This site is basically the same thing as Craigslist, except it has fancier design and allows sales of pets www.kijiji.com. I came across it because I'm looking to get a second dog.
So, why isn't it competitive with Craigslist? If I knew the answer to this question, then it would make me a better hacker and entrepenuer. Is it just because Craigslist was first? I think that's a facile answer.
Y-Combinator is looking to fund a Craigslist competitor, but before they do, they should ask themselves this same question, and the corollary - if not this site, then what would it take to unseat, or even compete with Craiglist?
1. Define the large market.
2. Focus entirely on one small niche within that large market that will give you enough credibility to win over the late majority in the latter. See facebook [harvard college social], myspace [music], bebo [birthday reminders], craigslist [local events in san fran] etc.
3. Own > 90% of your niche
4. Cross the chasm into the large market. The market adoption curve demographics of the large market should ideally match the niche you chose.
BTW it is unlikely that a "tech" audience are a good niche to pick, as they do not contain many peers for the larger market to identify with. It will be interesting to look at twitter in a few years to see if it crosses the chasm into the mainstream user.
I'd say read the book. It's a classic.