Why I believe B2C startups are more difficult than B2B startups.

Hi all, I’ve updated the newsletter format in my effort to make it more than just a calendar summary + some links. I figured this structure would add more value. I hope you enjoy.

Hi, A-A-Ron here. Welcome to my weekly startup newsletter. Each week, I offer opinions, education, and spotlights on all things startup - both funded and bootstrapped. My areas of focus are launching/validating ideas, building minimum viable products, financial/capital strategy, and growth. I hope you enjoy.

Opinion & Education:

Starting a startup is no small feat no matter what type of business it is. However, in my experience, B2C (business-to-consumer) startups often face a difficult set of hurdles that can make them extremely challenging, especially when compared to their B2B (business-to-business) counterparts. Here are a few characteristics I've noticed that can make B2C particularly tough.

B2C Means A Larger Customer Base, With Bigger Expectations

B2C companies target individual consumers, which inherently means a larger, more diverse (and demanding) customer base. This diversity requires that startups cater to a wider range of tastes, preferences, and expectations. Unlike B2B, where you might have a few key accounts that guide your product development and marketing efforts, B2C demands you need to appeal to millions of individual consumers. Founders are often confused by which target market they should focus on as all seem equally relevant and necessary. This reach complicates marketing strategies and product design as startups try to balance the right features, the right message, and the right customer base. They are spinning plates and it's no surprise that finding the initial sweet spot of demand is so difficult. If they can, the the growth is incredible, but many often struggle in the early days to get out of obscurity.

B2C Faces More Emotional Buying Decisions

Consumer buying decisions are often driven more by emotions than purely rational calculations - yes both emotion/rationality play a role for both B2B and B2C but I'm painting with a broad brush here. This emotional component can make predictability and customer acquisition a trickier game to navigate. How many trendy startups driven by general consumer FOMO (fear of missing out) did we see the rise and fall of over the years? I default to thinking of Clubhouse which was a firework for sure. Compare this to B2B customers who are typically looking for optimization (more revenue, less expense) and are willing to hear you out and make a decision, regardless of most feelings, if the numbers work out. For a B2C startup, predicting these emotional buying decisions and positioning a product accordingly can be a major challenge.

Brand Loyalty and Competition

In the consumer market, brand loyalty plays a crucial role - because competitors will pop up who offer a slightly different/better version of what you offer. For example, think of how many "ship to you in a small box that inflates" mattress companies there are nowadays. Feels like new ones are popping up every week. Building a brand that resonates with individuals on a personal level can take time and a much more substantial marketing investment. It's critical to not only launch with a strong product, but also to maintain a pace of innovation and marketing that keeps a startup continually relevant.

Pricing Sensitivity

Consumers are incredibly sensitive to pricing. A slight difference in price can be the deciding factor in a consumer's choice, especially in highly saturated markets. How many of us knew of parents/grandparents who would drive all over town to save a few dollars? In contrast, B2B transactions, which often involve larger dollars and long contracts, can take the hit of a high price if the value they receive in exchange is fair. For B2C startups, finding the right price point without sacrificing too much on the margins is a delicate balance and let's face it, nobody wants one more subscription.

Faster Pace of Change

Consumer trends can change in the blink of an eye. What’s popular today might be obsolete tomorrow. This market dynamic requires that B2C startups remain responsive both in message and product. Adapting quickly to new trends, technology, and consumer behaviors is not just an advantage: it’s a necessity for survival. We’re in the age of AI and every startup is quick to message that point. Why? Because it works. It drives consumer attention, just like web3 before it, and just like SaaS/Cloud before that. Welcome to the consumer cycle. Not to say it doesn’t impact B2B, but B2B is primarily concerned with the outcome, not the trend. If I’m using web2 to do what web3 can, end users don’t care so long as the tech works and brings them value.

Customer Acquisition Costs (CAC)

Lastly, the cost of acquiring customers can be incredibly high in B2C markets. In the early days you’re often running campaigns, be they digital, print, physical, etc. and getting little return for the investment. Yes, some startups nail it on the first go, but plenty have to test/pivot repeatedly until they finally get it. This broad testing and high market competition leads to higher spending on advertising and marketing campaigns. Efficiently managing CAC while scaling can be one of the most difficult tasks for a B2C startup. Many acquisition efforts work at 100-1000 customers but breakdown at 5k, 10k+. And for B2C startups, scale is a requirement. Failure to scale = failure to win.

Despite these challenges, I believe that B2C startups are worth building. In the same way that I think it’s great when bodybuilders lift a huge weight. I respect that they did it the once, but I respect that they have done all the work to be capable of such a feat far more. To lift a 1,000lb weight you have to be strong enough - to build a successfully scaled B2C startup, you have to be capable enough. So, let’s all become more capable (for all the hard things that come with building any startup) and let’s get back to work.

Community Spotlight:

Top Tool:

Notable News:

Startup Review:

I came across this company while doing some research on recent investments for a client, and it caught my eye. At this point, I'm rarely impressed by startup websites, as it's always hard to tell what is actually adding value and what is there just for fluff - both in product and design. Atlys, a platform helping people get their visas on time, seems to be going for the counterpunch with something dead simple - both in its value proposition and its design. Sometimes startups don't need to innovate; they just need to facilitate, and it looks like Atlys is doing just that.

I like simple hero sections where I can easily understand what the startup does, the value provided, and who it's for. When I land on a website, I ask myself two questions: What does this company do? Is it for me? If I get a 'yes' to both, then I move on to features, pricing, etc. Needless to say, Atlys answered both those questions by pushing at least four messages in the hero section:

1. They have a super high proof of value - that's why it's in bright green - and they can lean on that value all day long if questioned about their business.

2. 'Get your visas on time' tells you not only what they do but also why it's valuable. You wouldn't use 'on time' unless it was normally a problem that people don't get them on-time.

3. 'Or on us' - talk about a challenge and a sales pitch. At this point, my natural thought is that I may as well give Atlys a try because what’s the worst that happens? I get my money back? This pushed me to view them as the de facto choice since the risk has been removed.

4. They offer two options for conversion: either search for a place to get the time/price, or see what’s available via a discover section, facilitating both specific and open searches.

Look how clearly they highlight their top three key performance indicators (KPIs), all focused on value and validation for the customer.

1. On-Time, a great reminder of their proof of value. Why use Atlys? Because it works. Side note: just because you're a big startup doesn't mean you can't make mistakes. Notice how it says 99.2% at the top and 99.7% here?

2. +200k processed. Why use Atlys? Well, it looks like everyone else does, so I may as well.

3. 4.8 star rating. I wonder what everyone's experience has been. They've told me they can do the job, but how's the experience? Oh, they have a great rating across many systems, so all those people who use it seem to really like it.

5/5 - a masterpiece (-1 typo), well done Atlys.

Content Highlight:

Speak soon!

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Written By A-A-Ron