From Digitally Native Brand to Digitally Native Franchise: a New Model for Commerce and Entrepreneurial Empowerment

A play on the historic franchise model, but reinvented with digitally-native platforms to support solopreneurs

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By Brian O’Malley, General Partner

@omal

In the early days of Forerunner, we partnered with many of the first-generation of digitally-native brands. This was not necessarily because of an inherent commitment to brands, but a belief in the underlying trends driving their adoption at that time. Social media advertising was new and far more cost effective. Supply chains were compressing. And, consumers were ready to adopt new products discovered online. Now the standards set by the Warby Parkers and Glossiers of the world have become table stakes for any digitally-native vertically-integrated brand launching today, making it much more difficult to launch something new today than it was before.

Today we see similar underlying trends giving way to a new category that’s uniquely positioned to capitalize on the tailwinds of the 2020s: the digitally-native franchise. Digitally-native franchises build upon new technologies designed to empower SMBs and those that power managed labor marketplaces, like those making up the gig economy. The digital franchise is a play on the historic franchise model, but reinvented to take advantage of the best of both startup models referenced above, a centrally controlled platform to provide structure, but a distributed economic model to empower local entrepreneurs.

While the fundamentals are quite different from digitally-native brands, the need to understand the mindsets of consumers, both franchisees and their customers, remains the same. We’re actively looking to partner with founders and learn about others operating in this space, so please share thoughts and ideas on our latest deep dive on the opportunity in digital franchises. Success here doesn’t just benefit those in the technology ecosystem, but the millions of potential entrepreneurs looking for the purpose, community and financial empowerment inherent to the model.

What We’re Talking About on Slack:

1. The jobs most at risk of being replaced by AI are typically those held by women: bill and account collectors (82.9%), payroll and timekeeping clerks (79.7%) and executive secretaries (74.3%), according to a new study. “The distribution of genders across occupations reflects the biases deeply rooted in our society, with women often being confined to roles such as administrative assistants and secretaries. Consequently, the impact of AI becomes skewed along gender lines.” 

2. What does healthy masculinity look like today? The New York Times tackles this thorny topic, recounting how men’s academic performance and college enrollment rates are declining significantly, as well as how 15% of males say they have no close friends, and how men account for three out of four suicide or opioid overdose related deaths. “The modern plight of men is a problem that has too many names. It’s toxic masculinity. Or it’s the epidemic of fatherlessness. Or its deaths of despair. And each of those carries so much political baggage.”

3. The cost of childcare is at an all-time high — it increased 41% from 2018 to 2020, from $9,977 to $14,117 annually. American Inequality delved into the data and found a huge divide. In 34 states, the cost to send a baby or toddler to a daycare is actually more than the tuition at a state college. “The US Department of Health and Human Services considers childcare ‘affordable’ if it costs less than 7% of a family's income. But nearly two-thirds of parents, including 95% of low-income parents, spend far more than that. And only 2% of counties in our analysis fell within this limit, meaning that by the government's definition, childcare is unaffordable in 98% of counties across the country.”

4. The number of babies born in the U.S. is down 15% since 2007 — even though there are 9% more women now who are in their prime childbearing years. The Wall Street Journal explores what’s at the heart of this issue: economic obstacles, a weak social safety net, delaying childbearing until later years when pregnancy is more difficult, not wanting to bring children into a world dealing with climate crisis, and a teen birth rate that’s declined 78% since 1991 due to more access to contraception. These numbers concern economists: “America’s longstanding geopolitical advantages are underpinned by a robust pool of young people. Without them, the U.S. economy will be weighed down by a pronounced labor force shortage who can fill jobs and pay into programs like Social Security that care for the elderly.”

5. On that note: More people than ever are living longer — about 30 years longer, say professors at Stanford Graduate School of Business. Global life expectancy has doubled since 1900, and experts say children born in developed countries now have a good chance of living to 100. In 2035, people 65+ will outnumber 18-year-olds for the first time, and 3.8 million Americans 75+ are projected to still be working in 2031, nearly double the number today. It’s estimated the “longevity economy” is worth $8.3 trillion in the U.S. Those in their 70s or 80s don’t want to be marketed to like stereotypical seniors, though. That’s where a “stealth design” approach comes in: creating products and services that speak to the needs of older adults, while “keeping the demographic targeting on the down-low” as to not alienate younger customers. A good example: BMW adding bright primary colors to their sedans’ controls so they’re more visible for older drivers yet visually appealing for younger ones. 

