R&D doesn't matter if you are an early-stage tech company

Most people never realize that building a non-deep tech company is a game of product positioning.

Spending years building a product before selling it to someone isn't a clever move. Indeed, all the technologies are available to put up a good enough product and go to your market.

Besides, as Marc Andreessen explained in 2018 with words I still remember:

"The general model for successful tech cos, contrary to myth and legend, is that they become distribution-centric, rather than product-centric."

Building a distribution-centric company means focusing on getting products to ALLthe customers in a given market.


The most successful distribution-centric company that exists is Google. By focusing on serving all Internet users worldwide, Google captured more than 90%+ of the world search-engine market share.


Like Google, taking down a whole market by being distribution-centric is highly valuable.


I had the chance to back Elisath, a French-based vertical software company, on its next strategic move.


The playbook of Elisabeth Ferlet, Elisath's foundress, is worth sharing to help you build an impactful and valuable company.



Artwork by Camille Laurella


In the beginning, instead of using its limited capital and resources to build a one-of-a-kind product, Elisabeth leveraged ready-to-use technologies to offer point-of-sale software to an unaddressed specific niche: the French aquatic center.


With its good enough product, Elisath invested in marketing and managed to build an initial customer base among the French aquatic center. With a jump ahead on its vertical, Elisath invested in R&D by building, around its initial product, a comprehensive ERP solution for aquatic centers.


Thanks to an execution capacity whose only entrepreneurs have secrets, Elisath managed to get a distribution advantage over competitors. Elisabeth built a distribution engine through an organization, corporate culture, and technology to transform its distribution advantage into a competitive advantage.


When I met Elisabeth, Elisath had two significant assets.

  • First, Elisath was the French leader in aquatic facilities with a market share superior to #2, #3, and #4 combined.

  • Second, Elisath emerged as a distribution channel for new products such as CRM or energy management software.

According to Marc Andreessen, what Elisath has created for the past two decades was one of a tech company's most valuable assets.


As an M&A dealmaker, I love these kinds of assets. Because these assets can generate strong interest from companies for different strategic reasons, it gave me the weapons to organize a competitive process.


Unfortunately, I've encountered many tech founders who get frustrated because they get beaten by companies with better distribution while they have a better product.


Please, don't become one of them.


If you want to have an impact and build generational wealth along the way, you should care more about marketing than R&D at the beginning of your journey.


Good luck!

Cheers,

Thomas

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