August 21, 2013

I have 15 minutes free and have been thinking about 2 topics that I can’t get out of my head. These will probably be blog posts at some point, but right now, thought I’d throw them out there.


1. Product / Distribution Fit

My friend Brian Balfour wrote a blog post yesterday about emerging distribution channels and how they impact innovation.  It’s a great post – read the entire thing.

One point he makes is that in even established vertical, new companies tend to rise on the back of new distribution channels.  One reason he points to is “product/distribution fit”.  I think this is a really insightful comment, and a really great lens to think through the early stages of building a company and a product.  Many times, I’ve seen a product to heard an entrepreneur talk about their business, and I thought to myself “this just doesn’t seem right for the times”, but what I really meant was “this product doesn’t fit the distribution options that are most likely / most accessible to get early traction”.  I’m sure I’m going to be thinking about this all week and use this lens more and more when I evaluate companies and teams.

2. Seed stage founder heuristics

I had another conversation with my friend Nick Ducoff (incidentally, both Nick and Brian are involved in our portfolio company Boundless – I continue to learn so much from the entrepreneurs we work with).  He pointed me to this cool article by Nicholas Taleb on the “Skin in the game Heuristic”.  The gist here is that it is really really important to see a lot of skin in the game for leaders engaged in activities with long-tail but very high impact potential outcomes.  We talked about this in the context of founders risk, equity splits, and opportunity cost.

This reminded me also of a question a really successful angel investor I know has found to be the single most important determinant of success or failure.  Basically – how “all in” in the founder CEO.  Has this person put in a significant amount of their net worth and sacrificed insanely high opportunity cost to pursue their new company?

I’ve been thinking about other sorts of founder “heuristics” that can be identified and I need to do an analysis of all the companies I’ve seen up close to try to develop something more data driven.  But these resonate with me for sure, and I guess ultimately, they sound pretty obvious.

Gotta run.  Would love thoughts on both of these memes!

  • Aaron Klein

    Could not agree more with both.

    A product without distribution might as well not exist. That’s why I love the framework of figuring out the value proposition you deliver to both the customer and whoever already has distribution to those customers. If there’s not significant value driving to both…you’re already in trouble.

    And the best entrepreneurs I’ve worked with are 110% all in. They might not be financially ruined by failure, but they will definitely have a “lost decade.” They are deeply driven to succeed and it manifests itself when your back is to the wall. (No startups fail…founders just give up.)

    • robchogo

      I like the idea not of being “ruined by failure” but by sacrificing a “lost decade”. Well put

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