We do an in-depth episode on our “saviour generation” (as Nuno calls them), gen Z: who are they, what do they stand for, what are their aspirations and hopes, why does it matter so much, how entrepreneurial will they be, how will they engage, what products and services will they use – in commerce, social, entertainment, gaming, finance, how to reach and appeal to them.
- Definition of Gen Z (1:31)
- Aspirations & Hopes (4:13)
- Why should we care? (08:57)
- Openness & Consciousness (10:31)
- More or less entrepreneurial? (12:33)
- Growing up ‘mobile-first’ (16:55)
- Institutions and political engagement (20:49)
- What apps do gen Zers use? (23:26)
- How do they play mobile games? (28:00)
- What social apps do they use and how? (30:27)
- What entertainment apps do they consume and how? (32:59)
- How do they use shopping and financial service apps? (34:25)
- Gen Z at work and their career development (39:33)
- How to reach and appeal to Gen Z (47:13)
- Gen Z – Conclusion (48:37)
- App Annie, How To Win Gen Z on Mobile – http://bit.ly/2w8TvVJ
- Criteo, Gen Z Report Based on the Criteo Shopper Story – http://bit.ly/2IOv0Qr
- McKinsey, True Gen: Generation Z and its implications for companies – https://mck.co/39W0noe
- Morning Consult, Understanding Gen Z – http://bit.ly/33pbeV1
- IBM, What brands should know about Generation Z shoppers – https://ibm.co/33qWXXZ
- Imagen, Switched on Superfans – http://bit.ly/3aRZahA
- Deloitte, Understanding Generation Z in the workplace – http://bit.ly/38TT6nx
- Google, Gen Z: A Look Inside Its Mobile-First Mindset – http://bit.ly/2TT65BK
Subscribe To Our Podcast
Full transcription: may contain unintentionally confusing, inaccurate and/or amusing transcription errors
Bertrand: Hi Nuno, how are you today?
Nuno: I’m well, and you Bertrand?
Bertrand: Pretty good, pretty good.
Definition of Gen Z (1:31)
Nuno: So today we’re going to talk about gen Z. And as I normally call it the generation that will save us all. So let’s start by understanding what we mean by gen Z, or at least going back to what people understand as gen Z at this stage.
The definition seems to be people that were born either from 1995 to 2010 or 1997 to 2012, but certainly an interesting bulk of the population. Seems like 23% of population today would fit into a gen Z, which is a significant part of the U.S population. 74 million people to be more exact.
Bertrand: It’s one third of the world population.
Nuno: So again, either they save us all or we are all doomed in effect. So significant part of population, clearly very interesting because they represent a shift from millennials who came before them. And, today we’ll talk quite a bit about the different things that are being observed in the market, coming from a bunch of very different surveys that are quite interesting in their findings.
But do you want to go a little bit into, what do you think characterizes Gen Z at this stage?
Bertrand: Yes. It’s not only the generation after the millennial, but obviously what it means, it’s the next generation of consumers. And not just that, but they are moving from being at their parents, not having direct income to actually coming out of university or coming out of high school and having money to spend.
Also, it’s one of the generation actually, wtih quite strong influence on the family spend. So even if they didn’t have the money before, they were influencing the whole family more than some other generation before.
Another piece: that’s the first true mobile-first generation.
That’s pretty exciting for me as a mobile guy.
Nuno: For me as well.
Bertrand: To see a generation who doesn’t know what is a fixed line phone or barely knows, doesn’t know what is a floppy disk, doesn’t know what is a radio. When you see the stats, we are talking about 95% plus, at least in developed markets, if they are beyond 16, having a smartphone. And also strong penetration, even around 10-year old .
Nuno: And so if we had call the millennial generation a digital generation, this is definitely a different type of digital generation. It’s a digitally native mobile generation where people do use mobile phones more than they use their laptops or PCs.
Where they were absolutely born digital, where they were born with social networks, right? When they were young, there were already some social networks around. And so they’re very much used to that type of consumption and interaction. We’ll come back to that later in terms of what trends people are seeing around communication, et cetera.
Aspirations & Hopes (4:13)
Also, very interestingly, a generation that seems to be very different, in terms of what their aspirations are, in terms of what is the truth to them, in terms of what matters versus doesn’t matter. And, I usually call it the “Oh crap” generation because they’re probably the first generation that sort of figure it out. We have a bunch of issues that we have to solve around the world right now. Climate change and poverty and clear issues around how tech is affecting people. And all of a sudden, I think they’re growing up into all these problems at the same time, all these issues that are surrounding them globally.
So, as I say, I call them the “Oh crap” generation, and I laughingly, as at the beginning of this show, I said, I have great hopes for this generation that in some ways they can help us move forward on a variety of topics, which to be honest, I don’t think we as gen Xers and millennials have been able to do to a certain extent.
Bertrand: Yes, even if actually at some point we have to acknowledge, the percentage of population below the poverty line was probably 90% of the world population hundred years ago.
And now we are probably at 10 or 20%. I think that previous generation did a lot, and they are inheriting actually world that is much better in so many ways.
Nuno: Yes, but at the same time, it’s also a world that’s facing its own new asymmetries. Peter Drucker wrote “the post capitalist society” book in the 90s, and I think we’re finally talking about a society that is led by knowledge where you’re either sort of part of the info rich or the info poor, where there’s a lot of asymmetries of information, of influence.
