Confusing a user with a beneficiary in the messy middle

We have previously written about the difference between attention and reputation in the messy middle, and that prompted some great questions about how to move from the left to the right — how to obtain reputation.

It is clear enough that reputation must be earned, but how exactly do you earn it? Founders face another challenge here in deciding who to build a reputation with, and this is where another confusion crops up.

Founders confuse a user of their product with the beneficiary of their product — these are often not the same thing.

  • A user may not even be paying for the product (i.e. most social media platforms)
  • A user might continue to use a product, but only experience incremental improvement from it
  • A beneficiary is a person or organization who reaps the real economic advantage from the product’s use but may not actually use the product.

The best business models focus on the beneficiary first.

One reason for stalling in the messy middle is that a truly sticky business model has not been found. Reputation is earned through delivering value and enabling beneficiaries to share their success with others.

In agtech, many products that have farmers as the target user can fall victim to this trap. For example, in-field monitoring of all kinds usually needs some device installed in the field. The device costs money, measures something (weather, water, pest), and provides information. That information may allow a farmer to make a better decision or act differently, but the changes are often small and incremental. These types of business models usually get caught in a race to the bottom on pricing or experience slow growth because of high churn and/or unit economics don’t scale.

The business model innovation here is to discover who benefits the most from that change in farmer behavior and focus on capturing and delivering the most value possible for them.

The relationship between user and beneficiary is vital

There is usually a critical relationship between user and beneficiary. You can’t deliver for the beneficiary at the expense of the user — especially in key psychological factors like trust and self-determination.

You can often engineer a business model so that the beneficiary subsidizes the cost of the product for the user, enabling faster and lower friction growth.

A well-crafted symbiosis between user and beneficiary fuels reputation

Nirvana here is when there is a virtuous cycle between user and beneficiary. Beneficiaries incent more use, more users deliver greater benefits.

Reputation grows when beneficiaries have news to share, and happy users are a great story. Happy users that deliver efficiency and profit is news that will spread itself and greatly enhance your reputation.

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Key takeaways

  • Founders confuse a user of their product with the beneficiary of their product — these are often not the same thing
  • The best business models focus on the beneficiary first
  • Tenacious Ventures is working to unlock this vision, and looking for true believers to invest

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