Ask HN: How to solve the cold start problem for a two-sided marketplace?

Most common advice is that you have to be at least one of the sides somehow. Reddit famously did this with lots of sock puppet accounts to foster discussions and create pseudo activity.

In your case, I'd probably start by reaching out to businesses in mid-size metro markets, ones where bike couriers don't already exist, and offer to save them on shipping small packages. Build up a list of clientele and encourage them to contact you for jobs when they need to ship small ad-hoc stuff. That should give you an idea of demand. Then start posting on craigslist and facebook looking for delivery drivers, then start match-making. From there encourage the drivers you find to sign up on your platform for future work.

You need to cheat to kickstart one side

1) Incentivize people on one side to join without the other side. For example Uber paid early drivers money just for signing up even though they had no riders.

2) You provide one side of the marketplace to kickstart the other side. This would be like Uber hiring drivers in the beginning.

This is why starting a two sided marketplace often requires significant capital. They're very hard to start organically.

Another thing I'd suggest is to focus on a niche. Don't try to solve the global problem just yet. Maybe you know a lot of people want to transport books between London and Madrid. Just focus on that to get that market healthy, then add another product or location. This helps you focus your marketing. Also if you go global to start you might have 1000 users on both sides but no matches because everyone is too spread out.

Oh this is one I can answer. I was the co-founder of Prosper an early p2p lending company. Your problem is a relatively easy one.

Go find one or two companies with a lot of packages. Focus on delivering packages whose delivery time is not critical (say 7 days) and whose registered value is low (say $500 or less). Focus on deliveries that are just outside of ubers practical range (say LA to SFO).

Find a bunch of uber drivers who are already reliable. Over pay them to make runs. If they screw it up have them drop the package off at a ups store and over night it as a catch all.

Do 1,000 packages to get your logistics worked out. Don't market or launch or promote until you have it nailed.

Then find 10 more companies with lots of packages. Your goal is to develop profitable routes (e.g. 5 packages per car) and customers who are delivering 1000s of packages a month.

Your pmf is about reliably servicing one geographic region at a time like yelp and LinkedIn did.

Do not try and roll out a national service day one.

Do not focus on people shipping packages. Not enough repeat business.

Do not take high stakes runs day one.

One big advantage is your ability to do small heavy objects. Ups and FedEx are very weight sensitive.

Beware of drug and cash traffickers. Unlike ride sharing, where the end user, the passenger, is responsible for everything.

Real talk, though, you should already have talked to enough people about solving this problem for them that you have a list of contacts who are eager to sign up.

Sounds like you don't have that. I'm kinda going to guess that you fell into the trap of building something without validating the need for it first.

Because to be completely honest, no business would ever sign up for this, and no reasonable individuals will sign up to carry anonymous packages through customs. The people that would deal with this for whatever $25 you can pay them are exactly the people you should never trust to carry your customers' packages in the first place.

This is a really bad idea for reasons already mentioned in other comments. Personally, I travel a lot and there's zero chance I would ever take someone's random package.

I think you should instead think of this as a B2B2C type business. As in, Business (You) helps Businesses (B) find people (C) that would help deliver freight packages. Even then, it's not really clear why UPS or DHL or whomever would trust a random person in their car vs. their sophisticated logistics networks. If there is some gap in their network, that gap is your sales opportunity. Maybe last minute things? Urgent packages? Etc.

you should read the cold start problem (book). it talks a bunch about how uber, airbnb, zoom, github, dropbox solved the cold start problem in different ways. super interesting and well explained.

in two words, two sided networks usually have a "hard part". in the case of uber, the drivers. in your case, i'd probably "do things that don't scale" like brian chesky did with airbnb, start with a super small location (probably where you live) and drive yourself / your cofounders / friends all the packages until people know the product works.

usually, with cold start products, you have to solve it many times in many locations. you can't do it worldwide day one.

A recent episode of [David Senra's podcast with Tony Xu](https://www.davidsenra.com/episode/tony-xu), founder of DoorDash has some interesting points on this topic. Essentially there, they restricted the service to one locality, and he and his co-founders were the first drivers. Once demand was proven and slowly scaled, there was an incentive for other drivers to join, and with more drivers it opened up a wider geography.

> Travelers going between cities/countries carry items for people who need to send stuff.

