Unbundling billions in niches

Unbundling Craigslist, and the future of niche businesses

I’m an aspiring foot model

Sneakers are my vice. We all have one or two “unhealthy” obsessions that, for one reason or another, strike a primordial chord in our souls, and empty our wallets.

Some spend thousands of dollars on the latest golf clubs. Others back up the boat for fancy fishing gear. And the majority of people with a sales quota are obsessed with watches.

In short, we all have a “thing” that we self-identify with to a level that wouldn’t really make sense to an “outsider".

Many of these “things” are sold through niche, verticalized marketplaces, which cater to the unique preferences of sneaker heads, gear heads, foodies, etc.

Speaking of marketplaces, you’ve probably seen this image floating around the depths of the internet. It’s a raw illustration of all the ways entrepreneurs have attempted to unbundle Craigslist into standalone, seemingly niche businesses. Many of these companies went on to collectively raise billions of dollars in capital, and generate hundreds of billions in sales.

Andrew Parker, a tech geek and investor from Spark Capital and Union Street Ventures, made the thought provoking image back in 2010. It appeared in a piece he wrote about the unbundling of Craigslist, featured on his even more thought provoking Tumblr “The Gong Show” (nice).

My first observation: These logos are old AF.

My second observation: Many of the logos on the list are durable, publicly traded businesses in 2023.

Some unbundling examples that jump off the page:

• Sublets / Temporary —> AirBnb

• Tickets —> SeatGeek

• Arts and Crafts —> Etsy

• Real Estate —> Redfin

• Casual Encounters —> Ashley Madison (I actually don’t know if this one is still around and I’m too afraid to search for it on my work computer)

• Child Care —> Care.com

• Jobs —> Indeed

• Design —> Behance (Adobe)

• Electronics —> Gazelle

And then in 2012, David Haber of Spark took another stab at the chart, updating it for a shit ton more logos.

• Transport —> Uber

• Creative —> Fiverr

• Activities —> Get Your Guide

• For Sale —> Kickstarter

• Used Clothes —> The Real Real

• Discussion / Forum —> Quora

• General / Labor —> Task Rabbit

• Automotive —> Your Mechanic

• Systems / Network —> Stack Exchange

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Here’s what we’ll “unbundle” in this issue:

1. What is unbundling?

   1. A16Z’s definition

2. Why does unbundling work?

   1. Customization

   2. Targeted Offerings

   3. Enhanced User Experience

3. Why does unbundling not work?

   1. Engagement frequency

   2. Network effects

   3. Scale economies

4. How far can you unbundle?

   1. The story of Cars and Bids

5. How far will VCs fund?

   1. What’s considered “Venture Scale?”

6. How can I spot unbundling before it happens?

   1. The Chernin Group

   2. The creator economy

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What is unbundling?

Source: Hackernoon

In the context of technology and marketplace businesses, unbundling refers to the process of breaking down a horizontal platform or service into smaller, specialized businesses.