We’ve talked about that. We won’t go into a lot of details on the whole situation of politics around the world, and in the U.S., but certainly there’s a lot of debate around the influencing of politics and who can influence politics, who can influence government, et cetera. So I think in some ways they’re inheriting a bunch of other asymmetries and they are inheriting a world which depending on who you’re talking to, might face dramatic issues, for example, around climate over the next four to five decades, which directly impacts them as a generation, certainly will impact millennials as well, maybe will impact the generations like ours a little bit less, right. In terms of livelihood.
So I do think, it’s point taken on the poverty line and where it stands, but at the same time, I think we’re facing a whole new deal of issues that might not be just explained through capital. Some of it still is, we talked about healthcare, last week, and that seems to be still influencing capital. And we talked about people that go bankrupt, just because of their health bills. But in some ways, I think they are inheriting a complex world as well to operate in. A world that’s going through a lot of upheaval in terms of political system, in terms of government, et cetera. And the reason why I’m so optimistic about them as we’ll go into details in a second, is it does seem to be one of the more open generations, one of the more dialogue prone generations, one of the generations that really doesn’t take, prejudice, or preconceptions as part of the deal they won. And I think that’s what makes me very hopeful about this generation. Obviously, like everything in life, we’re oversimplifying, as you said, almost a third of the world’s population. So I wouldn’t want to, but there are certain characteristics about them that we will discuss today that, as we’ll see are quite profound and at least lead me to be hopeful.
Bertrand: I agree they would be facing some interesting challenge, like probably every generation before them. Just a different set of challenge and I think personally I am on the positive they are inheriting? And at the same time, I think they are very well placed to do something about it.
Because when you, we talk about communication, for instance, that’s the first generation to have been raised with a phone in their pocket, always available, always on, immense level of information. I remember reading this article a few weeks ago, they were making the reference to the level of access that a five year old in Africa with his smartphone could have versus even Bill Clinton in the early nineties.
Yes, he could have access to the right information with advisers after a few calls or stuff and 30 minutes of search, but actually that young person will have more information right away at his or her fingertips. So I think there is a change, and at the same time, as we have seen recently, it’s not as if you can trust everything out there on the Internet.
So that’s raising a…
Nuno: … different sort of issues.
Their way of interpreting news and interpreting what they’re seeing online as well, is maybe much more nuanced than some of the older generations, which is also positive. So, we talk a lot about dialogue and the ability they have to talk to with friends and being influenced by friends as well.
So there’s maybe a little bit of a silver lining there.
Why should we care? (08:57)
Let’s move into, why should you care about this generation? Well, one, its significance. It’s a different part of the world population. They are growing in capability to spend money significantly. So they are purchasing things. They are purchasing services, they are getting a lot of things that they need, and they’re influencing significantly the purchasing ability of their friends, of their parents, of their family around a number of very specific things: certainly around experiences, around food and around a couple of other areas; less so in areas that are probably more conservative or where the household has a different dynamic.
Bertrand: So to share some numbers on that, if you look at the U.S. alone, 16 to 20 year old, they spend $44 billion annually, and influence an estimated $600 billion in spending. So I think that’s the part not to forget. One, they are going to spend way more once they start working. But two, they are already influencing big time.
Nuno: It’s already happening and it’s only gonna continue as obviously they move into the workforce, they start working, they start having obviously the capability to generate income at a more significant level.
So clearly a generation that, makes sense to really keep an eye on. And also a generation that makes sense to keep an eye on, because their expectations, their way of looking on the world is very, very different from previous generations certainly. And you know, we talked already a lot about, the ability to dialogue.
Openness and Consciousness (10:31)
There’s a lot of openness in this generation and not a lot of prejudice and preconceptions. And so when the average Gen-Zer, again we’re always talking about the average Gen-Zer, comes to the table, he or she, when they engage a conversation, they engage truly in the conversation. They really want to see both sides of the table, have a view on how does that influence the world in general and not just themselves.
It’s also a very socially conscious generation, and impact conscious generation. They need to figure out why are they doing what they’re doing in terms of their activities. They need to understand what brands and corporations stand for. We’ll come back to that when we talk about hiring and when we talk about the workplace. They’re actually seemingly more motivated towards their career, but not really interpreting career as the only thing they would do. I think, and this is particular important for American society, which I think for many generations has lived this notion of American dream that you need to work your butt off, to really have a great living and to give a great living for your family.
I think while this generation is probably taking their career very seriously. At the same time, there seems to be also the notion that the career is to make money, and to prosper and to go to the next level. We’ve discussed this in the past, but there’s certainly a lot about gen Z that relates to their entrepreneurial spirit.
And so one of the key things there is that the average Gen-Zer, by the time they’re 23-24 will have done a bunch of side gigs, and they will have made some money. And the reality is because it’s so easy to make money online now , it’s actually almost like a “du jour” thing, but it’s in some ways a very significant thing. If we think about entrepreneurs, and you obviously are an entrepreneur, I am a venture capitalist, so when we’re starting to see 25 year olds, 27 year olds maybe they don’t have the work experience that others would have at 34-35 but they certainly might have more of an entrepreneurial outlook.
