Who is Your Customer?

I’ve had several conversations with a wide variety of people this week that have surprised me.  The central theme is business.  Yes, I’m an Engineering Director, and a fairly geeky one at that.  I actually like to stay close to the technology.  It matters to me what protocols are being used, what design pattern, what technology stack is chosen… and not just because I want to control my costs, contain my support efforts, manage the breadth of required skill sets, etc.  All those things are vitally important, but I actually enjoy the technology too.  I’m still an Engineer in my heart in many ways.

But a few failed startups along the way – and stories from many others – have taught me is that the technology only matters a little.  I’ve built some really cool stuff, and my friends have built even better cool stuff, and yet few of those cool things are real products you can buy or use today.   They nearly all vanished.  I’ll say it again:  few of those cool things are real products you can buy or use today.  Cool does not generate revenue, which means that eventually the folks building the cool have  go do something that does generate revenue if they want to keep eating, paying rent, or goodness, feed the kids or pay the mortgage (yes, even you young single, all-nighter amazing hacker programmers will eventually want kids and want to buy a house – yes, it will happen).  So somewhere along the way I started thinking really hard about how to make money and not just build cool tech stuff.

And I have learned that the first and most important question to ask is this:  who is your customer?  Some people will tell you that the first question is “what burning need are you solving” or “what value are you creating?”  I don’t grok things that way.  In my mind, I ask “who is my customer?”  And by customer I don’t mean partner or enabler or contributor or user… I mean who will pay me money for the product or service I’m offering?  Money.  Cash.  At the end of the day, that’s the core of it.  Someone pays money for something.  Who?  Really, that’s important.  Who will PAY?  What direction is the money flow?  Once you know that you can start to answer other questions – most of which are necessary before you can work out the data model behind it anyway.   And it’s certainly a fist step to getting the next set of answers:  what exactly are they paying for?  How much will they pay?  What’s the channel to get that product to the customer (if any)?

For example:  today I spent an hour on the POPAI Technical Standards Committee talking about inter-server communications.  The question at hand was how to model the information needed for various digital signage operators to book or sell advertisements on others networks.  It quickly became apparent that there were many ‘customers’ being discussed.  The vendors who sell equipment have one set of customers.  The companies who sell ads have another set of customers.  The vendors who sell aggregation have yet another set of customers.  There’s some controversy about which ‘customers’ will actually buy certain things.  It was a great start to an effort to identify and model the kinds of metadata needed between the vendors and the customers.   At one point some on the call were tempted to ditch the hard topic of the business issues and focus on the technology aspects… but that would have been a mistake.  The technology part is the easier part!  The hard part – the most important part – is to get clarity about the customer, the needs of the customer, and the product offering.

This whole notion that it all starts with the customer is not new.  It’s everything that Steve Blank has taught about for years.   I’ve only just learned about his writings and I’m really loving every word.   The general notion is that you start with customer discovery, then move to customer validation, then customer building and then company building.  It’s quite different than the normal product development cycle.  It just rings true to my own experiences.  Expect to read more about this in coming posts.  In the meantime, what are your thoughts?

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