Delisting Craigslist

The apartment-hunting juggernaut is trapped in the past. Who can finally take it down?

This bedroom looked somewhat different in the Craigslist ad.

Photo courtesy of Shutterstock

Craigslist is, to borrow a favorite phrase of Silicon Valley, ripe for disruption. Its bare-bones website looks like a relic of the early 2000s—and its user interface has hardly changed since then, as a trip through the Internet’s Wayback Machine indicates. Tales of scams, schemes, and sordid crimes arranged through Craigslist are no longer surprising, nor is the jumble of real and fake properties in its listings. The site has become synonymous with sketchy. Even Craigslist’s page on avoiding scams seems to resemble one. (“CRAIGSLIST IS NOT INVOLVED IN ANY TRANSACTION,” it advises.)

In an age when venture capitalists are dropping millions on tech startups like loose change, Craigslist is all but walking around with a target on its back. Or at least that’s what John Kobs, co-founder and chief executive of Apartment List, is thinking. “I see Apartment List eliminating Craigslist in the rentals category,” he tells me over coffee in New York’s West Village. “Consumers don’t want to be scammed, and consumers want choice.”

Kobs, 33, has set an ambitious agenda of overtaking the most ubiquitous name in the online renting and leasing marketplace. In the three years since it launched, Apartment List has matured from a small player in the online rental industry to its fastest-growing member. It has a sleek website and mobile app, and dedicates three of its 80-person team to weeding out scams. The company’s main goal, according to Kobs, is to make the apartment-finding experience smoother and far less miserable for everyone involved. Apartment List, in short, is just about everything Craigslist is not.

Tech writers and industry watchers have been predicting the end of Craigslist for years. “Despite its success, Craigslist has become stagnant,” Nick Bilton wrote in the New York Times in 2012. “One might think Craigslist is as ready for disruption as sleepy newspaper classified ad sections once were. Why hasn’t a site this vulnerable been displaced?” Yet if the figures on Craigslist’s factsheet are to be trusted, the site is doing more than avoiding displacement—it’s thriving. Craigslist reports that it has more than 50 billion page views per month and 60 million monthly users in the U.S. alone (keeping in mind that this applies to its whole website, not the rental section alone). It also maintains this massive operation with a tiny staff of 40 based in San Francisco.

Craigslist declined to answer questions for this article. “[I]f we’re keen to respond, [I]’ll be sure to send you an email,” Susan MacTavish Best, a spokeswoman for the company, wrote in response to one of several inquires. “[W]e do appreciate your interest.”

Apartment List, which raised $6 million in funding in February and $15 million a few months before that, is one of several online rental and housing companies jockeying for the Craigslist crown. Zumper, a 2-year-old startup with $8.2 million in backing, is building a fully mobile system that will let landlords upload photos of a new listing and renters finalize agreements without a paper contract. Real estate data and advertising website Zillow recently acquired competitor Trulia and is busy assembling a dominant portfolio of real estate resources that give it an enviable position in the home-buying, -selling, and -renting markets.

“I don’t think this is winner-take-all,” says Anthemos Georgiades, co-founder and CEO of Zumper. “In the gradual demise of Craigslist, there will be two or three platforms that are standout consumer brands that will be the paragons in a few years.” The sites that come out on top will make their names on trustworthy listings and high response rates from landlords and brokers. “If you ask what response rate renters get from Craigslist, it’s pretty poor, sometimes under 50 percent,” Georgiades says. “Building a comprehensive data set that’s accurate in real time, and you see on Zumper before you see it anywhere else—that’s what we focused on for our first year and a half, and it paid off massively.”

Like Zumper, Apartment List also dreams of optimizing the rental process so that scams are all but eliminated and contracts handled digitally. In early July the company launched Look, an enhancement to its mobile app that aimed to give apartment seekers a 360-view of properties by letting them scroll through professional, verified photos. Both Apartment List and Zumper also use algorithms to detect and strip out scams before they ever hit public listings. Zumper is live nationwide with a strong presence in 20 U.S. cities, and has seen a tenfold increase in its lead generation since the start of the year.* Apartment List gets 3 million monthly visits and hopes to hit 5 million by the end of 2014.

While the soon-to-be-wedded Zillow and Trulia are closer to property databases than end-to-end transaction sites, their potential to capture the lion’s share of online rentals shouldn’t be discounted. Analysts estimate that Zillow and Trulia combined draw slightly more than 100 million monthly unique users to their sites. For Zillow, more than 14 million of those monthly uniques come to look at rentals. “Their strategy as a company is always first to maximize audience market share, and from there, start to ramp up monetization,” says Chris Merwin, an Internet research analyst at Barclays. “I think that’s ultimately what’s going to allow them to disrupt the incumbents.”

At the moment, though, Craigslist—outdated website be damned—still dwarfs them all. “Liquidity is absolutely king,” Georgiades says. “Craigslist has been liquid for 15 years, and I think it’s really an amazing microeconomic lesson: that when a company hits liquidity, it’s really hard to lose that. They haven’t innovated; they haven’t changed their interface in a decade. They’re losing share, but not that much. They’re at the stage where they’re just cashing in on the liquidity, and good for them.”

Should Craigslist stubbornly refuse to modernize for another five or so years, it’s possible—even likely—that a more user-friendly startup like Apartment List or Zumper or Zillow will steal its throne in the online rental marketplace. But for now those ★ BEAUTIFUL !! ★ 2BR !! ★ NO FEE !!! ★ apartments aren’t going anywhere.

Correction, August 7, 2014: This post originally said Zumper is in 20 U.S. cities. It is live nationwide, but has particularly strong presence in 20 cities. (Return.)