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Does good distribution trumps good product?

Last week, I met the 10 new startups accelerating through London’s Techstars this year, and as usual with companies who have an early product to market fit, a big part of the conversations has been about finding new channels for customers acquisition. On my way back home, it struck me that we often explore this critical part of a new venture at a late stage, like as a necessary evil, and rarely as a trigger for a new business idea. In other words, first find a great customer acquisition channel, then think about what problem you could solve for them. Don’t get me wrong, I love the creative process and operational discipline of testing new distribution channel ideas, but once you have a product idea and target customer segments, you’re de facto limited to a range of channels that are relevant for this situation (e.g. you won’t market to Fisherman’s unions – hey Ben from Peskyfish if you sell access to Schools for events – Hey Jemma from School Space). And let’s be honest, you’ll only have a chance at the Holy Grail of exponential growth if you come up with customer acquisition channels that are structurally scalable, and with low customer acquisition cost. So why taking a chance, and not starting with a distribution channel idea instead of a product idea?! Have a look at Squirrel I have been following for a couple of years now. Mutaz offers savings solutions for employees, and hence distributes through employers who provide the service as an employment perk. Just the NHS employs 1.5M people in the UK. I bet 10 clients from the FTSE 100 list could add 1M more. That’s access to 2.5M end users in just 10 deals. Think along these lines: SMEs are in the hands of a handful of Saas accounting software services (Xero, Sage, Intuit,..). Engineering schools alumni networks hold thousands of highly segmented profiles/email addresses if you can convince the people managing these lists that there’s something in it for them... Up to you now now: Is there a particular channel you can think about that is highly scalable and low cost?! Let me know if you find a promising one, and for the 5 best ones, one of our mighty advisors will give you 1 hour of support to help you to come up with a product/service that this audience may need.

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