Why Second Time Founders Care About Distribution
Rethinking Customer Acquisition and Product Distribution Beyond Playbooks
Many early stage founders assume that building a great product is enough to create a transformational company. While it’s a necessary step, the distribution requirements of a great product go beyond hiring a gun marketer and using other companies’ playbooks to scale when you start to see signs of product market fit.
A fallacy early stage startups make is overlooking the need for original and innovative approaches to product distribution and customer acquisition. It’s well understood that a new product needs to be significantly better than the current alternatives to have a chance to reach customers, have them try it, love it, re-purchase, and rave to their friends about it.
But when thinking about distribution, oftentimes founders default to tried and tested marketing and sales channels. As a startup goes from positive feedback and early stages of product market fit, rather than strategizing and experimenting with distribution and customer acquisition activities, many founders skip ahead to hiring a growth marketer, searching for the right agency, and reverting to the textbook growth and acquisition playbook and metrics.
This article explores various insights on distribution, beyond playbooks and traditional marketing channels, from experts and resources including:
An interview with Blackbird and Startmate co-founder Niki Scevak, including his thoughts on avoiding playbooks and where to start with a great product
Andrew Chen’s theory on startups needing dual methods of distribution and product market fit
Frameworks on marketing and optimising for impact from MKT1
A case study into Canva’s backlink distribution strategy
Ditch the playbook - Niki Scevak
I was a few years into my startup journey as a founder with a product that had paying customers and good retention. We were confronted with sales and marketing challenges, and being an obsessive learner I thought the path to growth and profitability required a proven playbook created by experts that aligned with our product.
Niki Scevak is well known in the Australian startup community as a founding partner of VC fund Blackbird, and a co-founder of Startmate. I heard Niki speak as a guest on the ‘Invest like the Best’ podcast a few years ago, and his succinct insights on product distribution fundamentally changed the way I thought about distribution. Once he started teeing off on playbooks I paid close attention.
“Playbook is a very dirty word in customer acquisition. Playbook by definition means that someone has already succeeded with it and probably a number of other people have already succeeded with it. And so, by the time it is a playbook, you are the thousandth person to be implementing that playbook. And again, it's the sort of unoriginal thinking means that you're unlikely to succeed because you're too late to the game.”
Niki Scevak - ‘Invest Like the Best’ Podcast
Niki was kind enough to provide further insights on product distribution and customer acquisition via Zoom (some of the below responses have been paraphrased).
Where to start if you have a great product and no knowledge of distribution
If they have a good product, it probably means they have activity or traction with customers. My advice in a marketing sense is to amplify what’s already working, rather than trying something new. A lot of people say they’ve spent $0 on marketing and are raising money to spend money on marketing. And they want to do something that’s new. I’d ask, where are those initial users coming from? What do they do? Where do they come from? How do they hear about it? If they heard about it from a friend, what did the friend say to them?
It's like detective work to find what is already working on a really small scale and then trying to make that work at a really big scale and you discover more of that by observing. You're going to be more attuned to the specific circumstances, the specific uniqueness of you and your product, and your market versus if you think, I need to grow, you're going to look up how to grow and you're trying generic ideas to try to grow. By doing those generic ideas your anonymising yourself versus studying what’s happening already on a small scale and come up with ideas of how to 10x those activities.
Take advantage of not needing to do things scalably
When you have 0 customers, take advantage of not needing to do things scalably. Paul Graham's essay ‘Do things that don’t scale’ is the perfect advice in the beginning when you have zero customers. The most effective thing is just reaching out to people, because getting a message from a founder of a company who deeply cares and will action feedback in lightning time is compelling for a customer. The other thing I would say is to make sure you're targeting people who can make a decision quickly, so you're optimising for learning and learning means that you need people to say yes quickly. So target those who can say yes quickly and that normally is small companies, not big companies.
In the beginning, you’re optimising for speed of learning
Marketing is learning. Sometimes spending money can speed up your learning. In the beginning, always do things that speed up your learning. Don’t do things to be profitable or not profitable. How can you learn more? Usually with marketing it's about building a sample size that becomes statistically significant so you can draw conclusions. The dollars in the beginning should always be used to speed up learning, and you should optimise for learning.
