Red flag founders.

#129 - From idea to Series A - Weekly Newsletter

Jul 12, 2025

Yesterday Musk’s xAI team unveiled a new AI model called Grok 4, topping every benchmark. But being the best won’t guarantee commercial victory.

Behind this lies a truth many founders forget: Distribution > Product.

OpenAI will release ChatGPT 5 this autumn—probably equal to Grok 4. But the real question isn’t which is absolutely best, but which has better distribution.

OpenAI found traction first. Now it’s embedded in phones, browsers, computers everywhere. It became the standard. For most users, the most popular solution becomes the best by default. A self-reinforcing loop.

Even Google gets this. They pay Apple billions to stay the default browser on iPhones. Quality results are necessary but not sufficient to win.

Ironically, Grok’s future depends on distribution too. It’s integrated into X, will be in every Tesla, and eventually Optimus robots. Musk understands the game.

In a post-AI world where building is cheap, finding distribution matters more than ever.

Bottom line for us investors: When founders are too focused on product and too little on distribution, be aware. They could be the outlier exception, but most likely it’s a red flag you should pick up on.