Carrying othet people's parcels across national boundaries is a really, really bad idea for the person involved. Drugs, money, weapons, explosives, endangered species, etc.

If you plan to run a business that facilitates this then you are exposing yourself to potentially very severe legal liabilities.

There was a startup years ago that tried this. They shut down because people were afraid to carry a stranger's package.

> Travelers going between cities/countries carry items for people who need to send stuff.

Be thankful that you are having trouble recruiting users because a lack of users is what preventing your company's name being on the headline when someone gets executed in China or Singapore for carrying someone else’s drugs.

And even if nothing illegal is in the package, your users will still likely run into troubles when the security agent asks if all items in the bag belongs to the traveler. If you answer honestly they will likely double and triple search everything, if you lie and say no you are automatically breaking the law for making a false statement to a federal agent.

Man, I feel this. I'm literally grinding to get the first 30 active members for my own project right now and the chicken-and-egg phase is brutal.

Honestly, just be the courier. Pick one route, find the senders manually, and drive the packages yourself.

> Travelers going between countries carry items for people who need to send stuff.

Drug mule as a service in 3... 2... 1...

For my marketplace, I was friends with someone who could make it look like not a ghost town for the supply (an established game store with lots of trading cards in stock). Then, we struggled to get more sellers. Then, we found channels to get selllers, which were basically software systems we could build integrations with. The integrations de-risked the proposition for sellers enough to get more traction. Eventually, if you have growing volume, the supplyside just starts coming on its own mostly, and you focus on retaining sellers and growing buyers.

For your marketplace, you could bring the supply-side by Fedexing stuff when you don't have a carrier. You'll have to lose money on the initial shipment, until you can route the jobs to the supplyside. This assumes you think the typical use case for this isn't smuggling.

The amount of jobs may be low enough at first that you can be like "You said Cairo to London, that will be $N." Then, if you can fill the job manually by finding someone somehow, then you add them to the platform and they do the job. If not, you send a prepaid mailing package with a Fedex label to the recipient and they ship it easily, and you subsidize it so it seems like a great deal to them.

Limiting geography seems like a good approach too.

Platform Scale: How an emerging business model helps startups build large empires with minimum investment, _by Sangeet Paul Choudary_ (Sep 2015)

https://www.amazon.com/Platform-Scale-emerging-business-inve...

This book has various examples of the double-sided marketplace and how they solved the exact _chicken and egg problems_ you are talking about.

You need to be one side of the marketplace first. Uber started by the founders being the drivers.

That means either being the traveler and carrying things for others. Or be the demand and start shipping things this way and get some other people to carry packages for you.

There is probably no other way than to seed it. You can do this with outright bots or contractors from fiverr, but people who grew up with the internet are very good at spotting inorganic growth.

I'd start with a slow rollout to friends, family, colleagues and even LinkedIn acquittances. You'd be surprised how many people are super eager to be the first to test your apps, even with a generic cold message like "hey, remember me? I built this cool app, wanna try it out if you have a minutes? I'll send you money to cover the fees."

Partner as overflow, or undesirable route coverage, for a specific niche market of couriers in your existing location.

Practical examples from a US perspective, where the existing customer has a strong anchor for timely delivery:

1. McMaster-Carr couriers tons of stuff to industrial and commercial facilities. Partner with one of their exist carriers.

2. Local automotive repair shops need parts delivered.

3. Durable medical equipment delivery.

4. Overflow capacity on your local contract FedEx routes.

5. Emergency runs for event or wedding planners.

6. Fresh produce, greens, and fish for restaurants.

7. Airport to hotel lost luggage courier.

For advice let me use my current product. https://fontofweb.com is essentially Pinterest for web design. It does semantic search against a database of UI screenshots and recordings.

The problem with products like this is that for search to be useful, you need, well... data. And when your data is crowdsourced, you need, well... a crowd. That was the chicken-and-egg situation I found myself in.

So the way I solved it was by painstakingly clipping and recording ~8500 websites myself.

But the great thing about that arduous process is that it forces you to put yourself in the shoes of your typical user. And really, the only way to make good products is to have a deep level of empathy for that user. In my case, that meant streamlining the data creation process itself, the act of pinning a screenshot or recording, because I had to do it over and over again. Making it easier for myself ended up making it better for everyone else too.

