Business

How Thumbtack Overcame the Chicken and Egg Problem

I recently listened to an interview with the founder of Thumbtack on Y Combinator startup podcast that hit on a subject I've always been really interested in...

How to overcome chicken and egg problems.

Online communities, social networks, and marketplaces are ultimate examples of the chicken and egg problem.

Take Facebook as an example. The usefulness of Facebook is directly related to how many other people are actively using it.

Without active users, they can't attract other users.

How do you build users if the prerequisite for building users is having users?

This is the chicken and egg problem.

Quora is another example. Quora is a pretty cool question and answer site started by former Facebook employees.

Policiticans, actors, company founders, and subject matter experts all answer questions on Quora, making it a pretty awesome place to learn.

But Quora has a massive chicken and egg problem.

You can't get great answers to questions - particularly not from people like Steve Case, Mark Andreesen, or Michael Dell - without first drawing people to the site. But you can't draw people to the site without great answers.

Marketplaces have a chicken and egg problem as well. For example, AirBnB can't attract property owners if they don't have renters. And they can't attract renters if they don't have property owners.

So in the podcast, the Thumbtack founder shared a pretty brilliant method they used to overcome the chicken and egg problem.

Thumbtack is a marketplace that connects people needing home services with home service providers (e.g. roofers, plumbers, eletricians, etc) and they came up with a pretty brilliant strategy to overcome the chicken and egg problem.

They ignored the customers completely and focused on attracting service providers. They created a tool that allowed home service providers to easily post advertisements on Craigslist. All the provider had to do was create a profile on Thumbtack.

The home service providers obviously wanted more business, and many of them were probably already posting on Cragistlist, so this free tool was an obvious benefit to them.

Once they got enough home service provider profiles on the site, the customers started coming.

Really clever end-run on the chicken and egg problem.

John Crenshaw
John Crenshaw
President
UFO company founder. 15+ years experience in performance marketing.
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