How Margin Hubs Are Attracting Startups to Disruption
Imagine a world where the very parts of your business you rely on for profit are the first things startups target. It happened in Switzerland almost a century ago. J. Dutweiler, a pioneering entrepreneur, realized that expensive wholesalers and distributors kept margins for everyday products and started with his retailer Migros. By taking production and purchasing into his own hands and selling directly to consumers, he made goods affordable and widely available like many others in this time. He democratized access decades before the term “disruption” even existed.
Today, the same forces are at play—but on a global scale. Rising energy and commodity prices, supply chain bottlenecks, labour shortages, geopolitical tensions, climate shocks, and protective regulations are all driving costs up and creating high-margin “hubs” that attract disruption. Startups are exploiting these pressures to bypass intermediaries, capture value, and deliver directly to customers.
Migros, celebrating its anniversary, exemplifies this approach. Dutweiler’s century-old principle—turning structural inefficiencies into advantage by controlling production, distribution, and pricing—is strikingly similar to the strategies of today’s fastest-growing startups. I call it Hub Skipping Disruption: a lens for leaders to anticipate threats and opportunities before they hit the headlines.
As a startup founder, which semi-protected or monopolistic hub would you dismantle today to deliver its hidden margin to the masses—and why haven’t you started yet?
Understanding the Pattern
Traditional value chains are filled with nodes that generate margin. These are wholesalers, distributors, brokers, and specialists—each extracting profit from the flow of goods or services between producer and consumer. In many industries, these hops were the invisible scaffolding that kept products expensive, markets restricted, and innovation slow.
Startups, however, have discovered a consistent shortcut. They skip one or more hubs, reduce friction, and go directly to the end customer. The result is usually a lower-cost, more accessible solution that can reach far beyond the reach of traditional players.
The consequences are profound: the formerly profitable intermediaries see margins vanish, while new entrants capture attention, scale, and loyalty almost overnight.
Defining Hub Skipping Disruption
Hub Skipping Disruption occurs when a startup or new entrant:
Identifies one or more hops in a value chain that deliver disproportionate margin.
Uses technology, direct access, or new business models to bypass them.
Offers a product or service that is cheaper, faster, or more accessible to the end customer.
Forces a redistribution of profits along the chain—usually from incumbents to the disruptor.
Unlike classical disruption theories, this concept is less about technology alone and more about profit architecture and chain vulnerability. Startups are not just innovating products—they are systematically attacking the parts of the chain that are fat with margin and low with customer intimacy.
The Mechanics: Where Margins Attract Attack
Visualize a traditional value chain:
Producer → Wholesale → Retail → Customer
Each hub takes its cut. In many sectors, wholesalers or distributors make more money per unit than the producer. Retailers set high markups. Specialized consultants or brokers collect fees disproportionate to the value they add to the customer experience.
Hub Skipping Disruption works by shortening or eliminating the chain:
Producer (Startup?) → Distribution Startup → Customer
Suddenly, the middleman disappears, the product becomes cheaper, and the startup captures a direct line to consumers.
Why this works repeatedly:
