Struggling with Identifying Your Customers

We meet with a number of companies as Masthead that either provide ad-supported consumer content or technologies to enable/facilitate consumer applications. In both of these case, the leaders of these startups sometimes haven’t given much thought into who truly is the customer.

With ad-supported content sites, is the customer the reader/user or the advertisers? Or both? What about if the content is advertorial in nature? Many start-ups providing an enabling technology, a middleware component, or other type of infrastructure to support a consumer-facing business have the same difficulty. Is the company’s “customer” the true end-user of the product or merely the channel to the end-user? Examples of companies that run into this challenge include gaming infrastructure firms, music personalization companies, and mobile application providers who sell to the carriers, along with many others.

Why does this matter? While one party is a customer, and the other one can be an important constituent, there are times when decisions need to be made which will help one but adversely affect the other. Early on at Sombasa Media, which published consumer-facing e-mail newsletters, we struggled with who our customer truly was. But once we identified ourselves as an e-mail marketing company devoted to offering services to advertisers, our confusion subsided and our focus intensified.

I don’t think that that there isn’t a one-size-fit-all approach identifying the true customer. In fact, it’s something that is integral in defining the business model of the firm. And yes, it, like many other things in a startup, can change and evolve over time. But the entrepreneurs who we’ve met with who have given deliberate thought about and focused their company around clearly articulated customers make an impression with us and leave a trail of success that those who clearly haven’t don’t.

David Beisel

David Beisel is a co-founder and Partner at NextView Ventures. He has been focused on early stage Internet startups his entire career, both as an entrepreneur and venture capitalist. As an investor in the digital media space, David was most recently a Vice President at Venrock and previously a Principal at Masthead Venture Partners. Prior to becoming a venture capitalist, David co-founded Sombasa Media, an e-mail marketing company best known for its flagship product BargainDog. Sombasa was successfully acquired by About.com where David served as Vice President of Marketing. David holds an MBA from the Stanford Graduate School of Business and an AB in Economics, magna cum laude and Phi Beta Kappa, from Duke University. He also founded and leads the Boston Innovators Group, an organization which holds quarterly entrepreneur events drawing a thousand attendees.

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