The CQ | The Future of Search and Daydream's $50M Seed
Plus 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 musings from our investment team. Subscribe now to get the latest edition in your inbox every weekend.
By Kirsten Green, Founding Partner
If Generative AI has exposed anything, it’s that the prevailing search experience is post peak.
Traditional search engines have long served as gateways to the internet for people looking for information, products and services, but as the volume and complexity of options has grown, this value has rapidly deteriorated. The experience is all too often chaotic and ineffective, where ads and SEO take precedence over true personalization. The need for contextual, intelligent discovery is evident.
When it comes to the evolution of search, we believe the future experience won’t look much like search at all. Rather, discovery will take the shape of tailored, dynamic services, where users can not only access information but interact with a highly personalized, actionable edit of what’s uniquely relevant to them. We imagine vertical-specific portals to the world of options: imagine a discovery platform that can book itineraries, style outfits, scrapbook research, turn a mosaic of health insights into tailored action plans, and present financial data in the context of personal realities and goals.
Our investment in Daydream marks an early iteration of this shift, where the diminishing value of search is eclipsed by personal, actionable discovery services. Daydream, which opened its waitlist this week with plans to launch later this year, is a new approach to shopping. Led by retail visionary Julie Bornstein, the Daydream founding team has spent over a decade operating at the intersection of commerce and AI, hailing from Microsoft AI, Google, YouTube’s Gen AI division, Sephora, Nordstrom, StitchFix, Farfetch and more.
Not only is Daydream poised to transform shopping, we believe it has the potential to inspire the new standard in how people seek out what they want.
What We’re Talking About on Slack:
When it comes to the economy, watch what consumers do, not how they feel. Even though consumer sentiment has held quite strong for most of this year, that’s not a sign that spending will remain strong, Bloomberg says. A much better indicator is consumers’ ability to spend, and that’s not looking great. Consumers’ pandemic savings and gains in net worth have been depleted, and consumers are now saving 4% of their income, a low not seen since 2007. Pair that with higher interest rates sticking around longer and a slowly soften labor force, it’s clear we’re seeing smoke signals of more conservative consumer spending.
Related: U.S. retail sales barely increasing in May is a sign of consumer strain. The value of retail purchases rose 0.1% after a downwardly revised 0.2% drop the month before. Earlier this month, a report on consumer borrowing also revealed a pullback in credit-card balances for the first time in three years. “With services consumption growth slowing in recent months and consumer confidence plummeting again, maybe households aren’t quite as impervious to higher interest rates as we were beginning to believe,” noted one economist.
The startup Prenuvo and John Hancock are teaming up to fight cancer in a unique life insurance benefit that people can use while they’re still alive. The insurance agency announced that its customers will be eligible for significantly discounted whole-body MRI scans from Prenuvo, which can detect hundreds of conditions, including Stage 1 tumors, aneurysms, gallstones, endometriosis, and spine degeneration. Important to note that the results from the scans will not be shared with the insurance agency or affect consumers’ rates. “It's a business model that makes a lot of sense for life insurers, who can collect more premiums from their customers if those customers live longer.”
Fast Company looks at how generative AI is clouding the future of search—and small business may be getting hit hardest. After Google launched SGE, search marketing experts and business owners are reporting that spam and AI content are flooding search results, often ranking at the top. There are even YouTube videos explaining how to manipulate Google’s search rankings with AI. To address this issue, Google has started pushing content from human-generated sources, like Reddit and Quora discussions, to the first page of search results. In other words, a search for “kidney stone pain” turns up posts from Quora and Reddit in the top spots along with the Mayo Clinic alongside the National Kidney Foundation. “Google derives more than 75% of its revenue from selling ads on search engine results pages (SERPs). That revenue is reliant on the company’s ability to deliver trustworthy, useful search results. As long as it continues to deliver the goods, it has an audience. But if search result accuracy deteriorates, audiences may defect, and advertisers could follow. So defending the reliability of search results against AI abuse is critical to Google’s future prospects.”
