Neighbor's founder explains how they solved the cold-start problem by focusing on Utah first, using door-knocking and $1 flyers to recruit hosts, and keeping liquidity requirements low. They iterated on product before scaling, then expanded to other cities once they proved product-market fit.
Chapters
you know, we all kind of face like the cold start problem, right, as marketplaces, and kind of given how fragmented, you know, probably some of your suppliers or hosts were, like, how did you initially kind of solve that, you know, challenge and really kind of onboard, you know, your initial kind of hosts?
Yeah, I like to think of users, and I don't think this will be a new example for anyone, as kind of concentric circles, right? You have kind of these circles that contain each other. And the users that you're going after initially are kind of that white-hot core, if you will, of early adopters. When we first started this business, we tried as much as possible to do as little marketing as possible and to really focus on the engineering side of things, the product side of things, because we wanted to iterate before we went and spent a bunch of marketing dollars. And I don't, I don't think all marketplaces take this approach. The whole point of a marketplace is scale and network effects. A lot of people try to scale it up really fast. We kind of took the opposite approach of let's let users come to us organically. We'll do a little marketing here and there, but then let's just iterate and be highly, highly adaptable. And we really focused on Utah, which is where we're headquartered. We only acquired users in the Utah market. And then once we felt like we had strong product-market fit, then we started expanding aggressively outside of Utah and using more scalable channels. So, you know, solving the cold start problem, I mean, initially we found our first host by knocking doors, right? So there's kind of the do things that don't scale there, but I don't know that I'd necessarily recommend that to anyone. We did a lot of, you know, door flyering. We came up with some creative ideas where, you know, we didn't want our flyers to get thrown in the trash. So we would clip a $1 bill to all of our flyers. And the flyer said, this is the first dollar that you'll earn renting out your space on Neighbor. And, you know, you cover 1,000 houses, it's $1,000, but it sticks with people and people remember it. And you don't need that many hosts to start out a marketplace. I think people overestimate the amount of liquidity that they need initially. Airbnb's number for a city early was 100 to 300 hosts, kind of 300 being peak liquidity that they needed in a market. I think Uber operated with— they needed like 20 drivers within a certain radius. of thing. So kind of finding what you need in the early market and then just finding creative ways to get that white-hot core that'll give you a lot of feedback and deal with a really, really crappy product and onboard to a site. We're called neighbor.com today, but in the early days, we were called Neibor with a Y. So N-E-I-Y-B-O-R. So, you know, people that would join a platform called Neibor and actually onboard their space, you just, you need to find those users.
