The new distribution revolution: Why ChatGPT may be the next great growth platform

There is no opting out of the game. You have to play the game, and it's better to be early than to be super late to this game, especially if you are a startup.

Traditional growth channels like SEO, paid advertising, and social media have reached saturation. As costs rise and organic reach declines, a new distribution opportunity is emerging that could fundamentally reshape how startups compete and grow. Brian Balfour, founder of Reforge and former head of growth at HubSpot, reveals why the next six months could mark the beginning of a transformative new era in startup distribution strategy.

The Four-Step Platform Cycle That Defines Winners and Losers

New distribution platforms follow a predictable pattern that smart companies can exploit. The cycle begins when market conditions create intense competition among several major players, with no clear winner yet established. Currently, OpenAI, Google, Meta, and Anthropic are battling for dominance in the AI space, setting the stage for the next phase.

Step one involves identifying and securing a defensible moat. The winning platform recognizes what will create lock-in and competitive advantage, then aggressively pursues that advantage. For AI platforms, this moat appears to be context and memory - the more a platform knows about users and their workflows, the better outputs it can provide, creating a reinforcing cycle of engagement.

"My hypothesis is that the moat is really about context and memory. These models, by themselves, generate the same result. The actual difference maker is which one has more of your context, because it's the context plus the model that produces the best output."

Step two sees the platform opening to third-party developers and content creators. The value exchange is clear: developers build applications and content that increase platform engagement and use cases, while the platform provides unprecedented access to users and distribution. This symbiotic relationship rapidly accelerates platform growth and user acquisition.

The final step involves platform closure and monetization. Once the platform achieves dominance, it begins restricting third-party access, either by developing competing first-party applications, reducing organic reach to push paid solutions, or outright shutting down certain integrations. This pattern has played out consistently across Facebook, Google, iOS, and LinkedIn.

Why ChatGPT Is Positioned to Win the Next Distribution War

Multiple signals indicate ChatGPT has the strongest position to become the dominant AI distribution platform. Beyond having superior user retention and engagement metrics compared to competitors, OpenAI demonstrates the critical "smile curve" - where user engagement actually increases over time rather than declining. This rare pattern typically indicates network effects and sustainable competitive advantages.

The platform already shows evidence of the moat Brian identified: superior context and memory capabilities that improve with usage. ChatGPT's recent partnerships with major companies like HubSpot for data integration, combined with hiring patterns suggesting a third-party platform launch, indicate they're preparing for the next phase of the cycle.

"It was never the person who had the biggest distribution at the moment of time. It was the one that had the best retention and engagement. Google had the best retention engagement over the others. Facebook was smaller but had way better retention and engagement over the others."

Scale advantages are also becoming apparent. ChatGPT maintains approximately 10x higher monthly active users than competitors like Claude. For developers choosing where to invest limited resources, this user base differential makes platform choice obvious. Even if alternative platforms offer superior technical capabilities, the distribution opportunity heavily favors the largest audience.

The Startup Imperative: Play or Perish

Companies cannot opt out of new distribution platforms without consequences. When platforms emerge, customer expectations shift rapidly. If competitors embrace new channels while others hesitate, market dynamics quickly favor early adopters. This creates a prisoner's dilemma where participation becomes mandatory for competitive survival.

Historical examples validate this pattern. Companies like Zynga grew from obscurity to massive valuations by riding Facebook's platform wave. Similarly, many current successful companies built initial traction through early iOS App Store adoption or SEO optimization before those channels became saturated.

The window for advantage is shrinking. Platform cycles are accelerating, giving companies less time to evaluate and capitalize on opportunities. Late-stage companies can hedge bets across multiple platforms, but startups must make focused choices. Spreading resources across multiple emerging platforms typically leads to failure due to insufficient commitment to any single opportunity.

Strategic Framework for Platform Selection

Companies should evaluate emerging platforms based on four key criteria rather than following herd mentality. First, prioritize user retention and engagement depth over vanity metrics like total signups or monthly active users. Platforms with sticky, highly engaged user bases offer superior long-term distribution potential.

Second, assess user quality and monetization potential. The iOS versus Android example illustrates this principle perfectly - despite Android's larger global device share, iOS users generate significantly more revenue per user, making it the more valuable platform for many businesses.

There is no opting out of the game. You have to play the game, and it's better to be early than to be super late to this game, especially if you are a startup.

Third, analyze the platform's value exchange proposition carefully. Understanding exactly what platforms offer developers and content creators, and how those incentives align with business goals, determines success potential. Each platform creates different arbitrage opportunities for those who understand the rules.

"Startups is a game of trying to get distribution before the incumbent can copy. So it's this concept of escape velocity, and that game has gotten way harder in a lot of ways."

Finally, consider pure scale and momentum, but only after evaluating other factors. A platform with perfect retention but minimal scale may not provide sufficient opportunity, while a massive platform with poor engagement offers limited long-term value.