The Empathy of Easy Distribution

And a new prototype for “business people”

Lately, I’ve been thinking a lot about empathy in the context of business. And how surprised I am by its importance in my career and seemingly tech/startups at large.

There are definitely micro factors driving my experience. See, for example, the mission-driven team at Tala and award winning culture at Grovo. And there’s probably some self selection at play as well. I flaked on jobs in finance & law to work with startups because I wanted to be more creative and build things that helped people. But the more I think about it, the more I’m convinced that this perceived move to empathy is at least partly attributable to one clear macro-shift. Ease of distribution.

Compared to even five years ago, it’s incredibly easy for early stage companies in an increasing number of industries to get their product to the people who want it.

The ways in which the Internet has made distribution easier is well documented, but here’s a quick summary for convenience.

1. First and foremost, software is eating the world. This means that an increasing number of things we use are, or are in large part powered by, software.
2. More and more of this software is being built for the cloud, which (among other things) means it can be distributed through the Internet.
3. At the same time, cheap smartphones are helping to bring the Internet to billions of people throughout the world.
4. Networks like Facebook, Twitter, Youtube and email/Whatsapp are using this Internet penetration to truly connect the world for the first time.
5. Self-serve ad platforms built on top of these networks make it incredibly easy and democratic for businesses to reach these billions of connected people with increasingly software-enabled products and services.
6. The icing on the cake are APIs and the culture of open architecture they represent. This culture invites new products/services to build on top of and leverage the networks/audiences of established ones.

And so goes the loop.

So what are the implications of this loop? How does easier distribution on the web positively correlate with empathy?

Well — “empathy” is valuable in a variety of ways. An appreciation for it makes you easier to work with. And having it in spades can make you a killer storyteller. But, more than anything else, empathy is key because it helps you understand customers and build better product. And, as distribution becomes easier and easier, building winning businesses is becoming increasingly about having the best product.

At least that’s how I see it. And here’s why.

On the demand side: easier, more efficient distribution lowers the cost of bringing product to market and creates more choice for consumers. At the same time, free exchange of information (e.g. Amazon reviews & threads on Product Hunt) makes them more informed. Finally, non-permanence of the the app and software marketplace (e.g. free trials & ease of uninstall) empowers them to try stuff without the cost of premature commitment.

On the supply side: self-serve ads and open APIs are by definition democratic. There’s little room for backroom deals and negotiation when it takes just a few minutes to start running ads and everyone pays market rates for clicks. They’re also ruthlessly meritocratic. Salesmanship and “grin f*cking” are all but useless when you pay per click and know exactly how each click performs. This is even more the case when you think about how easy it is for most cloud software to be updated and improve over time, and the (positive) competitive pressure that puts on core product value. Finally, paid acquisition and APIs notwithstanding, the single most powerful form of distribution the Internet has unlocked is word-of-mouth. And in a world of increasingly informed consumers spoiled by their choice of constantly improving options, it’s usually the companies with the most clearly valuable products that monopolize that benefit.

The net effects of this shift to product-centric business are still playing out. Even in tech, empathy is far from a panacea. For example, as important as empathizing with customers and understanding how to solve their problems is the ability to quantitatively measure success in doing so and identify helpful patterns with data. And there are of course still plenty of industries and contexts where distribution is tough, gatekeeping/rent-collection rampant and empathy not emphasized at all. But it really does feel like increasingly easy distribution is slowly killing much of the lore of prior generations and changing the way we think of “business”.

That’s why you see, and will continue to see, more and more business/econ students interested in startups pursue jobs in product management & analytics instead of biz dev and “strategy”. And more investors seek founders that obsess over product vs. ones that “hustle”. And more people in general pursue jobs at companies that make things…instead of the ad agencies that message them, consulting firms that analyze them & even investment banks that gatekeep their financing.

Many of us grew up with a very specific image of a business person.

He was a man who wore a suit. He was a charming salesman, crafty financial engineer or ruthless manager. He networked, closed deals & if he didn’t yet work in finance, he probably wished he did. He read the Wall Street Journal as much as a signal of success than as a source of information. He hid behind brands, instead of getting out in front of them or building new ones. He was successful because of the value he captured, not that he created. I can’t imagine empathy was very important to him, especially professionally.

And that’s why he’s growing increasingly obsolete every day — replaced by people who want to build stuff, care deeply & create more value than they capture.

That is, at least in my experience.