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(rephrasing a previous question)

My partner and I are in the development phase of a website which essentially is a new marketplace for a sector that we believe is lacking one.

However most of our resources are going for design and development leaving us with just a couple of thousands to solve the "chicken and egg problem" (reach critical mass) and we believe that it will be difficult to get funding before we have a proof that we have a business in our hands.

I'd love to hear your advice on how to attack this problem. Can you point me to good articles/posts on the issue?

Thanks in advance!

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3 Answers

up vote 15 down vote

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.

Example: Del.icio.us, the founder made it valuable even if it's used by a single user (bookmark). It provides additional value as it reaches critical mass (share etc).

There are few techniques you can use to do that (references below). That's the best i can say without any clear idea what marketplaces you guys are building.

Few more links that you might want to read about this problem that kill heaps of startups:

Hope that helps.

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Thanks very much for your useful responses! – Gera Nov 14 '09 at 12:00
I've quoted your statement here: answers.onstartups.com/questions/9332/… – Joseph Turian Mar 18 '10 at 5:21
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up vote 2 down vote

If you have a solid and unique value proposition for both sides you shouldn't have any problems. We were very concerned about this in the beginning of our startup, but it proved to be a much smaller issue once we launched. The key is to roll out a good product that solves a specific problem in a way that people respond to. If this is apparent from the beginning, then you won't have any problem raising money or getting users. Just be patient and the cream will always rise to the top.

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up vote 1 down vote

Is it really a problem? I don't think so.

Your idea must reduce an inefficiency that currently exists, this is my start-up equation -

                                          execution
High inefficiency + efforts/investment --------------> Low inefficiency + Benefits/Money

Also read this answer by Alex - http://answers.onstartups.com/questions/3313/what-can-i-learn-about-internet-business-from-these-charts/3451#3451

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