🍌 14 Charts on the US Consumer
Health is the new wealth, startup valuations increase slightly in Q2, why Gen Z doesn't tip, and a potential cure for cancer enters Phase 1 of clinical trials
A lot going on here at The Split / The Peel / Banana Cap the past two weeks.
First, we’ve ramped up recording on the podcast. Some guests you’ll hear from over the next two months include the founders of Medal.tv, Modern Treasury, Deel, Webflow, Linktree, and GlossGenius - plus many more playing calendar battleship that I should be able to share soon.
Smash those follow buttons on Apple and Spotify to get them in your podcast players the moment they drop. And if there’s any founders you’d like to peel back the curtain on their business, industry, and founding story, please let me know!
Second, we sent our Q2 '23 update to all Banana Capital LPs. If is something you’d like to see, let me know and I can share a redacted version with everyone here.
Today I’m highlighting my favorite chats from the latest Consumer Trends report. Put together by Dan Frommer at The New Consumer and Coefficient Capital, its one of the few reports like this that’s actually worth reading.
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14 Charts on the New Consumer
The Consumer Trends report from The New Consumer and Coefficient Capital is one of the few of these reports that I read all the way through every year. I’d recommend reading the full thing yourself, but a few of my favorite charts:
Health is the new wealth: Across every income demographic, Americans would rather be 25% healthier than make 25% more money. And they tend to prioritize health even more as their income increases.
Young consumers value trust: Gen Z and Millennial’s say its 3x more important that they admire and trust the founder of a brand than baby boomers.
Young Consumers also like creator-founded brands: Considering the popularity of YouTube and TikTok, for internet native generations this is just the modern-day equivalent of seeing a brand on TV.
And those creators can drive product exploration: Even in new categories where a consumer isn’t necessarily a regular buyer.
But customers don’t come back: The problem is exactly that - the purchases are more discovery than long-term relationships.
Consumers still care about product quality: It begs the question, is the low repurchase rates of creator brands a quality issue, or something else?
TikTok users don’t care about its Chinese ownership: It shouldn’t come as a surprise, but regular users of TikTok don’t think it should be banned in the US.
Support of TikTok decreases with age: The opinion on whether or not TikTok should be banned ultimately comes down to age, which also likely reflects its adoption across demographics.
Food delivery is changing consumer buying habits: There’s a very wide range in how younger and older consumers order from restaurants. Personally, I’m not sure if this related to how intent differs amongst age groups (IE younger generations use them for discovery) or if older consumers just stick to their favorites (which isn’t a new phenomenon).
Consumers are drinking less alcohol: This isn’t a particularly new trend, but it’s interesting to see how much “physical health” shows up in the reasons why.
The banking crisis negatively impacted perception of tech companies: This was one of the most surprising slides to me. While the underlying reasons for the crisis weren’t specifically due to tech companies in particular, it also strangely had just as much of a positive impact on consumer perception as well.
I wonder what the same question would look like in terms of perceptions around NFT / crypto after behaviors the past few years?
Older, city-dwelling males with kids are the happiest: Across the board, Americans that are older and have kids appear to be the most satisfied with life.
“Life Satisfaction” is on the rise broadly: Consumers overall are happier, up 14% over the past year.
Remote work should be a legal right: I think this was the single most surprising. I’m not sure how exactly this could be implemented, but 79% of US consumers believe there should be a legally protected right to work remotely. This feeling is strongest amongst women, younger generations, and people with children.
These 14 charts stood out to me the most. The full report has 103 pages going even deeper + many more (like charts on AI and weight-loss drug Ozempic).
🚀 Product Launches
Pokemon Sleep Passes 3 Million Downloads in Two Weeks: If you remember Pokemon Go, its a similar concept. However instead of walking around town, you catch Pokemon from sleeping. Sleep is some of the lowest hanging fruit to increase personal health, and it’s not surprising to see products like this taking off considering the poll results above.
Microsoft Launches AI Subscription for Office: The $30/month subscription unlocks generative AI features across Teams, Excel, and Word. Even if only a fraction of Offices 1.2 billion install base upgrades, that would equate to tens of billion in annual, high-margin revenue tacked on to Microsoft’s existing products.
Spotify Teases AI-Powered Personalization and Ads: It also raised prices, a crucial test in the Warren Buffett investment checklist. Personally, I could see AI-generated audio (music, audiobooks, ads) reaching human-like parity much faster than in video. Spotify could be one of the first incumbent consumer tech platforms to see real benefits from generative AI.
🔗 News and Charts
Startups Are Getting More Lean: And surprisingly, this wasn’t a new phenomenon in 2023 or even 2022. Startups are doing more with less.
Startup Valuations Are Bouncing Back: Q2 median valuations were flat or up across every funding round, as tracked by Carta. I don’t expect them to rebound much higher very fast, and this likely reflects the return of healthy companies raising at market-priced valuation multiples.
