Six strategies for overcoming "chicken and egg" problems

5 is something that Joshua Porter strongly emphasizes in his "Psychology of social design" talk. REALLY IMPORTANT for my startup. Give a read: http://bit.ly/1J00n

"...Providing a stand-alone use is the strategy that VCR producers used to achieve a successful launch and avoid fighting the difficult chicken and egg startup problem. Unlike the VDP, the VCR offered the ability to time-shift television programming. In fact, when the VCR was launched this was the only application available because the market for pre-recorded videocassettes had not yet developed. The standalone value for the VCR “time-shifting television programming” was sufficiently strong to get over a million people to purchase the product in the first 3-4 years after its launch. "

Key advice for where to start:

3. Exploit irregular network topologies. In the last 90s, most people assumed that dating websites was a "winner take all market" and Match.com had won it, until a swath of niche competitors arose (e.g. Jdate) that succeeded because certain groups of people tend to date others from that same group. Real-life networks are often very different from the idealized, uniformly distributed networks pictured in economics textbooks. Facebook exploited the fact that social connections are highly clustered at colleges as a "beachhead" to challenge much bigger incumbents (Friendster). By finding clusters in the network smaller companies can reach critical mass within those sub-clusters and then expand beyond.

When Philips invented the cassette tape - they opened it up completely. If you called Philips they would give you designs, tell you what manufacturing equipment was required - even where to source the equipment and materials.

Philips ended up with a decent percentage of a massive market - as opposed to 100% of a niche (perhaps non-existent) market.

They took a similar strategy with the CD.

thanks! that makes much sense..

I will also be writing my master dissertation on this subject, so I was glad to find a bibliography at the end of your paper. It’s quite hard to find good reference material on the topic. Thanks again!

Very useful advice! Now, I just have to put these ideas into action for a project I've had on the backburner for a while...