The subscription model is the wet dream of any business. Just imagine: once you got a client he pays you monthly… endless… But the problem here is that for most B2C startups, this financial model does not work.
You can ask why? That’s because most of the startups start with the wrong hypothesis: trying to satisfy a regular (I would say fixed) demand. For example, a startup idea: somebody has a cat, so let’s deliver him a certain amount of food every week at a certain time.
At first sight, it seems logical, but it leads to some issues…
What if I’m not at home at the delivery time? Of course, you can leave next to the entrance.
What if I bought food myself at Costco and I don’t need your food this week?
What if you don’t bring cat food on time? Should I leave my cat hungry?
What if I have a spare just in case? And then why do I need you with your delivery?
Can you remember the original model of Netflix? Actually subscription model successfully started here becoming a wet dream to others. The client initially received five DVDs. He could send back any number of DVDs at any time in order to receive the same number of other DVDs as a replacement.
Pay your attention! It was a story not about “we gonna send you five new DVDs every week”, so you are actually forced to watch every new movie per day.
It was a story about “let you always have five DVDs at home to watch any of them at any time.” I can watch the same movie several times in a row, or all in a row during the weekend. It is up to me. I can not think or plan, but just reach out to my TV with DVDs at a convenient moment.
This is actually the difference between the mass consumer and the professional one and the B2C market and B2B.
For example, a professional designer pays an Adobe Cloud subscription because he uses it every day. The average person pays for this subscription to fix their photo at any moment.
Just look at what conclusion we can make. The subscription becomes a mass product not when a minority of people has a regular basis demand, but when most of the people want to pay for a permanent availability of the product or service… which is, frankly, rarely used.
And this is actually the reason why investors prefer startups working with B2B instead of B2C: it is more predictable and has a steady demand.
