

Ask HN: Chicken and egg problem: Ideas on beating it? - rriepe

I just launched a site that aims to solve a two-sided market problem with a simple newsletter-style solution (a similar approach is found in HARO). In this case, it's product placement.<p>The site: http://productplaceme.com<p>I've gotten some modest coverage so far but I'd like to build up the list more before I send the first one out (Tuesday).<p>I've seen some clever solutions to the chicken-and-egg problem here on HN. What did you do? Or what would you do for PPM?
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sleepdev
Brian Chesky, of AirBnB, gave a talk at startup school that touched on this
topic: <http://www.justin.tv/startupschool/b/272180383>

His advice was that "you always focus on supply first... then you shift to
demand." Here that would mean to try to grab producers before promoters.

The idea is that producers are more willing to list their movies on your site,
no harm done, but promoters won't be interested unless you have some movies
for them to choose from.

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Timothee
From Startup School as well, Adam D'Angelo said they answered a lot of
questions themselves at first, Mark Zuckerberg said they had interns scrape
the course info manually, Brian Chesky talked about how they recruited the
first people themselves by door-to-door basically.

Summed up by D'Angelo: "it doesn't matter if it doesn't scale if it
strengthens your position". Though I don't know how that applies to your case,
if there's anything you can do to get things started.

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bravura
In addition to the two other Chris Dixon blog posts other commentators have
linked to, Chris Dixon also has a great post on this topic:
[http://cdixon.org/2009/08/25/six-strategies-for-
overcoming-c...](http://cdixon.org/2009/08/25/six-strategies-for-overcoming-
chicken-and-egg-problems/)

Here are his six suggestions:

1\. Signal long-term commitment to platform success and competitive pricing.

2\. Use backwards and sideways compatibility to benefit from existing
complements.

3\. Exploit irregular network topologies.

4\. Influence the firms that produce vital complements.

5\. Provide standalone value for the base product.

6\. Integrate vertically into critical complements when supply is not certain.

This has also been discussed on answers.onstartups.com:

[http://answers.onstartups.com/questions/9332/how-do-you-
solv...](http://answers.onstartups.com/questions/9332/how-do-you-solve-the-
chicken-and-the-egg-problem)

[http://answers.onstartups.com/questions/3623/solving-the-
chi...](http://answers.onstartups.com/questions/3623/solving-the-chicken-and-
egg-problem)

There are some conflicting answers:

* Joel Spolsky says: "When faced with a chicken & egg problem, you have to find a way to sell simultaneously to both sides of the equation."

* Hendro Wijaya says: "Focus on satisfying one side of the equation first. Pick the chicken, or the egg. Make sure they can see the value early in time."

Nonetheless, the discussion includes useful advice like: Low risk buy-in for
one party, Partner with an existing business, and Scaffold (Greg Belote).

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ryanwaggoner
A few links that might be useful:

<http://news.ycombinator.com/item?id=1799565>

<http://hbr.org/2006/10/strategies-for-two-sided-markets/ar/1>

<http://blog.asmartbear.com/marketplace-business-model.html>

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belehe
I would choose a very small niche. The chicken-and-egg problem disappears
almost complete if you choose the niche small enough. This can be a movie
category or a region, maybe the movie category is better in your case.

Because, if the niche is small enough, you will always be able to handle the
short coming of the other (supply/demand) side in a realistic way, be it by
cold calling or adwords or whatever.

I would stick with this niche for a while. You will have some first successful
transactions, some success stories, some data you can use for statistics and
pr, generate modest earnings, build up some ranking positions on google,
etc... and you start understanding the numbers of your business, the
conversion rate, etc..

And you will provide traction for your current users. Promoters that have
signed up for the newsletter will regular receive some opportunities, and this
is what counts to make your useres happy in a marketplace.

When your first niche is doing well, you can risk the next step, expand two
other segements (categories). And repeat.

From my point of view, the critical thing is that you will loose a lot of
ressources everytime you start acquiring new customers/segments. There will
always be a mismatch of the demand-side and the supply-side. To be
successfull, you needed to cover one segment by segment, otherwise you may run
out of time and money before you get significant traction.

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jeromec
One thing I've found is that potential customers can visualize _hypothetical_
products nicely, and can be quite responsive, especially if you are solving a
pain point for them. So, for example, you're already underway with your
project, but I'd scale that mental impression back in any sales pitch. Call
producers/product advertisers and describe what your _potential_ product (now
nothing more than an ambitious idea) could be like and ask their advice for
further tailoring it to them. This allows them to see their benefit, and past
your real world start up difficulties. Next, ask if you may contact them once
you've got something solid going. Do this with both sides. Build up a list of
contacts over a month or so, then tell everyone how many people you've got
interested and that you're opening the initial sign-up page now! :)

Edit: Also, your homepage looks great, but I'd take off any solicitation for
ads for yourself. I know that's what _you_ get out of it, but you don't want
to do anything which might scare away those first crucial users. One step at a
time. :)

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thetylerhayes
Marco Zappacosta, founder of Thumbtack, addressed this issue at some length in
his interview with Jason Calacanis on This Week in Startups. (Sorry, I have no
idea where it is in the interview. I believe Marco starts talking generally
about the topic about 30 minutes in, and calls it Network Independent Value.)
[http://thisweekin.com/thisweekin-startups/this-week-in-
start...](http://thisweekin.com/thisweekin-startups/this-week-in-
startups-68-with-marco-zappacosta/)

------
dh
Check out these 2 posts

<http://cdixon.org/2010/08/21/the-bowling-pin-strategy/>

<http://cdixon.org/2010/10/16/the-ladies-night-strategy/>

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noahc
Another approach is build a community that either producers or promoters would
want to be a part of. I'm not sure how that would look, but basically, you get
one side to show up and then pitch to the other saying, you need to see what
these guys are doing and that's your newsletter-style solution.

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jcsalterego
Eggs, beating -- I see what you did there.

~~~
captaincrunch
reddit much?

~~~
jcsalterego
Hardly. Probably IRC too much.