They’re certainly more aware of the digital tools that they have to generate income and to do things out of.
More or less entrepreneurial? (12:33)
Bertrand: So on that topic actually, I think some reports we read were pushing a different view, the view that they might be less entrepreneurials than the gen Y and the Millenials. And yes, they are doing jobs in different ways as a freelance, as a gig. They want to have part time opportunities, all of this, no question. But the part around entrepreneurship: I’m going to start a business and build a business and hire people and all of this, it looks like, at least from some of these reports, that this might be actually pretty significantly lower than the previous generation.
Nuno: So maybe more conservative in terms of what they’re doing, but more multifaceted in the types of gigs that they’re doing just to generate income. So income being a tool, not necessarily going after the next big thing as an entrepreneur.
Bertrand: And some say, interestingly they want safety of income. One thing to keep in mind, is that they saw their family, their older brothers or sisters going through tough times in 2008, 2009, 2010, so I think there is a stress about that time from them. So I think they are looking from some level of stability, but in a way, stability might also be seen as completely compatible with: I’m going to do some gigs that I can check in, check out at the push of a button and get money in a certain way.
So their definition of certainty or stability of income is interesting
Nuno: it’s quite different.
So maybe more a hustling generation than an entrepreneurial generation. Someone create side hustles who gets some income out of it, maybe less entrepreneurial.
Bertrand: Yes. I was interested to read this is profile of a young person around 18, and he was joining a very big company, learning his job on site, but at the same time he was spending the weekend selling stuff at some department stores in order to have access also to cheaper clothes and stuff.
So for me that was very interesting. I don’t think that was typicall when you have a good job at a big company to start looking at additional gig.
Nuno: And one of the reports we saw showed something really interesting, which is a generation that sometimes it’s more reengaged with capitalism than the previous generation, but at the same time, a generation that also believes more in socialism than the previous generations.
Again, it seems like this is sort of counter sensical or a little bit of an aberration, but it actually does make sense because if we do believe this is a more open generation that’s willing to really see the facts. Both of those make sense. In some ways, the notion that capitalism provides the ability to grow and to have a great life, but at the same time that you need certain parts of society to be sort of protected in some ways and bring this element of socialism into it.
It seems, it seems like a paradox when you first take a look at it, but I do think there’s something in it. I know you’re going to object to this immediately, but I do think there’s a sense of openness that sort of aligns more with the capitalist society that is much more forgiving, that provides sort of a safety net for people that don’t have the opportunity to do as well.
Bertrand: So I think most of the reports we been compiling are focused on developed economies , and I think this generation is probably the first to have lived after the fall of the Berlin wall.
Nuno: Since I’ve been in the U.S. every time I mentioned the word, socialism, there are very strong response to it. So let’s sort of unbundle, what it means as a title and as a movement. I think at the end of day, they were talking about a more socially aware society that’s really much more forgiven, forgiving to certain parts of its membership and citizenship. I do think there is a social awareness that needs to exist in society.
So this whole notion of capitalism above all things, is not working anymore. Right? So people do see a capitalism that is different, that maybe is a little bit more positive, that maybe is actually still a bit more forgiving and that’s how I interpreted those results. I don’t think it’s about saying that socialism as a political system is what they want, but it’s more sort of that social notion of society.
Bertrand: Yeah. I think if we talk about social awareness it’s a different story, but again, let’s not underestimate the part that, these are people who are born after the fall of the Berlin wall, and that’s probably in my mind of the key element that define that generation.
You could argue another one is the ongoing war on terror, they have not really known a world without that. That’s probably another angle for them on how they see the world.
Growing up ‘mobile-first’ (16:55)
Nuno: Interesting. Maybe let’s talk a little bit about a couple of other interesting elements there. Their tech skills are almost embedded, you know, this generation sort of grew up with their iPhones and their Android devices.
Actually, there is a report that shows that it’s pretty evenly distributed, certainly for certain countries. The Android and iOS penetration. More surprising. That was a bit of a surprise for me, to be honest. But clearly much, much more savvy from a tech perspective, but also that has another side to it, which is their expectations.
Which does provide a more complex sort of arena, if you’re a product developer and a product manager because they are expecting stuff to just be sort of flawless at the end of the day.
Bertrand: We will all benefit, they are probably the first one to say, you know what? I’m not going to transact if your stuff is too bad. Because it’s simply not acceptable for them.
And that’s one point I like to always come back. That’s a generation that grew up on Instagram and Snapchat, very, very, very refined apps, that think gen Z first actually, in term of how they are designed.
And I think that a lot of existing apps or website will have to adjust to what is top of mind, in term of apps, for this generation. How do we manage to adjust our design or UX expectations? Like these guys have been adjusted for years, because that’s a new reference point.
That would be YouTube as well and others. So I think that’s a big one to keep in mind.
Another effect when we talk about: they are the most tech native population. One thing though to keep in mind? In term of you know how it works, in term of you are able to understand deeply how these objects are working, it might be a different story. And you could argue it might be actually worse in some ways because now you have these systems and machines that are relying on layers and layers of technologies.
Nuno: I am a little bit less sure on that. I think certainly in certain markets, mostly, the more developed markets in terms of education, STEM has become something that’s pretty pervasive.
