At my current startup, we recently confronted an interesting challenge: How do you grow a two-sided marketplace without frustrating early users? Testing with real customers is incredibly important in the beginning stages. But when your business facilitates interactions between buyers and sellers, a chicken-and-egg problem occurs. If you have buyers and no sellers, your buyers leave. If you have no buyers, it’s tough to convince sellers to come aboard. It’s the classic economics of supply and demand.
In my quest for enlightenment on the chicken-egg-marketplace, I interviewed founders of well-known and up-and-coming online marketplaces: Jake Nickell, founder of t-shirt crowdsourcing company Threadless; Collis Ta’eed, CEO of the marketplace network Envato; Aaron Harris, co-founder and CEO of the tutor ing marketplace Tutorspree; and Odysseas Tsatalos, CTO and co-founder of the freelancing marketplace Odesk.
Here are seven takeaways they shared.
1. Start Simple
Provide simple utility and basic features for your users so you don’t leave them out in the cold while you work on all the bells and whistles. As long as users have a small amount of basic utility, they’ll be much more inclined to stick around for promises of even more features.
“The reality is that development takes a long time and the bigger and more complex a site gets, the longer the development takes,” says Ta’eed (Envato). “We have a great challenge to pick and choose what we build wisely. This means a lot of compromise, but it’s a good discipline and to some extent unavoidable.”
2. Breed Quality First
What’s possibly worse than having a lopsided marketplace in terms of users? Hav ing bad quality users...
