AI Was Supposed to Replace Sales Teams. Here’s What’s Happening Instead

“Distribution is the new moat” is the hot new phrase in business circles. VCs are saying it. Consultants are saying it. Entire frameworks have been built around it. They’re right that distribution matters. They’re wrong about what distribution actually means. The popular argument goes something like this: AI has collapsed the cost of building software, so the only remaining advantage is to build an audience and get to those customers before a competitor. That’s the starting point. But it’s not a moat. Distribution is more than building an audience Anthropic, the mega-AI company behind Claude, has millions of social media followers and created one of the most viral products in history. Yet as of this writing, the most in-demand role at the company is… sales. You read that right. Anthropic is currently hiring more salespeople than engineers and product managers. The company that predicted AI would replace salespeople is now hiring hundreds of them. Here’s what Anthropic knows better than anyone: Building a viral product and massive audience is not the same as having a distribution moat. Real distribution muscle comes from the capacity to build relationships at scale, expand your footprint within organizations, and turn one-time customers into repeat business. In other words, real distribution muscle is built in the sales organization. The distribution moat is created through expansion and retention So, distribution is about landing new business? Yes, but that’s just the beginning. The real distribution moat starts to form when you have a system designed to retain and expand existing customers. Wasabi, a Boston-based cloud storage company, is a case study I’ve taught at Harvard Business School for years (full disclosure: I’m also on the board). They scaled from a few hundred thousand dollars in revenue to hundreds of millions. Their strategy? Good ol’ fashioned channel sales. Working with resellers is not sexy or on trend, but it’s one of the most durable distribution channels around. Resellers have relationships with the end users you want. You are creating essentially two layers of lock-in: One with the resellers and one with the resellers’ customers. Today, over 14,000 channel partners work hard to sell and expand Wasabi’s install base. But making this channel a success was not easy. Wasabi made two key changes: First, they aligned sales incentives to compensate their own salespeople for selling through channel partners. They created a special version of their product to encourage channel salespeople to sell Wasabi cloud storage over competing cloud and on premises storage. Channels sales reps started pushing Wasabi over Amazon cloud storage or EMC on premises storage. Second, they changed how they measured success. Onboarding channel partners is one thing. But could they actually sell the product? Wasabi decided on a KPI of “Time to Second Sale,” to measure and incentivize their top partners. Anyone can make one sale. The second sale is proof of a relationship. And relationships, not features, are what competitors can’t copy. Relationships—not distribution—are the real moat In the age of AI, everyone can build. But not everyone can sell, expand, and retain. Founders who treat distribution as audience-building are playing a different, shallower game than founders who treat it as relationship-building at scale. The moat isn’t how many people have heard of you. It’s how many people can’t imagine operating without you, because someone at your company took the time to understand their business, earn their trust, and keep showing up. AI can help you reach people faster. It cannot replace the human judgment, persistence, and relationship-building that turn a first sale into a second, a second into an expansion, and an expansion into infrastructure. Before you hire your next engineer, ask yourself: do you have the sales and customer success capacity to actually turn your distribution into a moat? BY LOU SHIPLEY, SENIOR LECTURER, HARVARD BUSINESS SCHOOL