People do program pretty early, or programming and coding skills embedded pretty early into their lives as students. So I’m not sure that’s necessarily the case. I do think there is maybe less understanding of the core infrastructure below it potentially. But certainly at an abstraction level of coding and developing and thinking through algorithms and logic, I think they might actually be sort of one of the most significantly well-prepared generations of our recollection, for sure.
Bertrand: I think my point was, a way kind of that: it’s not because you learn how to code in PHP that you understand all the layers.
Nuno: You’re talking like a true computer engineer.
Nuno: Unless you understand, C or assembly, you don’t get it.
Bertrand: Exactly and in a way 20 years ago, you had usually no choice, but to understand a bit what was below because you had to get that juice out of the system, to get the best performance. And now you don’t, your iPhone has so much much computing power that everything is easy.
So I’m not saying it’s a big worry because it doesn’t matter in many, many scenarios.
But for instance, I’ve heard that some companies have really trouble now to find any competent assembly engineer. And newer generation probably don’t care in so many instance about even bothering learning that at some point. It’s more for the older generation to keep going, keep the flame alive so these systems still can be developed or maintain, but it will be interesting.
Nuno: Yes, I agree with you. I do think there is probably an operation at a high level of abstraction because there’s a lot more tools today. The languages have become actually higher level by themselves and so certainly there may be a challenge there.
Institutions and Political Engagement (20:49)
Let’s talk about their views of institutions and sort of political engagement, religion, this will be an interesting one, and sort of Americanness in the case of U.S. GenZers. Sort of the high level, and then we can have a bit of a discussion on this. It seems that they are less American , which probably alludes to them be more global and a little bit less feeling this notion of patriotism. Less religion, we’ll come back to that as well. And then, fairly politically disengaged and distrustful. How do you see this, how do you see these findings?
Bertrand: It’s interesting for me that search for truth. It seems good: you want to understand, you want to go more in the weeds, and I think that’s probably because you can have access to more information than before, so you can believe at least that you can get to the truth. Again, I think as we are seeing today, actually the truth might either be: not that easy or simple, or actually there is so much false truths out there that it’s not an easy one to get to. It’s not an easy path to get there, that’s probably my point , but it’s good to have that mindset.
Nuno: I think there’s clearly a lot more mistrust towards, you know, authority and the definition of an institution, which is basically not necessarily negative. There’s a bit more questioning about why should we trust this institution versus not.
The religion one is interesting because as you said, there is a significant search of truth. There is a significant sense of what is the world about, et cetera, which in some ways might lead to religion. So maybe we’re seeing a generation early on in their path rather than later on their path.
But certainly it’s interesting to observe what that means over time. And the Americanism for me is very much linked to this notion that we’re now very global citizens. We interact with people from all around the world. And there’s also some research that does suggest that sort of this distinction between, who my friends are online versus who my friends are in real life is much less strong for gen-Zers, right?
They’re still friends. It just happened to be friends that maybe I haven’t met yet. Maybe are in different parts of the world that I have different types of interactions with, et cetera.
Which does allow for this maybe less American patriotic notion notion of the world.
Bertrand: I agree with you on this one. I think the world is more open, you know more easily what’s happening anywhere in the world. Any smartphone can live share video from anywhere in the world. If you look at in the past, there was that core belief around: where we are, where we live, specially in the U.S., it has to be the best place in the world, full stop. And I think there is a bigger question mark now. And I think it’s fair.
What apps do gen-Zers use? (23:26)
Nuno: In terms of, maybe just to finish this section, in terms of what’s cool, very interesting findings. When I first saw the analysis, my immediate response is Google’s doing really well shockingly enough, Snapchat is doing really well, also shocking enough for gen-Zers.
Interestingly enough, Facebook is doing relatively poorly and more than that, if it was not for Instagram, I would say they would be doing extremely poorly. But Instagram sort of seems to save the day for this generation. Besides talking about the future, I do think there’s a lot of innovation that’s still gonna happen around gen Z.
I’m not sure the social tools and communication tools of today are going to be the social tools and communications of tomorrow for gen-Zers. I do think they’re looking for different things. But besides that, that was a little bit my surprise when looking at it.
I mean, Facebook really, if it wasn’t for Instagram, they would be definitely in trouble.
Bertrand: Oh yes, that was such a smart acquisition. Instagram acquisition followed by WhatsApp, quite quickly after, two years after Instagram. That was such smart acquisition, I remember at the time being quite openly positive because I thought it was pretty good business move and people were questioning the value of this investment if you remember. So now it’s easy to criticize, Facebook as an all evil monopoly company. But back at the time of this acquisition, some shareholders were asking Mark Zuckerberg to get fired over this acquisitions. So a lot of question marks at the time and I think he probably understood some writing on the wall, that you have to have a multi product strategy. One product won’t be enough, especially with the younger generation, where you don’t want to be seen with the products of your parents.
Nuno: Yes, on this one, I feel particularly vindicated. I was actually a judge back then. This was months before the acquisition, and I was proposing Instagram as, the app of the year. I’m not going to name the award I was trying to go for or trying to actually nominate for as a judge.
