I wasnt able to go to the Echelon event. But, I was following the whole action via twitter. One of the key takeaways from the blog posts I read and the tweets I read was Fake the Chicken!.

quotable @erenbali @udemy: “Q: how 2 solve chicken/egg problem 4 marketplaces? A: Fake The Chicken.” (manufacture liquidity) #Echelon2014

— Dave McClure (@davemcclure) June 10, 2014

You wont know that feeling of that you missed something really important from a guru when hes in town. Ever since I missed Echelon I felt like that after I missed Eren Balis talk.

Suddenly this popped in from fi.co. The video from Echelon. Immediately started watching. And, here are few notes that I have gathered from Eren Balis talk.

The different aspects that you will have to decide when you start a marketplace business is shown in the below slide about the service chain of your marketplace business:

Service Chain for Marketplaces
Connect Supply & Demand How are you going to connect your buyers to your sellers?

Discovery How the buyers are gonna find you?
Discovery How the sellers are gonna find you?

Pricing How are you gonna price the products? Set by the sellers / centralized

Service / Product What kinda product are you gonna sell?

Customer Experience Is the whole process of connecting buyers and sellers visible to the buyers & sellers (decentralized) or its just automatic (centralized)?

Support Who providers the support? The seller or the marketplace?

If you still dont resonate, the below provides you with an example of a decentralized and a centralized marketplace.

If you say that you company is a Uber for X then you are centralized.

If you say you are a Craigslist for X then you are decentralized.


Centralization vs Decentralization

Getting the Initial Traction:

Chicken And Egg

Question: Whos your chicken and whos your egg?

It depends from marketplace to marketplace. In udemys case, the speaker says that they faked the courses to attract customers. They put their team and investors to work i.e. to prepare faked courses to put up on udemy. Well, its not really fake. They delivered and showcased the value of their platform through these.

Liquidity is the most important thing

Yeah! Liquidity is the most important thing. Get money in As Soon As Possible. The udemy team started selling paid courses! Not free courses!

On a side-note: Free is no more a model to validate your business. You have to get people to pay money. Thats how you validate!

So, how do you get money in your pocket?

Do things that don’t scale

Thats a quote from Paul Graham which is worth a 100 billion dollars! Do Things That Dont Scale!

How do you do that? You will call and talk customers to buy from you, give them gifts, give them free credits for the money they spend with you.

All these are not scalable (i.e. you will be losing money / time doing such stuff), but it helps you build up your initial customer base. You will also learn a lot of stuff doing this. Stuff like what your customers are really looking for. And a ton of ideas for future marketing.

Achieving Early Growth:

Focus on Segment

Focus on a segment and then expand. Be known for one little thing. You can expand later. The beach-head, the niche, the low hanging fruits or whatever your call it. Uber did this with Luxury cars. They were known for Luxury cars and then recently they are stepping into cheap taxis as well.

Early Growth Ideas

So, now its time to build your marketplace business with an advantage. Dont have an idea yet, look below:

The Spawn of Craiglist