The Chicken & Egg Problem of Networking Startups

This is a problem which is prevalent in startups focused on building traffic or user networking. Getting the first set of users is difficult as the incentive of these users is dependent on some factors which in turn are met only once these users come onto the website.

This would clearer with some examples.

Facebook faced this problem initially. A user would not see the value of the website until he/she had atleast 10 friends. The challenge the startup faced was to get a group of friends collectively so that they could experience the benefits the portal had to offer. Most social networks have faced this problem and require a minimum threshold of people to join before users can see the benefits and get engaged with the platform.

For a classifieds site like Craigslist, this was a problem as well. Buyers of goods/services would not want to come and use the website until they knew sellers were there on the platform and vice versa. Only getting both sides together could enable users to experience the potential benefits of engaging with the platform.

Dating apps like Tinder also face a similar situation early on. Boys would like to enroll only if there are profiles of girls on the platform and girls would start enrolling when profiles of boys were there on the platform.

For a new entrant in either of these business models or similar to them, this ‘chicken & egg problem’ has to be thought off and addressed in the initial days itself.