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

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.

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

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.

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

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/

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...

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/3623/solving-the-chi...

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).

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. :)

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.

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...