Of course, all that data-seeding effort goes to waste if search engines and potential users cannot discover it. So you have to go all in on SEO, especially sitemaps, and on programmatic socials where possible. This is especially true for a product like mine.

A lot of these marketplaces also have relatively homogenous data, which is actually useful, because it means you can present it through templates and publish pages at scale automatically.

I'm the cofounder of Infura.io and we were building a 2-sided marketplace of API providers for blockchain infra. We bootstrapped it by doing exactly what you said: focus on one-side first. We focused on the provider side but we had that luxury. We had demand on the customer side already with our existing SaaS product. What we wanted to do was evolve our product to serve our existing customer base with a marketplace instead of solely by our product team. This is because of the evolution in the blockchain space of people interacting with dozens of APIs instead of 8 years ago when it was just our main Ethereum API. Serving the existing customers with a marketplace of providers made a ton of sense and so that is the direction we took the product. Over 2 years we grew it to a network of over 40 providers serving several dozen blockchain APIs.

For your idea I’d start narrower. One route or type of sender/package. Pick a high volume popular route and see if you can bootstrap the 2 sides just on that route alone and then expand. Then manually match people for the first 50-100 transactions. It takes some manual work to get that flywheel going

How is this different from Uship? I've used that service and it's pretty good and reasonably priced. They do exactly what you talk about which is allow people to ship things between cities for a pretty reasonable price. You can either specify a price or have shipper bid on it, along with flexibility as to when it gets shipped. People end up being small-time shippers and will buy vans and then just deliver in between cities for as many parcels as they can ship.

Co-founder of CoachUp, a two-sided marketplace between sports coaches and athletes, here.

We started in a single city (Boston), and just the coach side. The non-technical founder was himself a coach and had lots of friends who were coaches, so it was easy to get the first ~50 coaches across a handful of sports. From there we focused heavily on getting coaches to sign up with the pitch that it was free to them, gives them a nice profile / landing page they could put on their website or business cards or tell people about, and would eventually even start driving leads.

I think the cost/benefit was there for the coaches: little cost (short application) and some minor benefit even without the athletes.

> Every marketplace founder says "focus on one side

Unless you already have demand lined up, I would solve the supply side of the problem first. People who either travel routinely or are planning to, or just a lot of people from a specific, large community in order to target your recruiting campaign.

I would also spend a lot of time figuring out the user journey for both the supply and demand side. See if you can reduce the work someone on the supply side has to do to sign up. You might have to run this like a modeling agency in the beginning until there is sufficient demand to force suppliers to do more work.

Constraining to one route (SFO -> Honolulu) is how DHL got started.

My bigger question is how you would validate this isn't drugs because this seems like the perfect low effort way to send high value drugs.

I've not built one, nor have I got a better solution than those offered here, but I did use a service like that before to transfer the contents of a storage unit from Romania to London. It was called clicktrans.com, and they do something similar. You say what you want to move from where to where, and people effectively send you offers. They are all vetted by the company, which charges them like 70 euro for the chance to bid on my delivery.

Do it yourself, beg your friends, subsidize. You'll learn a lot by being the supply side yourself since you'll be talking to customers every single transaction. You'll also learn a lot about the actual unit economics, which I think are really hard for this problem in practice.

I would pick 2 cities and deliver yourselves. Or hire people to do it. Then promote to those 2 cities.

Did I just copy how Uber did it? :) IIRC uber was basically a taxi company to begin with.

Volunteered, perhaps uselessly, without experience making a P2P market (so skip if you only want experience from actual doers):

Same as always, you need market-making: you do it or get someone else to do it. i.e. place resting orders that others will do. e.g. in your case, maybe there is a demand for one specific kind of item: let me say GPUs. Then you be customer number one of your thing, you buy GPUs in one place and have people move them to the other place in their checked bags or whatever. Alternatively, you make the other side of the market that is highly heterogeneous (say, Indian sweets) and you or your family fly between the two locations yourself. It might teach you about the time preference of your clientele etc.

Anyway, it would seem that ultimately all markets need market-makers to bootstrap.

Simply put, start with a niche market concept that helps solve very specific problems that people may have (such as delivering pet medicine to old or handicap people who live in villages or the countryside), and then to actually get started make an offer to those providing the solutions (the drivers) that is too good for them to refuse.