The State of Databases: Basedash just released its annual State of Databases report. PostgreSQL still dominates, coming in as the highest-rated database in the survey (over half of respondents currently use Postgres in production). PlanetScale (based on MySQL) came in a very close second. Notably, there were a few newer products near the top of the ratings, including Weaviate, a vector database that's popular for working with LLMs.
Barbie Spends More on Marketing than Production: Per Variety, rival studios estimate the "Barbie" marketing campaign cost $150 million - more than the $145 million budget used to produce the movie in the first place.
And its working! Lots of fun numbers on its big opening performance last weekend here. Specifically, it was the first time that two movies opened to over $80 million each.
Will Fresh Food Drive Grocery Ecommerce Growth? Perishables have lower online penetration, but are purchased more frequently by customers who buy them. Fresh generally corelates to healthier nutritional value, which also falls inline with what we saw in the latest Consumer Trends report above.
Fertility is Booming: While birth rates decline globally, births resulting from Assisted Reproductive Tech (ART) are growing 6% annually. IVF is now 9% of live births in Denmark. And a recent study finds that in low-income countries a single IVF cycle costs between 50% and 200% of average annual income.
Does Attending an Ivy-League College Matter? It doesn’t have a big impact on average income, but it does increase the chances of becoming “rich” or working at an “elite” or “prestigious” firm.
China GDP No Longer Expected to Pass US: A look at projections over time shows how Chinese GDP growth estimates have declined, which has really shown up in estimates over the past three years. The lower projections seem to largely be driven by demographic issues, namely an aging work force and low birth rates.
Since 1980, China’s Planted More Trees Than the Rest of the World Combined: At least it’s not all bad for China…
Only 35% of Gen Z Always Tips Their Server vs 83% of Boomers: Boomers are higher tippers in every category, which includes food delivery, ride hailing, and hairstylists.
Americans Are Running Out of Money, Racking Up Credit Card Debt: Gen Z credit card debt rose 4.2% to levels exceeding $3,300 on average, while millennials increased their credit card debt by 2.5% to an average of nearly $7,000.
US Per Capita CO2 Emissions Continue Falling: There’s much more to do, but from what I can tell, it is not widely understood that US per-capita CO₂ emissions have fallen below WWI levels. Some of this is likely due to outsourcing CO₂-producing industries, and I’m interested if anyone knows how much!
How Global Warming Regulations Accidentally Increased Global Warming: In a lesson in second order effects, a 2020 regulation around sulfur emissions from ships had the adverse effect of increasing global temperatures. This is because SO₂ seeds clouds, and a drop in sulfur emissions caused a warming effect that became extremely noticeable over the past year.
Instagram Reels Revenue Run Rate Hits $10 Billion: Up from $3 billion in the fall of 2022 and $1 billion last summer. This compares to TikTok’s $9.9 billion worldwide (outside of China) in 2022, and forecasted $13.2 billion in 2023.
Most of Instagram’s revenue (and Facebook more broadly) comes from the US, however TikTok has nearly 2x more average time spent per US user. Instagram does benefit from Facebook’s existing advertiser relationships, which is why I still think TikTok’s bigger opportunity is ultimately in enabling commerce, not advertising.
Finally, a wild three paragraphs of stats highlighting the slow pace of corporate and government tech adoption. h/t Trung Phan for sharing.
Quick headlines in case you missed them:
📚 Long Reads
The making of ‘Acquired,’ the No. 1 tech podcast sensation: Amazing look behind the scenes of one of my favorite podcasts.
How Bad is CO₂? A fascinating exploration of the Earth’s relationship with C0₂ and temperatures over the last seven billion years. I recommend the full piece, but in summary:
Historic C0₂ levels were much higher than they are today
This benefitted plants, which made them grow fast, and their byproduct covered the Earth in oxygen
Over the past 100 million years, sea levels have fluctuated within a range of 1,050 feet, or 0.20 miles
Rising C0₂ levels and temperatures aren’t actually bad for the Earth - but they are very bad for humans and our current way of life.
The Trillion-Dollar Grift - Inside the Greatest Scam of All Time: A look at pandemic-era relief programs and how enabled some of the greatest fraud schemes of all-time. Most of which we still don’t know the scale of the damage.
Did They Find a Cure for Cancer: A fascinating paper on a cancer drug that kills 100% of solid tumors across 70 cancer types (in both animals and synthetic test environments) with no side effects. Phase 1 trials are underway, which means they’re starting to test it on humans, with commercialization at least a few years away.
How startups should think about virality from the ex-VP of Growth at Facebook, Alex Schultz.
ICYMI last week, here’s the latest episode of The Peel with Dan Porter, the Co-founder and CEO of Overtime.
We spent 70 minutes talking about the business of sports, how he founded and scaled Overtime to 85 million fans, and how OT has launched three of its own sports leagues. The episode is packed with lots of hard-earned lessons.
🐵 Monkey Business
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