This story appears in the May 15, issue of Forbes. It's nearing bedtime for Asher Huzar, but on a Tuesday night at he ducks the rules, wriggles out from the dinner table and disappears to the basement for playtime. By the time his father, Nick Huzar, checks in on him, 3-year-old Asher has inflated his indoor bounce house, which provides him and his sister, Ava, with 15 minutes of entertainment before they pinball onto the next activity. Raising kids can be taxing, but at least for Huzar and his wife it has been relatively inexpensive. Huzar is the cofounder and CEO of OfferUp, so it's no surprise he's raising his children on hand-me-downs bought on the classifieds service he started six years ago.
That's nearly a quarter of what was sold on eBay in In the technology industry, where survival depends on constant innovation, conventional wisdom suggests Craigslist should have vanished long ago. Launched by Craig Newmark inthe website, which has kept roughly the same de through the years and now has some 55 million visitors a month, has not only survived but also thrived.
It is the cockroach of the internet age, an ugly but effective e-commerce platform that decimated the newspaper industry by wiping out print classifieds sections and emerged unscathed from technology shifts that crippled mightier contemporaries like Netscape and Yahoo.
Craigslist's effectiveness cannot be understated. Don't be fooled by the ".
In fact it's a virtual ATM. With only around 50 employees, some server costs and a few legal bills, Craigslist converts most of those sales into profit. Neither its CEO nor its founder would speak to Forbes for this story. A company spokesperson said in a statement that "we don't comment on s that are bandied around by media, analysts or others, and never have. While Newmark and Buckmaster are getting richer by the day, they are more vulnerable than ever.
Despite its success, Craigslist has shunned innovation, refusing to create a mobile app and litigiously pursuing third-party developers that have tried to improve the experience. Huzar argues convincingly that Craigslist's lock on the secondhand-goods market is coming to an end.
When asked how he can be so sure, the dimple-chinned year-old Seattleite stops smacking his gum and turns an icy stare to his iPhone. It's virtually impossible to calculate how many transactions Craigslist facilitates, but a good proxy for the potential of its business if it were run to maximize profit is the U. on the business of Craigslist here.
OfferUp allows users to list almost any item for sale by simply snapping a picture, selecting a price and posting a short description. Interested buyers can browse local goods in a Pinterest-style photo feed, haggle with a seller through the app and then arrange an in-person transaction.
The multibillion-dollar question is whether OfferUp can persuade the owners of all that stuff to sell on its platform. Investors such as Andreessen Horowitz and T. But it's not the only one vying for that lucrative moniker.
Both are hoping to overtake OfferUp in what many see as a winner-take-all battle. Whichever has the most buyers and sellers on its platform, or what economists call "liquidity," will eventually corner the market, leaving competitors bankrupt and buried.
For now, Craigslist remains the rival to beat. Started in as a mailing list for San Francisco events, the company has flouted just about every maxim taught in business school.
By the early aughts, it had assumed the austere layout people are now familiar with: plain-Jane text links to like jobs, personals, for sale and housing. In an era of dial-up internet connections and limited bandwidth, Craigslist's simplicity quickly attracted users, and it grew as more and more people came online.
It was one of the first websites to demonstrate a strong network effect, a phenomenon by which a service gains more value as more people use it. As buyers flocked to Craigslist because it had the most listings, sellers did so in turn because it had the most buyers.
Even at wildly successful eBay, some executives eyed this perpetually self-reinforcing economic engine with envy. Now a general partner at Andreessen Horowitz, Jordan sees an opportunity: "I think Craigslist has been largely unmanaged for a decade. Though the vast majority of Craigslist is used for free, it's not a socialist endeavor. Those fees were originally implemented to counter spammers, former employees told Forbesbut they quickly turned into an extremely profitable business.
The times of unfettered profits, however, may slowly be winding down. In recent years, entrepreneurs have found opportunities to build businesses around certain Craigslist by providing better features and services.
They range from Airbnb for temporary housing, Redfin for real estate services and OkCupid for personals. Collectively, they're taking their toll.
In February, Still, while startups have homed in on sub to compete, none have succeeded yet by going head-to-head with Craigslist's core "For Sale" section, where users can buy and sell anything. OfferUp is the first to make ificant headway.
The company says it had 14 million monthly users in March, about a fourth as many as Craigslist. Huzar claims his company is already larger than the incumbent in certain markets. Those hesitations are summed up in the corny but plain principles that guide OfferUp: simplicity and trust.
Posting has to be easy, to lure sellers away from Craigslist, Huzar says, and OfferUp's four-step process makes it possible to list anything from a set of skis to a car in less than a minute. The marketplace also has to be safe, and with Craigslist's reputation as a potential place for crime--one blog has counted murders with alleged ties to the site since June OfferUp has implemented buyer and seller ratings. Users can also choose to "verify" their s by using their Facebook profile or a driver's .
It's not perfect. For the uninitiated, the app's main shopping window can seem like an endless feed of junk ranging from cans of infant formula to counterfeit Ray-Bans.
There have been s of muggings during OfferUp transactions, and banned items like marijuana are easy to find. Huzar says it's an "endless pursuit" to eliminate bad actors but one he is forced to endure--a single bad experience can send a user over to Letgo, which offers a similar de and experience.
Letgo, unlike OfferUp, is active in some overseas markets, including Turkey and Norway.
We believe [our lead] is becoming clearer and clearer, and we are becoming very comfortable. Letgo cofounder Alec Oxenford says his app, which is already in international markets, is growing Every few years, someone in Silicon Valley looks at Craigslist and thinks he or she can do better. In the late s, the startled newspaper companies tried collaborating with each other on various projects, and inGeebo launched as the "safe" Craigslist.
Inthere was Oodle, a well-financed website that later tried to incorporate Facebook identities.
All these efforts basically came to naught. Even mighty eBay has stumbled. It bought a That led to a seven-year legal battle, which was settled when eBay sold its shares back to Craigslist for an undisclosed amount in These days, eBay has its own OfferUp clone, though usage peaked at a few million people a month, and the company has been shopping it around for an acquisition, according to one source.
Huzar has distanced himself from the Valley and its past failures, establishing OfferUp in the Seattle suburb of Bellevue. The son of a Boeing-engineer father and a mental health-therapist mother, he was born and raised in Washington.
Having picked up some coding skills, Huzar landed a job at a frat brother's startup before bouncing into product management roles at Microsoft and T-Mobile. Byhe had become tired of life as a middle manager and started a professional networking website called Konnects. He spent four years constantly raising money to survive, while watching a rising startup called LinkedIn eat his lunch. ByHuzar threw in the towel, and he and his wife were expecting their first child, Ava.
As the couple went into "nesting mode," Huzar ran into a predicament while clearing out space for his incoming daughter's nursery: He had plenty of valuable stuff to get rid of, but no time to list it on Craigslist.
Instead, he unloaded his stuff at Goodwill, where the parking lot always seemed full. From that Goodwill parking lot, Huzar wrote the first lines of code for what would become OfferUp. Cofounder Arean van Veelen, a former Konnects employee who no longer works at OfferUp day to day, calls this period their "chicken and egg" phase as they struggled to create a two-sided marketplace with a critical mass of buyers and sellers.
The company greased the wheels by buying products from other users and relisting them on the app.
On Huzar's 36th birthday, he and van Veelen filled a truck with balloons to canvass suburbs, but the outing was cut short when one of the hired hands was accidentally thrown off the truck. Huzar paid a minor hospital bill and dodged a potential lawsuit that could have ended the company. The efforts started to pay off, gradually, as users outside of their immediate network began listing and buying items.