Distribution, Distribution, Distribution
Guy Kawasaki posted a video from the Churchill Club’s annual look at startups. It’s a good look at the issues start-ups need to handle as they try to turn their idea and turn it into a product and a company.
Reid Hoffman made an important point that Distribution is a critical factor to success. The distribution channel of wholesalers and retailers is well known for traditional businesses.
For internet companies, the methods of distribution become more challenging.
I’d love to see a definitive list of distribution channels for internet companies.
Here is my starter list:
1. Partnering with companies that can provide high traffic
2. Partnering with companies with adjacent business models. (eBay & PayPal, Linked-In & Simply Hired, etc.)
3. Company or Product Blog. This was worked very well for us in Windows Live. Each team has a blog for their product which allows us to have a conversation directly with our customers. We have links between the products so customers can learn about other products from Microsoft. (Examples: Windows Live Mail Desktop, Windows Live Messenger).
3. Community (Discussion boards & other people’s blogs)
4. Invites: This works when users inviting other users will increase the value provided by the site. (Social Networks, Photo Sharing, etc.)
5. Brand: MySpace has become a brand with their controversy. The passionate users of social networks may migrate to other versions as they come out (Bebo?). However the brand will bring in people unfamiliar with the pros/cons of the different sites. Brand can bring more companies to MySpace than their competitors when they want to create promotional pages. Zillow.com is becoming a powerful brand resulting in few people realizing that they have competitors.
6. Advertising on Social Networking sites: Companies are creating MySpaces promotional pages in place of advertising. I wonder if this will die soon after being rejected by the community.
7. Buying Ads in Search Engines: This is a traditional way of acquiring customers.
The goal is to avoid a linear correlation between acquiring customers and costs. #7 is an example of linear costs, which is the downside of traditional marketing. #1 through #6 are leveraged ways to acquire customers compared to the costs.
I know there are more ideas out there. I’d love to hear other people’s ideas of what I’m missing.