Ask HN: How to validate an idea that involves both users and businesses? | Hacker News Reader

Ask HN: How to validate an idea that involves both users and businesses?

9 pointssendos5 comments

When you have an idea that is consumer oriented, there are several well-known ways in which you can validate it to see if people are interested before building the whole thing (e.g. put up a simple wordpress landing page, etc)

What happens when you have an idea for selling a service to companies but also requires lots of users to sign up to make it valuable to the companies you are selling to?

It seems like a chicken-and-egg problem. Users won't sign up unless many companies use this service and companies won't sign on unless many users sign up.

Are there any good strategies for attacking this problem, besides just talking to companies and gauging their interest if you had users, and having some incentives for early-adopters to sign up to beef up the population of users?

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This kind of market is usually called Multi-Sided Markets. It is hard to help without knowing more details about the product, but Harvard Business Review has a great article on it, which should help you with your issue: http://hbr.org/2006/10/strategies-for-two-sided-markets/ar/1

Here is another article that might be useful: http://www.strategy-business.com/article/03301?gko=16442

You're right that it's a difficult balance.

I would try starting with a landing page regardless. You can get a list of people interested in the service, by making vague promises about the kinds of businesses that will be using it.

Then, after you have a sizable list, you approach targetted companies with a list saying "I have 1.6M+ customers interested in my service. That's X% of the market for your service type. I am willing to offer you [HUGE DISCOUNT HERE] to sign up for the service." I'd even offer it free to begin with, until you have x number of users.

You're selling the interest in the product to get the business interest. Then you can launch with a list of businesses and you might have a greater chance.

It sort of depends on the size of the businesses you are approaching.

If they are mom/pop stores or regional stores it should be relatively easy to approach owners/managers to give them the pitch. If it is a problem they have which they are aware of they are going to recognize how valuable your service is much quicker than a normal person would. If it is a multi-national company then it's more tricky to get to the right people and linked in can help you there.

I would figure out the perfect first company for your service and contact them. Focus on the first one to figure out what DSL you need to speak to talk to other people.

Its a difficult balance...I would say if you are talking to companies, just for gauging interest, assume that you are going to have the users when explaining it to them.

If there is any way you can provide some sort of value to users without needing the businesses or the other way around that could help... or providing it free to businesses initially while you build up a user base might be the best way to go about it.

Generally, this model is evolved from something tighter niche and targetted towards the consumer audience first.

I think AirBNB and early Ebay might be good cases to look at? Neither of them really started out the way they are now, they grew into and actually created the marketplace themselves.

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