Last month, I had the privilege to chat with a third-time founder with two successful exits under his belt. The one takeaway he had from all three of his experiences is that “distribution is king.” My initial thought was to disagree—that product engagement and retention are actually more important, but after mulling it over in my head several times, I began to realize why he said that.
Most startups, given sufficient product iteration cycles, can create good solutions to problems that probably engage and retain users well. This is because products (especially software solutions) are getting easier and easier to build over time. Most software is built on top of open-sourced packages of code with tens of thousands of libraries available at hand, and no-code solutions get more advanced and easier to use by the day. Building software is no longer a skill exclusive to Bay Area specialists, and many companies like Stripe are tapping into remote workforces across the globe to cut down on costs.
It seems the exact opposite is happening with distribution channels. Due to the rising availability of seed funding, cheap incorporation tools, and the ease of building products, a lot more competition exists. Advertising channels are less effective and more expensive, spam filters more aggressive against cold outreach, and SEO is harder to game than ever before. I occasionally hear about this trend through various sources. In particular, Open View has a really great article on why this is happening.
Startups need to have a growth strategy from day one. If I was an investor, I wouldn’t back founders if they haven’t extensively thought about and planned for distribution. Gone are the days when startups were strictly product teams whose growth strategy was based off of the mantra, “if you build it, the users will come.” Companies like Slack got lucky, and in today’s startup environment, there’s no room for luck in distribution strategy. There’s simply too much competition—you can’t leave anything up to chance.
I think even regardless of competition, teams that delay hiring on growth will fall behind on finding product-market fit. Growth is more similar to product than founders think. It requires constant iteration cycles to make it better. There’s no one magical feature or thing that you can build that will unlock growth. It’s a constant process in learning about and iterating on your target market. The longer you wait to invest heavily in your growth strategy the longer it will take for your startup to find product-market fit (unless you get lucky).
What’s the saying? First-time founders focus on product, second-time founders focus on distribution? As a first-time founder now, I think the focus should be both from the start.