E-commerce: chicken and egg problem is overrated, get on it!
I was advising a couple founders who are building an e-commerce business. One of their worries is the classic “chicken and egg” problem of building a critical mass of sellers before the service becomes valuable for the buyers, and vice versa. Typical. They are building a full-blown business plan. Typical.
My advice was, “Chuck it, get on it. You already have the chickens.”
The “chicken and egg” metaphor sounds so metaphysical that, hyperbolizing the problem, and forcing you to think about a solution, not take action. Let’s face it, you are building Web 2.0, not creating Chicken 2.0. In fact, you already have the chickens (buyers and sellers), you just have to make them party at your place.
The metaphor also introduces a false notion that once you have one part of the equation, the rest would be “automatic” - once you have the egg, then you will have chickens, then you will have more eggs, then… And it undermines the incentive and momentum aspect of the whole process.
Starting a “snowball fight” is a better analogy, because it forces you to take action. Starting a snowball fight is easy. You throw a snowball at one of your buddies, he fights back. You get another person to tag team on him, taunt and laugh at him - it provides him incentive to get more people on his side. And it provides you more incentive to grow the size of your team… and so on…
The takeaway is that there is some value in planning, but not much value in too much planning. It’s better to get started and test whether your plan works. Once your user base grows, most of the time your acquisition strategy will change anyways.
So get on it.
