Part 2: The new initiatives / 0 to 1 handbook

In my previous note on going from zero to one, I had broken down the process into 3 parts:

1. Finding a whitespace
2. Fixing your distribution channel
3. Fixing your product’s positioning

The previous note delved into detail the process of finding a whitespace which can be done via:

1. Keyword research
2. Surveys
3. Figuring out exiting players’ traction
4. Finding supply for your product / platform

Feel free to refer to the article for an in-depth exploration of the four points mentioned earlier. This note will focus on the next two steps: optimizing your distribution channel and refining the product’s positioning.

Distribution Channels

There are 2 kinds of distribution channels:

1. Building your own distribution channel
2. Using an existing marketplace / channel

Building your own distribution channel

Building a marketplace

The ideal time to build a marketplace is when your idea requires significant capital expenditure (capex), and the profit margins aren’t high enough to ensure a quick return on that investment.

Take urban mobility in India as an example. If you want to provide easy access to cabs for everyone in a city, you'd need to establish a robust network. Let's say your city requires 1,000 cabs, and the average cost per cab is ?5 lakh. This means an initial investment of ?50 crore is necessary to create the supply infrastructure.

If you have ?50 crore available or the risk tolerance to invest such a large sum, building your own platform may be viable. Otherwise, a marketplace model would be the smarter choice.

Advantages?

• It is less capital intensive
• Easier to scale

Disadvantages

• Low control over customer experience
• If there are no network effects, scaling up would become a chicken & egg problem between the demand side and supply side

Build a platform for your own products / service

If the problem you've identified requires relatively low fixed costs to solve, it's worth investing in building your own platform. For instance, take the example of short news. When Daily Hunt and Inshorts started, they could build their own apps and distribute them directly to users, as setting up a team of editors to curate content required far less capital compared to something like purchasing cars.

Another situation where it makes sense to have your own distribution channel is when you're leveraging your own influencer network to build distribution for your service. One of the best examples for this is an app my mother uses, Habuild which derived its initial distribution via Saurabh Bothra’s Channel

Advantages

• More control on customer experience and service levels
• Better margins

Disadvantages

• It is operations intensive
• Speed to scale up is a little slower

Using an existing marketplace / channel

Sometimes, it's more practical to leverage an existing distribution channel to generate early results and conduct experiments. In certain businesses, having a large variety on the platform is crucial for keeping users engaged and coming back.

For example, if you're starting a record label, it’s far easier to distribute your music through platforms like YouTube and Spotify rather than building your own app. The same applies to a restaurant—partnering with Swiggy or Zomato is more effective for reaching customers, as people are more likely to use those apps over a restaurant's individual app.

However, in the long run, establishing your own distribution channel can offer greater advantages, as it frees you from relying on marketplace economics, including their commission fees and algorithm-driven discovery mechanisms.

How to think about distribution

Here is a framework that I would use to evaluate possible distribution channels based on the whitespaces that you’ve identified (link if you need a refresher):

I've outlined scenarios based on the problem discovery process discussed in Part 1, highlighting when it's best to build your own distribution channel and when it's smarter to leverage an existing one. Now that you have clarity on which distribution channel to use, the next step is to determine how you want to differentiate yourself.

Fixing your product/service’s positioning

While there are infinite ways in which one can think about product positioning, the ones that are the most relevant from going to 0 to 1 are:

1. Value based positioning
2. Quality based positioning
3. Problem / solution based positioning
4. Culture based positioning
5. Competitor based positioning

Let’s briefly explore each of these points. Keep in mind that the examples I provide are interchangeable, as the key lies in identifying the right opportunity and creating a world-class product at a price that resonates with your ideal customer persona.

Value based positioning

Consumers worldwide appreciate getting the most value for their money. This value can take many forms—cost savings (like D-Mart for supermarkets), time efficiency (like quick commerce), or network access (like LinkedIn for professionals), among others. Offering a significant price-to-performance advantage can help you stand out in the short term, but for long-term success, it’s crucial to position your product or service based on its quality.

Quality based positioning

Quality-based positioning focuses on showcasing the superior aspects of your product or service. This superiority can be reflected in areas such as reliability, user experience, security, performance, or build quality. It’s particularly effective for premium or high-priced offerings. A prime example is Apple, which highlights the exceptional build quality and robust security features of its devices.

Problem / solution based positioning

This approach to product positioning focuses on identifying a specific customer challenge and presenting your product as the ideal solution. For example, Grammarly addresses grammar and writing issues, while Man Matters, a platform I previously launched, targets men's hair fall concerns.

Culture based positioning

This approach focuses on highlighting the cultural elements, traditions, and values that resonate with your target audience. One major advantage of this strategy is its ability to cut across socioeconomic boundaries, making it accessible to a broad audience. However, there are only a few niches where culture-based positioning is truly necessary. A couple of great examples are STAGE, for regional cultural entertainment, and Mainstreet Shop, for sneaker culture.

Competitor based positioning

When other strategies fall short, you can focus on how your product outperforms others in addressing the identified problem. Simply comparing against the competition isn’t enough; you need to show how your product or service provides more value, better quality, or superior problem-solving capabilities.

How to think about distribution + positioning

The framework above integrates both distribution and positioning. The type of positioning to use should be determined through an iterative process, based on survey results and early customer reactions.

Concluding

Concluding the 2 part series on going from 0 to 1, the journey for going from 0 to 1 includes 3 critical steps:

1. Finding a whitespace: This is where you should invest the most time. If there’s no clear pain point from the customer’s perspective or if incumbents have no traction, there’s no opportunity to succeed. You can identify whitespaces by directly gathering insights from potential customers, by researching keyword volumes and incumbent traction, etc.
2. Building distribution: The key decision to take here is whether you should use/build your own distribution channel or rely on a marketplace
3. Fixing your positioning: Over here, we’ve explored 5 main paths you can take with respect to your product positioning. This is not an exhaustive list but a good starting point on which you build more nuances.

None of this would work in isolation and all the 3 of them have to be looked together to conclude a great 0 to 1 experiment that scales. You can write your feedback in the comments or reach out to me at [email protected]; I would be happy to cover more topics or any of these in detail. Feel free to share ideas & suggestions.