Fri, Jul 24, 2015
As Singularity University’s Graduate Studies Program I invited my former boss, good friend and now partner at Greylock Partners John Lilly to speak about (venture) funding and his lessons learned from being deep in the trenches of entrepreneurship.
John made a comment which needs repeating: Distribution advantages trump nearly everything.
Assuming you have a decent product or service and your solution has reached proper product/market fit — the game shifts from a product-development play to a distribution play: She who gets her product into most hands will win. Simple as that.
History is full of companies which had comparable products in market at the same time — the ones with distribution advantages typically win. When eBay entered the German auction market there were something like eight other online auction houses; with at least one or two very strong competitors. But eBay had the distribution advantage of being global and thus allowing for cross-border trade plus the team rocked and built tons and tons of partnerships. Soon there was only eBay. WhatsApp continues to win as most of your friends are on WhatsApp — so why would you use anything else? Google won in search as their business model creates abundant income which Google pours back into building the best possible search engine.
When building your company focus on creating a distribution advantage — this can be built into your business models (marketplaces tend to be “winner-takes-it-all” situations), the strength of your partnerships or any other factor.