There are no diminishing returns to originality in marketing
I never have an opinion on what’s a good idea or a bad idea, specifically with marketing campaigns. The internet is a weird place. Things resonate that I never could predict. Who would have thought Gamestop’s share price would go up? I don’t think you can ever predict how these things will end up because they’re so random. The random wildness feeds the concept because people see something funny and it reaches a new height, and I don’t think you can ever pick it ahead of time. The advantages of identifying a risk, but actually the risk of being a niche idea or only resonating with a smaller audience is something you don’t care about at a startup because a small audience is actually a big audience relative to the traction that you have. As a big company you have to evaluate what's worthwhile, but as a small company everything can make a difference. Everything is mostly the same on the internet. So the more original you can be, the better.
You need dual theories on distribution and product market fit - Andrew Chen
Andrew Chen is an author, and partner at VC firm Andreessen Horowitz. He reckons that startups need both an insight about customers that gives them product market fit and an insight about distribution that creates traction.
99% of startups are not differentiated on their underlying technology, and there is very little engineering risk involved. (I’m ignoring deep tech and foundational AI research companies, for the sake of this conversation). Because technology differentiation is no longer a real factor today start ups, it turns out that most products are succeeding or failing due to core product/market fit followed by the distribution strategy. There are over 9 million mobile apps. There are a billion websites. Figuring out distribution is key.
Andrew Chen - Startups need dual theories on distribution and product/market fit. One is not enough
With an increase in the volume of software products and apps, popular marketing methods including SEO, paid ads and influencer marketing work better for companies beyond product market fit who are looking to accelerate growth rather than for early stage companies searching for early adopters.
Instead, Chen argues that startups should tap into distribution opportunities that are inherently connected to the product rather than supplemented. For example, Dropbox tapped into the need for users to share files as a way to acquire new customers, and Uber led to riding with other people that would naturally learn about the service and then try it for themselves.
The popularity and effectiveness of marketing channels changes over time, so starting with small, highly relevant channels that might not be scalable beyond an early adopter audience can also lead to your first couple thousand users and therefore be worthwhile. If you’re able to identify your early adopter customers and get them to use the product, you increase your chances of receiving relevant feedback, which can then increase your chances of creating a valuable product to reach to a critical mass of users.
Building a great product is the only chance you have at successfully evolving beyond unscaled and highly relevant channels to the dozen or so large scale distribution channels. At this point you’ll be competing with the world’s top brands, so having a strong product with high levels of word of mouth is critical.
The journey of a new product is to move, from unscaled and relevant, to highly scaled. And at the end, great products win.
Andrew Chen - Startups need dual theories on distribution and product/market fit. One is not enough
Use Frameworks and Optimise for Impact over Activity - MKT1 Method
Emily Kramer and Kathleen Estreich are the writers behind The MKT1 newsletter, which provides strategic advice and tactical help on building B2B startup marketing.
Some of their recommendations include:
Build your own playbook and avoid copying other companies
Aim for impact instead of random acts of marketing
Treat marketing more like product and less like sales
Hire marketers with depth in multiple marketing sub-functions
Build your own playbook and avoid copying other companies
You should avoid other companies playbooks because of the differences in your products and audience. Regardless of being a B2B or B2C company, your approach to marketing revolves around your customer, and it changes over time as the product evolves and broadens to a wider audience.
Aim for impact and avoid random acts of marketing
What marketing activities work for other companies, particularly later stage companies, will vary wildly to the success of early stage startups. Random acts of marketing is trying things without any plan or strategy that at the very best will result in an uptick if you get very lucky. For example, you might read about another company’s accomplishments in a new channel and look to replicate the approach with your own product and customers, despite the company being well established and beyond product market fit. Thinking about your products audience, unique advantages and short-term and long-term growth enable you to track and measure both consistent goals and place calculated bets with a much higher potential to drive meaningful growth than replicating other companies activities.
Marketing should be more like product and less like sales
Marketing should focus holistically on the entire funnel rather than only optimising for disconnected outcomes like MQL’s, awareness or pipeline growth. When marketing is aligned with product, there are measurable project goals to encourage short-term and long term thinking, efficiency and growth. Similarly to the consistent look and feel of a great product, every brand touch-point in every channel should ensure consistent messaging to connect with the product’s desired audience.
Hire marketers with experience in multiple sub-functions
At the early stage of a startup, avoid hiring marketers who don’t have the breadth needed to set strategy across all areas of marketing.
“The earlier stage the startup the more critical the ability to zoom in and zoom out. The marketing leader must design the plane, build the plane, and fly the plane all at the same time.”