And I was having a discussion with my fellow judges and everyone’s like, well, it’s gimmicky and you know, they have some good numbers, but they had just come through some issues around their end user licensing agreement, that they’d done some tweaks to it around the photos and the use of the photos, if you remember those. There was quite a lot of backlash, which was a strange story. And I was like, this is really fundamentally an important company. These guys are getting it right. They’re going to really serve well Millennials. And I was just booed out of the table.
They ended up not winning app of the year, and like months later they got bought out, and then the same people came back to me and they said, well, Facebook clearly overpaid. And I remember also saying, I don’t think so. I think this was like the play that Facebook has to go after that generation . So now I feel properly vindicated after all these years at this stage.
Bertrand: Yes, and let’s not forget that most of these acquisitions where in stock by Facebook, so if you truly understood and valued Facebook at that point in time, their acquisition as a value per user was not so off versus Facebook. Yes these apps were not monetizing at the time, but on a per user basis, the acquisitions, we’re not crazy at all.
Nuno: Yes. I think there was a lot of also backlash around the fact that it was a small team, right? It was below 20 people, if I recall correctly, at least 20 employees.
Bertrand: Yes, 60 for Whatsapp maybe.
Nuno: Yes. And so basically, I think there was a lot of backlash. WhatsApp we won’t talk about, because it was a very significant acquisition in terms of value , but certainly I think people didn’t quite understand what was the value of hiring these 13 or 15 people. That had this space that was interesting. But what was the next thing about it? And in some ways I think we’re going to go through a similar motion with gen-Zer because in some ways, at the end of the day, we really don’t know what’s going to stick fully with them. I do think the tools we have today and the big services and products are very much gen X, Millennial products that then propagated and became mainstream. I do think we have a lot to see still on the gen Z side, which makes me very optimistic about investing in consumer space there.
Bertrand: Actually, interestingly enough, you could argue that Instagram, even WhatsApp are the anti-WeWork in some ways, and I know it’s a stretch, but you are talking about companies with 10, 15, 20, 50 people, monetizing little, but they were starting to monetizing, insane potential margin, taking the world by storm and getting to a scale of a billion plus users each, versus, something that is a false tech company that has tens of thousands of employees, very bad margins. It’s very interesting actually, to see the big story of six, seven years ago versus the big story in tech of this year.
How do they play mobile games? (28:00)
Nuno: We’re going to spend quite a bit of time with the report actually from App Annie on their use of different mobile products and services. The high level piece, which is quite interesting to me, there’s two or three things I took out of it, but one that immediately popped out was the fact that gen-Zer, seem to use less games, certainly from a retention engagement perspective than other generations. And while I know this is not true for the whole world, in Japan, we see a trend that’s actually significantly different, on a global basis that seems to be the case, which is really, really interesting. At the same time, they seem to have more retention engagement with non-gaming apps, which includes obviously everything else from social to productivity and other tools. How do you see this Bertrand, how do you see these numbers.
Bertrand: That’s very interesting because yes, indeed you see some numbers in term of time spent, outside Japan, gen Z is spending less time on games, at the same time when you look at the rankings on Game publishers and how they are aligned with gen Z in term of audience, actually they are very well aligned, better aligned than other apps. So in a way, my take is that they have found a formula that works well, they understand the ability that gen Z, the willingness to spend time in games, what is enough, what is too much, and they found the right balance because it’s clear that they are better aligned with gen Zs.
Nuno: Because one thing you could say as a corollary is maybe there was more willingness to pay, which sort of shortcuts the process to having more use of the game and the gaming platform, right?
Bertrand: I actually think so. One is more willingness to pay: I really don’t mind as a relatively young person to spend money on games because I don’t see that as a weird way to spend my money. I see that as a perfectly fine way to spend my money. I wonder if another point also: some from this generation are also pretty good at games. So they might simply be able to achieve as much or more with less time than their older generation to be franck.
Nuno: That’s not very good news for the rest of us. But yes, maybe that’s true. Maybe there we have really certainly more pro players than ever in gaming coming from this generation and younger and younger, to be honest so that might be the case as well.
Bertrand: That’s why I like to play single player, not as much competition.
Nuno: I like the competition. I like the competition of just being in the middle of guilds or alliances and competing against others from all around the world. But I do think it’s true.
I think there’s probably also a level of proficiency in it.
What social apps do they use and how? (30:27)
Interesting to see how strong in social Snapchat seems to be doing with gen-Zers across the board, almost in every entire country. which for me was also surprise.
Bertrand: I’m not totally surprised , if you look at at least developing markets, or some markets like Japan where Android is strong, a few years ago, it might not have been true because Snapchat product was not good on Android, now that they have made these changes, it’s not just a great product on iOS. If there is one app that was Gen Z first, it’s really Snapchat.
Even Instagram, yes by extension, it’s working with gen Z. No question. And it might be a leading audience, but it’s not their only audience. Where I think for Snapchat, it might be their only audience. It’s really, you go to Snapchat because your parents are not on Snapchat.
So, and as you know, there is on Snapchat some other pieces that were there from day one, in term of disappearing message and stuff. And if you remember people were why do you want that to disappear and actually they were smart enough to realize that, yes there is some stuff you don’t want to stay forever for the world to see.
So, I think they are quite conscious about the risk of putting too much stuff online. And actually that somethings that our generation might have learnt the hard way there is some stuff you should not have put on Facebook, for instance.