Social-media influencers aren’t getting rich—they’re barely getting by. The average median yearly income for a full-time worker is $58,084. About half of creators made $15,000 or less last year. A mere 13% earned over $100,000. Even with tons of followers, creators don’t necessarily make much—one influencer reported receiving only $120 for a video with 10 million views. A big reason has to do with social media platforms making it more difficult for creators to earn money these days, and the threat of TikTok shutting down causes even more anxiety. Sponsorship deals are also getting harder to come by with brands becoming pickier about working with established influencers and expecting to see evidence of strong engagement with authority to dictate the content. “Now it’s, ‘We’re paying you and this is what we want you to say.’”
The New Yorker explores the rise of the nanomachines: Nanotechnology is essentially the design of extremely small devices at the nanoscale that allows scientists “to manipulate the building blocks of life mechanically, rather than chemically.” These molecular machines can already enter cancer cells and drug-resistant bacteria and rupture them, and now researchers are exploring just what else these tiny machines can potentially do, including deliver drugs to specific points in the body, allow obsolete antibiotics to become effective again, and break down the molecular defenses around tumors. One expert said molecular machines will be less like “an individual tool and more like the creation of a new toolbox,” comparing them to lasers which were invented for military warfare in the 1960s, but evolved to be used for eye surgery, high-speed internet, and tattoo removal.
High network Gen Z and millennial investors are embracing crypto, real estate, and private equity along with stocks, according to a Bank of America survey of 1,000 people who have more than $3 million in investable assets. Over 70% of investors aged 21 to 43 “believe it is no longer possible to achieve above-average investment returns by investing solely in traditional stocks and bonds.” Meanwhile only 28% of investors over 44 believe the same. Crypto and alternative investments (anything from artwork and wine to hedge funds) comprise 31% of younger investors’ portfolios, compared to only 6% for older investors. Growing up, millennials saw the effects of several economic downturns in addition to the pandemic and “that impacts their view of asset allocation, diversification, and risk.” Easier access to alternative investments also plays a part.
Customer experience seems to have gotten worse — again. According to a new report analyzing Americans’ perceptions of 223 brands, the average score was 69.3—declining for the third year in a row since its peak of 72.0 in 2021. Shrinkflation and junk fees seem to be the main gripes as consumers are faced with higher prices. Brands that came out on top of the ranking were Chewy, Tesla, Navy Federal Credit Union and USAA, with the IRS coming in dead last.
AI is getting very popular among students and teachers, very quickly. A new poll shows that the number of teachers who are familiar with ChatGPT increased from 55% to 79% in just over a year. For K-12 students, the percentage jumped from 37% to 75%. Nearly half of teachers and students alike report that they use ChatGPT weekly and research shows that AI has saved teachers 5 to 10 hours per week. Parents are also getting on board, with 68% who have a favorable view of AI chatbots, and 47% who want AI chatbots to be used more in schools. While 52% of students say they use AI to study for tests, 56% say they use it to write essays and assignments. But teachers can also implement AI to check for signs of cheating.
Gen Z leads a revival in pursuing a masters in finance: 27% of Gen Z students are considering a masters in finance in comparison to 13% of millennials, says a new survey from the organization running the GMAT entrance exam. In the last two years, over half of all American finance master programs saw an increase in applications, mostly from Gen Z. Numerous rounds of tech layoffs are driving young people into finance, which offers some of the highest salaries and more stability. Business schools are responding to Gen Z’s interest by incorporating social responsibility, ethical investing and sustainability into their courses as well as covering more tech topics like blockchain and artificial intelligence.
Portfolio Highlights:
Daydream’s seed funding is covered in TechCrunch, Vogue Business, Business of Fashion, Feed Me, Mashable, Silicon Angle, and more.
Faire hires Thuan Pham, former Coupang and Uber CTO, as its technology chief, Axios reports.
Oura’s CEO Tom Hale joins Bloomberg Technology to talk about the company’s milestone of 2.5 million Oura rings sold.
The New York Times’ The Athletic, Men’s Health UK, and The Daily Mail report that England’s national football team is wearing Oura rings at this year’s Euro Cup.
Kelley Morrell, CFO at Wonder, visits Future Food Cast to discuss how the company is changing food delivery.
WWD shows the beauty industry’s most beautiful offices including those of Glossier.
Business Insider declares “travel agents are back,” with a mention of Fora’s use of social media.
There are ~580 open jobs at Forerunner portfolio companies, check them out.