In this case I think you'd basically have to pay the drivers to make deliveries for yourself, and then work to show the value of this service to those whom need this service and are in a position to take over paying for it.

I founded logotournament.com in 2007 when I didn't even know what a two-sided marketplace was. I only learned many years later that this was considered hard[1]. Luckily, as a self-funded, solo-founder I had no idea it was hard, so I launched my side project anyways. It's done roughly $25,000,000+ USD in sales since.

At the time I was a partner in an ecom firm (few guys and a small warehouse), and I needed a new logo every week or two, so I had the initial demand covered. Acquiring customers is at least 3 orders of magnitude more difficult than acquiring designers.

I launched a private vbulletin forum and invited about two dozen designers from a handful of forums. I posted my first logo contest with a prize of $200 IIRC. I offered $25 each to the first 4-5 people that submitted, to get the ball rolling and building some initial trust. And just like that I had my first successful logo contest. Over a few months I would host a contest 1-2 times a month, and would manually message each designer when there was a new one.

In parallel I started development of the actual site. When it was time to launch, I manually imported the vbulletin logo contests, and kicked things off with a single contest that I was hosting. That site still wasn't a living breathing thing yet, until I had an actual customer that wasn't me. So I burned about $1800 on adwords over a month, and received 3 customers where I made maybe $100 in fees. A rough start, but running nevertheless. After that I was able to get Facebook ads working after lots of trial and error which led to the first 100 customers.

[1] It's not that the actions were hard, it's that a successful result had a low probability.

I think this is quite similar to Uber's mode. Their strategy is to fake one side first, their employees fake as the passenger side and attracts the driver. When the driver emerges, the passengers begin to emerge, and then the flywheel begins. So maybe you could fake the demand side, attracting supply side and then begin the flywheel.

The doordash story is very relevant here - they started with a menu and a Google voice number and did the orders and deliveries themselves.

I wrote about this many years ago: https://gomox.medium.com/i-have-a-marketplace-business-idea-...

At the time I was actually doing this exact business idea and one of our founders worked at an airline.

Marketplaces are famously difficult to start - even Uber just started with black car service in a handful of cities and expanded from that. Find a trusted network of mules as your supply-side and expect to lose some money as you bootstrap.

You should already know what your largest city-to-city routes might be at this point, so why not focus on economy of scale there? If you need to rent a cube van to make it happen, do that.

My buyers and sellers were heterogenous, so I could not acquire one user and get both personas; I purchased supply which had publicly-measurable demand and resold it below cost (in line with my target CAC) to bring the demand on platform. Once I had aggregated enough demand and developed the demand-side marketing and trust, I brought in the suppliers directly.

I tried to do the same in 2015 (blablacar for packages, startup name was tomandgo) and we couldn't solve that problem, it is genuinely hard.

I think in our case the main problem was incentives, we were suggesting low prices for the people sending packages but we forgot that the drivers need an incentive to drop it.

Best of luck!

Failed to build one but my advice would be to focus very narrow. In your case start with literally between two cities. Also, fake supply by either paying people to do the trip (in addition to the normal payment on the platform) or literally do it yourself once per week. Focus on supply. It will be way harder to get.

read andrew chen's book Cold Start Problem.. tackles this on all possible angles.

Every platform has this problem. Ycombinator even asked explicit to come up for ideas for this problem.

This being said, your idea is not new https://www.traveltechnation.com/companies/piggybee

The side that is most patient (e.g. the one likely to make money) is the one to start with. Once you build up enough on that side you can start being useful to the other side. The key is going to be whether or not this business model makes sense on unit economics too.

In this day and age, I would never carry something for someone this way. It's such a bad idea. You could land in prison. Even if you're taking books, the spines might contain fentanyl. And I have no idea how you get past that.

