The CQ | Kirsten's Report on Winning With Consumer in AI
Plus the Forerunner Team's Top 10 Reads of the Week
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This past week, our Founder and Managing Partner Kirsten Green took the stage at Fortune Brainstorm Tech to present on how to win as a consumer business in the AI era.
The presentation is centered around two larger frameworks: values shifts (fundamental evolutions of human needs) and technological shifts (new pathways that advance people's way of living).
In our view, one of the most pressing values shifts underway stems from consumers' broad sense of fatigue and overwhelm from a culture that's now dominated by hyper-access and hyper-consumerism. The tech industry has fueled this: the lion's share of the past decade's startup have touted democratized access, and it’s created a flurry of different options, decisions and tasks that newly fall onto consumers' plates. We see this level of access working against consumers, who now feel paralyzed by the sheer volume of choice. It’s driving refreshed desire for experts and services that edit the vastness of what’s available, present the best possible options instead of more options, and do things for us instead of enabling us to do it ourselves.
AI — the technological shift underway — is uniquely suited to drive the tech industry's shift from Access to Edit.
In this deck, we cover this values shift and technology shift — and introduce our findings for how to succeed in this domain:
Consumer appetite: What we know about where consumers are most eager to use AI in their lives and what they anticipate from the experience
All eyes on quality: Traditionally, products and services are measured against price, convenience and quality, typically only able to optimize for two. The past decade has focused on price and convenience, but the next decade will focus on quality.
Magic and Trust: These are the two essentially building blocks in this new era. We extrapolate how we define Magic (relief and delight) and how consumers experience Trust (”do it with me” and “do it for me”), as well as where we believe is the best place to build from with each — and how.
See here for the full presentation and please reach out with questions and ideas: investments@forerunnerventures.com
What We’re Talking About on Slack:
The next hot jobs for Gen Z are healthcare and government jobs, according to a survey of more than 10,000 Gen Zers. Noticeably dropping down from the top of the list are Big Tech jobs—Google fell from the #2 spot in 2018 to #7 in 2024; Amazon went from #4 to #8; Apple went from #6 to #9; Instagram from #23 to #48. The change of heart may simply be due to the fact that the healthcare and government sectors offer stability, while tech companies have been laying off workers by the thousands, plus “tech no longer looks like a force for good.”
The economy’s big split: Poor consumers feel slowdown, rich ones don’t. Higher-income consumers are making up a big share of the aggregate spending, and “the lower income consumer is in their own personal recession." Those with lower incomes spend more of their earnings on rent, food, and gas, all of which have been hit hard by inflation, plus their wage gains have been leveling off and they’re less likely to profit from the stock market. Citigroup pointed out that “consumers with lower credit scores are seeing a sharper drop in payment rates and more borrowing. While customers with higher credit scores were driving spending growth, with continued strong balances in savings."
Is delaying menopause the key to longevity? Research shows that when women enter menopause, aging accelerates and there’s a greater risk for dementia, cardiovascular disease, osteoporosis and other diseases. And women who become menopausal earlier in life are at higher risk of developing these conditions and of having a shorter life span. “Researchers think that prolonging their function, better aligning the length of their viability with that of other organs, could potentially alter the course of a woman’s health—and longevity research overall.”
AI has an insatiable appetite for energy that’s driving up planet-warming emissions. It’s projected that by 2027, AI data centers could use as much electricity that Argentina uses in a year, or that U.S. electricity demand could increase 20% by 2030. We’re already seeing the effects: Last year, Google’s emissions were 48% higher than in 2019; Microsoft’s emissions increased 29% from 2020; and Meta’s emissions rose 66% from 2021 to 2023. To meet demand, tech companies are exhausting the existing power grid and building new natural-gas infrastructure to support data centers, which would require new pipelines to be constructed to meet the estimated “3.3 billion cubic feet per day of new natural gas demand by 2030.”
