The Last Free Lunch

It’s distribution, distribution, distribution.

"You're gonna need a bigger boat." — Chief Brody, Jaws (1975)

This week I had the privilege of moderating a dinner at Cipriani in New York City for Beanstalk, which has become THE commerce event of the year. My guest was Michael Preysman¹, and as we discussed his journey from building Everlane in the 2010s to now launching Magna in a post-COVID world. On the cab ride home, I couldn't stop thinking about it: the landscape has shifted so radically between these two ventures that they might as well exist in different centuries.

When Preysman built Everlane in the 2010s, the internet was essentially a free distribution playground. Today, building Magna in our post-COVID reality, he faces something entirely different. Every channel that once drove organic growth - Instagram, Google, Faceboo, Tumbrl (little known fact: Everlane was the largest tumblr leading up to its launch), et al - has either been locked down or turned into a toll road.

That realization crystallized something I've been watching unfold for years. The great fortunes in technology have always been built on a simple premise: find the free distribution, then monetize the attention. Bill Gates understood this when he bundled DOS with IBM's hardware. Mark Zuckerberg grasped it when he hijacked Harvard's email directory. Brian Chesky recognized it when he scraped Craigslist for Airbnb's early growth. But today, as I survey the consumer technology landscape I see something that should terrify every ambitious founder: the free lunch is over.

The Severed Arteries of Growth

When Instagram launched in 2010, the company could count on three fundamental truths: Google would surface their content in search results without payment, Facebook would allow viral sharing without restriction, and Apple would feature innovative apps without demanding tribute beyond its standard toll. These weren't just growth channels; they were the arteries through which new ideas flowed into public consciousness. Today, those arteries have been severed, cauterized, and replaced with toll roads that only the wealthy can traverse.

The numbers tell a story that should make any student of business history shudder. More than half of Google searches now end without a click to any external site. Facebook has engineered its algorithm to suppress links with the ruthlessness of a medieval city closing its gates during plague. When Pinterest launched, it could rely on Google Images for a river of free traffic; today, that river has been dammed, diverted, and monetized.

And I saw this playbook up close. ShopStyle², which powered commerce for publishers from Condé Nast to Time Inc. to POPSUGAR, once had tremendous SEO strength. For years, "little black dress" or "Christian Louboutin" searches would reliably surface ShopStyle at the top of Google's results, driving a tidal wave of traffic. But starting in 2015, Google's Panda updates slowly moved ShopStyle off the first page. Why? Because Google realized it could extract more value selling ads directly to ShopStyle's partners - the very brands and retailers we funneled customers to. What began as a free channel that built an entire industry was turned into another toll road, one Google itself collected. Rakuten acquired ShopStyle in 2017.

The very distribution engines that created the consumer internet's greatest fortunes have been systematically eliminated by the companies that rode them to dominance.

Moats as Weapons, Not Defenses

This is not mere corporate defensiveness. It is the systematic destruction of the competitive landscape by companies that have learned the most important lesson in business: it's not enough to win; you must prevent others from playing.

Facebook didn't just copy Snapchat's Stories; it used its massive distribution advantage to make sure innovation would never again threaten its dominance from the outside. Google didn't just organize the world's information; it reorganized it to keep users from leaving. ShopStyle's decline wasn't the collateral damage of an algorithm - it was distribution weaponized.

"These aren't bugs in the system; they're features of a new order where incumbents wield scale as both sword and shield."

Cracks in the Wall

Locket³, the photo-sharing widget that captured the imagination of Gen Alpha. Its founders didn't succeed through the old playbook of SEO or Facebook virality. They exploited perhaps the last remaining loophole in the attention economy: TikTok's algorithmic meritocracy. Millions downloads in a month, zero dollars in paid marketing. It sounds like the old days.

But here's what should worry us: Locket's success required finding a crack in the wall, not walking through an open door. And cracks don't stay open for long.

