Winning companies have either a remarkable product that ‘sells itself’ or a strong product with remarkable distribution. As a startup founder, one of the fundamental questions you have to ask yourself early on is: should we focus our energy on product or distribution?
95% of the startup world answers, “product, no questions asked.” I disagree. Either option is a viable path but if you are a first time founder nailing distribution is going to be a helluva lot easier than nailing product.
THE CHALLENGE WITH AN ‘ALL OR NOTHING’ PRODUCT FOCUS
The big problem with focusing all of your startup’s energy on product is that the “build it and they will come” argument only works if your product is an order of magnitude (10x) better than your competitors’ (H/T Peter Thiel). If it’s not at least 10 times better than your competitor, then you’re essentially still competing on marketing.
Think about that for a minute. In order to win on product alone, you need to build something 10X better than anyone else!!! It’s not impossible, but as anyone who has ever tried to build a product will tell you, it’s really, really, hard.
To build a 10X-better product you need a team of extremely skilled individuals (think Tony Fadell). On the other hand, to nail distribution you only need one person who’s willing to hustle and understands how to play the game (think Gary Vaynerchuck).
When making a decision on which route to go, it’s important to be honest with yourself and leverage the skillset you actually have, not the one you wish you had. When you look in the mirror, do you see Tony Fadell? If so, by all means go the product route. It’s your best best. If you don’t see Tony Fadell and there are no Tony Fadells on your team, then the Vaynerchuck route will probably give you a better shot at success. The beauty of the Vaynerchuck route, especially as a first-time founder, is that you don’t need specialized skills to pull it off. Anyone can do it. You just need to commit to out-CARING your competition.
That’s primarily why I have a bias towards distribution. It’s not because I think distribution is an inherently better lever. Truthfully, it’s probably an inferior lever. But it’s just a bit easier to pull off. In the startup world, the odds are so stacked against you. If you can continually make decisions that move the odds slightly more in your favor, you give yourself the best chance of catching a few lucky breaks.
GOOD PRODUCT IS A NECESSARY BUT INSUFFICIENT CONDITION FOR SUCCESS. WITHOUT GREAT DISTRIBUTION, IT DOESNT MATTER.
The second reason I have a bias towards distribution is because even if you nail product, it doesn’t guarantee success. More often than not, the difference between commercial success and commercial failure is the distribution. A great example of this is Kickstarter’s coolest cooler, which raised $13M and is the most successful Kickstarter project of all time.
So what is the coolest cooler? Well, it is exactly what it sounds like. It’s like the fucking swiss-army-knife-Megatron-bad-ass-MoFo of coolers with everything from a built-in blender to stereo speakers to LED lights to help you locate your beverage after the sun goes down. Is it 10X better than the competition? Dude, seriously? IT HAS A BLENDER IN IT!!!!!! it’s probably 20X better than the competition.
So, they had this amazing product. It must have just sold itself, right?
Of course not.
I think the most interesting part of the Coolest Cooler story is that it wasn’t initially a success. The dude who pulled in $13M for his cooler, posted the same cooler on Kickstarter eight or nine months before and only reached $100,000 of his $125,000 goal.
So what changed? He made a few tweaks to the design and launched it in the summer when people were thinking about margaritas. But the biggest difference between the two campaigns is that the second time around he had a bunch of loyal fans from his first campaign who were willing to shout from the rooftops to get the word out from the start. These raving fans were enough to seed the campaign, build momentum and get the flywheel spinning. From there, the press [i.e. a distribution channel] got hold of it and it took off.
In essence, during the first go-around, Dude had great product but no distribution strategy. When he got a second bite at the apple, he succeeded because he had figured out how to play the game; second time around, he already had his distribution channel built-in.
Same product. Different distribution strategy. Wildly different results.
Here’s another example:
A few months back I wrote a blog called “Nobody has a clue what they are doing.” It was an decent post, but certainly nothing groundbreaking or novel. For the most part, no one really cared about it. Then, a few days in, a VC by the name of Hunter Walk found it and tweeted it out to his eight-five thousand followers. Shortly after that, Marc Andreessen who must have seen it on Hunter’s feed, tweeted it out to his two-hundred-eighty thousand followers. And then BOOM! All of a sudden, it seemed like everyone in the startup universe got blog FOMO, shared it like a billions times on Twitter and collectively decided it was a brilliant post.
Hooray! I just nailed distribution. My formula: create a okay-to-solid product, catch a lucky break, and then stumble my way into the distribution jackpot of Hunter Walk and Marc Andreessen. For about one day, I won the Internet.
So, if my blog was a startup and I wanted to scale it, what would my next steps be? Well, I’d basically have two choices, the product route or the distribution route. I could either magically become a really smart, insightful, amazing writer like Tim Urban at Wait but Why and draw people to my blog because of my brilliant writing (odds of this are about nil) or I could try to build a relationship with Hunter Walk and Marc Andreessen so that when I write decent-to-above-average blog posts in the future, I can ask them to tweet them out for me. Neither of these are easy to pull off, but the latter is slightly more feasible.
CONCLUSION
To become a company that can last for decades, you really need both great product and great distribution. The point of this blog post isn’t to say, you should only focus on one lever for eternity. That would be silly. The point is help you think about which lever to focus on first. If you’re a first-time founder and you don’t initially have the resources to bring a Tony Fadell into your team, you’ll likely increase your odds of success by focusing more of your early energy on distribution. Once you’ve achieved product market fit and you have figured out enough of the distribution side to see real adoption, find your Tony Fadell, inspire him or her to join your team, and go out to build your 10X-better-product that changes the world.
FURTHER READING
some great blog posts on the topic of product vs. distribution (several of which take a different view point than this post) see below:
Short reads:
How to Avoid Delusional Thinking In Startup Growth Strategy
Why You Should Find Product Market Fit Before Sniffing Around For Venture Money
Long Reads:
