Chicken or Egg Problem (Cold Start Problem)


The "chicken or egg" problem refers to the problem of getting enough critical mass to trigger a positive feedback loop. If the people on a network produce the majority of value for other users, how do you get the first users to join?

This is an especially big problem with 2-Sided Marketplaces (and to a lesser extent with 2-Sided Platforms) because there are two types of users - buyers and sellers (or developers and users) - and one needs to be in place before the other one will have an incentive to join. Kickstarting 2-sided networks requires giving some sort of initial value to the users on one side or another, which is independent of the complementary value that results from the other side of the network being there.

There are at least 19 specific tactics we know of that can help solve this problem. Several of them involve creating a single-player mode product that provides value to one side of the marketplace even without a network in place. Others involve attracting one side of the marketplace with compensation, such as cash or leads. The full list will be published later.