Developing a product without a clear distribution strategy presents a significant challenge. Many startups invest considerable effort into building their initial product, only to face the critical question of how to attract their first users once development is complete.
Reaching this point without a plan indicates a problematic position for a startup.
The majority of startups today do not rely on unique underlying technology for differentiation, and engineering risk is often minimal (excluding deep tech or foundational AI research). With technology differentiation less of a factor, a product’s success or failure largely hinges on achieving strong product/market fit, followed by an effective distribution strategy. Considering the vast number of mobile apps and websites available, mastering distribution is paramount.
Dual Insights Required
Startups ultimately require two key insights:
- An understanding of customers that leads to product/market fit.
- An understanding of distribution that generates traction.
Product builders often find it simpler to achieve product/market fit, as they might be creating solutions for themselves or a familiar customer segment. However, developing a distribution insight is frequently more challenging. After engaging initial users like friends and family, expanding to hundreds of new customers necessitates delving into growth marketing strategies and tactics, which constitute a distinct and specialized skill set.
The Impact of Disruptive Platforms
In instances of new technological breakthroughs, such as with AI, Apple Vision Pro, or Web3, a product’s mere functionality can be sufficient. Being present during the early adoption phase of a new platform can lead to automatic distribution. This explains why many successful startups emerge at the inception of new platforms.
However, the situation changes dramatically when launching a product in an already saturated market, like the millions of existing mobile apps. The natural inclination is to research existing marketing knowledge. A less obvious point is that while much of this information covers channels like SEO, paid marketing, or influencer campaigns, these strategies are often best suited for established, well-funded products seeking to accelerate growth. Many such tactics may be ineffective or too costly for new ventures, as mature marketing channels can be less impactful. It is often observed that by the time a new marketing tactic or channel becomes a widely documented case study, its initial advantage has likely diminished or disappeared.
Therefore, an alternative approach is often necessary.
Products with Integrated Distribution
Ideally, product development and distribution hypotheses should evolve simultaneously and mutually reinforce each other. The founders of Dropbox, for instance, integrated folder sharing into their initial vision, which later became a significant growth driver. Uber exhibits natural virality, as users often share their experiences with others while riding or traveling to meet someone. Platforms for creators, such as Substack, inherently motivate users to produce and share content, thereby attracting an audience who ultimately may also be creators. Collaboration tools like Zoom include features that encourage users to invite colleagues, integrating distribution into the product experience.
These examples illustrate the most effective form of distribution: one that is intrinsic to the product concept rather than an afterthought.
Acquiring Initial Users
Even with a foundational theory for organic product distribution, identifying the first cohort of users is essential for refining the product and validating initial hypotheses. The early stages of new product launches are often unique and subject to continuous change. This is largely because marketing channels are constantly evolving, with smaller-scale channels, crucial for acquiring the first few thousand users, changing even more rapidly.
Previously, launching products at major conferences like SXSW was a common trend. Currently, there is a greater emphasis on early influencer engagement or “building in public,” where founders themselves become influencers. Years ago, many consumer products, such as dating sites or photo apps, would launch on college campuses through the Greek system, leveraging organized networks to reach thousands of undergraduates. Today, these organizations are frequently overwhelmed with startup requests, making this approach less effective. Consequently, these initial channels are always in flux, requiring founders to adapt and identify what strategies are effective in the current landscape.
A key challenge with these early channels is their limited scalability; they eventually become exhausted.
Navigating Distribution Channels
This marks the beginning of a startup’s journey to expand its distribution channels, moving from smaller, highly relevant ones to larger avenues.
One way to visualize this is with an X-Y axis, where X represents channel volume and Y represents responsiveness. Early channels typically have low volume, which is desirable because they are highly relevant and often overlooked by larger companies. Influencers, niche newsletters, and event marketing are examples. If a channel proves successful, the next step involves scaling up to new channels that offer greater volume but are consequently more competitive.
This phase often involves having one somewhat effective channel while simultaneously experimenting with several others. Such efforts should be experimental and iterative. Observing direct competitors and adjacent products can provide inspiration for suitable channels. The inherent nature of a product often suggests the most effective channels. For products with episodic usage, such as travel or health apps, strategies like SEO/SEM, affiliate marketing, or referrals are often necessary to target high-intent users. Social products or workplace collaboration tools might benefit from referral programs and viral growth. E-commerce products naturally gravitate towards paid advertisements and creator partnerships. Insights can also be gained by consulting with peers in the same or related industries.
It is common to encounter developers of episodic usage apps, like those in travel or health, seeking viral growth for free users. However, a natural alignment exists between a product and its distribution channels. While free distribution is appealing, only specific types of networked products can achieve organic viral growth. Most other products typically incur costs for distribution, whether through referrals or advertising.
Transitioning to Volume-Driven Channels
The ultimate goal is to shift towards high-volume channels. Approximately a dozen large-scale distribution channels exist that can drive a product to significant scale, including advertising, SEO, and viral growth. However, these extensive channels are characterized by high scale but lower responsiveness. Consequently, companies often find themselves competing with prominent industry brands. Engaging in advertising alongside major credit card companies or airlines, for example, means contending with entities that have substantial marketing budgets, long payback periods, and less sensitivity to costs.
Paradoxically, this is precisely where exceptional products tend to prevail. While the discussion began with the dual necessity of product/market fit and distribution, product/market fit ultimately becomes the dominant factor.
A company’s capacity to effectively utilize these expensive, high-scale channels stems from having a superior product that naturally generates significant word-of-mouth. Greater organic usage reduces the need for extensive marketing efforts. Any existing marketing costs are then offset by the large volume of organic users.
The trajectory of a new product involves progressing from niche, relevant channels to broadly scaled ones. Ultimately, superior products achieve lasting success.
