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Silver Tech and The Rise of the Longevity Economy

April 8, 2019 by Nabil Leave a Comment

Which consumers represent the biggest economic opportunity for today’s entrepreneurs? Is it “Generation Z,” just entering the workforce? Or perhaps Millennials, settling down to take care of young families? According to Joseph Coughlin’s latest book, The Longevity Economy, the answer lies elsewhere. Hint: they’re older than we might think.

First, some stats:

  • In the US 10,000 people turn 65 every day.
  • By 2035 the number of older people in the US will have grown from 46 million, today, to 78 million.
  • By 2035 people 65 and over will outnumber those 18 and under for the first time in US history.
  • By 2050 the worldwide proportion of those over 65 will have doubled from 8.5% today, to 16.7% (roughly the makeup of modern day Florida)

Okay, so the world is getting older. But do older consumers buy things? Again, some figures:

  • Consumers age 50+ control 83% of US household wealth
  • The average older adult spends $39K per year (about $10K more than their younger – age 30-44 – counterparts)
  • In 2015 spending by people 50+ came to $5.6 trillion (vs $4.9 trillion for those 50 and under)
  • By 2030, BCG estimates that the 55+ population will have been responsible for 50% of the US consumer spending growth since 2008.

It’s numbers like these, Coughlin argues, that makes the “longevity economy” (read: products for older people) foolish for entrepreneurs to ignore. Moreover, these consumers are under-served. Enter the market, and you’ll find competition that’s either missing the mark on what older people want, or simply missing in action. The reasons for this are twofold:

Systemic Bias: Behind many of our generation’s most successful tech products (e.g. Uber, Airbnb, Facebook, Twitter) often sit founders and engineers who are predominantly young and male. As such, he argues, it’s difficult for them to relate to the needs of older people and so they ignore them or, if they do pay attention, they design products based on shallow assumptions of what they want. (Remember: “I’ve Fallen And I Can’t Get Up“?).

Entrenched Narrative: The government and the private sector developed, and then perpetuated, a narrow view of what it means to be an older adult. In short: “needy and greedy.” Government programs such as FDR’s Social Security program – structured around peoples’ age rather than their abilities – solidified the notion that older people are not valuable economic actors (“needy”). Private sector companies, in turn, developed the highly lucrative concept of “golden years” – implying that meaning in old age is derived mainly from consumption, i.e. golf outings and cruise ship buffets (“greedy”). This messaging has created a one-dimensional view of being older, which implies that there are limited ways to serve the needs of older people – if they deserve to be served at all.

No alt text provided for this image

The truth, of course, is very different. According to a 2009 Pew poll, only 35% of people over 75 said they felt “old.” A growing number of people elect to “work into retirement” (a beautiful contradiction – and testament to how dysfunctional our narrative around aging has become). Eight out of nine older brains are unaffected by dementia or Alzheimer’s, with perfectly capable cognitive function. Not to mention that as you speak to older people, you find that they have many of the same aspirations that younger people do: to have a sense of purpose. To express oneself. To connect. To learn. And to contribute.

So how do entrepreneurs take advantage of this opportunity? 

According to Coughlin, it starts with employing better methods to understand the underlying needs of older people.

One such method is walk-a-mile immersion. The MIT AgeLab has helped facilitate this by developing the AGNES (Age Gain Now Empathy System) suit. Designed with features such as tinted lenses, reduced range of motion, and trickier footing, it helps younger designers personally experience the physical changes one experiences when they’re older, and design accordingly. This is especially helpful for designing products such as cars or retail spaces, where physical restrictions are most at play. The best designs, Coughlin states, are “transcendent” – they meet the needs of older people so effectively that younger people covet them (e.g. the OXO line of kitchen products).

Source: Medical Xpress

Another method is to design through a psychological framework, such as Maslow’s Hierarchy of Needs. With its delineation of needs into escalating categories such as friendship, family, sexual intimacy, self-esteem, confidence, self-expression and spontaneity, it can serve as fodder for a new generation of products not typically associated with older people. Such as Stitch – a social network for adults 50 and over. Or a job matching site to enable older people to put their experience to good use as consultants. Herein lie some of the most interesting possibilities to develop a new class of products.

* * *

As the world ages, Coughlin argues, there’s an incredible opportunity to serve a new class of consumers and rewrite the narrative of growing older. That said, there’s also a risk that we stick with the status quo, and growing older is for many people something that’s dreaded, versus looked forward to. Worse, an older population shut out of the workforce – and thus forced to depend on a shrinking pool of younger people for its well-being – may create a conflict between generations. Evidence of which is already surfacing.

Inspired in part by Coughlin’s book, last weekend I attended the Aging Into The Future summit in LA, one of several age-related events now sprouting up across the country. From call-lines to help older people find connection, to stylish clothing that can be put on and worn even with people with disabilities – it’s clear to me that the drum beat for new products and services for older people is starting to be heard. As these products come into market, and we see older people showing up in society in profoundly novel ways, what an opportunity – I think– to redefine what it means to grow older into something more enriching, sustainable, and dare I say – fun.

