Chicken and egg? The egg came first.
So atleast one theory says that the egg came first.
The classic chicken and egg problem for a lot of startups is what to chase first - the supply side (businesses) or the demand side (users).
When you go to businesses and tell them to partner with you, the first question you’re asked is how many users you have. At the same time without a critical number of partner businesses with whom the user can use the product/service, it is hard to sign up users.
The supply side is the egg in this case and it has to be solved first. There are several ways to go about this and here are a few examples.
1. Industry expertise
It is no surprise that several startups have an industry expert as one of the founders or atleast one of the early employees. The industry expert brings contacts, and a precise understanding of the pain points of the target businesses. This can get the first couple of referencable businesses to the table.
Egs: Hailo (taxi hailing app had one of the founders who came from the industry)
2. Straight up hustle
3. Give away something for free
In addition to the core product, you give something that the business needs, and that you’re good at as a free service to the business. This gets the business more incentive to work with you, and further, it gives you leverage over the business and thus reduces churn rate of businesses.
Egs: Uber, Seamless
We’ve come up with a really unique way to use #3 in our sales approach at Haggle. I’ll write a post about it once we have some success with it.
So chasing the egg first is not laying an egg, after all.
More about the demand side in a post in the coming days.