Most founders dream of creating exceptional products. However, the hard truth is that an average product with a powerful distribution system will usually outperform a brilliant product with mediocre distribution.

The gold standard of distribution occurs when existing users bring in new ones. Dropbox achieved this by encouraging file sharing and offering extra storage for referrals.

However, they encountered an issue — only 40% of new signups ever uploaded a file, let alone invited others. So the team finally tested their viral loop with real users.

None of the first five testers uploaded and shared a file after registering. This failure resulted in a complete redesign of the onboarding process.

Viral growth only works when each user successfully brings in more than one engaged new user. And 'engaged' doesn't just mean signing up — it means actually starting to use the product.

Dropbox realised that even if a user sent invites to 100 contacts, of those who clicked, only 50% signed up and of those, only 10% uploaded a file, meaning the true viral coefficient was just 0.5, not 5. This final drop-off ruined the whole loop.

So ask yourself: does your product have a distribution system designed for real engagement, or just surface-level growth? Or is your product's viral engine breaking down right before it matters?