Time was, newspapers owned the local classified ads business, and it was their cash cow. Many people bought the paper just for the classifieds, and it was by far the most valuable real estate of the paper. In recent years, free Internet- based alternatives like Craig’s List decimated their business and contributed greatly to the decline of newspapers.

In this November 2009 interview, Craig Donato, CEO of Oodle, an online classifieds startup, explains that “If You’re The Challenger, You Have To Play A Different Game”. He tells Andrew Warner how he was able to build a successful online classifieds business despite free competition, and become the classifieds provider for many local newspapers.

Donato shows that his company achieved success through innovation based on customer needs, whereas newspapers remained complacent and failed to compete. Clearly, there is room for both free and paid providers in this industry, but the key is innovation in providing customer value. Newspapers, so long enjoying monopoly privileges in their markets, didn’t have the innovation experience they needed to compete in the newly opened market.

Watch Mixergy’s interview with Craig Donato