That being said, there is a long-established business for this kind of thing for companies, not individuals, that goes back decades. Here are two examples:

1. 30+ years ago companies would give discounted tickets to people with the condition that they couldn't take any luggage. Why? Because the company would use their luggage allowance to send stuff. I believe it was mostly documents. Discounting an airfare by $500-1000 to send 50-80lb of documents was actually a good deal. I don't know how the logistics worked of baggage drop off and pick up but I believe it was relatively understood that the passenger wasn't responsible for the luggage. I assume the shippers had some kind of commercial relationship with the airline and handled all the customs declarations, import duties, etc;

2. There are times when businesses need to get certain parts or materials in a very time-sensitive manner. For example, I knew someone who worked in oil and gas. An oil platform had shut down production and needed a replacement drill part or something, I forget, and it was over Christmas. They could've ordered it. It would get sent and then sit in a customs warehouse until it gets cleared. That could take days or even a week or more. Not having it was costing half a million dollars a day. So what did they do? They flew someone across the Atlantic to the US to get the parts, pay exorbitant extra baggage fees (it was large) and come back with it. Why? Because passenger baggage would immediately pass through customs at the airport. This would likely save 5-10 days.

So there are some obvious questions to be asked here like:

- How do you make this safe and legal?

- Why isn't this just being Fedexed? Fedex is your cap on fees too;

- How does someone pick this up and drop it off?

- What if they get charged customs fees? How is that recouped?

- Who fills out customs forms?

- What about transiting countries? You may run into issues where something is legal in the source and destination countries but you transit somewhere where it isn't.

I don't know how you bootstrap this because you're going to be dealing with people who have way more experience than you at shiping thing sinternationally. More importantly, they'll have much more volume. That means they can send things via courier at rates you can't dream of getting. So how do you compete with that?

Even in the example mentioned above, the company used an employee to go pick it up. It was an expensive part so an employee could be trusted more than some random could.

As someone who has worked on multiple marketplace startups, I highly highly recommend this resource: https://www.nfx.com/post/network-effects-bible

A key term is ‘single player value’. One type of user needs to get benefits out of this marketplace as a tool so that you can use that engagement to solve the chicken and egg problem.

I always thought of this idea in the city, there are lots of driving schools and perhaps taxi drivers that can drop packages off if the packages are not in a rush. That might be a start.

> basically BlaBlaCar but for packages instead of passengers

Roadie. https://www.roadie.com/

Don't waste your time. I've been down this road and unless you've got business connections or a LOT of marketing money, it is not worth attempting.

If you decide to pivot based on the comments in this thread about this turning into UberDrugz, an underserved market adjacent to this space is LTL freight.

For an example of this look for items on eBay whose shipping method is “freight.” As a buyer (or sometimes seller, if your buyer is clueless) of one of those items, it is your responsibility to arrange an LTL freight carrier (flatbed or liftgate truck). Fastenal and Uber freight will accept 1 pallet, up to a certain weight limit; you may even be responsible to bring it to a freight hub yourself. Above that size you’re on your own calling trucking companies, and renting a forklift or crane when you actually find a trucker.

It’s a smaller market than small packages, but more revenue per transaction. And if you figure it out and get it up and running, eBay (e.g.) might allow buyers and sellers to automatically select your service as the shipping method instead of black box “freight.”

Source = my personal experience 1. selling a metal building kit on eBay that the local zoning board would not let me erect. 2. Buying a large greenhouse kit online

"Focus on one side first" means get in your car and start fulfilling orders.

yeah. I have the same pain. But for your case, don’t start as a marketplace. Start as a concierge service on one route, one parcel category, and one trust model. If you can’t force the first 20 successful matches manually, the market is still too under-specified. my 2cents

I'd say it makes sense to build for one really heavily traveled route.

Drug mule as a service

Start with a small local market (one town). FB started from Harvard only.

Great discussion! As someone building in the specialty coffee space from Muzambinho, Brazil, I find these topics fascinating.

I’ll add another piece of feedback.

It’s easier to narrow the domain of your market as specific as possible so as to maximize transactions and matching early on.

For instance, Uber launched in one city. This is so that all the growth efforts on both sides go to helping the markets meet. Twitch had to win with gamers before it could win in other categories. Pick a narrow domain for your business, perfect that user experience, then, as other have stated, prop up one side of the market yourself (probably the one least likely to churn forever) until the market can support itself organically.

Random remarks from the internet.

- In most markets with money, shipping is a solved problem.

- Businesses can only survive in markets with money.

- The chicken and egg problem is one form of the general problem of markets: Trust.

- Experience shipping is the only way to understand shipping.

- This is an idea. If it is not impelling you to actually and physically ship, it is a bad idea.

- For generalized shipping you are under-capitalized and no amount of VC funding will build a general shipping company.

