Critical mass and scale

This article was originally published on the Nesta UK blog.
Many Collaborative Consumption ideas are pioneering new spaces, and changing users’ behaviour in some shape or form so their biggest initial barrier is typically inertia.
Quite simply, getting people to try an idea that might be perceived as ‘risky’(e.g. sharing your home with a stranger) or figuring out how to make an action that didn’t exist before (e.g. swapping your skills) second nature. From working alongside entrepreneurs in the space from all around the world, what I have seen is that even though the ideas are wonderfully diverse, there are actually fairly common problems to solve.
During a workshop with the inaugural recipients of Nesta’s Innovation in Giving Fund, many attendees echoed common questions I am frequently asked: How do we use technologies to enable trust between strangers? What’s the best approach for building critical mass? How do we know when and how to scale? How do we design a user experience that gets to the heart of what people want?
In the following post, I have synthesized some key learning around what it takes to successfully address these questions, with an example of a start-up that has excelled in solving the issue.
Building critical mass
Many Collaborative Consumption marketplaces depend on matching ‘haves’ with ‘wants’, whatever they maybe. So the first big issue to address is building a critical mass of inventory (users, products or services) on both the supply and demand sides of the equation. I am often asked, “Which side should I focus on first/most- supply or demand?” and ‘How do I know when I have achieved the right level of critical mass for my marketplace to be effective?”
Here are some key learnings from successful two-sided marketplaces.
Nail the supply-side of the market first to build inventory up to a level where the buyer or receiver on the demand-side can be offered an appropriate amount of choice in a specific area.
Initially, try to limit the number of variables – location, product or service types, times etc – that require you to build a greater critical mass of inventory. For example, if you were launching a ridesharing platform, you would focus on specific routes or certain times.
Shift your focus to fuelling the growth of the demand side once the initial tipping point of ‘choice’ has been reached.
The ultimate goal is that when a user searches for ‘x’, the ask can be successfully and quickly fulfilled. It is rare for a user to give a marketplace or a community a second chance, so nailing the first experience of having what they want when they want it is critical.
To read the full article, please visit the Nesta UK blog.