Early marketers hired at the startup stage need to understand the requirements of the role largely go beyond management and specialisation. Ideally you can find a marketer that is an expert in one marketing subfunction, strong proficiency in a couple of other sub functions and a broad knowledge of how each area of marketing works together.
Case Study -Canva’s backlink strategy
Before Canva, doing any design work as a non-designer felt impossible. You started with a blank page on an intimidating and unintuitive software platform, or like me you’d fumble your way through Google or Microsoft tools that were not built for design projects. Then Canva came along armed with an incredibly simple UI and a trove of pre-created professional templates that enabled users to quickly and easily create a shareable design.
A few years ago, Ross Simmonds wrote a piece for Foundation that comprehensively laid out Canva’s backlink distribution strategy that lead to 270 million annual visits to their website back in 2020.
Basically, the backlink strategy involved a blend of SEO, outreach, and content creation. By understanding user search intent, Canva crafted scalable landing pages targeting both broad and niche keywords, leading to high rankings and extensive organic traffic. Their approach includes creating parent and child page structures, investing in personalised backlink outreach, and leveraging content directories to enhance visibility and authority. Through these tactics, Canva has amassed over 4 million backlinks, driving substantial annual traffic and reinforcing their SEO dominance.
Chat GPT article summary - The Canva Backlink Empire: How SEO, Outreach & Content Led To A $6B Valuation by Ross Simmonds
The backlink strategy worked specifically for Canva because they already had a sticky product with a broad range of use cases. For example, when a user was desperate to create a business card and Googled a blog post or guide to find out how to create it, that resource inevitably recommended Canva and a user would sign up.
Niki Scevak added his observations on the influence Canva’s product had on the backlink strategy:
The backlink strategy is how Canva succeeded in SEO, but not necessarily how they ended up there. As an external observer of the company, they always had a very strong philosophy that first time users to Canva had to have a really beautiful, frictionless experience. They were obsessed about that user challenge, if you sign up to Canva, they want you to succeed. One of the ideas about a first time user succeeding in the product was to have a pre-made library of templates, and templates were a really big help because when you start with a blank sheet of paper you can get paralysed, if you start with a template your halfway along the road to success. But that choice and that template library turned out to be a great SEO second order consequence. I don’t think they realised it was going to be great for SEO, and then very quickly realised it was going to be great. The backlinking came at the end, the first thing was really caring about someone succeeding in their first session.
This also worked because Canva has over 400,000 templates. Everything from invitations, business cards, flyers, to more specific business use cases such as invoices, proposals and even websites. Backlinks make sense for Canva because of the breadth of use cases of their product that directly link to search terms.
A lot of founders (me included) might have read about Canva’s SEO success and figured it was time to invest in a backlink strategy. But the beauty of this strategy is how specific it was to Canva and their inherent product advantages, as well as being a second order consequence of their obsession with users succeeding when using the product.
Summary
I speak to a lot of early stage founders who have an incredible vision for their product based on their experience and expertise, and from astutely observing an unsolved problem existing somewhere in their world. When the conversation shifts to customer acquisition and sales, it’s apparent that these are only an afterthought. Building a revolutionary product should be the primary focus, but it can’t be the sole focus.
A product roadmap should have an accompanying distribution strategy that encapsulates a product's originality and unique ideal customer insights. Beyond Facebook, Google ads and attending conferences, the distribution strategy should evaluate the granularity of users requirements and test and measure subsequent distribution and acquisition methodologies.
Treat distribution with the same strategic importance as product development. A product roadmap is a vision and collection of features and benefits crafted into the overall product that details the steps to strengthen the benefits leading to better retention and growth. Transcendent products are hailed for their originality and exponential improvement to the current solutions available. The detective work required to sift through the subtext of your ideal users requirements to build the perfect product should also be applied to distribution and customer acquisition, starting at the idea stage.
Additional resources
Niki Scevak is a founding partner at VC firm Blackbird. You can find an archive of his writing on Medium here. Here is the episode of ‘Invest Like the Best’ that Niki featured on here. He recommended the following resources in our call:
Startups = Growth - By Paul Graham (essay)
Zero to One by Peter Thiel (book)
MKT1 Newsletter (I’m a paid subscriber) - When it comes to establishing your brand and marketing infrastructure, their principles and frameworks, as well as sound advice on what to avoid, is a great place to start. They use clear illustrations to visualise their recommended strategies on a range of fundamental topics, including:
Andrew Chen is a partner at Andreessen Horowitz and an author of The Cold Start Problem
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