Distributors - The New VC?
I've been noticing an interesting opinion trend on LinkedIn recently:
Investors will soon be replaced with distributors
Why?
Especially for B2C products -but for many B2B products as well- marketing has become incredibly cost-prohibitive or ineffective.
A few factors are at play:
Formerly over-funded startups obsessed with growth at all costs set price expectations out of wack
Monopolistic behavior from mainstream advertising channels made marketing cost infinity
An influx in advertising has led to marketing fatigue in customers
Shrinking budget for engineering has decreased average product quality and increased the default mistrust in new brands for the average buyer
Squeezed spending budgets and shrinking savings make customers more risk-averse to try new things
In this environment, it can be impossible to get your product in front of customers, no matter how big your budget
(And in this investment environment, your budget WON'T be big)
Hence the theory: Investors getting replaced by distributors.
If distribution costs infinity,
1M new customers
Is infinitely more valuable than
$1M in funding.
Think about it: Does your company need more funding or does your company need more customers?
If it's more customers,
Then why are you pitching investors
When you could be pitching distributors?
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