Is Craig's List Killing Innovation?

I was having a conversation over e-mail with a friend about the local startup eegloo. I don't know much about the company, so I won't take any liberties to elaborate; you can read their executive summary [PDF link] yourself.

What I do know is that they, and many, many others, are trying to improve the Internet classifieds market that Craig's List currently dominates. Craig's List holds their market share for a lot of good reasons. It's clean, simple, free and most importantly it has massive scale.

I don't have exact quotes, but Craig's List has made it clear that they aren't looking to innovate any further, improve usability or make significant changes to the site. That's not to say they aren't doing things like combating spam and fraud (to a limited extent), but they aren't looking to change the way their website works.

This poses a huge problem for innovation in online classifieds. How can you compete with the massive scale of Craig's List?

Newspapers are certainty failing at it, but we haven't seen them use innovation to try and upset Craig's List's lead. Newspapers are generally relying, wrongly, on their own reach and ability to go to market. In this example users have a choice: go to Craig's List and see a ton of listings, a ton good and a ton that are crap or go to your local paper and see a limited selection and still a ton of crap. At least there are more choices with the former.

So you have startups like eegloo that think they've found a better way. Maybe they have, but challenging the scale of Craig's List isn't even an uphill climb - it's upmountain.

My theory is that there are much better classifieds solutions out there, but Craig's List is killing them. They've basically frozen the market for the foreseeable future and I, just like everyone else it seems, haven't quite figured out how to break them.

I plan on doing it by skipping the destination site and creating highly scalable software that others can use to power their own idea of an innovative marketplace.

Connecting Data Seamlessly

Everyday we work to connect data types. We do it by searching on Google.

I think of something I want see, I ask Google for it, it searches it's vast database and makes suggestions. In theory, it's a simple transaction:

What's happening here, while very complex, is not entirely complicated. Google is compiling information and deciding, based on your query, what to show you. The idea is that the results are relevant. In this particular transaction, you're required to make a query.

Google compiles all the information it can get it's hands on. This is a good strategy for them and works well, but when you start to silo off that information and group it together, you get communities. These communities can be very broad, Facebook, for example, or very niche, NextNY, for example.

The information that these communities draw upon is usually called your 'profile.' This isn't to mean that all profiles are filled out by the user. It can be based on information you provide, your behavior, the data and media you create, the friends you keep, etc. These silos, by themselves, don't mean very much.

When you start connecting these silos, in intelligent ways, it starts to get interesting. This is most often done at the user's request. I know what I'm interested in, so I seek out and join communities that share my interest. It's intelligent because it's human.

Sites with existing large communities, again Facebook is a good example, are starting to find ways to suggest intelligent connections. Here are people you might know, based on them being friends with your friends. Here are topics you might be interested in, based on what you've been interested in in the past.

Suddenly unexpected, but intelligent, communities are being formed.

So what does this mean to you? Well, the great part is, you don't really have to do anything. Unlike submitting a query into Google for information, there are solutions being developed that anticipate what information you're looking for.

Most of the innovation in this particular space takes place around advertising. Send an e-mail in Gmail to a friend about your apartment search and you're bound to see ads for real estate sites. But what if, instead of seeing advertisements for various marketplaces, you were connected directly with the market?

I'm working on something that connects people who can help each other. If I have an apartment that's a good fit for what you're looking for then we belong, whether we know it or not, to the same niche community. I want us to connect. Seamlessly.

Starting A Company Without Raising Money

I put this question out to the NextNY e-mail list and will follow this post up with any answers I come up with. In the meantime, feel free to leave a comment if you have something to add. This question, of course, applies to something I'm working on, but I'm not quite ready to get into specifics.

Hi All,

Maybe this is a silly question, but I'm looking for a little direction...

On the finance and legal side of things, there are a ton of great
resources out there for entrepreneurs, including this e-mail list, but
I'm finding information hard to come by for companies that haven't
raised money and don't plan to in the near future (or ever). So my
question is fairly simple...

We have 2 founders and we're self funded, but I would like to bring on
an advisory board and offer equity, as discussed recently here. How do
we do that if we haven't been valuated by a Series A or angel
investment?

Besides the advisory board there are other many other reason we would
like to have a pool of shares to leverage. Without outside investment
how do we determine the number of shares, their value and what does it
all mean? I don't want to just pull it out of my ass - it has to mean
something.

Thanks in advance,

Andrew