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“They think they know everything and are often quite sure about it.” – Aristotle
“The Children now love luxury; they have bad manners, contempt for authority. They show disrespect for their elders.” – Socrates
”OK Boomer.” - Gen Zer
As we wrote last week in part 1 of our demographic deep dive, many of the great investors are also great demographers. Why? Because there are few clearer clues to the future.
People are concerned that AI is a cheat code to know all the answers to now. Understanding demographics does the same thing, but better – it gives you the answers to next.
Last week, we focused on geographics/population demographics…this week, we’re looking at generational demographics.
What’s wrong with young people?
They’re entitled. Self-Centered. Narcissistic. Not self-sufficient. Lazy.
This is as clear as day, right? And frightening!
The truth is, it’s as predictable as night follows day that the older generation thinks the younger generation is all messed up.
Equally predictable is that younger people think older people “don’t get it” and are set in their ways.
This has been the case for thousands of years.
A brief history of kids today are spoiled
A brief history of kids today are too soft
Genetically, we’ve been basically the same as our ancestors for the last 10,000 years. Yet, we seem to think we’re all so radically different from the people of the past.
Human Nature is the same today as it was back when 99% of us were hunters and gatherers. We want to love and be loved. We are motivated by fear and greed. People look to reduce pain or increase pleasure. That’s who we are, that’s who we’ve always been, and that’s who we will be.
Maslow’s Hierarchy of Needs is the timeless foundation and as Jeff Bezos has said, he focuses more on what’s not going to change than what is going to change.
That said, there are significant generational differences based on environment and circumstances. For example, individuals from the “Greatest Generation” who grew up in the Depression and World War II are thought to be patriotic and prudent which makes sense given the times they lived in. “Baby Boomers” were born between 1946 and 1964 when America was on the rise, mainly at peace, and are viewed as optimistic and goal-orientated.
USA Population By Generation (by Millions)
If you want to see the future, study young people. That’s why this week's EIEIO is about Gen Z, the 70 million people born between 1997 and 2012 in the United States.
The combination of nature and nurture gives us a powerful lens to see how Gen Z is going to influence business, politics, and society for the next sixty-plus years.
Gen Z is anxious. 29% self-report that they suffer from anxiety. 57% constantly take prescription medications. We kid you not, 86% of Gen Z Americans suffer from “Menu Anxiety.” Being “always on” with technology, living through COVID, experiencing the 2008 Financial Crisis, the dire warnings of climate change, and even 9/11 - which much of Gen Z doesn’t remember (or weren’t born yet) - impacted their environment.
Gen Z is far more diverse than previous generations. Ethnically, 25% of Gen Z is Hispanic, 52% White, 6% Asian, and 14% Black. Just to put context on this shift, just 4% of Baby Boomers are Hispanic.
In an eye-opening change in the views on sexuality, Gallup released a study this week that showed that 20% of Gen Z overall and 29% of Gen Z females identify as LGBTQ+, which contrasts with 2% of Baby Boomers. On elite college campuses, the numbers are even higher with 38% at Brown, 35% at Princeton, and 34% at Stanford. It was in 2015 that the Supreme Court ruled that Gay Marriage was legal.
In the Boomer generation, 13% have tattoos, and many of those served in the military. Today, 62% of Millennial parents have tattoos, and Gen Z will likely be even more ink-friendly.
Statistically, Gen Z is less religious, less patriotic, more digital, more mobile, and more individual than any generation before it.
Below, we highlight 10 themes that show where opportunities are going to be created by the demographic tailwinds of the Z’s.
Top 10 Gen Z Themes
#1 Digital Self
Conventional wisdom is that the Metaverse was a fad, but the reality is that our Physical and Digital Worlds continue to blend together. Half of Gen Z and Millennials say they “live online,” and Gen Z spends 11 hours online each day.
