Building a successful marketplace has some peculiarities compared to building a “normal” product or service-based business. Contrary to popular belief, the hardest part is not necessarily solving the “chicken and egg” problem. It’s finding a “marketplace model” that’s desirable to all parties participating in the long term: buyers, suppliers and the platform operator (you). Most marketplaces fail because the chosen model is not a good fit to the realities of the targeted market. Not being able to solve the chicken and egg problem is then just a symptom of an unfitting marketplace model—not the root cause. On a high level, marketplaces need to succeed in the same four dimensions as any other successful venture: desirability, feasibility, viability and strategic value. So, what does this mean in terms of building marketplaces?

JAMES CURRIER, Managing Partner @ NFX Guild and former CEO @ Ooga Labs, Wonderhill, and Tickle: It's hard to get marketplaces started and even harder to work out which comes first: the supply or the demand? We've noticed 17 tactics for solving this chicken-or-egg problem.

The author's analysis of Dropbox's S-1 is that they are a cash machine and possesses a magical business model. He argues that anyone who concludes otherwise doesn’t understand the difference between cash flow and GAAP and the power of negative churn.