At Tribe Global Ventures, when we evaluate companies for investment, a fundamental question we ask is: “Is this product a direct or indirect outcome?”.
From a venture capital standpoint, we believe indirect products are generally uninvestable because achieving the necessary growth to secure a return is challenging.
It’s harder to find customers willing to take action, it’s harder to differentiate from competitors, and they are often reliant on key people that can’t be easily replicated. It’s just a hard world to be in if you want to build a large scalable business.
However, that doesn’t mean you can’t build a successful business with an indirect product, and this article seeks to share some ideas on how to go about it.
Direct products have a straightforward relationship between the problem and the solution offered. For example, if you’re in legal trouble, you need a lawyer; if you’re hungry, you need food; if you need to verify someone’s identity, you need an ID verification tool; if you want to plough a field, you need a tractor. The connection is clear.
Indirect products, on the other hand, involve an outcome that is a few steps removed from the product or service itself, often making results harder to measure. Examples include:
Indirect solutions involve one or more steps between the product and the desired outcome. They often address multiple problems and aim to achieve a range of outcomes.
The biggest challenge with indirect products is their main competitor is often inaction—the prospect can simply continue with their current approach. This means sales cycles are long and frustrating. The prospect’s world doesn’t change too much tomorrow if they don’t take action. If you need a lawyer and don’t act? You’re probably going to be in more trouble.
Secondly, there’s uncertainty around the outcome, as success is not guaranteed. The outcome may occur, it may not. And it may not for a whole range of reasons that are not the fault of the seller. As humans generally dislike uncertainty, it makes selling these products more challenging.
If you’re working with an indirect outcome product and love what you do enough to put up with the painful parts, there are strategies you can employ.
Those who find the most success tend to move the messaging of their solutions to be as direct as possible. A solution that tries to address lots of problems often ends up solving nothing. Don’t solve lots of problems. Solve one. People who can say, “We solve X problem and achieve Y outcome,” generally have an easier time making their offer clear and digestible.
Instead of saying, “I help improve cultural performance”, you might narrow your focus to, “We stop sales teams wasting time on bad data and increase sales by 22%”. If the person you are speaking with has a bad data problem, they are more likely to see how you can help them.
From here, your success depends on how many people recognise they have this specific problem, want to address it, and are open to you helping them. While someone might acknowledge the problem you are addressing, it doesn’t mean they’re ready to take action or want your assistance. However, making the problem and outcome clear is a strong first step. Building trust with them is next to ensure they’re willing to engage with you.
Indirect products often face a scalability issue, as they often require human involvement to deliver results. Coaching, professional services, and consulting, for example, depend on individuals with expertise supporting each client. However, the number of clients one can serve is limited.
This creates a challenging “feast or famine” cycle: spending time with clients limits the time available to attract new ones, while focusing on finding new clients reduces the time for existing clients. This is a common struggle for those working with indirect products.
To achieve scalability, moving from one-on-one to one-to-many interactions is essential. This shift can be intimidating for coaches and consultants, as they often see value in a personalised, one-to-one approach—and clients may feel the same. However, in many cases, I’ve seen indirect product providers transition from one-on-one to one-to-many models, resulting in exponential growth.
People who achieve success have a business model that is one-to-many first and foremost, and then one-on-one is an order of magnitude more expensive if people really want it.
Indirect products benefit most from leads generated by existing customers. External advertising and marketing rarely match the effectiveness of referrals, which adds to the scalability problem and uninvestability. However, a referral only grants you an initial opportunity.
One lesson I’ve learned is trust doesn’t transfer automatically. For example, if I trust you as a coach, consultant, or service provider, and recommend you to a friend, saying, “You should talk to this person; they can solve X, Y, and Z”, it’s important to remember that my trust was built over multiple interactions. The new prospect hasn’t had those experiences, so their brain will likely activate its natural defence mechanisms.
So understand all you have is a ticket to the ball game. Building trust over time is what is going to lead to the conversion.
The most successful indirect products that achieve scale do so by building incredibly strong communities—almost to the point of feeling cult-like. With a strong community in place, clients and sales become natural by-products. Members don’t feel like they’re being sold to, and there’s little question about the value they’re receiving for the price. These communities thrive across multiple channels, both digital and physical.
The priority becomes building the community, and then one to many customers come from the community interactions.
A major challenge with indirect products is they can sometimes confront a prospect’s worldview, challenging their beliefs about what is true. Additionally, fear can trigger our brain’s defence mechanisms, causing people to avoid action for both rational and irrational reasons.
To overcome this, it’s essential to offer low-risk entry points. The lowest risk is often joining someone they already know in a group setting where the focus will not be entirely on them. My suggestion is that you should avoid asking for direct one-on-one introductions. Instead, create group opportunities where existing clients can invite people from their network to learn more in a low-risk comfortable setting. If managed well, these group events foster trust and connection, which can then support a transition to a one-on-one conversation.
Referrals also carry some risk for the referring party. If someone they recommend rejects the opportunity, it can feel like a personal rejection.
Regularly scheduling low-risk events on your calendar creates a steady opportunity to invite people. By committing to these events, you’re more likely to put consistent effort into inviting participants, ensuring they don’t feel like a failure if only a few people attend. Typically, these sessions would be free, and focused on connection and information sharing.
The goal of these free events is to build trust and understanding. From there, your offer should be the first paid group product. For instance, in coaching, this might be a one- or two-day offsite where a group of people with similar interests and goals work on areas that matter to them. While this event generates revenue, it also deepens trust, setting the stage for the next step in your service ladder.
Tony Robbins is arguably the best in the business at scaling an indirect product, despite it being centred around something unscalable: himself.
He begins by hosting introductory events, encouraging his followers to invite others. These initial events generate excitement and build momentum, leading participants to sign up for one of his larger, two- to five-day mass-market events, attended by thousands.
From there, the energy and commitment build further, motivating attendees to join his premier events held at his resort in Fiji, where hundreds of people pay tens of thousands of dollars.
These high-level events lead participants into year-long programs that can cost over $100,000.
On the surface, this model seems simple, but it’s challenging to implement. Here are some common obstacles:
Never miss a story: sign up to SmartCompany’s free daily newsletter and find our best stories on LinkedIn.