What’s even more interesting is that nearly 50% of Gen Z and Millennials say they feel most like themselves online rather than offline, and that they’re more valued for their talents, more appreciated, and more creative online. 34% of Gen Z’s closest friends met online…2X higher than Gen X and 10X higher than Boomers.
Given that Gen Z feels most like themselves online, it makes sense that they will learn, earn, and socialize in a digital-first way. X has become more important than your resume for many industries. Former Sixers GM and Venture Capitalist Sam Hinkie follows “digital breadcrumbs'' to spot emerging talent.
Games have become a new hub for how people learn (we call this invisible learning) and socialize. 60% of Gen Z and Millennials consider themselves gamers.
COMPANIES
Public: Meta (META), Roblox (RBLX), Pinterest (PINS), Activision Blizzard via Microsoft (MSFT)
Private: X, Discord, Fortnite / Epic Games
CASE STUDY: ACTIVISION BLIZZARD | 20% Rev CAGR, 17% Stock CAGR From IPO To Acquisition
#2 Living At Work
Work used to be a place that people went…now it’s wherever you are. Offices are coming back, but occupancy rates still hover around 60%. Remarkably, 82% of Gen Z has never worked 5 days a week in office…and likely never will. Hi Solutions is creating your “operating platform for life” with its smart home offering (full disclosure: I’m Chairman of Hi).
The second-order effects of the shift away from the office are employee engagement and the connection between one’s job and their purpose (more on that later). Gen Z employees are less engaged than ever before, and will have fewer work friends.
Regardless of how many days a week someone is in an office, it’s best for an organization’s culture and soul to have one TEAM, one DREAM. Offsites, conferences, and social events are all playing this role…but nothing beats good old-fashioned 1-1 time.
One company that has zagged in its approach to remote work is Verkada. Verkada implemented an in-person office policy in June 2020 and recently launched a 3-3-3 program, which lets employees expense up to $30 in food and drinks if they go out together after 3pm in groups of at least three.
COMPANIES
Public: Atlassian (TEAM), Monday.com (MNDY), Workday (WDAY)
Private: The New Club, Key, Handshake, Blind / Fishbowl
CASE STUDY: ATLASSIAN | 33% Rev CAGR, 25% Stock CAGR Since IPO
#3 Mission Corps + Everyprenuer
Gen Z does not work like prior generations – less time at the office, more stressed, and switching jobs more. A recent study found that Gen Z employees could change jobs up to 10 times between the ages of 18 to 34.
But for those who want an antidote to these trends, Mission Corps offer an opportunity to align work with purpose. A McKinsey study found that 7 in 10 employees define their purpose through their work.
Where does this purpose come from? Entrepreneurship. Gen Z is the entrepreneurial generation. The combination of Silicon Valley becoming a societal bedrock (HBO’s Silicon Valley made being a geek cool) and the rise of YouTube has made entrepreneur/creator the dream job for Gen Z.
75% of Gen Z wants to become entrepreneurs and 84% of Gen Z views entrepreneurship as the most exciting out of 12 possible career paths. 57% of Gen Z would be an influencer if given the chance, and 45% of creators aspire to own a business and make money from online content.
There are dozens of companies “arming the rebels” in this space, from Intuit’s recently announced QuickBooks Solopreneur product to Stripe Atlas (a startup incorporation platform). Stripe Atlas has seen that incorporations are up >5X on the platform from January 2019.
COMPANIES
Public: Intuit (INTU), Block (SQ), Shopify (SHOP), Wix (WIX)
Private: Saltbox, Brex, Ramp, Webflow, Teamshares
CASE STUDY: INTUIT | 17% Rev CAGR, 19% Stock CAGR Since IPO
#4 Community As An Asset Class
“Communities went from local and physical to infinite and digital” - Slow Ventures GP Sam Lessin
The intersecting trends of work no longer being a place and the rise of the “digital self” has created an entirely new meaning of what community looks like. Traditional community involvement has decreased dramatically over the past 25 years.
