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The CQ: A New Model for Digital Entrepreneurship and an Early Look at Gen Alpha
The Forerunner Team's Must-Reads of the Week
The CQ is Forerunner’s weekly newsletter rounding up the most pressing consumer news and analysis, plus some bonus musing from our investment team. Subscribe now to get the latest edition in your inbox every Saturday.
By Forerunner, @ForerunnerVC
"We see an opportunity to enable the next generation of local entrepreneurs, where people want to work for themselves, and they have the grit and determination, but they don’t necessarily know what to do."
Recently, our Managing Partner Brian O’Malley sat down with TechCrunch to discuss a recent thesis we put out on new model for digital entrepreneurship that we're seeing emerge: Digitally-Native Franchises.
The shifts powering this model feel analogous to the market evolutions that inspired our early investments in some of the initial breakthrough digitally-native brands: new consumer demands, new industries structures, and new enabling technologies. In the case of Digital Franchises, we're seeing:
Broad, rising interest for people to be able to work themselves (though current market conditions can make that daunting)
An unbundling of historical service industries (healthcare, education, personal finance, home services, and more)
New tech making structures more efficient and scalable (yes, AI)
Digital Franchises enable people to start their own business with meaningful ownership and flexibility, but also the playbook and support of a centralized platform. The model sits in-between full solopreneurship with DIY software tooling (where there's full autonomy, but higher risk) and gig economy work (less risk, but limited upside). Essentially, it’s the goldilocks.
Historical offline franchises are a trillions-dollar industry in the US and a longstanding backbone of the economy, but they've yet to be recreated in a digital format. We think the tech-enabled adaptation can be transformative for services industries (healthcare, personal finance, home services, education...the list goes on) and local, small business entrepreneurs throughout the nation.
Read the full interview here.
What We’re Talking About on Slack:
Gen Z research fatigue? Good news, it’s almost time to move onto Gen Alpha. The oldest members of the youngest generation turn 13 this year. Like Gen-Zers and millennials before them, they’re already being identified by a fresh set of beliefs, aesthetics, and attitudes. Though it’s too soon to decode all that Gen Alpha will value and stand for, there are already some category-specific threads to follow: they are engaging with beauty earlier than their siblings and older family members, and their favorite brands range from Selena Gomez’s Rare Beauty to over-scented body butters from Bath & Body Works and their mothers’ Drunk Elephant products. As the reporter Rachel Strugatz writes, “I read an article about how millennials are approaching middle age. Admittedly, it was a shock to see these words for the first time, but then I reframed my narrative: Gen-Z brands, some of which have a target customer approaching 30, will soon seem passé – and this is very exciting for the industry because it means we’re on the cusp of an entirely new generation of beauty brands, trends and innovations.”
Young people are embracing location sharing in a big way via apps like Find My Friends — but as a safety measure and a way to form stronger bonds and “digital intimacy” among friends, despite the privacy risks. According to a 2022 Harris Poll, almost 80% of people have location sharing enabled some of the time, while 16% have it all of the time.
As climate shocks multiply, designers seek the holy grail: disaster-proof homes — think: geodesic domes and homes built with steel, concrete, and fire-resistant lumber (though they come at a cost of about 10% higher than typical construction). This comes after weather-related disasters pushed more than 3.3 million American adults out of their homes in 2022. “Most home buyers don’t know enough about construction to demand tougher standards. Builders, in turn, are reluctant to add resilience, for fear that consumers won’t be willing to pay extra for features they don’t understand.”
While all 50 states are experiencing teacher shortages, the number of bachelor's degrees in Education has dropped by almost 50%. Fifty years ago, one of every five students studied Education, making it one of the top majors — but today it has been replaced by Business. Declining levels of influence, broader career options for women beyond “caring professions,” and low pay alongside the high cost to achieve a degree have led to the decline. Only 18% of Americans would encourage a young person to become a K-12 teacher, according to a 2022 poll. "I don't think we've done enough to professionalize teaching and to raise the prestige of teaching, and to treat it like a true profession and be competitive around pay."
Young people think hearing aids can be cool, which is pretty important given that research from the CDC suggests one in every six to eight 12- to 19-year-olds in the U.S. has measurable hearing loss. According to the World Health Organization, 50% of people ages 12-35 years could be exposed to unsafe levels of sound from the use of personal audio devices. When younger demographics are accustomed to AirPod and modern hearing aids including familiar, savvy features like Bluetooth connectivity, wellness tracking, and the ability to play podcasts and connect phone calls, younger generations feel less of the stigma that previous generations did around hearing support.
It’s well-known that social media can crush one’s well-being, but what about their creativity? An op-ed in the New York Times by a Connecticut Senator highlights how the customized content provided by algorithms is leading to “the death of exploration, trial and error, and discovery”. Algorithmic recommendations now do the work of discovering and pursuing interests, and learning about the world. “Kids today are, simply put, not learning how to be curious, critical adults — and they don’t seem to know what they’ve lost.”
Amazon Prime Day raked in a record-breaking $12.7 billion. And it’s looking like Buy Now, Pay Later was the MVP — it was used for 6.5% of orders, or $927 million in revenue — a 20% YoY bump. “It’s evidence that deal-hungry consumers are still feeling the effects of inflation and will continue to lean on the service moving forward.”
More Americans are being denied loans. Over the last month, nearly 22% of loan applications were rejected — the most since June 2018 — likely due to higher interest rates and recent bank failures. The rejection rate was 14.25% for car loans; 21.5% for credit cards; 30.7% for credit card limit requests; 13.2% for mortgages; and 20.8% for mortgage refinancing applications. “The increase in rejected loan applications was seen widely across age groups, but was seen most acutely among those with credit scores below 680.”
One of the fastest-growth debuting apps of all time, Threads has now seen a drop in engagement. About 10 days after its launch, the platform’s number of daily active users went down about 20% and the time users spent on it was down 50%, from 20 minutes to 10 minutes, according to Sensor Tower data. “These early returns signal that despite the hoopla during its launch, it will still be an uphill climb for Threads to carve out space in most users’ social network routine.”
More than 40% of Gen Z thinks AI-generated music, movies, and art will replace human-made content in 20 years, according to a new report led by The New Consumer. And in their eyes, that’s not necessarily unwelcome — 34% of Gen Z and Millennials described themselves as “excited” and “hopeful” about AI, while 31% described themselves as “worried.”
Work at Portfolio Company:
Director, Logistic Development | Narvar: Narvar is helping simplify the everyday lives of consumers with great service from retailers. The role will support the growth and development of the global transportation carrier partnerships, develop and manage carrier relationships, facilitate technical integrations and provide analytical and professional support for client opportunities.
Senior Enterprise Support Specialist | Humane: Humane is a team of proven industry experts who have invented, built, and shipped category-defining hardware and software products to billions of people across the globe. The role will develop and manage carrier relationships, facilitate technical integrations and provide analytical and professional support for client opportunities.
Partner Success Lead | Catch: Catch is on a mission to unlock more rewarding relationships between merchants and their customers, starting with changing the way we pay for things online. This role will manage a portfolio of partner accounts and develop strategic, long-term business relationships.
There are ~528 other openings on our jobs site. Check ‘em out.