Tomorrow's Tech Unicorns Will Be Media Companies
Build it, and they will come. This might have made for a good storyline in Field of Dreams, but it’s a far cry from reality. I have to admit, I’ve never seen the movie, so maybe I’m missing some context here, but as far as advice to startup founders, building a great product isn’t enough, you have to think about distribution.
This isn’t a new debate, which is more important — product or distribution? I’m definitely in the camp of distribution. I believe that distribution is everything.
I would also turn around and tell you that you need to distribute a superior product, but I digress.
An interesting example to look at recently is Microsoft Teams vs. Slack.
If you aren’t familiar with either — the quick rundown on them is that they’re communication tools, instant messaging with the ability to video chat, integrate with other tools, etc.
I’m extremely biased in this conversation, I’m a big fanboy of Slack and I’m anti-Microsoft products, although I do hear good things about teams. Many startups and younger people I talk to like Slack as well. But it doesn’t matter what your opinion is as far as which product is better, the number of users speaks for itself.
Covid-19 was a catalyst for growth in tools that enabled companies to work from home. All things considered, Slack and Microsoft Teams were on a pretty even playing field to capitalize on this, but Microsoft had the one thing Slack didn’t — distribution. Major corporations and businesses were already on Microsoft Office, making it seamless to add Teams to their workflow. This lead to exponential growth for Teams.
Penn National Gaming Acquires Barstool Sports for $450 Million
Barstool Sports has shaken up the media scene becoming one of the biggest cult followings centered around sports and comedy. They have some of the largest podcasts and massive followings on social media, all driven by characters behind the brand.
So why would a casino operator like Penn National want to acquire Barstool?
Who understands distribution better than companies that build around the ability to attract followers?
Penn wants to scale its business outside of physical casinos and launch a digital betting platform. The issue is that they have to compete against Fanduel and Draftkings, who control the majority of the market share.
Fanduel and Draftkings both enjoy the benefits of network effects, Penn saw the opportunity to pierce through this moat with Barstool’s Audience of 66 million.
Penn will be able to utilize the community that Barstool has built to bolster their entire ecosystem. Some of the benefits:
- Increase brand recognition for Penn National.
- Barstool will be able to create content and hold live events to promote Penn’s physical casinos.
- Customer acquisition cost will be driven down dramatically as Barstool is used as a marketing arm for Penn.
This is what Penn’s flywheel might look like now that they have the Barstool community. It becomes a self-feeding machine that grows the entire ecosystem.
New Media Companies
The Hustle has already leveraged its audience to start developing products with the launch of “Trends.”
Trends is a platform that allows you to gain insight and analysis into what is happening in markets as well as connect with a community of other like-minded folks.
New media companies creating products and tech platforms will continue to grow in popularity, but tech companies will need to rethink how they handle marketing and distribution.
The attention span of humans continues to decline — and with so many tech solutions available, it’s hard to stand out from the crowd. I believe the startups that can create engaging content and cultivate communities on top of producing a great product, will be the winners over the next decade.