How to solve the chicken and egg problem on a marketplace

Most marketplaces face the chicken and egg problem in their early days. How to build supply without demand, and demand without supply? Here are nine tactics to solve the problem with 20+ examples from successful online marketplaces.

00:00 Introduction
00:33 What is the chicken and egg problem in marketplaces?
01:18 How to solve the chicken and egg problem
01:47 Examples of solving the chicken and egg problem from successful online marketplaces
02:25 Tactic 1: Start small
02:59 Tactic 2: Do things that don't scale
03:41 Tactic 3: Steal supply from a competitor
04:29 Tactic 4: Subsidize supply
04:45 Tactic 5: Fake supply
05:23 Tactic 6: Offer value through SaaS
05:55 Tactic 7: Engage with a community
06:24 Tactic 8: Tell a great story
07:09 Tactic 9: Find a market where the chicken is also the egg

Resources and further reading:

Tactic 1: Start small
- Our CMO Sjoerd's recap of the lessons from Season 1: https://www.sharetribe.com/twosided/ep12-five-takeaways-season-1-marketplace-podcast/
- Two-sided podcast with Casey Winters (ex-Grubhub, ex-Pinterest, ex-Eventbrite): https://www.sharetribe.com/twosided/two-sided-platforms-with-casey-winters-eventbrite/
- Two-sided podcast with Kickstarter co-founder Charles Adler: https://www.sharetribe.com/twosided/ep10-charles-adler-lessons-building-kickstarter/
-Two-sided podcast with Curtsy CEO and co-founder David Oates: https://www.sharetribe.com/twosided/s2e08-marketplace-in-crowded-space-david-oates-curtsy/

Tactic 2: Do things that don't scale
- Two-sided podcast with Florence founder Charles Armitage: https://www.sharetribe.com/twosided/ep4-charles-armitage-florence-talk-users-before-building/
- Two-sided podcast with Drive lah co-founder Gaurav Singhal: https://www.sharetribe.com/twosided/s2e09-marketplace-speed-vs-quality-gaurav-singhal-drive-lah/
- Two-sided podcast with Greenpal founder Bryan Clayton: https://www.sharetribe.com/twosided/ep11-bryan-clayton-greenpal-learn-marketplace-distribution/

Tactic 3: Steal supply from a competitor
- Two-sided podcast with Curtsy CEO and co-founder David Oates: https://www.sharetribe.com/twosided/s2e08-marketplace-in-crowded-space-david-oates-curtsy/
- Two-sided podcast with WhiteHat co-founder and ex-Hired Head of Sales Sophie Adelman: https://www.sharetribe.com/twosided/ep6-sophie-adelman-future-of-work-talent-marketplaces/

Tactic 4: Subsidize supply
- The Guardian article on Uber’s cash rewards to drivers: https://www.theguardian.com/news/2022/jul/12/they-were-taking-us-for-a-ride-how-uber-used-investor-cash-to-seduce-drivers
- Cnet interview with iStockphoto and Stocksy founder Bruce Livingstone: https://www.cnet.com/tech/services-and-software/istockphoto-founder-re-enters-the-market-with-stocksy/

Tactic 5: Fake supply
- Two-sided podcast with Casey Winters (ex-Grubhub, ex-Pinterest, ex-Eventbrite): https://www.sharetribe.com/twosided/two-sided-platforms-with-casey-winters-eventbrite/
- Two-sided podcast with Queenly CEO and co-founder Trisha Bantigue: https://www.sharetribe.com/twosided/s2e10-marketplace-growth-through-perseverance-trisha-bantigue-queenly/

Tactic 6: Offer value through SaaS
- Two-sided podcast with Freightos CEO Ruthie Amaru: https://www.sharetribe.com/twosided/ep3-ruthie-amaru-building-marketplace-for-fragment-markets/
- Two-sided podcast with CREXi CEO and founder Michael DeGiorgio: https://www.sharetribe.com/twosided/ep5-michael-degiorgio-crexi-embrace-middleman/
- Two-sided podcast with Encore CEO and co-founder James McAulay: https://www.sharetribe.com/twosided/s2e02-transforming-network-marketplace-james-mcaulay-encore/

Tactic 7: Engage with a community
- Sharetribe customer story with Gritty In Pink CEO and founder Shira Yevin: https://www.sharetribe.com/customers/gritty-in-pink/
- Two-sided podcast with Shortboxed CEO and co-founder Gene Miguel: https://www.sharetribe.com/twosided/s2e11-marketplace-from-community-gene-miguel-shortboxed/

Tactic 8: Tell a great story
- An analysis of Clubhouse’s rise and fall by a Clubhouse power user, Sara McCord: https://www.saramccord.com/blog/why-did-clubhouse-fail
- Two-sided podcast with Curtsy CEO and co-founder David Oates: https://www.sharetribe.com/twosided/s2e08-marketplace-in-crowded-space-david-oates-curtsy/

Tactic 9: Find a market where the chicken is also the egg
- Sharetribe customer story with The Octopus Club CEO and founder Anna Rachel Estrougo: https://www.sharetribe.com/customers/the-octopus-club/
- Two-sided podcast with Casey Winters (ex-Grubhub, ex-Pinterest, ex-Eventbrite): https://www.sharetribe.com/twosided/two-sided-platforms-with-casey-winters-eventbrite/
- Two-sided podcast with Kickstarter co-founder Charles Adler: https://www.sharetribe.com/twosided/ep10-charles-adler-lessons-building-kickstarter/