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Online Marketplace: I am building a marketplace. How can I make this attractive to other members while my presence grows online?
JF
JF
Joey Flores, Startup CEO/CMO/CPO with 20 Years Experience answered:

Solving the chicken and egg problem of a two-sided marketplace is among one of the hardest startup challenges. I have had the unfortunate experience of solving this multiple times. Here are my top tips:

1. Validate that your solution is needed. Talk to potential customers on both sides and get confirmation that this is a problem that both sides would pay to solve.

2. Figure out which side of the market needs you the most. Hopefully, your solution is a pain killer for both sides of your market but one side should be dying for it and easier to secure.

3. Get scrappy and do things that don't scale in order to secure these first initial customers. Find them first hand, email them cold, go to the home office in person, whatever you need to do to get a commitment from 1+ people that they will move forward if you come through on the demand or supply side they need.

4. Listen to what they tell you they need. Do not try to sell them something else. To the extent that it would not be a distraction, fulfill what people are asking for. Learn what they need instead of assuming you know.

5. Only secure the customers you feel confident you can deliver on. You don't want to spend $1k advertising to one side of the market, get a bunch of signups, and have nothing to offer them. Stay lean, get your first customer, meet their needs, then your second, meet their needs, then your third. Early on, you're trying to learn and establish a customer base and solid reputation.

6. Relentlessly work to deliver what you said you would. Go to the other side of the market with good demand or supply in hand and make things happen. Be a matchmaker. Do things that don't scale. Later you will figure out how to grow and streamline things.

7. As you start to achieve success but are probably limited in resources, switch your focus back and forth to keep the balance between supply and demand relatively in sync. You never want to grow one side of the marketplace significantly faster than the other or you just end up with both sides not getting any value.

There is more to building a two-sided marketplace than this but it is often very specific to the business. This truly is one of the harder startup problems to solve. If you need help, please feel free to reach out.

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