Before you can answer this question (and it is a question that you as the entrepreneur must answer for yourself), you need to decide if you are building a business or an application. I like to distinguish between organization-builders and feature-builders. Both are valuable, and entrepreneurs have different persuasions and motivations. I decided early on that I wanted to build a company (Plovgh, for the record, reconfigures agricultural marketing and distribution), in other words an organization that provided a product and service, rather than a piece of technology that could work wonders in a number of different contexts. I see company-building as choosing to play the long game in a given sector, whereas feature-building lends itself more to a quick acquisition.
If you decide you are a feature-builder, then go forth and do product like no one has done product before. Just make sure, as others have said, you get out into the world every chance you can to ensure you're building a product that human beings need and want. This goes for both B2B and B2C channels.
Now, you cannot build a company without product AND distribution. I suggest asking yourself, what is the easiest thing to hack? Is the problem I'm solving so entrenched that even an ugly, clumsy mock-up of a product could woo potential customers? In the case of Plovgh, the need among farmers to access their markets independent of brokers and middlemen was strong enough that we started with Google docs and Paypal buttons before we even wrote a line of code! Doing so taught us a great deal about what to build, but also established the seed of a userbase that we used as a stepping stone. We now take a step-wise approach to product and distribution, and the two elements get attention in a fairly synchronized way because with every improvement to product, we have another leg to stand on as we grow our userbase.
On the other hand, perhaps your personal network is an ideal target market for your product. Can you in a sense hack distribution by getting your better-than-basics product into the hands of lots of the right people right away? Maybe a simple way of thinking about this is, what is going to be easier for you and your team, given your skills, experience, contacts, and so on? If it's distribution, then invest more upfront in product; if it's product, then invest more upfront in distribution.
No matter what, don't pursue either in isolation.
