Start with identifying the weak side

June 3, 2020

To overcome the chicken and egg problem, find out which one will come by itself. Sounds easy, right?

The number one question I get asked is “how do I overcome the chicken-and-egg problem for my marketplace“, big surprise, am I right?

Now, I have written about this before. How you start out as a one-sided service, using your first suppliers to do the marketing for you and move to two-sided later. But when it comes to starting out one-sided, there still is a big question open: which side am I selling to?

So, I replied to this thread on IndieHackers here. I think the question on who to sell to is usually quite easy, but this one wasn’t so much. In most marketplaces, you have a clear “weak” side. If you build a marketplace for grocery deliveries, you have delivery people and people who want to get stuff delivered. Delivery people have a hard time finding these odd jobs and get someone to pay them for shop for them, but people who want to get their groceries delivered don’t really care HOW they get it delivered. They’d give you money no matter how you do it. Once you have people ordering, delivery people will jump on it with the premise to make a quick buck,

This is a great example where you can brand your site as a grocery delivery startup (one-sided) and do the logistics in the background. It’s actually much simpler to start with selling yourself as a delivery person, build the pipelines, then bring more people on. Chicken-and-egg solved.

However, in this case linked above, there is another problem: Access. While it’s probably easy to find a bunch of delivery people to help you, it’s probably harder to find licensed medical practitioners to help a future/unknown/unvetted marketplace.

If you read the thread, I actually recommend to try and see if you can find a practitioner to work with them, and market it as a tele-med / online-doc kind of thing. That’s the same strategy as mentioned above: You start with yourself (or in this case a friendly medical worker who wants to help out) and start building the pipelines. As customers start to learn about the great advice that other people are getting, they will come more often.

However, you could of course also go the other way: See if you can connect with patients in active/passive treatments and see whether they would like to take some appointments online, as you grow your list of interested patients, go to practitioners and show them the vast amount of interest. Show them that they can start taking appointments from home – or from the Maledives quite frankly – and still have a constant stream of income. None of the sides here is really much weaker than the other, and either of them will make the other side interested.

There are other issues with this specific example: scalability, monetary structures (I thought medical practitioners have a pretty stable income and not a ton of time?), possibly even legality, but that’s not my area of expertise.

I think in many other cases, the “weak” side of the marketplace (e.g. the side that will come and pay once you solve the “strong” side) is much more straightforward. As long as Airbnb has properties, people will rent it. As long as ebay has listings, people will buy it. As long as Upwork has customers, freelancers will sign up (and pay via their commission). As long as there is something which was previously hard to get, the buyers will find a way, which generates the so much wanted network effects – if there are many renters, a lot more people list on Airbnb. So if you struggle with the chicken-and-egg problem, start there.