I’ll start with a broad, sweeping generalization about consumer internet:

1. The user never pays. I would consider it to be not only true to a very large majority of consumer internet ventures, but actually a defining characteristic of consumer internet.

2. Since the user doesn’t pay, and the business exists to make money, there should be another set of entities who actually pay the venture. They might be advertisers, marketers or sellers selling goods to the users. From the perspective of the venture, lets call them customers.

So from what we see, a consumer internet venture deals with two sets of entities, namely Users and Customers. These two sets of entities have completely different reasons behind engaging with the venture,. Also, the venture needs to have completely different strategies for engaging, attracting, and dealing with these two sets of entities.

Here are some observations:

1. In most cases, customers would follow users. Meaning, a website must have users for someone to come and try to sell something there.

2. A start-up works with severe bandwidth constraints. It is impossible to deal with both users and customers initially.

3. Too much focus on customers, and hence, on selling and marketing on the website in its initial days almost always drives away users.

Keeping these in mind, I think it is very important for a consumer internet start-up to focus primarily on users in the initial days. Without dedicated, loyal users, the venture makes no sense.

What do you think about this?

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