Nuno: So I’m not ready to declare Snapchat the winner yet.
I think in some ways it addressed late millennials really well. It might be sort of having great success with gen-Zer right now, but we’ve seen that there’s sort of these demographic movements happening when people start going into the workforce, and they have to adopt other tools as well. So I wouldn’t take this as the sort of end game of this tool. I do think there are issues with formatting under the current tools. I mean, Snapchat, obviously now there’s the consumption of short form content, et cetera, but it is really a communication tool first and foremost when it started, and I do think people want to express themselves in different ways.
I think the whole fire and forget, like I’ll send a message and the message disappears. I’m not sure it’s a key characteristic of gen-Zers.
Bertrand: I think it depends on the message .
Nuno: And even Snapchat, now you can save your messages when you’re flowing back and forth, et cetera. It’s a bit more painful, but you can.
So at the end of the day, for me, maybe it’s a transition period that we’re going through where the tool that is sort of the most adopted is this tool.
But I do think that there might be something ahead for us. And I’m certainly betting that there will be different social tools that will be more aligned with this generation than the current ones.
Bertrand: It was not a report on the up and coming, that specific slide was more about who is today winning, tomorrow might be changing.
What entertainment apps do they consume and how? (32:59)
For me, where I was more surprised was the strong success of Twitch, as the main entertainment app, for gen-Zers in most countries. That, I was not expecting that.
Nuno: And that’s worrisome for YouTube as well. I mean, for sure there is certainly a great element of direct competition there.
Bertrand: Oh yes. YouTube is an entertainment app and it’s not the top one in any market that was analyzed by the App Annie report. Netflix was in one of them. But that was about it in terms of traditional video entertainment.
Twitch, it’s impressive. And maybe that’s also another point when we think about gaming. Yes, maybe less time spent actively gaming. But now if we look at entertainment as an extension of gaming, because Twitch is all about looking at other people playing. That might give a more fuller view of actually the gaming interest of that generation. It’s not just playing, it’s following others playing, and learning from others also.
Nuno: Yes. And I think for a long time we’ve sort of qualified gaming because of its origins as a niche, and therefore it was a “zone” thing and there was skill required.
There were achievements that needed to be achieved. There were things that needed to be done, but at the same time, gaming has really surpassed it. It’s huge industry today, and it is becoming pretty mainstream entertainment. And so, as you said, this consumption just shows that very vehemently, where people are consuming other people playing games, they’re learning as well.
But it’s not just about skill anymore. It is about fundamental entertainment consumption.
How do they use shopping and financial service apps? (34:25)
Bertrand: If we go to shopping, I was impressed by Wish, being so successful. It makes sense if you want cheap stuff, you go on Wish, that’s a generation that is not yet directly making money in most cases.
So going on the cheapest make a lot of sense, but it’s still a very impressive achievement for Wish to be number one in a few markets from U S to UK to Canada, Australia, being the number one shopping app. It’s very impressive for me.
Nuno: I think there is something around social commerce and it’s an evolution.
We will go to the next level. That will be particularly interesting to observe with gen- Zers because definitely: their consumption, the way they look at reviews, the way they talk to friends about what have you bought, is this good or not, et cetera. The way that brands translate into loyalty, is different.
And so for me, I think the whole social commerce experience is going to be in upheaval as well by this generation because they do need other things. They need other data points to make decisions. And friends do have a huge influence on them as well and their consumption. So interesting to see that Wish is there.
Some of the dynamics of Wish are exciting, but at the same time, again, I have the feeling that there will be something new emanating out of this.
Bertrand: And if we look at finance apps that are by definition way more traditional and targeting a wide range, and it’s usually a focus on who has the most money. Unsurprisingly, we don’t see so many, Apps from top banks. Actually, we don’t see a single one that is being favored by gen Z.
So this one actually kind of make sense. The only issue of course is that your next generation of consumer is gen Z and you want them as early as possible in the pipe, as a bank.
So that part might be more worrisome, is that other companies, new apps, FinTech, are probably taking over the early needs of these consumers and if they keep releasing more and more products, I think there is some significant threat for regular traditional banks, on the longer run.
Nuno: And I’ve talked about this in other forums, but FinTech seems to be going through strange movement of both unbundling and bundling .
Where there’s unbundling of services because people want specific services that are more tailored to them, provide better user experience to them in specific areas. And we have all these different products emanating around InsureTech, banking, savings, payments, et cetera. But at the same time, we have the bundling of experience where there are players trying to really unify these experiences for specific demographic verticals around students, college students, et cetera.
For me, the exciting piece is, I think, this is all up for grabs right now. And sort of the years where our banking institutions called the shots, told us what the fees were going to look like, we didn’t quite understand them because it was very black boxy, those days are going to be subject over the next five to 10 years to a significant change and evolution.
Certainly younger generations don’t feel any affinity with the big bank institutions. They’ve gone through all the chaos and all the scandals. And so now there needs to be sort of a significant renewal in this space.
If you want to be a dominating bank going into 2020 and beyond, you really need to get your game up and figure out what do these generations actually want from you.
Bertrand: Totally. So if we look at the e-commerce side, Criteo had also an interesting report on the topic. One thing I saw is that, even if they are going mobile through apps, physical retail is not completely out of the picture. Actually it’s still there as long as it’s connected to their needs, to their style, as long as it’s probably integrated with other channels, there is still an opportunity for retail, traditional retail.
