Gen Z Behaviors & The Consumer Renaissance
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Gen Z Behaviors & The Consumer Renaissance
We tend to overestimate technological change and underestimate social change.
Take The Jetsons. The Jetsons was an animated sitcom in the 1960s about a family living in a futuristic society. The show has flying cars, holograms, and a robotic housekeeper. But Jane Jetson—the matriarch of the family—is a stay-at-home mom whose hobbies include cooking, cleaning, and shopping.
The creators of The Jetsons could imagine a future with incredible inventions, but they couldn’t imagine a future with a working mom.
Our bias to technological change also resonates in the famous Peter Thiel quote, “We wanted flying cars, and instead we got 140 characters.” While Twitter wasn’t a technology breakthrough, it catalyzed an enormous shift in how we communicate. Often the largest and most consequential companies are born from shifts in how people interact with technology, rather than by new underlying technologies themselves.
This decade will see major innovations—artificial intelligence, virtual reality, autonomous vehicles. But just as significant will be behavior changes that shape the next generation of companies. Gen Z is at the forefront of these new behaviors.
There are nearly 3 billion Gen Zs alive today, roughly defined as those born between 1995 and 2010. The $143 billion in spending power that they wield is set to increase 70% over the next five years.
Gen Z behaviors are interesting to me for a few reasons. They’ve become the driving force shaping culture. Understanding them is key to be a good venture investor. And most of all, they give me an excuse to spend hours on TikTok each day (#research).
This week, I’m looking at five broad characteristics of Gen Z and how each is changing how people and technology interact.
1️⃣ Community-Centric & Radically Inclusive
Both Baby Boomers and Millennials have been called the “me generation”, prioritizing self-realization and self-fulfillment. Gen Z, by contrast, is the “we generation”: Gen Zs are deeply focused on building inclusive communities.
For previous generations, consumption was about possession or status. For Gen Zs, consumption is about buying access to a community. This shows up in Discord’s success: nearly every Gen Z brand, creator, or organization has a dedicated Discord server. These servers have become living, breathing nuclei for communities.
Gen Zs want connection, and the most exciting companies being built are those that help them find and nurture it. Itsme is a new entrant to the App Stores charts (#54 as of this writing). Itsme lets you customize an avatar that tracks your face in real time using your phone camera. The app then randomly matches you with strangers based on age, gender, and interests. The entire product is built around finding community.
Another social app with similar ethos is Monet. Monet’s core belief is that drawing is the fastest and most authentic way to meet people; the app prompts you to start conversations by sending a doodle.
Monet bills itself as a dating app, but it’s more than that. If Tinder is about utility—finding a date or a hook-up—Monet is about connection.
A related tenet to community is radical inclusivity.
Gender is an interesting example here. Billie Eilish, Gen Z’s biggest music star, is relatively genderless in her clothing and behavior, defying industry norms of how women should look and act. Eilish’s style embodies her generation’s attitude toward gender: less binary, more fluid.
48% of Gen Zs—compared to 38% of Millennials—say they value brands that don’t classify items as male or female.
In my personal favorite Gen Z behavior, Gen Z men are evolving our culture’s definition of masculinity. (Men’s make-up and skincare sales are surging as a result.)
Gen Zs care about building strong, close-knit communities. Anyone can be a member of these communities, and diversity is embraced and celebrated.
2️⃣ Playful, Joyful, & Serendipitous
Tasha Kim recently noted the rise of the “Gen Z aesthetic”—an emphasis on quirky, bright colors on the websites of Gen Z-focused brands like Thousand Fell, Studs, Starface, and Bubble.
This aesthetic reflects Gen Z’s fun, lively nature, which companies are leaning into. In How Companies Can Create and Capture Virality, I wrote about Chipotle’s shrewd collaborations with David Dobrik. Dobrik’s Lid Flip Challenge and #ChipotleSponsorMe campaign (along with his entire persona) embody Gen Z playfulness. Other examples include MCHF building its business model around absurd product drops and the rise of 👁👄👁 among Gen Zs. If you don’t know what that means, 👁👄👁.
Established companies are adapting their marketing to fit these behaviors. Square’s Cash App is even embracing drop culture:
“Boring” brands like Martinelli’s are retooling themselves as playful and fun:
They’re smart to do so. Dismissing Gen Z’s playfulness might mean that your company misses the opportunity to capitalize on a brand-defining moment.
Gen Zs take themselves less seriously than prior generations, recoiling from staid or overly “corporate” brands. It’s in a brand’s interest to shed old-school professionalism for serendipity and joyfulness.
3️⃣ Deeply Creative
In a 2005 interview with Wired magazine, Barry Diller—the archetypal media mogul, ex-CEO of both Paramount and 20th Century Fox and founder of IAC—weighed in on the future of media:
“There is not that much talent in the world,” Diller said. “There are very few people in very few closets in very few rooms that are really talented and can’t get out.”
“People with talent and expertise at making entertainment products are not going to be displaced by 1,800 people coming up with their videos that they think are going to have an appeal.”
You’d be hard-pressed to find a statement that proved more wrong. That same year—in a tiny room above a pizzeria in San Mateo—a company called YouTube was founded. Instagram, Twitter, and TikTok soon followed. It turned out that there was a lot of talent in the world, and all it took was internet platforms obfuscating the traditional media gatekeepers.