6. There have been many stories this year about how fewer and fewer kids these days are opting to go the college route. But that’s not exactly the whole picture. Turns out, students may be looking for more bang for their buck as community college enrollment has seen a jump this spring for the first time in over a decade — increasing 0.5% from the year before, after declining 8.2% in 2022 and 10.1% in 2021. The majors at community colleges that saw bumps include computer and information sciences (9.7%), mechanic and repair technologies (8.2%), personal and culinary services (9.7%) and transportation and materials moving (11.8%).

7. ”Trends have lost all meaning.” So says Matt Klein, Reddit’s head of global foresight, who argues that “in the process of chasing cool, brands have lost the purpose of analyzing culture…. In short, we’ve come to confuse what is ‘trending’ with what is a trend.” He offers a few data points to back it up (asking 1,500 people globally, via Reddit) including this one: Almost 75% believe algorithms can make anything go viral. 

8. Black creators are reporting strained relationships with platforms like Meta, TikTok and YouTube, due to issues like algorithmic bias, suppressed content, a lack of support in comparison to white influencers, contributing to a pay gap of 35% between white influencers and Black influencers. Even though social media platforms have made efforts through the introduction of their Black content creator programs, some Black creators find the selection process unfair or the level of support inadequate, while others would simply prefer an algorithm that favored their content. 

9. Many workers are resisting a return to the office (commuting and childcare costs are the main reasons), but almost 40% of Americans have embraced a hybrid or strictly WFH schedule. According to WSJ, it’s an untapped opportunity for local retailers to step up their hours and services to serve remote workers. For instance, shops that give daytime promotions, class offerings available during the afternoon, or flexible gym membership pricing. “Any membership-based business would do well to offer membership options that make sense for once-a-week customers.”

10. When it comes to the (notoriously high) churn rates of streaming services, Netflix shows the best, closely followed by Disney+ — while Showtime and Starz are at the bottom, with Apple TV and HBO lagging close behind. In 2023, streaming services have been losing 5.8% of their subscribers every month, so it’s only logical to wonder if mergers could help streaming sites turn the churning tides.

Portfolio Highlights:

• Alkeme founder Ryan Mundy speaks with The Today Show on mental health in the Black community. 

• Axios interviews Ari Bloom, CEO of A-Frame Brands, on building celebrity-led brands.

• Tom Hale, CEO of Oura, talked to Sifted about his visions for the brand’s future.

• Matthew Newcomb, CFO of Chime, is named one of the top 10 chief financial officers at fintech companies by FinTech Magazine. 

• Jenny Gyllender, founder of Thingtesting, speaks with Paper on how creators are driving the next wave of food brands.

• Dan Lieberman, M.D., senior vice president of mental health at Hims & Hers, offers guidance to Men’s Health on coping with getting laid off.

• PYMTS reports on Balance’s enhanced automated payment collection solution and a buyer portal. 

• Oura gets the Father’s Day thumbs up from HighSnobiety. 

• Hims & Hers Thick Fix Shampoo and Conditioner are included in Harper Bazaar’s roundup of best Amazon gifts for Father’s Day.

• Well & Good covers how a common impact of wearing the Oura ring is consuming less alcohol. 

Forerunner Highlights:

• Kirsten Green makes the Insider’s Seed 30 (at #2), which recognizes the best women early-stage investors of 2023.

Work at a Portfolio Company:

Senior Program Manager, Core Experience | Chime: Chime is the largest and fastest-growing U.S. player in the challenger-banking space, empowering millions of Americans to take control of their finances. This role will develop deep expertise on internal processes and be responsible for driving continuous process improvement initiatives, with a particular focus on member satisfaction and agent accuracy metrics.

VP of Sales | Real: Real is a team of innovators, clinicians, and technologists on a mission to make caring for our mental health a priority through a digital platform and in-person experiences. This role will build out a pipeline of employers and brokers, increasing Real market share by identifying and developing new opportunities to grow the busuness,

Senior Graphics Designer/UX | DUOS: DUOS is reimagining freedom at any age by providing older adults with the support they need to age independently. This role will guide the creative development and execution of marketing materials, branding, and product.

There are ~460 other openings on our jobs site. Check ‘em out.