One Distribution Channel Principle

Peter Thiel's observation from his Stanford class: successful companies focus on one dominant distribution channel and one revenue stream, rather than spreading efforts across multiple mediocre ones.

The "Seven Revenue Streams" Red Flag

• When entrepreneurs pitch with seven revenue streams, it signals they don't have one great one
• Same applies to distribution channels - seven channels means no amazing channel
• Thiel calls this one of the biggest "poker tells" in business pitches
• Entrepreneurs think multiple streams show strength, but it reveals weakness

What Actually Works

• Best companies find ONE distribution channel that really works
• Best companies find ONE revenue stream that really works
• They hammer that one thing for 5-10 years to build a monster business

Facebook Example

Distribution channel:

• Viral photo tagging on campuses initially
• Eventually expanded off campuses
• That was the growth tactic

Revenue stream:

• Self-serve banner ads
• Didn't need to sell stickers or do homepage takeovers
• Didn't need movie studio partnerships like MySpace
• Just focused on ads

Real-World Validation

• Brad Jacobs grew United Rentals and several other companies using the same principle

• Found one thing that worked (outbound sales team for contractors)

• Pulled the same executive team into next company

• Repeated the playbook across five companies

• Pest control company example building a $100M+ business

• Not hiring internationally, not using latest software, haven't looked at AI

• Not even answering phones past 5pm

• Just doing one thing really well

The Core Insight

• You don't need to do everything
• You don't need the latest technology or trends
• Find the one thing that works and run that play relentlessly
• Focus beats diversification in building successful companies