While TikTok gets the most attention for reinventing content consumption with its algorithmic, immersive feed, the app was equally groundbreaking on the content creation side. YouTube was first to democratize creation—anyone, in theory, could create and upload a video. But there were still barriers to creation: to be a top creator, you needed money for expensive equipment and specialized knowledge to use tools like Adobe Premiere.
TikTok leveled the playing field:
TikTok then further removed friction through remix culture. Creators borrow each other’s sounds, duet each other, and use the green screen visual effect—each piece of content becomes a potential building block for a new piece of content.
While only about 1 in 1,000 YouTube users also posts to the site, 83% of TikTok users have posted content. And six out of every 10 TikTok users are members of Gen Z. Gen Zs, more than any other generation, express (and monetize) their creativity.
New internet platforms unleash new levels of creativity. A new platform that we’ve backed at Index is Piñata Farms, which lets users easily create and share memes.
You first select a video clip, then easily add text or faces to the clip to meme-ify it.
Memes are an important part of internet culture, and Piñata Farms lets anyone shape culture. The app shares DNA with TikTok, removing the friction to create and helping anyone quickly produce high-quality content that leans heavily on remix culture.
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4️⃣ Scrappy & Entrepreneurial
Relative to Millennials, Gen Zs are more practical and less idealistic. Many Gen Zs watched their Gen X parents lose their savings during the Great Recession, and their financial prudence is a byproduct of that experience.
But Gen Zs are also deeply entrepreneurial: one recent study found that 54% of Gen Zs want to create their own company. This is the generation that grew up developing games in Roblox—and, occasionally, making millions doing it. Young people today are coming of age alongside new platforms that allow more self-directed, flexible work. They can make a living as a gamer with Streamloots (Series A), as a fitness instructor with Core (Seed), or as a knowledge expert with Airschool (Seed).
Gen Z attitudes toward work will drive a fundamental rethinking of the meaning of a career. Work will continue to disaggregate: freelance workers will increase from 65 million in 2020 to 90 million in 2028.
New SaaS tools and internet platforms are providing the infrastructure, while Gen Zs are providing the behavior shifts.
5️⃣ Authentic Individuality
It’s become trite to say that Gen Zs value authenticity, but it may be the generation’s defining quality. Millennials came of age during Instagram’s peak—think perfectly curated feeds filled with latte art and photos from the Museum of Ice Cream. Gen Z behavior is a reaction to this airbrushed online persona; Gen Zs are the finsta personified.
Downloads of FaceTune—an app for making photos look flawless—are down sharply. Millennials have also shifted toward authenticity, but they’re not natively authentic in the way that Gen Zs are.
The rise of Charli D’Amelio, who recently became the first TikTok creator to amass 100 million followers, signals this behavior. No one knows why Charli is so big; there’s nothing particularly special about her. But that in itself is the most likely reason: Charli is your everyday 16-year-old from suburban Connecticut. Her approachability is her selling point.
The best brands embrace authenticity. Dunkin’s partnership with Charli has been so successful because her love for Dunkin’ was well-documented before she ever got paid for sponsored content. (Partially because of Charli, Dunkin’ is now among Gen Z’s most-loved brands.)
The rise of streetwear culture can also be traced to the quest for authenticity and individual expression. Supreme (a brand), Seasons (Rent the Runway for streetwear), and Grailed (a streetwear marketplace that we’ve backed at Index) have all benefited from streetwear’s boom. (Supreme always benefits from the above-mentioned desire to gain access to a community.)
On the more atomic level, personalized products are thriving as Gen Zs seek individuality.
Gen Zs want to be singular. Unlike older generations, they rarely conform to fit in; instead, they embrace individuality and it’s that uniqueness that helps them find community and acceptance.
Gen Z behavior shifts are leading a consumer renaissance. We’re seeing major shifts in how people and technology interact, magnified and accelerated by COVID.
While Gen Z behaviors first showed up in content, commerce, and internet culture, they’re creeping into major swaths of the economy like education, financial services, and healthcare.
Technology is shifting power to consumers; more often than not, Gen Zs command that power.
The most interesting companies touch on all of the behaviors in this piece. Poshmark, which IPO’d last week and surged to a $7 billion market cap, is an example. As a marketplace for reselling, Poshmark encourages frugality while also giving young people a place to hustle and earn income. The platform lets Gen Zs express individuality through fashion. And—most interesting and perhaps most surprising—Poshmark is a community hub: customers in 2019 spent an average of 27 minutes on the marketplace every day.
There are also more horizontal trends that cut through all Gen Z behaviors. One throughline is an emphasis on social impact and “responsible capitalism”. We’re seeing this in companies emerging around core Gen Z causes: Joro, which helps you track and manage your carbon footprint; Folx, which provides healthcare to queer and trans people; Calm, which helps you manage your mental health.
The consumer renaissance will be built in the mold of Gen Z. It will be community-centric and inclusive; it will embrace authenticity and individuality; it will be creative and playful and entrepreneurial.
It’s becoming Gen Z’s world, and we’re just living in it.
Sources & Additional Reading
Generation Z’s Implications for Companies | McKinsey
Gen Z Report | ZebraIQ
The Content Creator Who Can Make or Break Your Skin Care Brand | NYTimes
Open-Source Content | Zack Hargett
If you’re interested in Gen Z behaviors, some of my favorite people to follow are Tasha Kim, Tiffany Zhong, and Taylor Lorenz
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