Product vs Distribution
There's this age old debate on what matters more for a company - product or distribution?
First let's define both the terms.
Product is what you build to solve customers' needs.
Distribution is how you get customers.
Now, some examples,
Great products having great distribution makes sense. So do bad products having bad ones. However, an interesting question to think about is why do bad products also have great distribution? Sales muscle ofcourse plays a crucial role in that, but wont the customers figure out if something is truly bad? My hypothesis is that this happens due to
Customers not having alternatives. Although, if a monopoly is working well, more copycats do emerge over time (except in case of strong barriers to entry), so this situation doesn't stay for long.
Customers having alternatives but not able to access them easily either because of stronger distribution (e.g. Internet Explorer) or high switching costs (e.g. Salesforce).
Customers not even able to imagine what better products might look like. This often emerges from the first one or if all existing products are bad.
Products are just enough —> in the sense, that they solve the basic problems but dont solve it in the best way or dont solve adjacent problems.
A complementary question to the one above is - Why do great products end up having bad distribution?
We have seen multiple instances of great products not achieving scale. It almost seems like an injustice happening. Why could it be though?
There are barriers to word of mouth. Great products grow exponentially due to virality, but if that is impeded due to some way, it might hurt their distribution. E.g. It's easier for a consumer to download Twitter than an org to use Slack, because the decision is more involved.
Market sizes are small
Mismanaged growth channels e.g. If the right channel for a product is offline but they only try online
Pricing is higher than the perceived value of products
Product with better distribution has locked-in customers e.g. Netscape getting killed because of Internet Explorer. Mozilla achieving some distribution and then getting killed by Internet Explorer + Chrome (who had better partnerships).
Running out of money or energy in the meanwhile
This explains the lay of the land, but still doesn’t explain which part to focus on and when.
Consider this journey of a startup.
There's an idea that the founders have, and they build a product to validate their idea. They put it in front of the customers. Based on the customer response, they iterate and make the product better. (This works best in software products, case might be slightly different in hardware). As they make product better, hopefully some customers start telling more potential customers about the product and people start using the product. Now, the base 80% of the product is set, so for growth, the company invests in distribution, either by hiring a sales team or advertising or through other growth channels.
What do you see here?
Product and distribution run in parallel throughout this journey
However, in the initial stages, product matters more. As the base product is set (often termed as product-market fit but can be even later), distribution indexes more. Like for Coke, once the product was set, it just had to figure out how to get it into the hands of everyone.
This is not to say that product innovation stops at this stage. Just that the base is set to be replicated across customers, while innovation happens in other directions on top.
This phase, of distribution taking over depends a lot on dominant growth channels. For sales led growth, this phase comes sooner. For viral growth, it comes later and in spikes.
Post script -
You can argue that what one terms as a great product might be subjective, either because the target customer set keeps evolving or because I might not be the target customer. True, but one also cant use objective measures like number of users, since that includes distribution also. Retention is one metric that could be slightly less colored (even though lock-in and sales play a role there also). Hence, I'm illustrating products that work well as great, irrespective of my own biases.
We won’t know most of the bad products with bad distribution because they didn’t take off. But perhaps they might offer the most learning about a space.
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