Who is the Customer?

06/02/2024

Although the question seems innocuous, implicitly successfully businesses (or perhaps they were very intentional) understand who their initial customer is.

This is just off the top of my head to think about the early users.

Some were a bit harder for me...interestingly, the largest businesses.

Google, for example, became the on-ramp to the entire Internet; so they seemed to have captured the nascent explorers of the Internet, no matter what their interest.

YouTube, I think, either had bootlegged TV in the beginning, which probably was a good way to capture eyeballs, while those on the supply side were experimenters in uploading their own content. While the privacy concerns made for lots of legal headaches, this was probably in their favor to attract more people. The controversy grew users.

A singular focus on the initial customer seemed to be a source of growth; but only in those cases where the use cases expanded and grew significantly did the business grow.

These rarely seemed to be bound by, say, title or vertical; but more by what they wanted to do.

Students, for example, was very targeted, but then difficult to grow out of and expand.

Book readers for hard to find books did rapidly expand because, particularly through acquisition, Amazon could leap into whole new verticals.

However, in many cases, the ability to provide better choice and, in the case of mobile-enabled businesses like Uber, one-press convenience gave them a way to enter and ultimately win.

Web3 needs to have different properties. Not ideologies, unless the audience is ideological.

For example, many niche security products long appealed to those who were concerned about privacy. This had been a very small segment.

However, products like 1Password and VPNs have, in fact, begun to grow due to a slightly more sophisticated audience of customers who did want to pay the "security" tax.

But this is largely a small segment of the population and, for now, still remains hard to expand.

Investing also had a smaller segment of people initially and did likely broaden, but some statistics suggest that the vast majority of people still don't invest. Investing probably acquired more assets, less because of the software (even things like Robo Advisors) because of ETFs, the products which simplified the investment process by removing decisions. Robo Advisors, even though their primary products were also ETFs, helped people with concepts like tax loss harvesting and rotation in and out of ETFs based on age and risk.

Salesforce deeply understand sales people, having been founded by a sales person. And so provided a new business and delivery model made possible by the Internet: software as a service.

That category has since become quite large, providing more niche-down and domain specific opportunities.

But does web3 provide a better experience in this regard?

The regular Internet and centralized software does a pretty good job of:

So, who are existing customers or emerging customers that are not yet served by web3?

And what are the properties of web3 that are done better on behalf of the customer?

Is there some aspect of web3 that increases convenience for users?

Is there a set of customers that exist now but at small scale that could grow very fast?

The other type of customer that seems critical in the growth of some products are Power Users - users who could benefit financially from a platform.

Some thoughts of potential businesses and properties:

For example, one interesting niche business which may have disappeared due to Covid was restaurant passes. I don’t recall the name but someone would buy this entertainment book and it would come with discounts on restaurants and bars.

The premise was that by buying this book of discounts, the discounts would exceed the cost.

A similar feature of Founders Card, which would supposedly offset the upfront cost with various negotiated discounts.

Currently these items aren’t tradeable.

And vendor participation is not permissionless in fact, it’s probably a large pain in the butt to get these discounts. These discounts typically are lead generation.

Groupon is an example of this model which created huge interest from consumers but was largely disliked by vendors. They don’t like giving away discounts even to acquire customers.

The second category are customers who are very small and have a lot of friction. But could someday be much larger.

Website development used to actually involve hiring an agency and consultants.

Now it is done by everyone whether using Wordpress or Squarespace.

What is a users desired behavior that is not yet unlocked?

I think tools like Flickr and instagram took off because of some human desire that was hard to achieve before: expression through photographs.