Discover more from The CQ
The CQ: The Crumbling Infrastructure of the Web
The companies that disrupted Yahoo are now starting to look a lot like Yahoo
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 Brian O’Malley, Managing Partner
As I look out around, I think about the crumbling infrastructure all over. Joe Biden has talked about it frequently as part of his $2 trillion plan to reshape the economy by rebuilding America. Roads are littered with potholes, water infrastructure is outdated, bridges are at risk of topping over. The fabric of our physical world is falling apart, creating risk — both economic and physical — for future generations.
But, that isn’t the infrastructure that I’m thinking about today. I’m focused on the infrastructure that powers the web. Google search results are littered with ads, SEO-spammy content, and shockingly irrelevant search results. LinkedIn is flooded with bloated content from people I barely remember meeting. Uber drivers routinely cancel on me if they don’t like the destination, or take increasingly long to arrive while charging increasingly steep rates. Pinterest boards have become chaotic. Facebook used to be a place where I went to see what is going on with my friends; now I can see Zuck in VR hawking Sweet Baby Ray’s Barbecue Sauce. And, Twitter, well, I’m guessing you’ve heard about what is going on over there.
The pages on the web have been over-optimized for maximum revenue at the expense of the user experience, and the ecosystem players have squeezed every last drop of juice out of the system. As a consumer, I find this infuriating. It isn’t just the poor experiences, but the fact that I remember when times were different and their products felt magically effective. Prime used to be a two-day delivery promise, not a smattering of identical knockoff products that may or may not show up at my house.
But, as an investor, this invigorates me. For so much of my career, we’ve been best served investing around the fringes of these massive platforms, because it felt near-pointless to encroach on their turf. Their distribution and underlying brands were just too powerful and well-serviced.
But, now things have changed. These incumbent brands are on their third or fourth generation of teams. They’ve gone through multiple rounds of layoffs. Even the CEOs that used to be on the covers of magazines are more likely to be found testifying in front of congress.
The stalwarts of the web just don’t have the same shine and their products don’t have the same allure. It still is unwise to come directly for them, but for builders who find the right initial audience or right initial foothold, there is a meaningful opportunity to build a new generation of consumer platform companies. Put another way, the companies that disrupted Yahoo and are now starting to look a lot more like Yahoo. The prevailing business model of the consumer web — where the user is the product — has hit max capacity for industry behemoths, who find themselves scrambling for where to turn next. It’s a classic innovator’s dilemma — they were born into a specific point in time, and consumers are now ready to move with or without them.
There are new massive businesses to be built, where success is measured not by being worth a billion dollars, but by serving a billion people. This opportunity laid out in front of today’s boldest entrepreneurs inspires us here at Forerunner. I’ve accepted the fact that my drive to work will likely be littered with potholes indefinitely, but I’m eager to meet with entrepreneurs who won’t accept the current state of online infrastructure and have plans to usurp it.
What the team is talking about on Slack
AdWeek poses the question, “do consumers still care about brands backed by big names?” A recent study showed that Gen Z’s interest in influencer endorsements fell 11% since 2020. For celebs, the drop is slightly steeper at 22%. What they’re finding is that people want to be reassured that celebrities are passionate about a product and that it’s not just a cash grab. In a nutshell: Relatable, expertise-driven content is winning over the aspirational.
It feels like everything we’re reading is calling out the return of prep. From WSJ championing the boarding school uniform look to the New Yorker’s examination of the paradox of J.Crew and Ivy league style, the more traditional prep aesthetic is having a resurgence. It’s all about the appearance of wealth, leisure, and status in an economically strained time.
With online customer acquisition costs increasing 60% in the last five years, brick-and-mortar stores are coming back in a big way. But the approach is evolving, with updates like short-term leases with less commitment and curbside returns.
The tween culture that defined earlier years (think: Bratz Dolls, Limited Too, Tomagotchi pets) seems to be dissolving, as 13-year-olds are increasingly into the same things as adults. But is that simply because pop culture aimed towards tweens and teens has died off since the 90s and 00s? “We’re seeing teen girls comparing themselves and their lives, bodies, and experiences to people who are in different life stages and life phases compared to them.”
While most brands charge more for their highest-demand items, Beyonce-favorite Telfar is experimenting with selling their most popular items for less. The designer is adamant about being accessible to all income levels, but this seemingly counterintuitive move also makes sense, cost-wise. “If they knew there would be a lot of demand for certain products, they could place larger orders with the factory for future collections and negotiate a cheaper price, and then pass savings on to the customer.”
Middle-aged millennials are changing travel. Many of them may be delaying marriage or buying a home due to finances, but they’re the generation that’s traveling the most (though they may not be spending as much as Gen X or Boomers). Highly driven by experiences, this age group is more likely to choose trips that focus on wellness, self-care, and sustainability. They deem vacations “a right, rather than a privilege” and travel as “part of their identity.”
Mental health issues are causing more than 40% of college students to consider dropping out. That’s up from 34% at the beginning of the pandemic. Most are pointing to emotional stress or personal struggles rather than financial problems or difficult coursework as their primary reasons. Regardless, college counseling centers are in over their heads trying to provide services to meet the demand.
Despite reported optimism about the job market, most Americans are pessimistic about their children’s future, according to a new WSJ poll. Reasons cited include fears about the economy, rising costs of healthcare and housing, skepticism about the value of a college degree, as well as record-low levels of happiness. “Fewer than 3 in 10 agreed that people like them and their family have a good chance of improving their standard of living.”
Buy Now, Pay Later for groceries is taking off. Online transactions using BNPL for grocery store purchases were up 40% in the first two months of 2023.
There’s less concern about a digital divide between poor and affluent kids, but now there’s a different type of gap to worry about. Low-income children and adolescents participate in less physical activity and sports than their more well-off peers.
Jump is profiled in Sports Business Journal, sharing their visions to reshape the fan experience at live events starting with real-time dynamic ticketing.
Brian O’Malley writes for Fortune about the sheer momentum of AI and what we can learn from the past web3 hype cycle to ensure AI solutions are enduring.
Nicole Johnson talks to The Information about her 48+ hrs navigating the SVB collapse and her unique coping mechanisms (spoiler: she loves her cold showers).
Work at a Portfolio Company
Senior Product Marketing Manager, Hims&Hers | Hims&Hers is a multi-specialty telehealth platform building a virtual front door to the healthcare system, connecting people to licensed healthcare professionals for numerous conditions related to sexual health, hair care, mental health, skincare, primary care, and more. This role will synthesize customer insights and data to drive go-to-market strategies and product adoption.
Director of Planning and S&OP, Glossier | Glossier is a people-first beauty company on a mission to give everyone a voice through beauty. This role will drive excellence in demand planning and S&OP for all channels and geographies, leading the demand planning team and cross-functional participants to monthly forecast consensus, delivering new product innovation forecasts with market intelligence applied, as well as establishing S&OP processes while improving integrated business planning as a whole.
Director of Customer Success, Real | Real is a mental health care company combining a digital platform and in-person experience to integrate empathy, design, and progressive care in an elevated end-to-end mental healthcare experience. This role will build and lead Real’s customer success function with a vision and strategy to provide customers with a voice, support, guidance, and knowledge resources that maximize their experience with and impression of Real. As the first person in this role, this leader will design and launch Real’s account management and customer success discipline.
There are ~577 other openings on our jobs site. Check ‘em out.