I talked to some very smart folks last night over dinner about Craigslist and their position in the market. Currently, CL is the leader in online classifieds, they've had great success porting their model to other cities and countries and they have a built-in loyalty and fan base that rivals that of any online user-generated-content site. The question is - why don't they improve?

My dining companions were frustrated particularly by:

• Lack of upgrades/updates to UI
• Lack of duplicate post filtering
• Lack of community reputation system
• Lack of comment/participation system
• Poor monetization
• Poor depth of information
• Poor archiving

I've always been a big fan of CL from the perspective of what it's done for previously inefficient markets like rental real estate and other classifieds-based businesses. But, without the monetization (which people are happy to pay for in the markets where it exists) and without the innovation and push to become a dominant company, can they succeed in a largely capitalist world.

The quote that stands out in my mind was:

"So what if someone has to write a $100 million dollar check to take that market from them - if it's profitable to do so in the long run, it's going to happen. And if it's $200 million or $400 million, it will still happen."

What are your thoughts? Could Microsoft win with Expo? Could a new player eventually steal the market? Will Craig and the crew ever take up the challenge? Are there barriers to entry that permit them to operate such an inefficient organization for now?