Free Entrepreneur Myths by Damir Perge

of it in order to succeed.
     
As a venture capitalist and a former salesperson, the one common flaw I see among high-tech startups is the lack of salespeople on the team during the seed or early phases. Even Twitter, after raising more than $50 million, didn’t have a solid sales team. Maybe they didn’t need one in the earliest stages of their life cycle, but most ventures do. However, as Twitter raised more money, they started to build out the sales team. If they had built their sales team sooner and developed sales revenues in line with existing costs, they would have required fewer funding rounds. Many VCs will differ with me on this comment.
     
Distribution is the pimp
     
Your salespeople should be getting you distribution (whatever the distribution channels), or you’ve got problems, captain.
     
Entrepreneurs and investors should give serious consideration to whether the product or service has distribution, or the level of difficulty in obtaining distribution. For example, in the movie business, distribution is the biggest challenge. You have to figure out how to distribute your film into theaters or straight to video, otherwise you’re SOL (shit-out-of-luck) on the ROI.
     
I funded one company that had several innovative products, but they just wouldn’t focus on getting distribution. They sold their products direct to retailers; however, no one on their team had retail distribution experience. This lack of experience turned into slow sales and they obviously missed sales projections. I learned a big lesson as an investor: fund ventures that have someone on the team with serious sales and distribution experience.
     
When launching products or services, look at all distribution options: direct sales (includes telemarketing, direct mail, television ads and infomercials), wholesale, retail and internet. I’m befuddled at how many entrepreneurs underestimate the cost and effort of getting distribution. Worse than that, they underestimate the effort of collecting the money from distribution.
     
If you’re distributing through retail, you better have (1) enough cash to offer terms (for at least net 60 or 90 days, or even consignment), (2) multiple products, (3) a generous product return policy, and (4) market development funds to launch the product. If you don’t offer some of these marketing and financial components to the distributors or retailers, then you better be married to someone in the Walton family to get retail distribution through Walmart and Sam’s Club.
     
You could argue against the “build a better mousetrap” theory, giving the examples of Facebook, Twitter, Instagram, FourSquare, Zynga, LinkedIn, Google and a handful of other companies. It’s possible to get lucky. Customers might discover your wonderful service without you having to spend large marketing dollars to hit the sales inflection curve on the marketing hockey stick. It’s a long shot, and your product or service must have a viral component in its value proposition. Even then, hitting viral liquidity is not easy, especially today when everyone seems to be planning viral campaigns for every invention under the sun. Consumers can only watch so many viral ads each day. They do have a life, my friend. They’re not just sitting around and waiting for the next viral advertisement.
     
Distribution is the pimp. And your product is the bitch. Never forget it.
     
Brain Candy: questions to consider and ponder
     
(Q1) When you developed your product or service, how did you launch it? Did you put tons of marketing dollars behind it or did the product just take off?
     
(Q2) How does publicity and viral marketing play out in launching a new product? Have you used these effectively?
     
(Q3) What is the chance of your product being distributed in the marketplace?
     
(Q4) If you plan to distribute your product in retail stores, do you have salespeople on your team with retail experience and contacts in the retail