For any who may have recently watched Apple’s series, The New Look, or High & Low, the 2023 documentary about designer John Galiano, this piece’s analogy may resonate, as it takes a step off the runway, and a page out of haute couture.
A few years ago my friend Soren Larson and I were discussing the reduction of the modern world, and we boiled it down to two comparative advantages; vastly superior technology, and vastly superior brand. We called this concept Silicon and Gucci. What wins in today’s economy, and probably even more so in the future, is superior access to the raw inputs of better, faster, cheaper technology, what we call Silicon, or premium storytelling, and Quality (capital Q, in the Robert Pirsig sense), which we call Gucci. At the end of the day, startups and products win because they obsess over one or the other, or in extremely rare occasions, they obsess over both.
As a kid in Palo Alto I had the fortune of getting to do my math homework at my soccer teammate’s house across the street from Steve Jobs Ramona Street home. I used to purposefully park in front of his house to catch a glimpse of him washing his dishes through the kitchen window after completing calculus problem sets. I’d wedge my 1986 clunker between his fleet of Mercedes that flocked the front yard.
Jobs was obsessed with Mercedes, and saw Apple as a luxury products company, a brand, not just a technology. It was this obsession that probably explains why Apple is in the very rarified space of possessing both excellence in being Silicon and Gucci.
In every business there are commoditized elements, and then there are elements which truly differentiate. In 2017 I made the contrarian argument that technology, in most cases, is actually the commodity, and it’s the human breadth of experience, critical thinking, historical context, and broadly “Liberal Arts” backdrop that makes technology’s application actually useful, and drives the majority of value. There is of course core infrastructure tech that is singularly about base layer efficiencies. Examples of this might include new language models, or web3 rails. This is deeply valuable, and where we’d say that the comparative advantage is Silicon. But this is about the only world in which being Gucci, or being deeply focused on brand and story, might be discounted, and secondary to truly exceptional tech alone. The truth is, most companies parade as “technology” but this is a relatively commodity component, and they are in fact “tech enabled,” and predominately dependent on access to distribution, scale, creativity in storytelling, and brand. Aka Gucci.
So in all application layer features, companies, products, and platforms, Gucci matters. Story matters. Brand matters. Distribution matters. What we first wrote off as “influencer marketing” is now I’d argue actually a core driver of differentiation. This reversal is a consequence of the democratization of technology and production whereby many more people have the means to produce, but not always distribute.
We saw Jessica Alba launching The Honest Company, which at one point seemed to be the aberration, an exceptionally-driven “Hollywood outlier playing the game of startups.” But what’s emerged over the past years is a reality that if you can distribute something, that is differentiation; production is the commodity. Technology is in many cases the red herring distracting us from what really matters, which is 1) how can this founder create brand and story around these ideas, and 2) how can they get to scale and distribution faster than their competition? Who has the idea, and who can build it, is no longer the bottleneck; story and distribution are. Being a first mover helps, but for example in the case of Kin Euphorics, bringing on Bella Hadid as a co-founder instantly meant that 60 million people recognized the brand. I was on a phone call with a co-investor in Germany, and his 16-year-old daughter shouted in the background, “Dad, is that Bella Hadid’s new company?” Distribution matters.
Alex Rampell who co-founded Affirm, and is GP at Andreessen Horowitz wrote on this a decade ago in his piece on Distribution versus Innovation. Startups race to get distribution against incumbents who race to innovate. Incumbents are slow to innovate, but startups often fail to get distribution. The success or failure of a startup looking to unseat an incumbent comes down to “can you get to distribution faster than the incumbent can get to innovation?” Again, Gucci matters. Sometimes a company is purely building a 100x better product, and Silicon matters, but short of that 100x differential in tech, speed, or quality, scale and adoption matter more to get the startup to a place of sufficient traction to be able to capitalize the business.
The production of beauty products is commodity, but Rihanna’s distribution is differentiated, and she, not product, is why Fenty can win against incumbents. We’re likely to see more celebrity-led brands not just because this is a cute gimmick, but because people are realizing that distribution trumps production in a highly democratized world where the walled gardens of information asymmetry, raw material access, supply chain optimization, and on-demand production have withered, and anyone can find their way in. In a capital constrained world, distribution, or growth hacking to access scale for lower cost per acquired user, is what wins. Someone like Rihanna or Cristiano Ronaldo with CR7 have community baked in. In the nicest sense of the word, they are “cult leaders” with an ability to influence. It is their uniqueness, not technology or product, that drives success of their brands. Of course, just slapping someone’s name on a product isn’t sufficient. What I’m arguing here is that scale and access to genuine distribution matter as much as product.
It’s not about celebrity. It is the idea that every business is a content business.
At Everywhere Ventures I often think about this lens of Silicon or Gucci. I ask myself, does this startup, or founder, have a true comparative advantage when it comes to differentiated technology. Can they win at tech? Or if not, do they have an obsession with Gucci, a perfectionism around storytelling, vision, and identity. There is a rock and a hard place between those two extremes, so ask yourself, are you Silicon or are you Gucci, and depending on your answer own that identity and invest in it. Chances are, unless you’re building core frontier infrastructure, your visual identity, story, and softer factors around your brand matter a whole lot more than you think, as do the ways you might need to get creative on distribution if your name’s not Rihanna.
Think of how your own business needs to pull from these worlds of Silicon and Gucci, and don’t discount the importance of both poles as you build your company.
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Scott Hartley is Co-Founder and Managing Partner of Everywhere.vc. You can read more from him here.