The reality is that despite this decline, humans are wired to be social creatures and we’d bet that people are in more communities than ever before…they’re just digital and haven’t been fully integrated into the “real world.”
We think there’s a massive opportunity to leverage digital communities and networks to facilitate IRL experiences…and friendships. The Internet has effectively connected the world around shared interests that people never knew existed…the next evolution of that is bringing people together.
Like most technology trends, the first movers are in the enterprise, with coding meetups, networking groups, and hacker houses all leading indicators of bringing people together around a common mission. Eventually, this will flow beyond the enterprise to consumers…just look at sports to see how big the power of shared connection can be.
COMPANIES
Public: Meta (META), Nextdoor (KIND), Reddit (RDDT), Grindr (GRND),
Private: Meetup / Bending Spoons, Flow, Partiful, Skool, Hauste
Big Opportunity: “Adult extracurricular network” (i.e., “Coach for America”)
CASE STUDY: Meta Platforms | 35% Rev CAGR, 24% Stock CAGR Since IPO
#5 Degenerate Economy / Hooked On Everything
Much of Gen Z has never known a World where they didn’t have all of the World’s information at their fingertips. Glass half full, this allows people to dive deep into niches, quickly become incredibly knowledgeable on specific topics, and collaborate with others across the world who have shared passions. Glass half empty, it has never been easier to access self-destructive content and supercharge self-destructive behavior.
Take pornography, for instance. 30 years ago, in order to access pornography people would have to get in their car, drive to the seedy adult-video store, risk running into people they knew, and look the cashier in the eye while purchasing adult magazines or XXX VHS tapes.
Contrast that with today, when you can access all of the pornography in the world on your iPhone, in 4K, in a matter of seconds.
Howard Lindzon talked about this precarious positioning in a 2023 podcast:
“30 years ago if you were scared or you didn't want anything bad to happen you could just sit on your couch in your room and nothing bad could happen. Today you that same couch you could blow the whole world up. . . you can wreck yourself, you can wreck your family, and wreck your credit. . . that's the degenerate economy . . . we could hide from it [but] now we're all in it.”
Today, people can lose their life savings trading options (Robinhood), crypto (Coinbase), or gambling on sports (DraftKings) - all on mobile. If TikTok does become illegal, the lines start to blur on what’s good and what’s bad - but that’s a whole different can of worms.
The same story of how things “used to be” with porn applies to gambling. Gamblers were forced to physically go to a casino or call their illegal bookie to place picks, now they can gamble on whatever they want on their phone, often 100% legally. This is not all bad - there is an opportunity for community to be built around this existing infrastructure.
Companies like DraftKings, Prizepicks, and Fanduel could be turning sports bars into sports books by hosting in-person gatherings for big games and encouraging members to go to these meetups. For all of its downsides, anyone who has set foot in a Vegas sports book during March Madness can’t deny that there is lots of male bonding taking place.
However, the problem is that these businesses know that Gen Z teens, particularly males, are easy targets as customers. They’ve grown up gaming, in lots of cases wagering or playing for virtual money, so the concept is not foreign. They are digitally native and have zero skepticism about placing bets over the internet.
On top of that, they have been exposed to media influences that have pushed gambling for years (see: Barstool Sports as just one example).
(also: TheScore launched in 2005 as a sports coverage media company, but launched TheScore Bet in 2018 when the US legalized sports gambling. They sold to Penn Entertainment in 2021 for $2 billion.)
The problem is, these “degenerate” businesses are luring young people in and targeting them when they are most vulnerable. This is a free country and everyone should be able to make their own choices, but it seems like there will be consequences for this one. Don’t be surprised when this generation (again, primarily the males) is known for its significant gambling problem.
Do these ads look like they are targeting anyone over the age of even 25? We don’t think so. They remind us of Juul’s old ad campaign which brought the company tons of heat a few years back.
