Earlier this year, I wrote on how I believe reddit may be (or is being) unbundled. In the post, I draw similarities to how Craiglist is being unbundled, and provide several examples of startups that are within verticals of reddit.

Of course, where there is an argument, there is also a counter-argument. And in this this case, there is clearly a counter argument.

I’ll kick if off with a great comment left by Christian Puricelli:

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.

Christian hits the nail on the head.

A fundamental difference is that there are monetary transactions within marketplaces. Where there is a transfer of money, there is a cut of that transaction to be made.

Also, because there is a monetary transaction, trust is also important; important enough that is can be a major differentiating factor. Discussion sites could play up trust also. For example, everyone on Quibb uses their real identity. So do many on Inbound and USV’s new front page. It makes a large difference in the quality of discussions (IMHO). But is trust is online discussion as important as the trust between people when money is exchanged? Probably not.

There is also the difference between need and want. People go to Craigslist to spend money on a service/product they often need. They will take the time for search for that thing they need, and then spend hard-earned dollars on it. People go to reddit to chat with people, which is usually a want (and fairly often, just to procrastinate or kill time). There is a big difference here.

Craigslist monetizes fairly easily. reddit is having a tough time.

Billion dollar companies lay within the verticals of Craigslist (i.e., AirBnb).

Do billion dollar companies lay within the verticals of reddit? If I had to guess, the answer would be “no”, but I would love to be proven wrong 🙂

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P.S. This is post number #41 in a 100 day blogging challenge. See you tomorrow!

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