Hi, it’s Thomas from Positive Capital. I'm backing growth mindset entrepreneurs in increasing the probability, velocity, and scale of an M&A transaction.
Deal Making Intel is an insider framework & playbook about M&A Deal Making. I’ve recently supported Elisath in its strategic partnership with Ekkio Capital.
Today, I’m sharing a mental model I’ve learned from this experience for early-stage tech entrepreneurs to tune their decision-making process.
Most people never realize that building a non-deep tech company is a game of product positioning.
Spending years building a product before selling it to someone isn't a clever move. Indeed, all the technologies are available to put up a good enough product and go to your market.
Besides, as Marc Andreessen explained in 2018 with words I still remember:
"The general model for successful tech cos, contrary to myth and legend, is that they become distribution-centric, rather than product-centric."
Building a distribution-centric company means focusing on getting products to ALL the customers in a given market.
The most successful distribution-centric company that exists is Google. By focusing on serving all Internet users worldwide, Google captured more than 90%+ of the world search-engine market share.
Like Google, taking down a whole market by being distribution-centric is highly valuable.
I had the chance to back Elisath, a French-based vertical software company, on its next strategic move.
The playbook of Elisabeth Ferlet, Elisath's foundress, is worth sharing to help you build an impactful and valuable company.
![Marketing is better than R&D Marketing is better than R&D](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc418ec57-f75c-486d-bda0-dae89d8c6b57_5001x5007.jpeg)
In the beginning, instead of using its limited capital and resources to build a one-of-a-kind product, Elisabeth leveraged ready-to-use technologies to offer point-of-sale software to an unaddressed specific niche: the French aquatic center.
With its good enough product, Elisath invested in marketing and managed to build an initial customer base among the French aquatic center. With a jump ahead on its vertical, Elisath invested in R&D by building, around its initial product, a comprehensive ERP solution for aquatic centers.
Thanks to an execution capacity whose only entrepreneurs have secrets, Elisath managed to get a distribution advantage over competitors. Elisabeth built a distribution engine through an organization, corporate culture, and technology to transform its distribution advantage into a competitive advantage.
When I met Elisabeth, Elisath had two significant assets.
First, Elisath was the French leader in aquatic facilities with a market share superior to #2, #3, and #4 combined.
Second, Elisath emerged as a distribution channel for new products such as CRM or energy management software.
According to Marc Andreessen, what Elisath has created for the past two decades was one of a tech company's most valuable assets.
As an M&A dealmaker, I love these kinds of assets. Because these assets can generate strong interest from companies for different strategic reasons, it gave me the weapons to organize a competitive process.
Unfortunately, I've encountered many tech founders who get frustrated because they get beaten by companies with better distribution while they have a better product.
Please, don't become one of them.
If you want to have an impact and build generational wealth along the way, you should care more about marketing than R&D at the beginning of your journey.
Good luck!
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