Solving chicken and egg for new platforms

Posted on 11-Aug-2018 12:31:47


When it comes to building new platforms a network or a market place, one of the key questions that gets asked is how are you going to solve the chicken-and-egg problem? If you have not heard of this, this is about the question of should a new platform bring in the producers first or the consumers. The true benefit/end goal is achieved and targeted monetization happens when both sets of users are on-boarded onto the platform and are fully engaged. Anyone looking to create a new platform would need to come up with ideas on how to solve this problem. There are quite a few examples of how successful platforms have cracked this problem.

Before we look at the problem further, the most important thing to note is that a new platform is new and has to have its own USP. It has to solve one or more problems the 2 sets are facing. If its a slight variation of the earlier successful platforms or not something that either of the two sets of users are not looking for, it will fall down.

Another thing to note is that whether it is the producers first or the consumers, they fall into 4 main categories as mentioned in the famous Crossing the chasm book.

  • Early adopters: An enthusiastic set of users who are interested in the platform in the early stage and they keep the engagement going. Getting this group from each set (producers and consumers) is vital. Now how do you get to this set is a different thing altogether. It can be your close friends, a group of people you identify independently and connect together, social media marketing, etc

  • Early majority: This set of users start using the platform after the early adopters are happy with the platform. These users come onto the platform through referrals, word of mouth or through marketing campaigns.

  • Late majority: The platform can be considered decently successful when this group starts using the platform.

  • Laggards: This group is at the end of the technology/product adoption life cycle. They start using when it becomes indispensable.

Coming back to the chicken-and-egg problem, the solution falls into 2 main buckets based on what problem(s) is/are being solved for the 2 sets of users and how they are being solved. And the actual solution within each of the buckets depends on how you get the 4 groups of users from each of the producer/consumer sets.

  • One set can live on their own without the other

In reality, whether it was the chicken first or the egg in this world, that group would have flourished together. If your platform is where one of the 2 sides producers or consumers, can be engaged independently by connecting them together until the other set comes in, this would be the best in my view. There is no need to worry about things like who should be brought in first, what percentage of engagement is required before bringing in the other set, etc. The sets of early adopters can be brought in at the same time and allow them to flourish independently and cross-connect with the other set as the engagement keeps growing.

The founding/building team can keep their focus on taking feedback and enhancing the user experience and engagement for the 2 sets of early adopters. Once the early adopters are satisfied and product evolved with decent number of target features, the early majority from the 2 sets needs to be attracted through various marketing mechanisms.

  • One set which attracts the other

If the platform is where the producers attract consumers and there is nothing the consumers can do without output from the producers, you need to get the content first. Now this is where the most problem is - how do you get the output from producers?

The team needs to get on the early adopters and let them produce the initial content. For the consumer side, there can be 2 things:

  • You be the consumer

  • Send those to your target consumers outside the network and get feedback

Get the early adopters from the consumer side when you and them are satisfied with the amount and quality of content from the early adopters in the producers set.

In order to move forward to early majority, like with the other bucket, there can be various mechanisms. Few of them being (a small list):

  • Run marketing campaigns

  • Attend events where the users from the 2 sets also come, especially the after event parties

  • Spread success stories from early adopters

  • Provide a referral fee for referring others

  • Give few free features or features at a discounted rate which otherwise would have been at a premium

  • Market their work to consumers

PS: I posted this in YourStory in Aug 2017.

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