Thread by @Julian

It's done! I read 3,000 startup pitch decks.

I wanted to find what the incredible pitches had in common.

Was there a "secret ingredient" unifying them?

YES. The 4 best (that VCs wanted intros to) had the same talking point:

First, here's why most decks were *not* interesting:

Founders believed that explaining how they're better than the competition is what makes them compelling to VCs.

Maybe, but in many markets, it's not hard to suggest a solution better than status quo.

What's more interesting:

...is what approach you use to *acquire customers at scale.*

Meaning, what's your *distribution* insight?

Not just your product insight.

Because if you build something good, often they will not simply come.

Why is distribution so important in 2024?

Because winning your market by just having a better product worked better in the last startup cycle when SaaS ideas were more novel.

That ship is sailing for many non-AI plays. SaaS has become commoditized.

Meaning:

Every idea has 10 VC-backed competitors.

Plus, many incumbents move faster to suffocate startups by releasing new features.

I think of it like this:

Your SaaS co is no longer competing with slow-moving incumbents like Netsuite & Oracle.

Now you're competing with the founders of Figma, Dropbox, Airbnb, Stripe— who are still the *original* CEOs at the top of their game.

They're still cutthroat & fast.

For example: Are you starting something in the design space?

In the past, perhaps you worried about slow-moving Adobe.

Today, maybe you're competing with Dylan of Figma and his team of world-class engineers.

They're armed with copilot and hungry to line-extend to maximize market share and eventually IPO.

And even "slow-moving" Adobe is faster than before.

Did you see how quickly they released Midjourney-like features?

Did you see how quickly Notion integrated LLMs?

Did you see how quickly Microsoft integrated ChatGPT into Office?

And so on.

The point is that some VCs don't JUST want to hear how your product is better.

What some investors including myself also want to hear is:

What is your unique approach to scalably and convincingly *getting in front of customers*?

Because great ideas eventually get copied by other great founders anyway.

So let's explain distribution:

First, for context, this thread's distribution insight is from my weeklong deck review of , where hardware founders get VC dollars from the best energy/chips/robotics/bio investors.

Okay, so here's why distribution matters SO much:DeepChecks.vc

1. Most founders are bad at growth, so if you're amazing at it, the advantage is significant.

Consider: Most startups die not because founders are bad or products suck, but because they couldn't figure out how to get anyone to try them.

2. If you can grow rapidly and win the hearts of customers by scaling to them before competitors do, and if you have a great product, people are unlikely to immediately switch to competitors.

Lock-in is real. Being first can matter. Especially when users fall in love with your brand.

Also, if you've already sucked all the oxygen out of a market, competitors may be less likely to emerge and get funded.

This is why I'll sometimes invest in B-tier tech with A-tier growth strategies, especially if I believe the CEO can become A-tier over time.

But. Here's the kicker—the point of this whole thread:

Founders NEVER talk about distribution in their decks.

They do not think like marketers.

The few founders who do are the 4 decks who stood out to VCs!

Peter Thiel spoke about this a while back, and it feels like no one noticed:

"Distribution is essential to the design of the product. If you invent something but you haven't invented an effective way to sell it, you have a bad business. Superior distribution by itself can create a monopoly, even with no product differentiation. The converse is not true."

Paul Graham spoke about it too:

"Don't start a startup where you need to go through someone else to get users." —Paul Graham

There are exceptions, of course:

Companies with actually novel and defensible products can often focus more on product than distribution. However, few software companies are actually novel. Instead, novelty exists more often today within deeptech (hardware, robotics, energy, chips, etc.)

And when you're NOT novel, your major advantage is going to be a distribution edge combined with great retention.

Okay, finally, so how do you crush distribution? What do the best startups do?

First, it's OK if your distribution insight starts as a hack.

For Airbnb, their early approach was cross-posting room listings to Craigslist where people were already desperately searching for places to stay.

Airbnb had the inventory craiglist needed, and they took off.

For Hotmail, pioneers of cloud email, their growth strategy was including an email signature that said “Sent through Hotmail.“

Everyone you emailed suddenly learned about the product. That's free viral distribution.

This was before the iPhone did this.

I call that billboarding.

It's a form of my favorite distribution strategy for most startups: product-led acquisition (PLA).

PLA means your users naturally invite other users just by using your product.

It's a clearer definition of network effects for tech startups.

Example:

Another subtype of PLA is *deliberate user invitations:* When you join Slack, you naturally invite your team and contractors so you can talk with them easily.

By doing so, you’re growing Slack’s user base for them—sparing them the need to spend money on ads.

Here’s another example:

If you Venmo or PayPal someone who doesn’t yet have an account on those platforms, they will create an account in order to claim the $1,000 you sent them.

Because who isn't going to take 30 secs to claim money they're owed?

Once again, by using the app, you encourage others to sign up and grow the userbase.

I talk about more ways to do PLA on my site. For now, the takeaway:

For software companies, put a bunch of energy into your distribution insight—not just your product insight.

One last thing.

Distribution has at least two components.

The first is the HOW: the channel that you use to get the word out, e.g. PLA or ads.

The second is the WHAT: what is your message—and whether it's compelling enough to resonate.

Meaning:

For people to try your product, you should present your product in a way that people intuitively FEEL how much better you are than your competition and perceive ENOUGH of an improvement to warrant QUICKLY switching plus enduring your switching costs.

Meaning, customer adoption isn't just about whether you provide more value than the status quo.

It's also about whether users can PERCEIVE that big value reflexively.

The skill of growth doesn’t just consist of getting the word out, but also in presenting your value in a way that *resonates.*

That means distribution is (1) growth engines and (2) great storytelling.

That's where the best founders I've backed often win.

Here's an example of storytelling. I call this a "genesis narrative:"

At Synthesis, their CEO told the true story of how their cutting-edge, online, interactive game that helps children become better at problem-solving is a spinoff of Elon's school for his kids at SpaceX.

The message: If it's good enough for Elon, it's good enough for you.

That narrative piqued the curiosity of skeptical Elon-favoring parents and led to millions in profitable ad spend because parents gravitated toward genesis narratives justifying what made something fresh.

Put another way, Synthesis’ pitch isn’t just value props.

Rather, it’s a story that customers partake in.

So, keep this in mind:

When a post-product business is still a young startup, it's not a traditional business yet.

*It's an experimentation factory in search of distribution insights and storytelling.*

Set your priorities accordingly.

And if you're building something dope in hardware or the sciences, consider submitting your deck to Deep Checks VC. It's where the best scientific founders get funded.