Over the past several weeks a certain topic has appeared on several blogs that is worth mention. Paul Allen recently submitted the following:
…Ultimately we have to produce revenue. That always comes down to distribution…For new companies, it’s distribution, distribution, distribution. Must be big, fast, easy. We always asked “Where is the money.”
On September 21st Guy Kawasaki posted the following:
To old fogies like me, “distribution” meant Ingram/Micro D physically distributing software. This was in the days when “partner” was still a noun; companies wrote software manuals; and customers paid with money, not clicks. Moderntrepreneurs focus on “virality” and “eyeballs” and have made it necessary to redefine “distribution” to:
Getting companies with a lot to lose to help companies with a lot to gain
The underlying and important assumption in modern day distribution is the asymmetry of the arrangement. For most entrepreneurs distribution involves piggybacking on another organization with much greater momentum. This reality affects many decisions and actions, so come to grips with it.
I recently attended a Connect Magazine Business Ignitor event with Tom Stockham, the former CEO of MyFamily.com who is now at 3point5.com. In speaking about how his new venture got off the ground he stated that the individual that approached him with the 3point5 concept currently held channel relationships with the target market of the new product and that now, 1+ years into the venture, they already had millions in revenue.
While attending a class lecture at BYU a representative from Dentrix Dental Systems, based in Lehi, Utah, spoke concisely about the acquisition of Dentrix by the Henry Schienn Company. Henry Schienn leveraged existing client relationships, the distribution channel if you will, in order to gain economies of efficiency and therefore to push the Dentrix product to a larger market.
Speaking specifically to Guy Kawasaki’s comment that ‘distribution involves piggybacking on another organization with much greater momentum’ distribution could also be conceieved as the creation of strageic, albeit money-making, partnerships that enable both pig and piggybacker to mutally benefit from an increased business stature. This may include the fact that both companies are able to make more money off their core competencies while enjoying the (BUZZWORD ALERT!) synnergies of mutual momentum, a shared but non-competitive target market, or a Good to Great hedgehog concept that leads pig and piggybacker toward a focused end.