Nuno: Yes. I think the need to be tactile and experience things in real life and see what they look like and what the product actually is, is something that does appear to be very important to this generation.
More than that, even in the online experience we’ve already mentioned. The bars are very high on what the online experience needs to be like: what customer support looks like, what actually product descriptions look like. And we were just talking about it earlier: product descriptions sometimes in online are very unclear and it’s very unclear exactly what “rev” are you buying of that product?
So I think the bar was certainly go much higher driven by gen-Zers. They will shop around, they will look around and figure out what’s the best price, and where can I get it, and maybe the Wish point that we made earlier, in terms of cheap.
So value for money does seem to matter significantly for this generation. This is not just an experiential generation. It’s also a value for money driven generation. I do think there’s a lot of interesting things happening across the different channels, be it online, be it in retail, and that’s quite exciting.
Bertrand: I think you can get away with: worse marketing, worse online shopping experience with older generations. You might still remember the old days or even before the old days, when you had a physical product catalog, that sort of stuff. So, so you might not feel too bad if the website you are browsing is relatively static, doesn’t give you every shot, doesn’t really let you understand enough about the product. Where I think that generation is expecting a lot. It’s probably because they also get a sense of how easy it will be if the retailer truly care, to give more information, make it easy to see stuff. And basically they have a higher bar.
Gen-Z at work and their career development (39:33)
Nuno: Yes. So we’ve talked about their usage and their consumption. Now let’s talk about how they make their money, and let’s talk about work and effectively how to hire this generation, how to actually retain this generation, how to develop this generation.
You know, what are they willing to do versus not do? It seems to be one of the biggest points of difference, certainly than the average millennial or our perception of the average millennial, is coming here in the workplace and how, these gen-Zers look at workplace.
Bertrand: We saw a pretty good report from Deloitte, quite focused on this topic: how to hire, how to manage gen Z.
And they run a survey and they had some hypothesis, and it was interesting what they managed to check or not check. It’s clear that they have aspiration like everyone they want to work in industries that they interact in their personal lives. That’s a plus.
They want career development. They want different working style, some independence, but not being isolated. They want to be connected to the core values of the company. Education, learning, apparently they had some surprise. There is re-evaluation of, especially in the US, the cost and benefit of education.
I feel sad actually reading that good people are making tough decision not going to university because it’s too expensive, and I think we’re going at the stage where there is something wrong, and that might be another story. Because if you take Europe, if you take China, if you can do it, you will do it, you are not putting a lot of additional analysis in terms of cost. But here it’s a big trade off to spend time and money on a Universit y education.
Nuno: Yes, and not just postgraduate, right. Obviously dropping out of undergrad as well, et cetera. And and so I think two points, I’ll come back to the values point in just a second because I do think matters a lot. But in terms of education, I think there’s almost a sense of pride. I’ve had a couple of interactions recently, the sense of pride of dropping out, and I don’t understand how there should be pride in that. and so, I do agree with you certainly from a US perspective, and sometimes you see that a lot in the entrepreneurial space where people are coming to the market doing startups very young.
We’re talking actually about gen Z entrepreneurs that I’ve met and they’re very proud that they dropped out of school. I’m like, you know, that you dropped out of school to do something that you’re very passionate about is great, but I’m not sure that the pride is warranted, right?
Because there is something about sticking to things for a period of time.
There is something about problem solving and going through the difficulties of very different subjects that you’re studying, et cetera. I do think there’s the other side of the coin, which is the system does need to reevaluate value for money and how it delivers its courses, and now it pays itself a little bit like the healthcare system.
It’s probably too heavy these days and too dependent on very significant, grants and very significant donations from alums, et cetera. So I think the system does need to reevaluate, not just in postgrad, which I think that the reevaluation is very market driven. It’s happening already, but also for undergrad.
And in some ways it’s a dual discussion, one that we sort of emphasize the role that education has, but maybe that education also needs to change and it needs to change how it delivers itself.
Bertrand: It’s clear that if you try a bit some new ways to deliver education, to train yourself, you have services : Coursera, Udacity and others or even if you want to learn piano now you have great apps. And my point is that actually in some case, you have access to the best professors, you have access to people who have reviewed their curriculum, like crazies in some cases, like this piano apps, that have optimized it 100% providing a brand new level of experience that was simply not possible before.
And my point is that if education means we are going to apply the same tools, the same learning mechanisms than before, I can see that there could be some level of very big frustration of: why do I need to work with these tools? Is it really relevant? And I think actually it’s still relevant because you still build a network. You still learn to do stuff in specific ways that are compatible with how businesses work. But I also agree that cost is going insane in most universities in the US.
And maybe the answers for some is just: I’m proud to drop out, and I’m not sure that’s the right answer actually.
Nuno: Yes. I wanted to go back to your point on values and sort of the alignment of the value of the company they work for, with the things that they care about. I think that’s very significant in this generation.
So even just a definition of what does the company stand for. What is the company trying to go after? What does the culture of the company stand for? I think is pretty important.
And I think at this level, it’s a very deep discussion to be had. So we used to have these discussions around millennials and how millennials behave and what they care about and what they don’t care about.
