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.

Case study: TaskRabbit, the peer-to-peer marketplace for errands, focused initially on recruiting high calibre 'Rabbits' to run errands to ensure that posters' tasks would be completed.  A staggering 97 per cent of all posted tasks get bids from at least one runner (most are answered in less than ten minutes) and 75 percent end up being completed.  The company also invested heavily in a rigorous four-step vetting process and community-driven reputation system to ensure high quality experiences from day one.

Scaling up - when & how

Most entrepreneurs are faced with the challenge of balancing growing too big too fast and taking advantage of the opportunity to expand what they can offer and who they can reach. Most successfully scaled Collaborative Consumption ventures follow a similar logic:

• For some companies (particularly those that involve some kind of offline/face-to-face interaction), density in particular geographic locations will be integral for scaling success; for others it may make sense to have national coverage as soon as possible if location is not a key criteria.
• Stay in beta mode for at least the first year.  Figure out the fundamentals that make your idea work but also get into the nooks and crannies to nail details that will keep your experience special as you grow. It's much harder to go back and fix pain points and add in the magic once you hit scale.
• When you hit scale, remember the things you did brilliantly when you were small whether it was for employers or users. Figure out how to keep appropriate elements into the fabric of your organization.
• Allow your user community to tell you where to go next and when -and collect 'expressions of interest' to guide your decision

Case study: Skillshare, a peer-to-peer learning marketplace, was initially launched in New York City, the hometown of the founders. When deciding where to expand the team provided a platform to help locals 'activate' their city.  A specific number of sign-ups were required in the area before the marketplace could officially launch. By ensuring a strong and active community was already established before investing energy into kick-starting the market, Skillshare could stay focused on their active cities, whilst giving their community a way to express interest along the way.

Rachel Botsman

[email protected]

Part two of this blog which focuses on the importance of user experience and building trust.