that is a price worth paying.
I second that. Things may unbundle and stay trendy for a short while. After that, people will just return to Craigslist and Reddit.
As a redditor, I actually disagree. Quora’s interface is rather annoying and if I just want to view an answer I shouldn’t need to get a fucking account. That was what made Expert’s Exchange die in favor of Stack Overflow.
Plus, reddit’s interface is simple and doesn’t bleed my eyes like some of the other sites listed. inbound.org, for example, looks far too “busy” and my eyes can’t concentrate on the content.
Also, yuck. 9gag.
Independent thought Gem! Love the post. I think the purpose will define the platform. Rest its up to human interests.
I don’t see you side of reddit and craigslist at all. Sorry!
People like habits. People are lazy. If it works, why fix it?
I believe they are more in terms of a service for people and that is why they are picked up by the public. Craigslist helps us find anything we need ( anything we want literally at our fingertips) As well as Reddit gives us news, and information without having to know what we are in the mood to see, or gives us more of a control of what types of things we want to see. StumbleUpon is a form of Reddit, but lets us explore websites about our favorites, but is not necessarily a service and therefore not as valued.
Well they’re great when you can find a real person there vs: bots/ spams/ scams
Reblogged this on Entrepreneurship + Location Independence.
Both have another common feature They are strong on anti spam.
unbundling is an interesting phenomenon, but: for it to successfully unfold, we must pretend Craigslist and Reddit won’t engage the competition? So far the reason they haven’t changed much is because not much competition has forced them for a tit-tat. But if they do, you bet they have rebound strategies up their bon-Nets.
TMBA41 – Should You Deprioritze Your Income and Go After Your Passion?
Unbundled startups are not a value added entity, IMO. Most simply provide more fluff and package a service that is more aesthetically pleasing. If a specific feature provides significantly greater content for a specific need, then perhaps, but generally, isn’t this why portals have been around since windows 3.1?
Really cool blog. I work at Disney and find your articles very informative for every day work. Keep up the good work! Lets also follow each others blogs so we can share more good ideas.
In regards to startups and verticals coming out of the gate. I work for an international start-up company for mobile marketing platform.
This is targeting one of the verticals for the marketing realms specifically mobile marketing like: SMS marketing(text message marketing), custom QR code generator, Mobile Website builder/ wizard, Email systems, etc…
Although I don’t see these marketing tools combined unlike Uneeqlee; in one space in, reddit or craigslist.
The company’s blog is over http;//uneeqlee.co/
The unbundling of Craigslist and reddit: the flip side | Alex Shye
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