Written by Serene Huang [Managing Director]
Most entrepreneurs dream to be the next Uber or Airbnb. What does it take to be a successful ‘platform’ startup in the sharing economy? How do companies go about tackling the chicken-and-egg challenge? Do you place emphasis on attracting the service providers or the customers first? As a startup, you will face various constraints in trying to answer to both the demand and supply of your platform at the same time!
- Understand your business model. Is the platform good enough to raise funds to help you through the first phrase? Always calculate and know how much you need to sustain the platform before trying to figure out the chicken first or egg first problem.
- Know your target customers. You only have one chance to make an impression. Once you go to the customers, you better have a solid offering for them. With that said, it is important to first acquire the right service providers. How do you entice them to use your platform is another question altogether.
- Find your service providers. Always figure out where you can locate people who will be interested in using your platform without a high switching cost. You must provide a better if not cheaper option. Poaching customers is what all competitors do differently. Service providers can be using different platforms simultaneously, but whoever serves them the best would be the last one standing.
- Always focus on providing a better user experience. Treat both of your service providers and customers well and they will treat you well. Word of mouth in this sense is very powerful. A good referral program can be effective but it also comes with a high cost and misuse. You should also come up with better marketing efforts through innovation.
- Choosing when and how to expand. To be a successful platform to gain a high valuation, expansion plans and strategies are necessary. Knowing the demand for your platform and understanding various different markets are essential to ensure a better execution. Launching in situations of high demand and low supply will help startups gain the right traction as well as acceptance by the right group of early adopters.
- Expanding the customer base from 1000 to 100000 to 100000000. Understand your target number and that each stage would require different strategies. To be a true unicorn, acquisitions of the right business units are important. From digital marketing to mass marketing, companies should consider the purpose of advertising in order to get the best effects in new customers acquisition.