“A 2023 prevalence report of gambling in New Jersey from Rutgers University found that a third of bettors 18 to 24 exclusively wagered online rather than being inside a casino or in-person facility. That statistic is five times higher than a prior 2017 report for the school and more than any other age group.” - NY Post
Calling a 1-800 number to quit gambling is like going to the DMV for help. There is lots of green space for great companies to be built with the purpose of helping people take control of their gambling (or pornography use). Whether it’s an app like Noom, or an in-person support network like AA, we’ll be keeping our eyes peeled.
COMPANIES
Public: DraftKings (DKNG), Coinbase (COIN), Pinduoduo (TEMU)
Private: PrizePicks, eToro, ByteDance / TikTok, Fliff, Barstool Sports
CASE STUDY: DraftKings | 62% Rev CAGR, 32% Stock CAGR Since IPO
#6 Booze Break
Gen Z is looking to live healthier and wealthier lives, and drinking less alcohol is a part of that. A report from Berenberg Research found that Gen Z respondents were drinking over 20% less per capita than Millennials did at the same age.
Nearly 70% of Gen Z prefer cannabis to alcohol, and while some people abuse it like alcohol, many consider it a wellness product (we have a different view, and the skyrocketing rise in cannabis treatment centers for males is evidence of that). 54% of people who buy cannabis take it to sleep. Gen Z men have gone crazy for Zyn, a tobacco-free nicotine pouch product that sold 350 million cans in 2023, up 62% from the previous year.
While Zyn is the dominant player, there are fast-growing competitors in the space like Black Buffalo led by our friends the Hanson Brothers – which notably includes a nicotine-free version (for people who don’t want the tobacco or the nicotine, but want the fixation element that a flavored pouch provides).
Non-alcoholic beer has gone from the least cool drink at the bar to the most hip. Athletic Brewing is now the #1 selling beer at both Whole Foods and Trader Joe’s. Gen Z favorite Liquid Death is rumored to be raising a pre-IPO round at a $1.4 billion valuation. Probiotic soda company Ollipop is having its moment in the sun, too.
The winner of this emerging category may end up being Celsius Holdings, which has compounded its stock price and revenue at a remarkable 125% and 90% over the past 5 years. Celsius has dramatically expanded the market for energy drinks by catering to a wellness-focused customer and female-friendly audience.
COMPANIES
Public: Celsius (CELH), Zyn via Phillip Morris (PM), Vitacoco (COCO)
Private: Athletic Brewing, Cann, Liquid Death, Prime, Black Buffalo
CASE STUDY: CELSIUS HOLDINGS | 57% Rev CAGR, 94% Stock CAGR Past Decade
#7 Slow It Down
Gen Z is overstimulated and overmedicated. Among people ages 20 to 39, prescriptions of A.D.H.D. Schedule II stimulants, which include Ritalin and Adderall, rose 30 percent during the pandemic. The rate of antidepressant use among 12-25-year-olds increased 66% from 2016-2022.
And country music is booming.
What do these things have to do with one another? The always-on lives of Gen Z have created a deep desire for quieter times and the simple life. As the Economist recently put it, “Country’s appeal in urban settings can also be explained by listeners’ hunger for escapism. For city folk stuck in matchbox apartments, the tunes represent bucolic freedom without the inconveniences of rural living (slower Wi-Fi, no food-delivery apps).” Morgan Wallen has become the Taylor Swift of Country, catalyzing a Wallen Economy in its own right.
Similar to the craze over Yellowstone in recent years - people who are focused on honest work, old-school relationships, and days spent fishing on the lake have peoples’ attention because the lifestyle seems so foreign. This “simple” factor also has a nostalgia element to it, and it's exemplified in Gen Z’s shopping choices.
Combine these inputs with Gen Z’s unique obsession with self-expression (there is a strong aversion to being “basic” - hardly anything could be worse) and you have some interesting happenings. For example, landline phones and vinyl records are making a comeback among the cohort.
