Why most founders get distribution wrong with David Sacks
David Sacks (founder of Yammer - COO of Paypal) talks about how founders get the distribution of their product wrong.
He says the following:
“The biggest mistake I see these days is brilliant founders who are brilliant product people, but they haven't thought about how they're going to make their product grow. They launch their product and it's like crickets chirping.”
He gives the following advise:
“If you're going to have a breakout startup, you've really got to think about how you're going to innovate on distribution, not just product.”
The complexity here lies in what he refers to as The Law of Distribution Arbitrage:
“Successful distribution techniques are copied until they are no longer effective. Think about SEO. The first people to use that technique got a lot of traffic from Google. Then, a whole bunch of people started doing it and they started gaming the system. Eventually, Google did their notorious Panda release and everyone using SEO basically lost traffic.”
So, there's a lot of trial and error in discovering distribution ways that are new and never done before. This makes your strategy highly competitive over others.
My point of view
Initially, your marketing allocation is lower because you want to share your vision with investors or your management team to raise capital or get a budget. But once you have that money, it is wise to have a dedicated marketing person or team in place. And this marketing team must work closely together with your product team. Why? Because some marketing strategies need to be integrated into the product itself. For example, if you're introducing a referral strategy, you need to build this into your product, so developers and designers need to know what to create. The better these teams talk with each other, the better your marketing strategies are integrated into your product.
Watch the full lecture from David Sacks here.