In addition to the two other Chris Dixon blog posts other commentators have linked to, Chris Dixon also has a great post on this topic:
http://cdixon.org/2009/08/25/six-strategies-for-overcoming-c...Here are his six suggestions:
1. Signal long-term commitment to platform success and competitive pricing.
2. Use backwards and sideways compatibility to benefit from existing complements.
3. Exploit irregular network topologies.
4. Influence the firms that produce vital complements.
5. Provide standalone value for the base product.
6. Integrate vertically into critical complements when supply is not certain.
This has also been discussed on answers.onstartups.com:
http://answers.onstartups.com/questions/9332/how-do-you-solv...
http://answers.onstartups.com/questions/3623/solving-the-chi...
There are some conflicting answers:
* Joel Spolsky says: "When faced with a chicken & egg problem, you have to find a way to sell simultaneously to both sides of the equation."
* Hendro Wijaya says: "Focus on satisfying one side of the equation first. Pick the chicken, or the egg. Make sure they can see the value early in time."
Nonetheless, the discussion includes useful advice like:
Low risk buy-in for one party, Partner with an existing business, and Scaffold (Greg Belote).