No distribution, no dice

One of the biggest changes in how I evaluate startup ideas in the last ten years is that I now place at least as much emphasis on a good distribution strategy as I do a good product.

Distribution is just company-speak for “how do you get new customers?”.

The ideal and most common answer to this question is “people love it so much that they talk about it”, but founders often give little thought as to why people are talking about the company or eager to try it. Unfortunately, most products that people use - even great ones - don’t prompt them to gush about the experience to their friends.

An interesting and frustrating trait shared by good distribution strategies is that they’re highly tailored to the products themselves. For example, let’s look at distribution strategies for three very viral consumer companies:

  • Facebook relied on Mark Zuckerberg’s access to house mailing lists at Harvard and students’ curiosity about what other students were up to. The most common “use” of early Facebook was to check other people’s relationship statuses, which has obvious utility on a college campus
  • Instagram made it easier to take good pictures on bad phone cameras by applying a filter. Although your filtered photo was uploaded to Instagram, one of the main draws at launch was the ability to share an (Instagram-marked) image to other social media sites like Twitter and Facebook - where your friends actually were. People on those networks would wonder “what’s that mark on the image” and become Instagram-curious
  • Discord knew it was entering an already-crowded voice chat space with Teamspeak. However, the team recognized that they could leverage new technology (WebRTC) to make a browser-based voice chat client (whereas Teamspeak required a download) and bet big on that low onboarding cost. They then used Reddit to target players of specific games and make Discord popular among players of those games, knowing that it would spread due to its multiplayer nature

When the distribution strategy is poorly tailored to the product, the result is often that the user feels spammed (see: Clubhouse spamming you with notifications to invite your friends). When the distribution strategy is well tailored to the product, it almost feels like a feature (see: Gmail slowly allowing early customers to invite friends while in private beta).

If you’re not already subscribed, subscribing to the First 1000 newsletter is a great way to build a personal playbook of successful early distribution strategies. In short, the newsletter describes how each company it profiles acquired its first 1000 customers. This is useful because the likelihood that a given distribution strategy will work for any startup is low, but the likelihood that some already-used distribution strategy will work for a startup is much higher.

Sometimes, a good distribution strategy relies on adding a missing cofounder or equity partner to your team. This can particularly be the case if your product will rely on “big sales” that require significant trust or if your product exists in a market where there are natural “hubs”. As an example, recruiting a few well-known food bloggers as equity/distribution partners for your new meal planning app could make a substantial difference.

To be clear, I’m not saying a good distribution strategy is an excuse for a poor product. Even if you get your product into people’s hands, a poor product creates too strong of a headwind for meaningful growth. However, I do think that a good distribution strategy should be put on the same pedestal as high product quality and that most inexperienced founders put far too much early effort into product and not enough on distribution.

Similarly, I think that your distribution strategy should be developed and tested alongside your product, not after it. A few useful questions to ask yourself when developing this strategy are:

  • How are you going to get your first 5-10 customers?
  • How are you going to grow from 5-10 customers to 50-60 customers?
  • Are there any other successful companies that share your target customer? How did they grow?
  • How are new customers finding out about your product?
  • Once you’ve saturated a single market (geography, vertical, etc.), how do you gain a foothold in a new market?
  • How can you gather more information about your distribution strategy before you need to use it?

(These numbers are for consumer applications: for B2B applications, you might want to cut them by 5x given the generally-larger customer lifetime value.)

Each of those answers - especially the early ones - should have simple, realistic answers. If any of them seem incredibly daunting, chances are that you have a tough slog ahead. In that case, “can I sell this thing” is probably a bigger existential risk to your company than “can I build this thing”. You should spend more time brainstorming and testing different distribution strategies before sinking significant time and money into building a product.

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