Craigslist isn't free -- there are certain categories (like job postings in some areas) that are paid. This subsidizes the entire service.

Craigslist has indeed done very, very well. They've maintained a useful service, ad-free, for decades. Made a ton of money doing it, too.

Their secret is they did not try to grow at an insane rate. They have 50 employees and over $650 million in revenue. The revenue per employee is over $13 million.

The reason the giants are giant is because they are driven to become giant by people and investors who want to become billionaires.

Could Craigslist have been as successful if it launched today, instead of 1996?

The lack of bs website overhead on craigslist is honestly impressive. RAW HTML BABY!