B2C or B2B2C

Consumer startups are flashy. They grab headlines, they feel big, and when they work, the winners can be massive.

But here’s the uncomfortable reality I’ve seen again and again in my own experience: 

• Acquiring consumers is expensive (as a marketplace, aggregating demand is hard).

• Servicing them is expensive.

• Competing for their attention is a knife fight that is getting more competitive.

That 1:1 relationship looks good on a pitch deck, but it’s brutal on the P&L.

The economics of pure consumer businesses are often terrible.

Now contrast that with B2B2C:

• Distribution partners drop your CAC to near zero (sometimes even negative).

• One enterprise deal brings you thousands—or millions—of end consumers you don’t have to market, sell, or support individually.

• Your org scales with leverage instead of linear customer service costs.

I’ve seen this play out in four different companies in my own career:

@ Handango: We were the leading consumer destination to download mobile apps (before the iPhone led to ecosystem walls), but the real money came from white-labeling for Verizon, Palm, and others, where our CAC was negative (we were paid to manage those storefronts)

@ Gilt: The flash-sale consumer brand was what everyone knew, but our B2B distribution business (moving our inventory to international retail partners) was far more profitable.

@ Spring: Our ~$100M consumer marketplace looked impressive, but in the end the real gem was quietly powering e-commerce for social platforms and major retailers via marketplace-as-a-service.

@ Gympass (Wellhub today): The founding team cracked the code early by selling through enterprises as an employee benefit. That meant negative CAC—Classpass never had that advantage.

All of these started as consumer plays, but their strongest businesses emerged as B2B2C.

So what’s the lesson?

If you’re building a consumer company today, don’t just think about your direct channel. Look for the leverage point: the partner, the enterprise, the channel that turns your hard-won brand into a distribution machine.

Sometimes that means a pivot. Sometimes it’s an incremental layer. But in today’s market—where capital is expensive and consumer attention is scarcer than ever—B2B2C is often the healthier, more scalable path.