The great unbranding of Abercrombie: The Cut shows how the once-troubled mall brand pulled off one of the most successful makeovers in American retail. Abercrombie’s sales last year hit $2.2 billion, topping its peak in the aughts. To accomplish that, they cornered the market on wedding-guest dresses and expanded their size range to make their clothes more accessible to a broader range of people. Then they focused on “the post-grad, the millennial, the 25-year-old” instead of the frat/sorority customer of their past. The brand saw “an opening in the market between fast fashion and luxury, targeting young, employed people who wanted a better option than fast fashion but weren’t going to spend $300 on jeans or $500 on dresses.” The results have led the stock to soar sharper than Nvidia in recent years:
U.S. economy added 206,000 jobs in June, a bit more than expected — however the unemployment rate rose to 4.1%, the highest it's been since October 2021 when the labor market was still finding its footing in the pandemic. Rate cuts are still a gamble but many analysts take this as a notable indicator.
American workers have quit quitting, for now. The WSJ looks at the shift from the ‘great resignation’ to the ‘big stay’. One survey showed that 77% of employees said they were happy with their jobs and 85% reported a good work-life balance. A different study revealed 73% were satisfied at work, up from 69% a year ago. Fewer employees are looking to change jobs, whether due to job satisfaction, a tight job market, or a shrinking pay premium for switching jobs. Only 35% of adults said they plan to look for another job, compared to 49% a year ago. For Gen Z in particular, the difference is significant, with only 44% looking to switch jobs, down from 74%.
The Atlantic takes a look at the new age of endless parenting. Today, nearly 60% of parents with children ages 18 to 34 have helped their kids financially in the last year, and 45% of young adults 18 to 29 live with their parents (the most common arrangement for this age group since the Great Depression). More than 70% of parents said they talk with their kids on the phone a few times a week, not to mention the fact that “texting enables an endless stream of connection.” And because people are marrying and having children later, one professor says these young adults need someone they know will be there for them—“thus, parents are beginning to take on roles a spouse previously might have, cheering on their kids or acting as a confidant.” Child-rearing has evolved from raising an independent child to building a deep, lasting relationship, and experts say this isn’t a cause for concern. Says one therapist focused on families and young adults: “If Americans should worry about anyone in this cultural shift, it’s not the adults who rely on parents—it’s the adults who don’t have a parent to rely on at all.”
After the lockdown years, teens want one thing from their jobs: friends, says WSJ. On top of a paycheck, young people are craving community as well as opportunities “to practice social skills and problem-solve” that they missed out on learning during the pandemic. “The social aspect does transcend money to me. I don’t care how much I get paid,” says one 16-year-old lifeguard at a waterpark. The large number of teenagers ages 16 to 19 working—about six million—are making employers rethink how they pitch jobs in a competitive market and being a bit more flexible when it comes to allowing young employees to socialize at work.
Reality bites for Gen X retirement. According to a 2023 survey, nearly half of Gen Xers worry that they won’t be able to retire. Another survey found only 60% of Gen Xers reported that they were on track saving for retirement, in comparison to 77% of Gen Z, 72% of millennials, and 68% of boomers. Fewer Gen Xers (40%) have consulted a financial planner than boomers (54%), millennials (54%), and Gen Z (47%). Axios points to the decline of pensions as part of the reason: Just 25% of Gen Xers have any kind of pension, in comparison to 39% of older boomers.
Portfolio News:
Alma, an AI-powered immigration law firm for immigrants, announces its seed round in TechCrunch.
Fortune reports that Faire’s CFO Lauren Cooks Levitan was promoted to president.
CNET covers the launch of Oura’s new AI health coach.
Forbes reports that Flip and Curated are joining forces.
Chime makes CNBC’s list of the World’s Top 250 Fintech Companies 2024.
The Strategist highlights the launch of Away’s Softside line.
Forbes covers Duckbill’s offering of personal assistance using AI, with a quote from Duckbill CEO Meghan Verena Joyce.
Clay’s new integration with Notion means users can create a database of all their personal and professional contacts in one click.
USA Today reviewed Sunday’s lawn care subscription, giving it 4.9 out of 5 stars.
There are ~606 open jobs at Forerunner portfolio companies, check them out.