Challenges in Building a Marketplace — 5

The chicken and egg problem.

Earlier in May, I started this series to document the various problems we encountered in cultivating an online marketplace — i1Machines. On hindsight, most of the articles were written without a purpose, although there is one positive note — I adopted a user-centric standpoint in most articles. This shall be the last item to round up the series.

Photo by Brina Blum, Unsplash.

One of the typical problems that many startup businesses face is building their first group of users. This applies for startups that serve to connect two groups of people e.g. a marketplace economy like AirBNB or Deliveroo or Carousell, an editorial like Medium or Tech in Asia. There is always the struggle of choosing which side of the market to build up first, which is commonly referred to as the chicken-or-egg problem.

You need the sellers as you do the buyers. You need the writers as you do the readers. Who should you get onto your platform first? Who should you serve first?

It does not matter which side of the market you first focus on. Just start with either. The truth is that you have to serve both your supply-side users AND your demand-side users, eventually.

If we were to take a step back and look at why the question in the first place, it leads to two points.

  1. Firstly, both sides of the market are important, hence the deliberation.
  2. Next, there is limited resources in a startup (manpower, money, time), hence the need to prioritise, and focus on one over another.

However, even if you have boundless resources, say you raise capital or have a pool or talented people, you probably will still face the same struggle. Some of the questions to consider in prioritising are:

Who is your paying customer? Who is easier to serve? Who faces a bigger pain? Which group of users is more accessible?

Photo by Bruno Nascimento, Unsplash.

The two different groups of users are like your left and right legs. As you climb up the stairs, you can start with either leg, the other will follow up.

Similarly, when you take your first step, you can just think of a small group of suppliers to serve first. When their needs are met, and your front foot is firmly placed, your trailing foot can follow. That is when you turn your focus to the needs of the customers.

After which, when both feet have been steadily elevated, you repeat. Gradually, you will find yourself climbing up the stairs, and bringing increasingly more value to all your users. You go left and right like “Suppliers, customers, suppliers, customers, suppliers, customers”.

I suppose you can hop up the stairs two legs at a time, or perhaps even on one foot. The question then becomes, how high are your stairs leading to, and can you last the whole way up?

It does not matter whether you start with your left or right leg. Just take the first step and get going already.

Thank you for following through the series. I’ll strive to make my next series more purposeful. Do give a if you agree with my standpoint, and feel free to comment with your thoughts below.