The CQ | From Network Effects to Cognitive Effects: New Rules for Platform Dominance
Plus the Forerunner Team's Must-Reads of the Week
The CQ is Forerunner’s weekly newsletter rounding up the top consumer news, plus bonus musings from our investment team and portfolio highlights. Subscribe to get the latest each weekend.
By Kirsten Green, Founding Partner
New tech, new moats.
For the past two decades, the strongest moats were built around external forces: network effects and economies of scale.
Cognition is different. It doesn’t depend on one massive external system, it’s about millions of micro systems—one per user.
Cognition goes beyond memory. It’s about understanding patterns and inferring intent, creating cumulative context and predictive intelligence that can’t be replicated elsewhere. Why would you leave OURA when it has years’ worth of data fueling an ecosystem of insights and frameworks entirely tailored to you?
Quitting doesn’t mean abandoning your network; it feels like abandoning a part of yourself.
We believe we can have these OURA-like relationships across every category—finance, learning, connection, commerce—where cognition compounds understanding for near-unbreakable loyalty over time.
The path to defensibility no longer requires capturing an entire market for the moat to deepen. You can now build an unassailable position one user at a time.
Read our latest thesis about cognition as the new moat, and how to build here. And as always, please feel free to reach out with questions or thoughts.
Must-Reads of the Week:
From The Atlantic: We’ve all heard that your 20s are supposed to be the “best years of your life,” but research says differently. The 2024 World Happiness Report found that Americans over 60 rate their lives highest, while those under 30 score lowest. Young adults are also less likely to have stabilizing factors linked to well-being—secure jobs, housing, and relationships. Fewer than half of 25–29-year-olds are financially independent, they’ve held an average of nine jobs by age 37, move frequently, and reach major milestones later—only half are married by 35, and the median first-time homebuyer age has climbed from 28 in 1991 to over 40 today. “The uncertainty that goes along with not having adult sources of safety—and not knowing if you ever will—is hardly fun. The brain interprets uncertainty as danger. As one 20-something client put it, ‘I don’t have a lot of knowns in my life.’”
A theory of dumb, as explained by New York magazine. For most of the 20th century, IQ scores rose steadily—an average of three points per decade—in what became known as the Flynn effect, attributed to better education, nutrition, and more mentally challenging modern life. However, new research analyzing 394,000 U.S. IQ tests from 2006 to 2018 shows a reversal, with declines in matrix reasoning, pattern recognition, and verbal reasoning, particularly among 18- to 22-year-olds and those with less schooling. Meanwhile, national data reveal broader cognitive declines: ACT scores are at a 30-year low, high-school math scores are the worst since 2005, and over 25% of U.S. adults read at the lowest proficiency level. Experts suspect that smartphones and the algorithm are eroding attention spans and abstract reasoning—“modern communication in all its forms has put us in contact with more minds than we were built to handle, and our own seem to be wilting under the load.”
From the New York Times: A recent survey found about one in six adults—and roughly one-quarter of adults under 30—now use chatbots for health information monthly. Many users find them appealing because they offer instant, free, and empathetic responses, even though studies have found that chatbots often omit disclaimers, reinforce users’ incorrect self-diagnoses, and produce false but confident answers, which has led to some patients challenging or overriding doctors’ recommendations. “If the system worked, the need for these tools would be far less. But in many cases, the alternative is either bad or nothing.”
Some the world’s biggest brands tap this agency to sell desire. Think: eerie inhaling and exhaling sounds from a 44-second track from David Lynch’s “Lost Highway,” instead of music, upon walking into a Khaite store. That’s what Chandelier, the creative agency behind Nike, Hermès, Victoria’s Secret, LVMH, and Rhode, calls “sonic branding.” It’s one example the agency is known for creating details that “customers might not even notice, let alone register as marketing.” The agency focuses on creating “tension” and emotional resonance to make brands feel distinctive and desirable in an oversaturated market. Says the CEO, “You can’t really manufacture cool. It’s more about an emotion, a taste filter. It’s about creating something that connects with someone.”
NPR looks at how women over 30 are rewriting the single mom narrative in America. About 40% of all babies in the U.S. are now born to unmarried women, up from just 5% in 1960. The number of single mothers over age 30 has risen by more than 140% in the past three decades. The U.S. also leads the world in children living in single-parent households—23%, compared to a global average of 7%. Older single mothers are generally more financially stable and educated than previous generations, as women now outnumber men in college and graduate programs and are increasingly able to support families independently. Many are choosing single motherhood intentionally, sometimes using IVF. While single-parent families still face financial and logistical disadvantages, research shows that children of unmarried mothers over 30 are nearly three times more likely to earn college degrees and higher incomes than those raised by single moms who give birth in their early 20s or teens.
AI’s next act: World models that move beyond language. “World models” are systems that can simulate and understand physical reality rather than just process language. Google, Meta, OpenAI, and Fei-Fei Li’s World Labs are racing to develop these models, and Yann LeCun of Meta predicts that within three to five years, world models will replace current LLMs as the dominant AI architecture. “Instead of predicting the next word, as a language model does, they predict what will happen next in the world, modeling how things move, collide, fall, interact, and persist over time. The goal is to create models that understand concepts like gravity, occlusion, object permanence, and cause-and-effect without having been explicitly programmed on those topics.” The challenge is that building world models requires a massive amount of information from data that’s not consolidated or readily available.
According to the Pew Research Center, 12th grade girls are less likely than boys to say they want to get married someday. As of 2023, 67% of American 12th graders say they want to get married someday, down from 80% in 1993, while 24% are uncertain—up from 16% three decades ago. The decline is driven largely by girls: Only 61% of 12th-grade girls now say they want to marry, compared with 74% of boys; in 1993, the reverse was true (83% of girls vs. 76% of boys). About 51% of today’s seniors say they’re very likely to stay married for life if they do marry, down from 59% in 1993. Fewer expect to have children within marriage as well—just 48% in 2023, compared with 64% in 1993.
Portfolio Highlights
Vogue looks at how Oura is capitalizing on Gen Z women’s wellness obsession, with quotes from CEO Tom Hale and Miklu Silvanto, chief design officer.
WWD covers the launch of Daydream’s new app, which uses Apple Visual Intelligence.
Bloomberg reports that Faire has begun a tender offer at a $5.2 billion valuation.
Business of Home highlights Arcade’s AI-powered custom design service.
Glossy names Prose and Teal Health among its 2025 Glossy Beauty & Wellness Award finalists.
Entrepreneur profiles Alma on how AI is changing legal immigration services.
Forerunner Highlights:
We led the $40M series B for Agentio, the first agentic marketplace for creator media. See more in Eurie’s post.
Kirsten was on Library of Minds for a conversation with Delphi’s CEO.
Job of the Week:
Head of Design at Daydream, the personal AI fashion agent.
There are ~2300 open jobs at Forerunner portfolio companies — check ‘em out.
10/10 best Substack I subscribe too. Thanks for doing what you do, Forerunner!