How to overcome "The chicken and the egg" problem on peer-to-peer marketplace?

[Deleted70138]

If there was no Uber (or Airbnb), but you knew that would work 100%, how would you overcome the initial obstacle of not getting hosts/drivers due to lack of customers, and not getting customers due to lack of hosts/drivers?

 

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[Raja]

I was building a marketplace last year, though I did not pursue the idea I did research about this problem.

you need to get products first, what you can do is to partner or sell as affiliate top-selling products. after this, it is similar to normal ecom and affiliate marketing

 

[Ronak]

This is one of the most difficult problems, that's why they had to raise billions of dollars to actually scale, and mostly lose money.

But, if I had to do it, I would find a raging need, where it's so great, that people would be willing to pay in advance and get on a waiting list before the solution is available. Then you can recruit the other side, the supply, citing your proven demand, and ultimately implement some sort of natural referral mechanism for viral growth.

Easy to say, harder to do, but not impossible.

 

[MJ DeMarco]

The project I've been working on actually is two-sided...

So was my old company.

My position is to attack the supply side first, then hit the demand side. Never easy which is why 2S Marketplaces are the hardest. Somewhere here I posted years ago that you should avoid them due to the immense difficulty because yes, they might burn capital fast.

 

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[Kevin88660]

If there was no Uber (or Airbnb), but you knew that would work 100%, how would you overcome the initial obstacle of not getting hosts/drivers due to lack of customers, and not getting customers due to lack of hosts/drivers?

If you are testing entirely new concept where in theory "buyers don't exist yet" until they have seen enough viable products on a platform that have been tested and verified by early adopters then I think the only option is to get the sellers on board, like how airbnb and tested different marketing approach.

But for most old traditional markets there are well established buyers and seller, it is always getting and buyers first, then the sellers will naturally follow. Literally the advertising/leads gen model. Build a community or pump quality contents for free to get buyers traffic.

 

[eramart]

Maybe get a hold of small established taxi business, make friends with them and try to get them customers through your new channel?

 

[Andy Black]

Consider first getting the side with the money, who want to pass money to the other side.

If you can get a steady stream of people who need a lift from A to B then you can use them to sign up people prepared to drive from A to B.

If you can get a steady stream of people who want to rent a flat in XYZ location then you can use them to sign up a owners of flats in XYZ location.

If you start the other way round then you don’t know if you can get them sales, and it’s harder to sign them up than if you came bearing a lead.

You don’t have to start it as a two-sided market place when you generate leads first. It becomes a lead gen project, where you acquire clients in the locations you can generate leads.

That’s how I’d approach it.


Oh, and the egg came before the chicken. The creature that evolved into the chicken laid eggs before it became what we define as a chicken…

 

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[Guest-5ty5s4]

My input here won’t be as good because I haven’t actually built a biz like that, but I would approach this similar to hosting a party in college (which I did quite well a few times with some other engineers and non-frat guys):

Nobody wants to go to a party that nobody else is going to, right?

So first thing I would do is get a core group of friends that PROMISED to go to the party, and get them to publicly RSVP on the Facebook event or evite or whatever...

Then you send out the public invitations and open up the event.

The same could work with a model like Uber, if you could get some guaranteed drivers in a specific location (or locations) to kickstart the process...

This is, of course, a slower compound effect, rather than the huge VC churn and burn method...

BTW. The biggest party we threw catered to all non-Greeks, specifically science majors, and we had over 300 people show up... my buddy wasn’t thrilled about the cleanup, lol

 

[Odysseus M Jones]

Maybe get a hold of small established taxi business, make friends with them and try to get them customers through your new channel?

"Hi, eramart here, how's it going?

I want to launch a service that will directly compete with you & ultimately put you out of business.

But I'll need your help to do this.

Essentially, I'll get you a tiny amount of extra business before we send you the way of the dinosaurs.

How does that sound?"

"Sure kid, let's meet!

You know that stretch of deserted highway about 20 miles outside town?

I just love the views, the peace helps me think.

Let's say midnight tomorrow.


Bring a shovel..."

 

[eramart]

"Hi, eramart here, how's it going?

I want to launch a service that will directly compete with you & ultimately put you out of business.

But I'll need your help to do this.

Essentially, I'll get you a tiny amount of extra business before we send you the way of the dinosaurs.

How does that sound?"

"Sure kid, let's meet!

You know that stretch of deserted highway about 20 miles outside town?

I just love the views, the peace helps me think.

Let's say midnight tomorrow.


Bring a shovel..."

Nevertheless, it worked in Moscow - nowadays old taxi businesses supply cars and drivers, and Uber-like services supply customers. You never know how things might turn out )

 

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[Deleted70138]

Thanks everyone for your comments.

I'll try to squeeze out as much from your ideas as I can to solve this problem.
Will report back with the results in couple of weeks or months, whenever the sky clears up.