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Startup Founders, Would You Rather Have A 10x Better Product Or 10x Better Distribution?

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Strategy

As a startup founder, one question I get asked frequently is: should we focus our energy on building product or on building our distribution channels?

Most of the startup world would tell you to focus on both.

I strongly disagree with this. It’s unlikely you will be able to nail your product strategy & your distribution strategy at the same time — especially if you’re a first time founder.

To build a 10x better product than your competitors, you would need a Steve Wozniak.

On the other hand, to build a 10x better distribution you just need a person who is ready to hustle.

As founders, we’ve all been guilty of focusing on the product with an “all or nothing” attitude.

The problem with this is that the “build it and customers will follow” argument only works in cases when the product itself is orders of magnitudes better than existing competitors.

If it’s not at least 10 times better than your competitors, then you’re essentially competing with them on marketing, instead of features or quality of your product.

Moreover, for a first time founder, nailing the product is helluva lot harder than nailing the distribution.

When making a decision on which route to go, it’s important to be honest with yourself and leverage the skillset you (and your team) actually have, not the one you wish you had.

If you aren’t confident about your ability to develop a 10x better product than your competitors then you should go the distribution route.

The beauty of this route is that one does not need any specialised skills to pull it off. Anyone can do it, all you need is to commit to out-caring your competition when it comes to customers or quality of your product.

My bias towards distribution is mainly because I think distribution is an inherently better lever to pull on.

Admittedly, it’s probably an inferior lever in the long run. But it’s just a bit easier to pull in the beginning when you’re starting out in order to get the flywheel spinning.

Here’s my formula to approach the distribution route:

  1. Create an okay-to-solid product
  2. Spend money on marketing & setting up strong distribution channels for organic reach (through SEO, Paid Shout-Outs by Influencers, Advertising etc.)
  3. Keep improving the product while you hope to catch a lucky break through your distribution strategy.

To follow the distribution route does not mean one must completely ignore building a good product in the first place.

Building a good product is a necessity, but it is insufficient to achieve success through it — especially without great distribution.

More often than not, the difference between commercial success and commercial failure is the distribution.

In the startup world, the odds are so stacked against us all the time that if one can continually make decisions that moves the odds slightly more in their favour, they give themselves the best chance of catching a few lucky breaks.

Take GoDaddy for example, nearly every person on the Internet has heard of GoDaddy and a majority of sites are registered with the company. The power of this brand came from its extensive advertising.

GoDaddy didn’t see much success early-on when they were advertising their brand on the internet to web developers due to extremely high competition in the web-domain and hosting space.

So, at a time when many people were still unfamiliar with the Internet, GoDaddy targeted their advertising towards regular, every day people both online and offline.

This was a risky move, at the time, but actually showed incredible foresight and as a result they are a $13 Billion company today.

In essence, during the first go-around, GoDaddy had a great product but not a great distribution strategy.

When they got a second bite at the apple, they succeeded because they had figured out how to play the game.

Same product. Different distribution strategy. Wildly different results.

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 make you think hard about which lever to pull on first.

If you’re a first-time founder and you don’t initially have the resources to bring a Steve Wozniak 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 Steve Wozniak, inspire him or her to join your team, and go out to build your 10x-better-product that changes the world.


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