Conference Presentation, Keynote
Distribution, Channel & Partnerships
- TrialPay's channel partnerships aim to acquire customers too small for direct sales, with competitors struggling due to inorganic construction and lack of industry-specific foundations.
- A tight vertical focus allows new companies to validate products with friends before broadening, while complementary products serve as primary sources for acquiring customers for new concepts.
- Netflix is expected to remain US-focused until unable to grow 10x domestically, expanding internationally only after hitting 30 million US paying subscribers.
- The business strategy involves starting with consumer software to secure "friends or friends and family" customers before expanding further.
- Channel partnerships are critical for sustainability when direct sales create a mathematical disadvantage, such as a salesperson earning $100,000 annually while generating only $5,000 in revenue from 10 clients.
- Hilton seeks direct bookings via Hilton.com or phone to avoid revenue sharing with intermediaries.
- Building a diverse set of channels creates defensive moats by displacing competitors in a zero-sum game for shelf space, as demonstrated by the Download.com partnership eliminating almost all competitors.
- Partners with tapered growth engines are preferred targets, whereas companies growing 100% year-over-year or like PayPal (growing 40-50% year-over-year) are unlikely partners due to lack of need for incremental revenue or priority conflicts.
- Expanding into major markets like PayPal immediately is considered a disaster that eliminates future chances if the deal fails, making smaller partners like Download.com essential "training wheels."
- Companies should test on smaller chains, such as a single store, before attempting large-scale tests with major retailers like Safeway.
- Channel partners should be contractually forbidden from competing on price to prevent undercutting direct sales, provided pricing transparency is maintained to avoid disincentivizing partners.
- Relying on partners to manage messaging is risky as it is not their core business, making direct sales preferable for owning the customer relationship entirely.
- Domain name registrars like GoDaddy may be irrelevant as 90% of their traffic does not consist of sellers, while download sites integrating only one service like TrialPay offer greater distribution and defensibility than those with room for multiple services.
- Proving a model with smaller partners facilitates sales pitches to similar companies by shifting the focus from management to distribution success.