1 9 T A C T I C S T O S O L V E
T H E C H I C K E N - O R -
E G G P R O B L E M
When the harder side (supply or demand) reaches its boiling point of
activity, network effects kick in and value will be created organically for
the easier side. In most markets, either supply is harder to get to
participate in your marketplace or demand is. You can figure that out by
testing the sales and onboarding process. Typically, whichever side is
hardest is the more valuable, and once you get enough of them, the other
side is 2-10X easier to bring onboard.
Examples: Outdoorsy is the RV rental marketplace. They figured out that
getting the supply—the RV owners—was the harder side of the market.
Once Outdoorsy convinced the RV owners to join their platform, the
demand came 5X faster and cheaper, and Outdoorsy became the online
mecca for mobile lodging.
Find the small groups in your community that care most about your
marketplace—what we at NFX call the “white-hot center”—and go after
them. You typically figure this out by going broadly enough to gather data
which shows the highest activity.
Examples: eBay first got traction with Beanie Babies. Craigslist started as
an email list to Craig’s friends who wanted apartments for rent and jobs.
Uber started with “rich bros” getting black cabs in SF. Poshmark started
with urban female professionals.
1 . G E T T H E H A R D E S T S I D E F I R S T .
2 . A P P E A L T I G H T L Y T O A N I C H E
A N D R E P E A T .
Pay cash to the most valuable side of the market—or the most valuable
niche within the most valuable side—to join your marketplace.
Examples: Uber initially paid the supply-side—drivers in key cities—to be
on their app so that riders always had a car to book. Helix subsidizes the
demand-side by covering a portion of the costs of genetic
tests. ClassPass paid the supply-side—gyms—upfront cash to join their
3 . S U B S I D I Z E T H E M O S T
V A L U A B L E S I D E O F T H E M A R K E T .
4 . M A K E T H E S U P P L Y L O O K
B I G