Distribution can be the ultimate bootstrap
Which comes first, the chicken or the egg?
Though product is the focus of many startups with funding often needed to get that product to market, the sales focused bootstrap approach may require different priorities.
Few might associate a multi-billion operation like Liberty Media with bootstrapping, but a recent interview with chairman John Malone and CEO Greg Maffei in anticipation of the company's $11 billion take over of 38.5 percent interest in DirecTV is an example.
In a conversation with Multichannel News editor in chief Tom Steinert-Threlkeld, Maffei explained how cash flow from the company's distribution would "bootstrap" an alternating expansion of new "content", distribution and then content again.
Maffei explains:
I call it a bootstrap. We start with distribution. [Then] you add content and then that allows you to broaden your distribution and then you can afford to have more content and you try to build the business that way.
Here are some reasons a distribution first approach can be important for bootstrappers:
• Distribution focuses on sales first generating cash flow that can be plowed back into improving existing product and creating new product.
• A sales first strategy can be less capital intensive than a build first approach since the bootstrapper can use customer cash, or at least customer commitments, to purchase product ready made.
• A distribution first approach gives bootstrappers more immediate feedback from customers, whether end-users or other businesses.
• Purchasing instead of bootstrapping a distribution solution can be extremely expensive (consider the price Liberty Media paid for that distribution above) but once established with a sales first approach can be scaled up for growth.
• The Internet has made distribution a potentially much less expensive proposition for the bootstrapper and when teamed with drop shipping can lead to truly low startup costs.
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