Another challenge is the risk of alienating one market is always present. To use the eBay example, they've recently focused their efforts much more squarely on buyers by introducing new "top-rated seller" criteria and a fairly liberal Buyer Protection Program. Buyers have benefited greatly, often at the expense of sellers. I imagine in the next couple of years, the balance will have shifted back to appease the unhappy sellers.
To contrast, Amazon seems to have done a good job of growing out its base of satisfied external sellers (no personal experience, just anectodal). Perhaps aiding this is the fact that Amazon has an intimate understanding of how to succeed as a seller (they get fulfillment, pain points in the purchasing process, etc.). They worked to cultivate their main market (the buyers), while actively operating in their future market (as a seller).
Interesting anecdote - an Israeli judge recently ruled against a club that had a "ladies' night", forcing it to charge equal price for female and male patrons, as having a different price based sex is a discrimination prohibited by law.
This also gets into a whole debate of gender issues. For example in matters of HR, nobody is qualified to judge someone's gender. If this same logic was extended to bartenders and bouncers then "ladies' nights" would not be able to exist. Then again, in this case it seems that the state of the system is a steady state: (heterosexual) men are happy that women are at bars, women are happy to get cheap/free drinks and bar owners are happy to make money.
The classic problem of having a two-sided market with an interesting real-life analogy of bar-hopping/clubbing. Interesting to see whether Red Beacon or Thumbtack address this issue the best (or maybe the services market is big enough for the both of them).
> If you are starting a company that targets a two-sided market you need to figure out which side is the hard side and then focus your efforts on marketing to that side.
But if you get a bunch of the easy side, that will attract the hard side. You can do it either way.
Look at buyers and sellers. If you have tons of buyers, that will attract sellers. And if you have tons of sellers but no buyers, that will attract buyers.
I think a lot of times the "hard" part is a prerequisite for the easy part. Think of UGC sites - the hard part are contributors. Without contributors you can't even begin to go after readers.
Interesting post, but I'm not sure that Microsoft users/developers is a particularly good example of a two-sided market.
What percentage of Windows users chose Windows "because there are so many developers"? (I'm sure many developers develop for Windows because of the vast number of users.)
Well, many users choose Windows because there are many developers (and thus a lot of software), but I'm not sure that, in a two-sided market, each side will choose the market because the other side has high cardinality. From what I understood, it's only one way (attract the users and the developers will come).
Digg was like this (and presumably Reddit and HN are too) - a small few contributed to the site comparable to the number of readers. So in the beginning there were many mechanisms (leaderboards, profiles, friends) for attracting contributions.
Correct. For content sites like Wikipedia or Digg, it's a small percentage of the users creating an overwhelming majority of the content (probably more extreme than the 80/20 rule). Adding social features and gaming mechanics is one way to incentivize those that are going to be putting in the work.
There's a rule similar to 80/20 which is 90-9-1. 90% are just observers, 9% react/respond (think upvote), and 1% contribute. I wouldn't be surprised if the HN/Reddit/etc. is close to this or some normalized and skewed version of it.
I'm not sure about HN, but I heard people say that the main editors/volunteers on Wikipedia that do the bulk of the work are somewhere in the 1000+ range (somewhere in the low four-digits).
I suggest reading other posts by Chris Dixon if you liked this one (cdixon.org) or any of the posts by Mark Suster on BothSidesOfTheTable (here's one that is somewhat related you might enjoy: http://www.bothsidesofthetable.com/2009/10/04/3-sales-tips-f...).
To contrast, Amazon seems to have done a good job of growing out its base of satisfied external sellers (no personal experience, just anectodal). Perhaps aiding this is the fact that Amazon has an intimate understanding of how to succeed as a seller (they get fulfillment, pain points in the purchasing process, etc.). They worked to cultivate their main market (the buyers), while actively operating in their future market (as a seller).