I have been a General Partner at Trinity Ventures for over 16 years with my primary focus being on investments in the business and consumer internet services verticals, in companies such as ThredUp, Zirx and RelayRides.
The importance of recognizing both subtle and seismic shifts within the tech industry cannot be overstated and, with the pace of innovation as it is, more and more companies need to learn to adapt.
At Trinity Ventures the one growing shift we’re seeing is the rise of the millennials and their influence on the tech consumer market. If your company plans to capitalize on this generation, by optimizing for millennial markets, you need to learn the ways of a new breed of consumer.
Optimizing for millennial markets
The first half of 2015 saw smartphone adoption among mobile subscribers crest 75%.
Not surprisingly, entrepreneurs have responded to this trend by evangelizing “mobile-first” experiences.
This means optimizing products for smaller screens with simplified user flows and a more visual experience. However, while the concept of “mobile-first” is important, a larger sea change is afoot as the generation that came of age with mobile devices – the millennials – enter the workforce.
The millennial generation has distinct needs and problems, and an enormous opportunity exists for entrepreneurs building companies that are not just “mobile-first” but “millennial-first.”
Why millennials matter
Here’s why millennials matter, and why optimizing for millennial markets is worth the time: their generation is big, larger than that of the baby boomers (87 million versus 76 million [USA figures] respectively).
They are also incredibly diverse; they are multi-tasking digital natives and their teens and early adulthood were shaped by the 2008 recession, unprecedented levels of student debt and underwhelming professional prospects after college graduation.
As a result, their approach to life is consciously very different on a number of fronts: they are skeptical about the successes and values of previous generations, they blur the lines between their work and personal lives, and they want access to products and services, but not necessarily ownership.
To borrow a phrase coined by Deep Focus’ Cassandra Report, they are “NOwners.”
Optimizing for millennial markets and building businesses that tap into millennials’ different approach to life is the opportunity for entrepreneurs.
The millennials checklist
For starters, millennials care about brands’ values, or the “why” behind a company; they want to feel good about their choices, and to be able to share their stories on social media.
Kickstarter, a funding platform for creative projects, has raised more than $1.6 billion from 8.3 million people since its 2009 launch. It has funded 81,000 projects, all of which featured a personalized “why,” or story, to solicit funding.
Thredup, a “recommerce” site whose mission is to inspire a generation of consumers to think second hand first, processes and posts online tens of thousands of “like new” clothing items every day. The company prints the benefits of collaborative consumption on the bags it sends to customers who wish to clean out their closets, reminding them that they are saving money and helping the planet.
Both Kickstarter and thredUP are optimizing for millennial markets by understanding that millennials care about the values of the brands with which they engage, so they liberally share those values and the stories that illustrate them.
Millennials also want immediate gratification.
They grew up with Google providing instant access to the world’s information and Amazon Prime’s next-day delivery service—so they believe that access to everything should be that easy.
The leaders of the on-demand economy, like Uber and Zirx, are tapping into those immediate gratification impulses by redefining traditional industries which were long-overdue for innovation. These companies feature diverse offerings and access where and when consumers expect it— perfect examples of optimizing for millennial markets – with no strings attached.
Similarly RelayRides, a P2P car rental service, not only offers a wide diversity of cars ranging from SUVs to sports cars, but recently introduced a “delivery anywhere” feature, designed to fit naturally into consumers’ lives.
No silver bullet model, unfortunately
When it comes to optimizing for millennial markets , one size does not fit all.
Millennials do not conform to traditional norms of work and education: many choose to pay by the class for their degrees—across multiple institutions.
They then work multiple part-time jobs, never expecting to stay much beyond two years.
Chegg has expanded its offering from renting textbooks to now providing a range of services: customers can create their own education support program, paying as they go the entire way. As Anne Dwane, the Chief Business Officer at Chegg, noted to me: “students want unbundled, pay-as-you-go, easy access to products, services and information so that they can customize an education support program to meet their needs.”
There is a considerable chasm between the millennial and previous generations, and the resulting difference in outlook and lifestyle should not be underestimated.
If your company aims start optimizing for millennial markets, ie, to appeal to an enthusiastic demographic of unprecedented size and power, you’ll want to build a millennial-first business model, which offers purpose, personalization and immediate gratification.