Why Founders Should Prioritize Product Over Distribution
Of course “both” is preferred, but often you have to choose
It seems like more and more the consensus among investors is distribution.
LinkedIn Founder and investor Reid Hoffman said:
“One of the first things that I really learned, which is one of the key things why social net failed, is, actually in fact, product distribution is more important than product.”
Elizabeth Yin of the Hustle Fund tweeted:
But looking at some recent successes, it seems like product trumps distribution.
Zoom was at a massive disadvantage when it came to distribution. Webex, Google Meet/Hangouts, and Skype all had great existing distribution channels through their respective parent companies. However — they just didn’t work as well. Zoom’s product was simply easier to use and just worked. Zoom’s shareholders have been well rewarded as a result.
DoorDash was in a similar situation to Zoom — late to the party and facing competitors with significant distribution advantages.
GrubHub and Uber pursued distribution over product by inking big deals with large chains. GrubHub signed a deal with Yum! brands (KFC, Taco Bell, Pizza Hut, etc) and Uber with chains like McDonalds. Uber also had the added massive advantage of leveraging its existing driver fleet.
However, with GrubHub the restaurant often provided the driver which led to slow and cold deliveries. With Uber, UberEats was a second class citizen to ride-sharing. DoorDash on the other hand put a high premium on a great user experience by…