How deeply have you thought about distribution? Sounds like an unusual question to ask at the very start of a company’s journey.

Conventional startup playbooks encourage you to think about product, and then, about distribution. There’s a logic to it: start with what the customers want to use every day, and then think about how you can place it in front of them.

The sequence works, unless, from the customer’s perspective, the way you distribute product is an integral part of the offering, which is almost invariably true in project-based industries.

It wasn’t too long ago that I was speaking with a founder building a construction estimation software, who had been struggling to sell through traditional SaaS channels.

One day, the founder had decided to re-think where to meet customers and handed out the software through hardware retailers and tool rental centers - going against a lot of common startup advice, mind you-. Yet, since the software was now activated at the same place workers already got their equipment, something around the perception of the product changed. Instead of being another cloud solution, it became associated with the equipment needed for the job - from "tech overhead" to "essential tool."

Customers loved it.

What is distribution-market-fit?

Internally, at Foundamental, we talk about distribution-market-fit i.e. the extent to which a team has figured out and put in place an initial distribution motion which truly reflects the way customers operate.

At scale, companies will leverage multiple distribution channels; the question here is about which strategy will give your company, at the earliest point in its journey, an advantage to reach scale in the most effective way possible.

We value distribution-market-fit as highly as product-market-fit.

Both concepts can be thought of in similar ways…

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Applying DMF to project-based industries

Whilst product is king, we have seen many cases in construction, supply chains and infrastructure where a company’s “secret sauce” derives almost entirely from distribution.

There is a central reason for this: these sectors are fundamentally relationship-driven. They are governed by intertwined networks.

For an outsider, the industry as a whole can seem like an impenetrable machine. Deciphering the web of dependencies is a full-time job in itself, and once you do, trust becomes the main conduit for change.

This has tangible ramifications on the startup job.

Below are just some of the patterns we have picked up on, on how to reach distribution-market-fit in project-based industries:

1. Start local. I recently discussed with an asset maintenance software company who spent months anchoring their tool with one city department. They first gave free access to local contractors starting on the project. From there, utility companies joined to coordinate with city works, local engineers used it to access infrastructure data and material suppliers integrated their inventory. They replicated this over and over, from city to city. In other words, they understood the trust networks and used them as natural distribution channels, turning existing relationships into pathways for technology adoption.
2. Do not replace human interaction. With trust being the main conduit, customers, especially at the beginning, will seek out not a product, but a partner. Some of the fastest conversions with general contractors came from tech teams who started by embedding their staff directly in the GC's offices 2-3 days per week, and using the proximity to iterate their product. At the beginning, your track record will reflect the quality of your offering. Your face, not the product, will be the front-end.
3. Build your own playbook. Like for the cost estimation software mentioned earlier, best practices about distribution from other industries might never be core to your strategy. Your investigation may require first principle thinking, over lateral thinking. With a job done right, your distribution won’t look like anything any other company has ever done.

Final thoughts

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The countless companies I have had the chance to work with have signalled a consistently reliable truth: distribution isn’t just how you move product from your hands to theirs. Distribution frames the product. It influences how it gets perceived by the customer, and it is a day 1 priority for builders.And this isn’t to undermine the importance of technology, on the contrary: distribution tactics are subject to gatekeeping and we want the best technologists out there to have access to them.In fact, this is exactly what gets me most excited about this job: through countless discussions with phenomenal builders, a new distribution playbook is emerging, one which answers the question “how to make things that do not scale, scalable”. The builders who have figured it out, are re-defining decades-long heuristics. But that’s a story for the next article.