Taking things even a step further, there are now $3 Trader Joe’s mini tote bags being sold on eBay for hundreds of dollars.
COMPANIES
Public: Boot Barn (BOOT), Etsy (ETSY), eBay (EBAY)
Private: Tecovas, Loop Earplugs, Buffalo Exchange, Whatnot
CASE STUDY: BOOT BARN | 15% Rev CAGR, 17% Stock CAGR Since IPO
#8 Wellness
If longevity is the end goal of Gen Z living healthier and wealthier lives, then wellness is how they think they’ll get there. Part of this shift is that Gen Z exercises more than prior generations, with 87% exercising at least 3X a week.
More Americans would rather feel 25% healthier than 25% wealthier, and that increases as income scales (67% of people making $150k+ choose health over wealth).
There’s been a seed oil revolution over the past two years…canola oil is out, beef tallow is in. Gen Z prefers natural to toxic…organic online supplement store Cymbotika has seen 440% two-year growth.
COVID made everyone the CEO of their own health, and one key trend that has continued is the concept of “food as medicine.” Podcasts such as Huberman Lab have become the most trusted authority people have for their health. 36% of podcast listeners have changed a lifestyle practice after listening to a podcast.
COMPANIES
Public: Hoka via Deckers (DECK), Cava (CAVA), Lululemon (LULU)
Private: Cymbiotika, LMNT, Alo, Vuori
TWEET: Growth story of Alo Yoga
CASE STUDY: DECKERS | 15% Rev CAR, 17% Stock CAGR Since IPO
#9 Longevity
Longevity is a massive market where nearly everyone is a customer. It’s easy to scoff at Bryan Johnson’s efforts to live longer, but like most innovations, what the wealthiest and craziest are doing today, the rest of us will be doing in the coming decades.
The data backs this up. 33% of US consumers, given the choice, say they’d like to live forever…and the rest, on average, say 103 years old. 30% of consumers would spend all their wages/income, savings, and/or take debt to extend their life.
The rise of GLP-1s such as Ozempic, Mounjaro, and Wegovy is the tip of the iceberg for both the tremendous demand and product-market fit for products that will help people live healthier and longer lives. Expect an avalanche of innovation in this area as more companies develop products that people need…and love.
COMPANIES
Public: Eli Lilly (LLY), Novo Nordisk (NVO), Hims (HIMS)
Private: Juvenescence, Retro Biosciences, Cost Plus Drugs
CASE STUDY: NOVO NORDISK | 15% Rev CAGR, 17% Stock CAGR Since IPO
#10 Pets Are People
As fertility rates continue to plummet in the developed world, people look to fill the human need for companionship in new ways. People are investing the same time, energy, and money that they would in children into their pets.
41% of Gen Z is more likely to spend $100 on their pet than on their partner, and Gen Z gets more joy from seeing their pet happy than their partner (36% vs. 21%), more than any other generation. The average pet spending per household in the US is $770 per year, but Gen Z spends nearly 2.5X that much at $1,885 per year.
It wasn’t long ago that people would chuckle when they saw an old lady carrying a puppy in their purse. Now, people are spending hundreds on dog strollers and hardly anyone bats an eye.
The same things people want for their children – education, exercise, fashion, and healthy food – apply to their furry friends. Pet insurance, monitoring, and organic foods are all massive growth categories…even pet travel.
Investors are taking notice, and entire funds are being launched on pet-centric theses. Mars and Digitalis Ventures announced the launch of Companion Fund II, a $300 million dollar venture capital fund that will back founders whose companies are leveraging breakthrough science, technology and design to improve the lives of pets, pet owners and veterinarians.
Organic pet food company The Farmer’s Dog hit $800M in Revenue in 2023 up 60% YoY, while veterinary diagnostic supplier Idexx Laboratories has compounded at over 20% since its IPO.
