David Sacks explains why many founders get distribution wrong

“The biggest mistake I see these days is brilliant founders who are brilliant product people, but they haven't thought about how they're going to make their product grow. They launch their product and it's like crickets chirping.”

Having a technique that gets you to scale is very important.

“If you're going to have a breakout startup, you've really got to think about how you're going to innovate on distribution, not just product.”

What’s tricky about this is what he calls The Law of Distribution Arbitrage:

“Successful distribution techniques are copied until they are no longer effective. Think about SEO. The first people to use that technique got a lot of traffic from Google. Then, a whole bunch of people started doing it and they started gaming the system. Eventually, Google did their notorious Panda release and everyone using SEO basically lost traffic.”

Friend virality is another example:

“If you look at Facebook, the friend virality was very powerful in the early days. Then people got sick of the spam and stopped paying attention… So the techniques that work initially to get distribution don't stay working because everyone copies them until the channels are spammed to death.”

Full video: Draper University “David Sacks on Unicorn Ideas: What Elements Are Needed to Create a Billion Dollar Success?” (Jan 2014)