A deep dive into the mechanics of distribution across the value chain, and how startups can jumpstart their customer acquisition process
It’s a cool morning. You grab your fishing gear, a net and some worms for bait. You head to the riverside and paddle your boat into the waters. You soon arrive at The Spot. You know The Spot because other fishermen you consulted for fishing tips all said the same thing: you’d find the biggest fish at The Spot.
True enough, you make a decent catch. Day after day, after day, repeated success. Your baits are almost not necessary. Soon your curiosity grows. Why do the fishes even congregate at The Spot? Why not anywhere else?
To seek answers, you find a fishing expert, a diver, a bunch of friends, and all set off to investigate. Turns out there’s been a dead whale the whole time, and all the fish’s been feasting on Moby Dick’s carcass. Yikes.
Ah. But it makes sense now. That while the remains of the whale lay there, the fishes were almost bound to congregate over the feast. Making it easy for anyone with almost no fishing experience to record success with minimal effort.
Fishing for Ready Clusters
This brief analogy mirrors the science of organic distribution and marketing a product. Except, unlike the fishing illustration, your bait isn’t useless. If anything, it can be even more efficiently deployed.
Now, which is more effective:
- painstakingly observing good fishing rules while patiently waiting for a few loose fish to find your bait, or
- Finding where the fishes congregate (if any), and pulling a heist. Maximum return on effort.
Great distribution is similar but more nuanced. Painstaking efforts in discovering clusters where potential users currently are, and efficiently converting them into a ready user base.
A simple framework of the symbiosis that can help facilitate the “capture” of existing user clusters is: incumbent + complementary upstart. Eg. banks + fintechs, exchanges + lenders, schools + job recruiters, hospitals + insurance, streaming + creators (artists, gamers, directors, studios), software ecosystem + developers, stores + vendors etc.
Of course, there is the possibility of the incumbent going rogue. Opting to leverage their position and power to clone the upstart’s product for their ecosystem. After all, they have The Spot, and the upstart does not.
Then again, this is an exception. Especially not when the incumbent’s core product stands to benefit from these complementary collaborations with upstarts at scale. Saves them the costs of doing it themselves.
Communities as Clusters
Communities and collectives are self-aggregating user bases composed of users with common interests and demands. Much easier to target and capture as an entity, and with minimal effort.
Typically, they exist in clumps and substructures of large formations and institutions. Incumbents provide a ready pool of high quality user bases that upstarts seek. DAOs and guilds are amazing examples of this in Web3.
Efficient distribution involves:
i. identifying these clusters,
ii. indexing the several fragments they currently exist in,
iii. and building a strategy to aggregate these clusters in one network to maximize bait.
The key to achieving this is: partnership and collaboration with incumbent players and institutions in the space. Especially if the upstart provides complementary features to the incumbent’s services.
Often, the collaboration might follow a symbiotic framework of non-competing ancillary features by one to the other. Usually, these features will often (potentially) enhance the value of service offered by both sides.
I find that the key strategy in choosing incumbents is an obvious alignment of mutually inclusive variables.
The Steam Example
On distribution to target clusters; Steam, for example doesn’t build games (nor do they try to). But they have built a platform with a huge, ready network of gamers by providing game store services.
Game developers don’t have stores, and even if they did, they likely wouldn’t match the sheer volume nor variety of Steam’s user base. This provides a neat ready-to-use solution for game developers to leverage on Steam’s network to:
i. bootstrap marketing and distribution
ii. drastically improve targeted efficiency by lowering
—probably would prefer to build more games with the time and let steam worry about distributing their content to their large network of gamers.
By partnering with Steam, game developers can leverage on Steam’s massive gamer base, allowing the developers to spend more time building and less worrying about distribution and marketing.
In turn, Steam benefits from the increased activities on their platform.
Great games make happy gamers. Happy gamers in turn attract other gamers. More gamers make for bigger cluster base for developers to target.
Alignment of incentives and mutually inclusive collaboration. To capture clusters, think incentives. Capture Moby Dick’s carcass, the fishes will dance into your net.
Once again, effective distribution is the ability to find The Spot, infiltrate through thoughtfully aligned features and leverage. Go fishing where the fish are clustered (if you can find it).
Stalk the herd, capture the meadow.
