Why mastering distribution is the key priority after reaching product-market-fit ⦨ Cracking the Code: Freshman Scaleups and the Art of Mastering Distribution ⦨ Midstage Institute

Why mastering distribution is the key priority after reaching product-market-fit

Why mastering distribution is the key priority after reaching product-market-fit

When startups “hit it” and reach product-market-fit, they become scaleups. And the first thing they need to learn as a “freshman scaleup” is how to scale their marketing and sales. Mastering acquisition or, in other words, mastering distribution.

DOUG: The freshman scaleup is the first “real” scaleup stage.

ROLAND: Yes, freshman scaleups have reached product-market-fit. They have moved out of classic startup territory and into solid scaleup territory.

DOUG: What customers do freshman scaleups have?

ROLAND: Freshman scaleups are starting to sign up more paying customers. The bulk of customers they sell to now are visionary business users. People who love the technology less for its own sake and more for the impact it can generate. Customers in this stage look to use the product to gain a competitive advantage.

DOUG: What milestone have they reached and how much have they raised?

ROLAND: Freshman scaleups have reached product-market-fit. That means that they have found a market willing to pay for their problem-solution-fit. They have a working revenue model. Freshman scaleups have raised a Series A round from “proper” venture capitalists.

DOUG: How mature can you expect their product to be?

ROLAND: Freshman scaleups’ products are not only functional. They are impacting people’s business or lives. Anecdotal case studies dominate their marketing. They all explain how the product gave visionary buyers an unfair advantage.

DOUG: What, especially, do freshman scaleups need to learn?

ROLAND: Freshman scaleup teams are trying to master building up distribution. They want reliable marketing and sales processes that go beyond mere growth hacking.

DOUG: How big are freshman scaleups, in your mind?

ROLAND: Freshman scaleups have more people than the typical startup, from 10–25 employees. They still feel like close-knit families. But you do see the first distinctions between “managers” and “frontline workers” appear.

Freshman scaleups also start to have a more solid revenue base, from one to five million dollars per year.

Roland Siebelink regularly speaks and writes about leadership in fast-growing tech startups. You can find more of his insights, including free chapters of his book “Scaling Silicon Valley Style” here.