Pet industry expenditure in the US, 1994-2023 (billions)
COMPANIES
Public: Idexx Labs (IDXX), Zoetis (ZTS), Freshpet (FRPT)
Private: The Farmer’s Dog, Rover, Loyal
CASE STUDY: Idexx Labs | 12% Rev CAGR, 24% Stock CAGR Since IPO
As we’re looking to identify, analyze, and invest in the Stars of Tomorrow, the demographic shifts in populations, geography, and attitudes provide strong signals to where we’ll be hunting.
Market Performance
For the second week in a row, the Market took a breather with the S&P 500 off .1%, NASDAQ being down .7% and the Dow flat. It’s the first time since October that the S&P 500 has been negative two weeks in a row, and previous to March 4th, had been up 16 of the past 18 weeks.
The Russell Growth 3000, which fell .3% last week has quietly been leading in 2024 and has advanced 8.6% YTD. GSV’s Model Growth Portfolio was off .8% last week but is up nearly 15% YTD and nearly 72% since 2023.
Reasons for the pause in stocks included inflation coming in at 3.2% in February, slightly higher than analyst forecast and consumer confidence fell slightly. Perhaps more accurate is that stocks have been on a hard charge for a while and needed to catch their breath.
It’s been a year since we had the tech bank crisis with Silicon Valley Bank, First Republic, and Signature Bank ultimately being no more. While panic struck the Market, it was a good reminder to keep your head when others lose theirs….the Market is up over 30% in the past twelve months. Also interesting, the Tel Aviv Stock Exchange is up over 10% in the past 12 months despite Israel’s GDP being off 20% in the Fourth Quarter due to the conflict in Gaza.
We maintain the conviction that we are in a healthy environment for growth companies with broadening participation of outperformance by leaders. Accordingly, we remain BULLISH.
Maggie Moe’s GSV Weekly Rap
Need to Know
READ: Mercado Libre: The Amazon of the Amazon
LISTEN: 20VC: Joe Lonsdale
WATCH: Summers: We are on the Foothills of Bubbles
READ: The Year to Be Great | Andreessen Horowitz
WATCH: Joe Rogan Experience #2117 - Ray Kurzweil
LISTEN: How Kirsten Green Built Forerunner Ventures
READ: An Interview with Zoom CEO Eric Yuan About Surviving COVID and Building Moats
WATCH:#38: Hartz and Minds and TikTok w/ Special Guest Julia Hartz
GSV’s Four I’s of Investor Sentiment
GSV tracks four primary indicators of investor sentiment: inflows and outflows of mutual funds and ETFs, IPO activity, interest rates, and inflation. Here’s how these four signals performed last week:
#1: Inflows and Outflows for Mutual Funds & ETFs
Source: X
#2: IPO Market
#3: Interest Rates
#4: Inflation
Chart of the Week
Chuckles of the Week
EIEIO…Fast Facts
Entrepreneurship: 249% – increase in aggregate revenue from AI companies on Stripe (Stripe)
Innovation: 0 – public SaaS companies expected to grow faster than 40% over the next 12 months (Gokul Rajaram)
Education: 60% – employers who will require corporate etiquette classes for staff this year (Morning Brew)
Impact: 23% – startup employees hired in 2022 who were gone before their 1-year work anniversary, up 77% since 2018 (Peter Walker)
Opportunity: 25% - increase since 2018 in the portion of American fifteen-year-olds who are not proficient in math (Harper’s)
FEEDBACK: We love it when our readers engage with us. Send your thoughts, comments, and feedback to dashmediagsv@gmail.com – we read every email!
Connecting the Dots & EIEIO…
Old MacDonald had a farm, EIEIO. New MacDonald has a Startup….EIEIO: Entrepreneurship, Innovation, Education, Impact and Opportunity. Accordingly, we focus on these key areas of the future.
One of the core goals of GSV is to connect the dots around EIEIO and provide perspective on where things are going and why. If you like this, please forward to your friends. Onward!
Make Your Dash Count!
-MM