And their value proposition, as even they realized later, was pretty unclear.

Not really, because the next thing we want to look at is, what we call the served available market.

We should be charging for it from day 1, or Wait a minute.

Sell, sell, sell.

Competitors, by definition, they are many.

How does your product over here get to your customers over here?

How big is this and what's the percentage marketshare realistically you could get?

For example, in 1996 Starbucks partnered with Pepsi to bottle, distribute, and sell Frappuccino , which gave them access to Pepsi's enormous distribution channel.

In other words, how are we going to make money?

So, you're selling costs were embedded here, this was the commission or direct sales costs or whatever you were paying your direct sales people and you made 37 selling directly.

The new product will not be distributed through conventional channels.

Another choice is that you might have an app that runs on a mobile device, and mobile devices like Android or Apple and others and Microsoft require you to use their platform app store and so that might be a choice.

Now if you're delivering a physical product, one of the alternate channels that you might want to consider is the web or online sales as well.

But this is, of course, an optimistic scenario. Let's think of other scenarios.

But remember, our costs were lower.

The first email is an ad for discretia.

Now, when companies first started, there were essentially manufacturing concerns and they hired agents, outsiders to be their sales channel, and the first types of companies we had made physical products and therefore, had physical channels salespeople, stores, etc., but with the emergence of the web, we now have web and mobile channels.

Sold

PHOTO RELEASE

What do you sell?

You are going to start thinking about, well, if I have a direct sales force, how much can they sell in dollars, or if I'm using an indirect channel, what's realistic number they sell for other customers?

Mail order is the main form of direct marketing.

Every one made a profit. How?

We don't sell you the phone, we don't sell you the monthly plan.

It's then distributed, and distribution is a massive issue.

We call it a select opportunity .

He's always making mistakes. Sometimes it's really embarrassing. He's giving me the old cripple's mail orders.

So you might be selling hundreds or hundreds of thousands of cases of toners, but you might be doing ten large system integrations a year.

Now what's really interesting is pre 1990s, the only channels to get to a customer was at physical channel.

He's like, you know what, we have to match his prices.

My dad sells tractors.

And the marketing complexity, would simply just say toner for you printer.

But it wasn't until the mid 1990s with the emergence of the Internet that we were able to distribute physical products through a virtual channel.

And so therefore on the x axis, we see increasing complexity of what each channel can actually have.

This is the PC guy over here.

Retailers and mass merchants often, though not always, get their products supplied through distributors.

Is your product physical or is it bits.

I'm a salesperson.

I had to break a machine open.

Our liquor license!

What's so awesome about a queensize futon sale?

This guy is a Bible salesman.

In a physical channel, a direct sales force are sales people that work for you directly and typically sell directly to the end user.

And the reason why they're the sell side is because they're always selling you stuff.

And that's better than what you get out of treasury bonds.