- The model has no way to ensure integrity.

Good luck.

> Travelers going between cities/countries carry items for people who need to send stuff.

What the hell, why would anyone perform such high risk activity

I think a common tactic is, getting funding (even if bootstrapped or F&F) and cover one side at a loss by wrapping the existing competition. For example by providing courier deliveries.

Also, get behind the wheel 24/7 and hop cities yourself, again at a loss, but that will help bootstrapping the actual business model instead of completely faking it.

That way the demand side can grow, and you split the supply side into synthetic and organic, synthetic is always 1-organic, but you are never left with imbalanced sides.

Nobody is going to fly internationally with a random person’s package in their bag. The only reason you’d use it is to ship bombs or drugs.

A lot of fantastic answers here: I second the "YOU need to be one side of the marketplace first" but two questions that I haven't seen appear yet are:

- What draws YOU to build a P2P crowdshipping marketplace? Is it just a hypothesis you have or did you suffer an issue that you can't find any existing company offer?

- Is there absolutely no existing company offering the product you need - why don't you call their sales team and ask them what it would take to build it for you?

I've seen founders find a profitable business that they hated running themselves (horrible founder-market fit) and I've seen founders learn why existing businesses weren't solving that problem (horrible unit economics).

Instead if treating yourself as an engineer excited to build a software stack and show off their skills, consider treating yourself as an investor figuring out the TOP 3 things that could get in your way of getting a positive ROI on your investment.

Well it's easy you fabricate complete horseshit business case, fudge all the numbers, create a nifty slide deck and raise enough VC money to pay your early users in order to bootstrap your business.

Fake it until you make it baby!

Free drinks for the ladies on Tuesdays.

A few thoughts from instant gut reaction:

- you're on HN, so you have an opportunity to tell us the name of the thing - marketing

- perhaps consider your marketing budget to be the area you need to invest in now, and indirectly how that budget can actually generate a little revenue and exercise the engine - e.g. do you have packages you can ship through your service to announce it to others? Use your marketing budget to do it and collect your marketplace fees - marketing again. Nothing says I believe in my product like using it for real (IMHO).

- a bold and risky move (?) - most would say fake it till you make it - but I for one tire of this tactic. How about approaching this with honesty and reward the first adopters? "We're brand new but you can be the first to help us prove out this model?".

- your marketplace is a network. Search for an opening that has viral properties. Try to tap into something that has a network effect, go to where your customer is and see how you can target/advertise strategically and respectfully - become a trusted partner to one or more communities (e.g. thinking out loud, eBay sellers maybe?). This could include finding the right partner(s) who have a problem and are willing to give you a shot in an existing network.

On the last point - as an example of the viral thing - I worked on a real estate tool a while back. We found a viral hook - there were for sure properties that needed to be processed and worked through the tool - we email invited the parties involved in the transaction to invite them to work on the property in the secure tool, and we gave them the ability to invite others working the same transaction to the tool, and we focused everything on polishing that workflow and experience.

This way, as soon as one person used the tool they could invite others to use it legitimately to work in the tool and that was the viral aspect.

This points to, replace real estate tool and house with "package" and invite... and can you achieve something viral that spreads itself... like, when someone ships with your tool, it emails the recipient with the link to your site for status tracking and a call to action to make them want to ship using your platform.

This to me is a lot of marketing and product strategy around incentivizing the network effect.

Disclaimer: I never made millions of dollars off a marketplace. But I did help stand up the real estate mechanism I mentioned and that business reliably brought in 5-10 grand a month with no marketing effort and just that one mechanism, and it also helped us find a few key network partners. That's what drives my feedback.

Take a page out of the YC playbook.

Ditch this idea and instead build a Sales Enablement B2B Saas targeted at other YC companies, fuel the pyramid scheme by selling contracts back and forth between your other VC funded B2B Saas company friends and exit before the hype around you dies down.

Bootstrapping a two sided marketplace in 2026 is virtually impossible, especially one as esoteric and low value as what you’ve described.

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As a personal nit, I really dislike the term "two sided marketplace"

It should just be "marketplace". The term implies the existence of a "one sided marketplace". But isn't that just a business? If I have a bunch of product on my shelves and I'm trying to sell it, I don't call that a one sided marketplace?