It's All About Distribution

Distribution.  The single biggest challenge for many start-ups is figuring out how to get the word out.  As first time entrepreneurs, GoTime.com has learned a lot of lessons about distribution the hard way, and I thought I’d use this post as an opportunity to enter into Andrew Liu’s Start-up Challenge (benefiting a great non-profit, Future Hope) and also share some insight with others.

Your product might be great, but at the end of the day, if nobody knows about it, it won’t end up mattering.  The reason why this poses a challenge is because several forms of distribution can be quite costly (e.g. paid media, or PR) and a start-up company with limited resources may find it difficult to create its own channels – all in the midst of building the next feature, managing employees, analyzing analytics or the million and one other things that come up in everyday start-up life.  Not to mention that several early stage entrepreneurs (and first timers especially) are product-focused and haven’t necessarily nailed the distribution piece.

The best way for a resource-constrained / time-constrained start-up to solve this challenge is to “ride waves.”  Let me explain using another Seattle-based company, Urbanspoon, as a great example of a company who has successfully accomplished this.  Every day, Urbanspoon reaches thousands of people (and also customers) across the country without spending a dollar on marketing.  How did they do it?  They identified and rode three existing waves:
1) Google (SEO): Search engines account for the overwhelming majority of traffic on the Internet and if done right, they can also act as avenues of free marketing.  Rather than throw parties in each city, Urbanspoon invested in SEO, riding the Internet’s most powerful distribution channel.
2) Apple: Urbanspoon got featured on a prime time TV commercial without paying for it, how?  They rode Apple’s wave.  They saw the power of the iPhone App Store as a way to get their product out to hundreds of thousands of people, and positioned themselves accordingly.  They made a cool/useful application, even put to great use the iPhone’s shake functionality (which I’m sure Apple loved), and went from hitting a homerun with the iTunes App Store (free distribution) to a grand-slam by making it into an Apple commercial.
3) CitySearch: Distribution in this case also refers to selling to customers.  Rather than knock on the doors of restaurants throughout the country, I’m sure that Urbanspoon recognized it will be much more efficient to find a wave here too, in order to monetize their product.  Who has business relationships and an established salesforce with their target customers?  One of their competitors, CitySearch, which led to an advertising-based relationship to start, and ultimately an acquisition.  Much smarter, quicker, and likely more successful than if Urbanspoon had gone out there thinking they were good at sales and building out their own salesforce.  Sales relationships can sometimes take decades to build, especially in the case of advertising – great strategy leveraging an existing distribution channel rather than attempting to create your own.

How else have other web-based companies successfully gotten the word out?  Another extremely efficient way to distribute one’s product is through the product itself, or virality.  Facebook, MySpace, LinkedIn likely spent very little money in their early stages on advertising, given embedded incentives within the product itself to pull friends in (thus leading to high viral coefficients).  To all those “wantrentrepreneurs” out there… building in meaningful virality into your website is much more difficult than you think it is.  If you haven’t read a blog post by Andrew Chen, Josh Kopelman, or the previous sentence was the first time you heard the term “viral coefficient”, I wouldn’t bet on virality as your primary distribution strategy.  Virality, like SEO is great in that it’s an ongoing strategy that enables a web-based company to build ongoing and sustainable traffic.  Distribution strategies that won’t work very well for early stage start-ups over a long period of time include PR, which is also expensive (and you never know what, if anything, you’re going to get), and Google Adwords (unless it’s directly funneling towards revenue).  I’d be remiss if I didn’t mention social media (e.g. Twitter and Facebook), which are great ways to boost one’s traffic, so I would recommend them to everyone, but not necessarily as standalone strategies.

Ride waves.  If you’re an early stage entrepreneur, you will get to where you need to go much faster if you think like this.  The other week, a PR executive was encouraging me to throw a party in San Diego for the CTIA conference to promote the national launch of GoTime’s “Happy Hours” for iPhone application in September.  My question back to him was, if anything, why wouldn’t we find a party that’s already going on, and instead piggyback off of that existing distribution channel?  That approach would likely be much cheaper, less time intensive, and probably more effective since that party’s audience would likely be greater in number.  “If you build it, they will come” – unfortunately for us, Teddy Roosevelt was not talking about websites, but referring to the Panama Canal.  Whenever aspiring entrepreneurs approach me about an idea they have that they want to run by me, I would usually include a discussion about how ideas mean very little and how “it’s all about the execution.”  I think I’m going to change my response to “it’s all about the distribution.”  My advice: make like a surfer, find the waves and ride them!

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Jeff Khadavi
Co-Founder
GoTime.com
jeff@gotime.com