I do think for this generation, the principles do matter, and I do think that what you stand for as an organization, as a person matters. So maybe the bar has gone actually again, pretty high on what the company stands for. What are we going to do? What are we not going to do? Why are we doing this? Why do we stand together? And that for me is interesting, because it creates maybe an added level of complexity to how company is managed and then company is grown, etc.
Bertrand: My take is that some of it was clearly already there with millenials.
Nuno: But millennials, it seems to me like there was a little bit of this notion of entitlement at times, again, we’re averaging out the generation, which is not fair, but there was a little bit of sense of entitlement: what can you do for me?
And I think now there’s a little bit of: what can we do for the world? Which is actually slightly different. No, a very different perspective on what the company stands for .
Bertrand: I would say that as a tech companies these days, if you were not answering, how are you going to change the world? You will have trouble in the first place to hire people. So I truly think some of this phenomenon was already there, at least with some millennials for me its very clear.
My worry actually is more that, some are going to become more cynical because when you see all the bullshit served by WeWork: “power of we”, and when you see what happen, and when you see how the founder treated his team, his company, leave them all hanging in the balance.
I’m worried that there is going to be some level of backlash in term of: “Hey, why are we going to trust that”, you had the best story, the best of the best everything, and the day this stuff really matters? You’re nowhere to be seen, you’re actually out. And you’re actually out when “we” are going to be forced out with certainly not a golden parachute.
It would be interesting to see how it evolves, because I felt some of it was already done too much by some tech companies, way beyond stuff that looks real .
Nuno: I do think we’re going to go into an age of authenticity, where authenticity will matter and this will create a bunch of ripple effects. It will create ripple effects on how you communicate. When you communicate. It will create ripple effects on how you market and how you advertise. And how you position messages?
I think it will create, a bunch of really complex issues around interpersonal relationships in the workplace, and how you interact with teams and how you interact with people. But I do think we’re going to go into an age of authenticity, which for me, and you know my thinkingon on that is, is good. It’s good that the BS goes away.
It’s good that the polished marketing brand stuff, which as you said in many cases is totally inauthentic and total BS also goes away. And so I do think that bar being raised in the workplace is is something that for me is just a positive thing.
Bertrand: It’s a true positive. In a way, I was probably quite amazed how some seem to have been taking advantage of pushing some pretty high values and mission, but ultimately not living up to it, at all, especially when it mattered.
Nuno: Very good.
How to reach and appeal to Gen-Z (47:13)
This is a good segue probably to talk about how do we, how does one reach and appeal to gen-Zers?
How does one thing through, through influencing gen-Zers, where did they get their content from? How did they make their decisions? How do you reach out to them? How do you sort of, at least, reach them. Rather than probably make them, in a Machiavellian way, consume X more than Y. Maybe we stop at reaching them piece.
Bertrand: I think if we go back to that retail report from Criteo, we see that some of their advice is around, it’s pretty simple actually: improve the online experience, so the experience matter stupid, I guess, provide a personalized experience, clean up, enhance your store design. Take advantage of real world retail, don’t be scared of it. That’s some of their key points on how to reach gen Z as a retailer.
Nuno: And a lot is around personalization. I think we’ve heard that the path to purchase does require more and more personalization, not only in terms of mix of SKUs, but also in terms of: okay, I know you’re talking to me, not talking to some other person that is not at all related to me.
And I think that bar and personalization also comes from the fact that it is a mobile first full on digitally native generation. And so I think the onus on personalized experience, on using data for that personalized experience is obviously very significant.
Nuno: So. I’ll just summarize this discussion. I think a lot of things to be positive about.
The increase in bar in authenticity, the increase in bar in terms of online and mobile experiences. Clearly a more open generation. Again, if we look at the average, a generation that actually cares about impact in the future for very obvious reasons. A generation that I am very positive about, that certainly I think it will be interesting to observe how the key products and services that have served previous generations will actually pan out with this generation how new services will emerge. So for me as an investor, something that I’m personally very passionate about and where I’m spending a lot of time really understanding who are the great startups out there, the great companies that are crafting their gen Z strategies at scale?
Bertrand: Definitely. I think it’s key to understand that generation that’s coming to market: be it to sell goods, be it to hire them, manage them. And definitely like every generation, it’s a new generation with different expectation.
And, it will require some work, to adjust , and to leverage them, and to understand them first, so that you can have them as productive as possible, as part of your workforce, for instance. And at the same time, quite a lot of it is quite logical. I mean, you expect better product because you are used in your daily life to great applications or services. And when it’s time to go to the workforce you expect that same level, when it’s time to buy stuff online, you expect similar levels.
So I don’t see, staying very positive, I don’t see very much irrational, actually. It’s a very rational generation, and ultimately it’s also a generation, that has learnt lesson from the crisis in 2008, so more careful with their spending. Actually, it was quite interesting, there was this report where, they are more carefull on everything, from having fun, drinking alcohol, absolutely everything is going down in term of behaviors that could be risky. So it’s a very interesting, more down to earth, “not much to prove” type of generation.
Nuno: So in a nutshell, positive outlook from Bertrand, and unconditional optimism by Nuno.
Bertrand: Yes. Thank you Nuno.
Nuno: Thank you.