Solving the Cold Start Problem with Contests
The story of how we cold started a new marketplace successfully
New marketplaces and social products have a common cold start problem: The network is not useful until you have enough useful content. The network increases in value exponentially as you have more content and users. But, at the beginning, you have nothing to start with. A classic example is a new social network that has no users yet. How do you solve this problem?
We recently encountered this problem when we decided to launch a new platform for web form themes. This was a brand new concept. There are template stores for all web sites such as Template Monster, and there are theme stores dedicated exclusively for WordPress blogs, but there has never been anything like this for web forms.
We were able to solve the cold start problem and launched our Web Form Theme Store this week successfully. Upon release, the Theme Store was stocked with over 100 form themes. More importantly some sellers made their first sales within the first week of the launch!
So, how did we launch a brand new marketplace for a brand new idea with more than 100 user generated items on launch day? We did not use magic, although some contended we would need to. The solution we found was actually pretty simple, and can be done by anyone. It required no special skills. What we did was to run a simple contest.
The Web Form Design contest generated a lot of buzz. 2500 designers signed up for the contest and 480 completed and submitted their designs for judging.
Here is the important part: We leveraged the contest to cold start the marketplace. We encouraged contestants to submit their form designs to the Theme Store.
- First, we made it possible to submit entries to the Theme Store two weeks before the launch. Our goal was to get the best designs in the Theme Store.
- We personally emailed some of the contestants and asked them to submit their form designs to the Theme Store.
- We used the award announcements as an opportunity to petition them to submit their form designs. We announced a category winner and sent the announcement to contestants daily. Each email announced the winner for a category, and asked them to submit their form designs to the Theme Store. Here is one of the emails:
The result was a great success. Most of the best form designs were also submitted. We accomplished our mission!
The contest involved a lot of hard work, and we spent $10,000 on the cash prizes. We could have probably used the time and money to come up with 100 designs for the Theme Store, but our primary goal was to jump start the marketplace. Just having 100 themes would not have accomplished that. So, it was worth the effort and spending.
In fact, the seller who made the first sale came back the next day and published 3 more themes. It was such an exciting story to hear! That’s exactly the behavior we want to see if the Theme Store will become a place where web designers can earn money and create more content in a positive feedback loop. Someone suggested we should buy some themes ourselves just to get sellers excited and motivate them to publish more themes, but in the end we decided not to do that since it would have been dishonest. If the Theme Store is going to be successful it needs to stand on its own feet. We, at least, gave it a chance with the contest.
This is the story of how we were able to cold start a new marketplace with a contest. If we can do it, you probably can too.
