Combining Startup Investing and Distribution

A while back I wrote about “me-too” products and that one of the biggest issues facing early stage internet startups is the lack of distribution to get their product out there. After going to Ycombinator yesterday, I, again, felt that similar feeling when I wrote my post many weeks ago.
I thought that some of these were really great, but most of them were much-improved twists on what was already out there. In this crowded world where people already have multiple ways of doing things, I thought it was a damn shame that many of these startups would fail not because they weren’t better, but just because they could not get enough customer exposure before their bank accounts ran out.
Just the other day, I had lunch with a buddy of mine at a small publishing company and the topic of distribution came up again. We talked about how valuable the traffic they had on their site was to all these little startups who had none at all. From this conversation, an idea emerged.
Here’s the idea, and it’s one that is best executed by people who have traffic, like a Yahoo or a Google, or even a NYTimes.
Any of these companies and their like all have done venture investing. But it’s been very much like a investor-startup relationship, which is we give you money and you go out to make something big out of it. To me, I think this should change. I think there should be a way to give both money and distribution. To an emerging startup, a firehose of traffic could be worth its weight in gold, in addition to the money.
Suppose at the bottom of every page, which is not worth very much to advertisers since they want to be at the top of the page, there was a row of links which was labeled, “New things to try:”, or “Cool startups:”, or even something more explicit like “Check out our new ventures:”. Then for each startup you invest in, part of the deal is to gain a place in that row of links. You could have permanent placement, or rotating placement if there are more startups than link slots.
Then just let them run. I think you’d be surprised at the amount of traffic the bottom of the page can generate. Certainly, even 1000s of clicks per day driving to a new startup would be extremely valuable. At Yahoo, we did some exploration on placing links down there. At Yahoo traffic levels, they were driving a tremendous number of clicks to Yahoo products and services each day! But yet that space at the bottom of the page wasn’t really being monetized otherwise, or of any use to users after the main content of the page had ended.
So why not give it to the startups you invest in?
Today, startups are in a fight for attention. The only way for most startups to get noticed, induce trial, and thus get true validation from the marketplace that they are better, is to point a firehose at them. SEO is too slow, SEM is expensive – what else is left – perhaps partnerships with companies who can give them exposure. But I think that while it is possible, it is a lot of effort to do a BD deal for distribution. As an investor, I would think that it would be easier to just give it them ourselves, right? If you can firehose your investments to show the world they exist, induce trial, really prove out their models, wouldn’t that take a huge amount of risk out of your investments and increase the chance of a startup being successful? Of course it would also show whether or not you chose wisely or not….
So c’mon big media companies – work with your venture arms. Invest AND offer a firehose. These guys need it, and, aspirationally, we do want some of these products which ARE better than what we have out there now.