Prerequisites for Starting a Business: Audience, Distribution, and the Reality of Scale

Before you register an LLC, design a logo, or build a website, there’s a more fundamental question you need to answer:

Can this business realistically be found, sustained, and scaled by the people it’s meant to serve? Many businesses don’t fail because the idea was bad. They fail because the structure was never viable. At the Founders Table, we treat this as a prerequisite problem—not a motivation probl

em, not a branding problem, but a distribution and scale problem. One of the most important prerequisites is understanding who your audience is, how they find you, and how your business is distributed.

Audience Isn’t Enough — Distribution Is the Real Question

Founders are often told to “know your audience.” That advice usually stops at demographics.

But the more important questions are:

• Where does this audience already exist?

• How do they normally access products like this?

• What is the method of distribution?

• Does distribution enable repetition, consistency, and growth?
  

A business only becomes profitable when enough people buy consistently over time. Distribution is what makes that possible—or impossible. Distribution Choices Shape Scalability Consider retail.

If you’re opening a physical retail business, distribution decisions immediately create constraints:

• Are you on a street corner?

• In a mall?

• In a destination location?

• Hybrid (physical + online)?
  

Each choice affects:

• Foot traffic

• Overhead

• Growth speed

• Risk
  

A coffee shop works in Midtown Manhattan because density solves the distribution problem. The same coffee shop in the middle of the desert does not—no matter how good the product is. The issue isn’t demand for coffee. The issue is access to buyers, often enough.

Many physical businesses scale only by repeating the same expensive unit:

• New rent

• New staff

• New inventory
  

That doesn’t make them bad businesses—but it makes them harder to scale.

A Broad, Scalable Example: Netflix

Netflix illustrates what happens when distribution constraints are deliberately removed.

From Physical Distribution to Digital Scale

Netflix began by mailing DVDs. Growth was tied to:

• Warehouses

• Physical inventory

• Shipping logistics

• Geography
  

Every new customer added cost. When Netflix shifted to streaming, distribution fundamentally changed. Content became instantly accessible anywhere with internet access. Discovery moved from physical logistics to digital platforms and algorithms.

Netflix didn’t just grow—it redesigned its distribution model.

Why Netflix Scales

• Massive audience

• Repeated monthly purchasing

• Predictable subscription revenue

• Ability to add customers without proportional cost increases
  

Netflix works because distribution allows one product to serve millions simultaneously.

A Niche, Scalable Example: Law360

Some readers might look at Netflix and think: That works because entertainment is huge.

That’s why it’s important to understand that scale does not require a mass audience. It requires the right distribution and irreplaceable value. Law360 is an excellent counterexample.

A Smaller Market — With Higher Stakes

• Audience: lawyers and legal professionals

• Market size: limited compared to entertainment

• Demand: extremely high-value and time-sensitive
  

Law360 sells information and intelligence, not entertainment. Its customers gain a professional advantage by accessing curated, timely legal developments.

Why Law360 Scales

• Distribution: entirely internet-based

• Product: specialized, non-generic intelligence

• Differentiation: aggregation, speed, reliability, and relevance

• Pricing power: high, because the information impacts real decisions and outcomes

  
  

Law360 demonstrates a critical truth: A niche business can scale if the information it provides cannot be easily replicated and materially benefits the customer.

Information vs. Commodity Content

Not all information scales. If you’re selling something like: “The best chicken soup recipes” You’re competing in a space where:

• Information is abundant

• Differentiation is weak

• Substitution is easy
  

That kind of content struggles to scale because it lacks defensibility.

By contrast, Law360’s intelligence:

• Is curated

• Is timely

• Reduces cognitive load

• Creates professional leverage
  

That makes it valuable—and valuable things can be priced accordingly.

What Scalability Really Depends On

When thinking about scalability, founders must consider:

• Distribution: physical, digital, hybrid

• Audience size vs. intensity of need

• Repeatability of purchase

• Difficulty of replication

• Value created per customer
  

Netflix and Law360 succeed for different reasons—but both solve the same core problem: They allow value to be delivered repeatedly to many customers without breaking the business.