How to solve the "chicken and egg" problem of a 2-sided marketplace...

I have always liked the "fake one side" approach.

There's a book called "Matchmakers" that goes into examples of this, but for example, if you want to connect small businesses with loan providers, you might call 100 banks and find out typical terms of their loans, put them on your site, then you just have to worry about getting businesses on board.

It's different for every business, but the last two companies I've worked for have done something like this in the early days.

In general, there is always a side which attracts the other side. In some cases that's the supplier (e.g. Uber drivers, Airbnb hosts), in other cases it's the customer/demand (eBay buyers. In many cases, you can make one of these sides to an active advocate for your product. Example would be Airbnb hosts advertising their objects somewhere else (e.g. Craigslist) and moving traffic to your site like this.

For me @mentorcruise it was clear that I need to attract mentors, before I could attract mentees/students. To this day, every new mentor will actively share their profiles in their network, communities and socials. Whenever I onboard a new (high-profile, highly followed) mentor, I can see an immediate spike in new visitors, and in many cases, they will convert some visitors for themselves, but also give a boost to the site overall.

Also like @karlhughes answer in here. If you can get rid of the two-sided constraint and bootstrap/fake one side first, your life will be much easier.

Thank you for your tips. I would be grateful for some simple advice.

I have built https://cryptostar.money which is a combination of the Yellow Pages and TrustPilot for crypto and blockchain businesses. I launched two months ago and I have been trying to get category sponsors with 1 to 1 sales. This is not working so I am going to invest more in targeted email marketing and then affiliate marketing.

You have done this before and got through this pain.

How long did it take you to get your first dollar?
How long did it take to get "traction"?
How many times did you have to pivot - and in what dimensions?
Anything else you think I should know?

Many thanks,
James

Hi Louis, nice episode you shared. Thanks!

I am currently building a marketplace which involves small companies/shops and consumers. What I am seeing myself is that the "fake one side" approach is the way to go.

Reason for that, at least from what I have observed, is that companies are not willing to be listed unless you can provide them a decent amount of visibility which, at the very beginning, you do not have (unless you have budget to spend in ads).

The strategy here is then to first grow the amount of traffic to my website by scoring higher in Google results while faking the shop side (I list a couple of them in order to feed my audience).

This puts in my hands a stronger argument when I go to pitch my platform at the shops. In fact, the recurring question I get when I approach companies is: "how many visitors per month do you have?"

If I understand correctly, your advice is to go after the side that's more difficult to acquire?

I'm trying to picture what that means and can't see it making sense. For example, if I am building an attorney directory, it's much easier for me to scrape all the listings on another website, and relist them on mine and THEN wait for people to show up after Google indexes me and I put in some effort to promote the site. In this situation the person needing legal help is much more difficult to acquire and in most cases costs ad money. Once people show up and hit those contact buttons no attorney is going to say no to those leads.

Another example: vacation rentals. I can onboard 1000 people listing rentals just by scraping them and importing to my site (let the contact info go off-site to wherever they actually listed themselves). Or, I could go the legit way and just say "hey, I don't much any traffic yet but I am putting in the effort, it costs you nothing to list and I'll do it for you, cool?" Who is going to say no to that? Again in this case the person doing the booking is the one that's harder to acquire.

Another example with design assets (which I have done personally). I started a design asset marketplace with zero designs of my own. I scraped other sites and added them on mine and gave full credit + reference to where they came from. If person did not like being listed I just de-list them. Nobody ever complained because to them it's just free exposure and more eyeballs = more sales. Then as the site grew larger I started adding additional original assets. I had a growing email list to promote to but I was not passionate about the project. I don't know if this example fits into your advice though, since both sides were kind of easy to build since people want free stuff and people making free stuff want eyeballs.

Maybe I read your statement wrong and arguing your exact point? 🤔