The False Comfort of Old Playbooks

Entrepreneurs still talk about "product-market fit" and "growth hacking" as if these mantras could overcome the physics of today's economy. They celebrate minor victories - a TechCrunch feature, a viral tweet - while ignoring that the entire game board has been redesigned to prevent new players from winning. It's like watching prisoners cheer at a loose bar in their cell while ignoring that the entire prison has been moved to an island.

"Every monopoly contains the seeds of its own destruction."

History teaches us this truth. Railroads thought they were invincible until highways were built. IBM believed it would dominate computing forever until Microsoft ate its lunch. Microsoft itself seemed unstoppable until the internet made its desktop monopoly irrelevant. The question isn't whether today's giants will fall; it's who will push them, and with what lever.

AI as Equalizer

This is where artificial intelligence enters the story - not as a feature, but as an equalizer. Incumbents use AI to deepen their moats, but AI is not loyal to them. Properly wielded, it allows David not just to fight Goliath, but to redefine the battlefield entirely.

When Lensa AI turned selfies into fantastical portraits, it didn't need Facebook's permission or Google's blessing. Its avatars were so inherently shareable that users became the distribution channel. Downloads surged more than 600% in a single month.

"The product itself was the growth hack."

Scrappy founders are now using AI to auto-generate TikTok videos, test them in real time, and double down on the winners. Others deploy AI agents to seed conversations in micro-communities, engaging users at a scale human teams could never match. These aren't marginal optimizations - they're new engines of growth.

The New Mandate for Founders

"If you're a founder today, your job isn't to pray for organic reach - it's to weaponize AI in ways incumbents can't or won't."

Use it to identify overlooked communities. Use it to generate content loops that bypass the ad tolls. Use it to personalize experiences so users feel seen, not surveilled. Above all, build products so inherently viral they don't need permission from Google or Facebook.

We are at an inflection point. On one side stand incumbents, armed with capital, data, and control over digital distribution. On the other side stand rebels, armed with artificial intelligence, radical ideas, and the most powerful force in business history: the inevitability of change.

The platforms that dominate today want you to believe the age of the breakout consumer app is over, that everything worth building has been built, that the future belongs to those who already own the present. They want you to accept their tolls, play by their rules, and content yourself with scraps of attention.

But I've been in this business long enough to know a secret the giants hope you never learn: every empire believes it will last forever, right up until the moment it doesn't. The next great consumer platform isn't waiting for permission. It's being built right now by founders who know the old rules are dead. They'll leverage AI not as garnish but as the core engine of growth. They'll create products so compelling they become channels unto themselves.

The walled gardens want you to believe they've won. The toll collectors want you to think there's no other way. But they're wrong. Dead wrong. The age of disruption isn't ending - it's beginning. And the founders who embrace this won't just build billion-dollar companies. They'll build the platforms that make today's giants look like relics of a bygone age.

The revolution isn't coming. It's here. And it's waiting for someone bold enough to lead it.

1. Michael and I have been close friends for 15 years, a friendship forged through the ups and downs of the founder journey. I was the first investor in Everlane and have served on the board ever since, witnessing firsthand the triumphs and trials of building a generational brand. Sugar Capital is an investor in Magna, his new hydration consumer brand. Michael is a LP in Sugar Capital.

2. Andy Moss, a serial entrepreneur and close friend, founded ShopStyle in 2006 and was acquired by POPSUGAR a year later and has since built FabKids, Roadster, and now MindTrip. Over the years, we've spent countless hours dissecting distribution strategies and go-to-market approaches for each of his ventures, watching firsthand as the playbooks that worked for one company became obsolete for the next. Andy is an LP in Sugar Capital.

3. Matt Moss, the founder of Locket, is a friend I've known since before his teen years. He's the son of Andy Moss, the founder of ShopStyle. Matt was an intern at POPSUGAR working very closely with me building fun viral apps in the summers of high school.