A few more points about customer segments and the different kinds of business models that there are in different kinds of customer segments. The first point which you should have some appreciation for by now as we dig into what's in a customer segment is that customer segments are different. Every customer segment has its own business model. Some potential customers want to buy, some want to rent. Some want to buy it in a store. Some want to buy it online. Some want to hear about it from their friends. Some want to hear about it from a blogger online. Every customer segment has its own business model. And unless you understand the business model of the segment you're selling into, you're going to be in trouble. The more segments there are, the more complicated, which means that all other things being equal, you want the simplest customer segment and the simplest business model that you can find. It's worth dwelling a little bit on a special case here, which is multi-sided market. A multi-sided market is a market, it's a situation, where there are several customer segments that are involved in the same product. So you'll have, advertising-sponsored businesses are probably a good example of this. Third-party payer businesses, like health insurance, is probably a good example of this. Doctors and patients is a pretty good example of this, and charity is a good example of this. Multi-sided markets are troublesome because they're complicated. Let's consider a famous multi-sided market, Google. Google has two main customer segments. A customer segment number one is users. And what do users want? The value proposition to them is all the world's information. The revenue model? It's free, and the product is a Google search box. Customer segment, users couldn't be happier with this. Of course, it doesn't pay the bills for Google. Google gets paid by customer segment number two, which is advertisers. Advertisers have a different value proposition. They don't want all the world's information. They want highly qualified prospects. That's what they want. Their revenue model's not free. Their revenue model is, they bid on clicks. It's emerged over time, it's a work in process, but today it's still largely bidding on clicks. And the product that Google offers is AdWords, which is specialized search results that are for pay. And AdSense, which is ads that are placed on websites that are for pay. It's a multi-sided market. In order to succeed at this market, Google has to amass a critical mass of users. And they have to amass a critical mass of advertisers. So unless they sell to both customer segments at once, their model fails. And, in fact, Google was around for some years, doing a very good job of sufficing customer segment number one without having any kind of idea about how to make customer segment number two happy. It's when they stumbled on that, that a star was born. Let's consider a different case study, Red Cross. Red Cross is a charity. And Red Cross also has two customer segments. But they are different than the two customer segments that Google serves. Customer segment number one for Red Cross is donors. Donors' value proposition, I don't know how Red Cross thinks about it, but I think about it as help the unfortunate. That's the basic proposition for donors. As a revenue model, it's tax deductible donations. If the donors couldn't get the tax deduction for the donations, they probably wouldn't give. And, if they had to do a subscription, they probably wouldn't do a subscription. But, they will give a tax-deductible donation, when there's some event, where it looks like there are a lot of unfortunate people, and they want to help them. Product, website, apps, text messages. There's all kind of ways that Red Cross gets its message across. The products they're delivering, donations from donors. That's customer segment number one. Customer segment number two couldn't be more different. It's recipients. Their value proposition is disaster relief. Something terrible has happened to them, and Red Cross helps them. They bring blankets, they bring food, they bring medicine. They rescue pets. The revenue model here, it's free. Red Cross is doing this based on the donations from their donors. And the product is not a website or apps or text message. It's a huge supply chain. For Red Cross to get those blankets and food and supplies to the recipients, they have to jump through hoops that make Walmart's job look pretty simple in some ways. So it's two different customer segments. They need to work on them both. If they don't have one of them, the business doesn't work. It's another multi-sided market. The problem with multi-sided markets is they're complicated. Unless you get both sides right, you're going to have a hard time building the business. And it's hard enough getting a business going if there's only one customer segment you've got to take care of. So generic advice, all other things being equal, steer clear of multi-sided markets. Each side in a multi-sided market is its own customer segment. It has its own customer types and they think differently, and you've got to work with them differently. So the main points here are that each customer segment has its own business model and you have to understand that in order to do business with that customer segment. They can be somewhat similar or they can be quite different. And multi-sided markets where the business has to simultaneously have several customers segments are tough. Although some very profitable companies and some very successful companies have been built in tough multi-sided markets. Thank you.
