Focus on the more difficult side of the marketplace.
For instance, if you think it'll be easier to get suppliers, then focus first on getting buyers - always be working on your toughest problem (aka your biggest risk).
You'll find some great blogging on Marketplace and Platform topics here http://platformed.info (read the ebook too!)
Might I suggest that you might have better success FINDING (versus "creating") a market.
And in that case you are discovering / uncovering a demand and then filling it. Just be sure that your business model is solid - because you can go broke filling (or trying to fill) a demand without it.
If you have massive resources (i.e. cash) and a protected proprietary solution and are skilled (or have a partner that's skilled) at creating markets - then go for it!
If, however, you are a typical start-up with limited resources and perhaps less experienced in growth-hacking / branding, then perhaps heed the advice here on clarity.
In either case... Best of luck to you!
When we started Wooshii we did very little to build supply. It was all about demand.
Our theory was "Build enough demand and finding supply is way easier."
It meant we didn't have to engage our community in other, (most likely distracting ways)
You can always deal with demand in an unscalable way early on. FInd some trusted suppliers to pick up the majority of the demand.
It worked out for us as we are service led. The last thing we wanted was a massive video community and no work for them
Another way to have done that might have been to create a sort of Single Player equivalent. Choose the side that has the most pain and help ease it with some other tool.
Of course with product or inventory type marketplaces supply may be the way forward - building an inventory of scarce collectables ( as eBay did) then allows you to start itching your product to the demand side
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I'm the co-founder of www.crated.com a marketplace for photographers and digital artists.
I'm going to say SUPPLY. Simple reason if your buyers land on your site and don't find anything you're done. They won't come back. Also the supply side users can be instrumental in helping promote and drive traffic to your site in the early days by putting them to work.
I used Clarity to speak with Micha Kaufman founder of Fiverr and he's a big reason for us shifting our strategy to building the supply side well in advance of launching our site which is currently in beta. He strongly suggested building SUPPLY.
Really surprised to see Dan Martel saying DEMAND since I know he worked hard to get the first 1000 experts on board before launching. Sorry to call you out Dan :-)
Supply! Supply! Supply!
CanvasPop / DNA11 / CRATED
Validate that there is a problem you are solving for both sides of the marketplace. Learn which one of the two sides is more 'hungry' for your solution. Then focus on the one side that is less hungry. It sounds counter intuitive but it's really quite simple. It'll always be easy to get the side that is 'starving' to use your product /service but not true for the opposite.
Example: UBER. It's pretty obvious that any taxi driver who'll be promised higher fulfillment rates (customers) consistently over time will want to use UBER. Their survival (pay check) depends on it! What's not obvious is that folks would pay a premium to get a cab under 5 minutes. Uber had to build the initial fleet of cars in one city but then the focus turned to validating that there was demand for the can-ordering service before scaling supply further.
Obviously in a new market, you need to be ready when you get your first order. So supply is critical. However too many companies shy away from demand building because it's not what they know how to do. They're not marketers and selling scares them. So they gravitate to what they know - the product - which leads them naturally towards the supply side. That's a waste of time when there is no market.
Demand, hands down! Here is how I would do it:
1. Pick a niche service specialty. If you're just starting out, determine which service speciality can get you the most early traction through secondary research. Make sure your basic premise (macro-level thesis) is solid.
2. Create your customer persona
3. Validate that by speaking with 30 prospects (or a statistically significant sample size).
4. Pivot (if need be)
5. Build your supply and create liquidity
6. Generate transactions and ...
I can go on about this, but I'm sure it will be never ending. Happy to talk more about this, if it would help.
You'll first need to define what side of YOUR marketplace is demand and which side is supply. For example, for DonorsChoose.org, I define the teacher need as "demand" and our donors' donations as "supply". In our case, we needed to have enough demand (teacher projects) before we started advertising such need to our donors. However, once we had enough demand (i.e. choice for our donors) it then became difficult to find the "supply" to meet that need, so we had to re-assign our resources from finding more teachers to finding more donors. You'll find that you'll always have an imbalance in your marketplace and you'll need to have enough demand and supply for the marketplace to thrive. You'll need to shift your resources from "demand outreach" to "supply outreach" (and viceversa) based on how your marketplace is behaving.
From a lean startup approach, try to create the side of the marketplace with which you have the most questions or doubts.
Tom Eisenmann at Harvard Business School has written a few papers on this subject. Try this one for starters. http://hbr.org/2006/10/strategies-for-two-sided-markets/ar/1
We've done a fair amount of this at Rev, building both supply and demand first for remote services.
Find the big gorilla problem(s) that need to be solved. From there one can assess the size of the demand. Without demand for a specific solution to a specific problem, we have nothing. When we have demand exceeding supply, we have the ingredients of a potentially profitable business.