The chicken and the egg, and why I ended up not building a marketplace

Anyone who has tried to build a marketplace knows the problem. Buyers come if there are sellers, sellers come if there are buyers, and on day one you have neither. It is the chicken and the egg, and it is probably why so many projects of this kind stall even when, on paper, they made complete sense.

I knew it perfectly well and walked in anyway. With Roomealo I started out building a place to bring together people looking for a room and people offering one, and I spent weeks thinking about how to fill both sides. In the end the answer was not having to fill them, and I want to tell how I got there because I think it might help someone at the same point.

What people usually recommend

If you look up how to start a marketplace, the advice is pretty consistent, and almost all of it is good:

• Start very small. One city, one neighbourhood, one campus. It is easier to fill a small place than half of a big one.
• Fill one side by hand. Go and find the supply yourself, one by one, so whoever arrives finds something.
• Open with a waitlist and do not launch until there are enough people on both sides in the same place.
• Give one side something free or paid to come, and charge the other.

They work, and there are huge companies that started that way. But they all have something in common: they are ways to hold out until the problem solves itself, not ways to avoid it. And holding out costs time and money, which is exactly what a small project does not have.

What I did first

I did the waitlist: you signed up, said whether you were looking or had a room, and in which city, and the plan was to open city by city, starting where most people were. Meanwhile, the profiles on the site were sample data, and it said so.

The trouble with a waitlist is that it tells you there is interest, not whether what you make is useful to anyone. You can have hundreds of sign-ups and still know nothing, and meanwhile you keep building for an opening day that does not come. That was exactly what was happening to me.

The question that changed my approach

There is an idea that comes up a lot in this world: come for the tool, stay for the network. First you give one person something useful even when they are on their own, and the network, if it comes, comes later. I had read it many times, but I had not applied it to myself.

So I asked myself seriously: is there something in Roomealo that is useful to one single person, on day one, even if nobody else is there? And it turns out there is. Someone who lists a room already has the other side, the forty people who message them. What they do not have is a way to choose between them. Both sides were already meeting elsewhere, on the usual listing sites. What was missing was the moment after.

That is where it stopped being a marketplace. Now whoever has the room sends a link to whoever writes to them, and every reply that comes in is someone from the other side they brought themselves. I do not need to fill anything, because each person who uses it brings the others.

How to tell if the same could happen to you

Not every marketplace can become a tool, but I think these questions are worth asking before you set out to fill two sides:

• Do both sides already meet somewhere, even badly? If so, maybe your job is not to bring them together but to help with what happens after.
• Is there a specific moment nobody solves? Choosing, comparing, trusting, meeting, paying. It is usually right after the encounter.
• Can one single person get something useful on day one, with nobody else inside?
• By using it, does that person bring the other side without you doing anything? If so, growth is built into the use itself.

If you answer yes to almost all of them, maybe you do not have a marketplace, you have a tool that might one day have a network.

What you give up

It is not free, and I do not want to sell it as if it were. Since you do not own the encounter, you depend on the sites where people already are, and if they change something one day it affects you. Charging is harder, because a marketplace charges for bringing people together and a tool has to prove it saves something. And you give up, at least at first, the network effect that makes a marketplace so hard to copy.

Even so, I would rather have something someone can use today than something that will work the day there are enough people. If that day comes, the network will follow. If it does not, at least I will have learned something from real people and not from a list of sign-ups.