// As published on LinkedIn.

Filed Under: Prose Tagged With: Entrepreneurship, silvertech, startups

Book Notes: “Zero to One”​ by Peter Thiel

March 21, 2019 by Nabil Leave a Comment

What valuable company is nobody building? It’s with this question that PayPal co-founder and Venture Capitalist Peter Thiel opens Zero to One, a book designed to give the rest of us a peek through the eyes of one of Silicon Valley’s more successful entrepreneurs.

Reading this book, I was curious to see what Thiel zeroes in on when building and investing in game-changing companies. Or in Thiel’s lingo, in companies that are making “vertical progress” (e.g. in a world of ever-faster type-writers, the company that’s first to develop a word processor).

The three themes that I heard most strongly in Thiel’s book were:

  • Aspire to build a monopoly
  • Great ideas are reserved for contrarian thinkers
  • Get ahead of misalignment in your company

If you have a different philosophy towards entrepreneurship, this book certainly offers a lot to pick apart. It can be overly generous in its maxims (e.g. “every startup should start with a very small market”), and Thiel’s staunch advocacy for monopolies certainly hasn’t aged well. That said, I appreciate that Thiel is willing to openly share a strong point of view. As he writes: “Brilliant thinking is rare, but courage is in even shorter supply than genius.”

My notes from the book below. If you prefer video, check out this fun visual summary here, and one of Thiel’s talks here.

* * *

Theme 1: Aspire To Build A Monopoly

  • Contrary to popular belief, in a capitalist system competition kills the ability for businesses to thrive. “Under perfect competition, in the long run no company makes an economic profit.” Instead, entrepreneurs should aspire to build companies that compete mainly against themselves.
  • Entrepreneurs build monopolies through several means. One is through doing something so well that “no other firm can offer a close substitute.” This often means a technology that provides value 10X above and beyond the existing alternatives. It can also do so through tapping network effects, economies of scale, and/or branding.
  • It’s a red flag when an entrepreneur’s strategy is predicated on capturing 1% of a $100 billion market. “In practice, a large market will either lack a good starting point or it will be open to competition, so it’s hard to ever reach that 1%.” Instead, launch said company with a small and focused market (“early adopter “in Lean Startup parlance). Requisite burn: “This is why successful network businesses rarely get started by MBA types: the initial markets are so small that they often don’t even appear to be business opportunities at all.” Ouch.
  • It’s often better to be the last mover: “that is, to make the last great development in a specific market and enjoy years or even decades of monopoly profits.”
  • Service businesses are hard to make into monopolies: competition is fierce, and scaling is hard.
  • The “Power Law” dictates that a certain set of employees, or market, will dominate growth and success (e.g. 20% of employees create 80% of the profits). The right strategy is to tap into those (versus hedging your bets).

Theme 2: Embrace Contrarian Thinking

  • When thinking about starting a company, ask yourself two questions: “What secrets is nature not telling you? What secrets are people not telling you?” Or put differently, what are people not allowed to say? What is taboo? Simply being contrarian is not enough. “The most contrarian thing of all is not to oppose the crowd but to think for yourself.”
  • This method of questioning is hard is because our society, and especially our education system, rewards conformist thinking. It is structured around competitions that have little relationship with success and failure in the real word. It’s also hard because it requires a high tolerance for risk. “By definition, a secret hasn’t been vetted by the mainstream. If your goal is to never make a mistake in your life, you shouldn’t look for secrets.”
  • Our risk-averse approach to entrepreneurship is reflected more broadly on society. This wasn’t always the case. Our attitudes can be broken down into a matrix, that relates to how definitely we see the future, and what our general attitude is about it:
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  • When America was in its economic prime, we solicited and embraced clear visions of the future, and worked practically to build it (“definite optimism”). Today, we’re optimistic but very indefinite about what the future will bring. Instead of making plans, we are happy to rearrange existing products (incrementalism), the capital structure of existing companies (banking), resolve legal disputes (law), and maximize efficiency from existing companies (consulting).

Theme 3: Get Ahead of Misalignment

  • When setting up your startup, it’s useful to have a clear perspective on three likely sources of misalignment: “Ownership: who legally owns a company’s equity? Possession: who actually runs the company on a day-to-day basis? Control: who formally governs the company’s affairs?”
  • To keep the board focused, keep it small. A board of three is ideal. A board should never exceed five people, unless the company is publicly held.
  • Take company culture seriously. At PayPal, Thiel wanted a culture that was tightly knit versus transactional. They had to be excited about working specifically for PayPal and the problems it was solving, not the benefits they offered.
  • Don’t underestimate sales. Often engineers look down on sales, because salespeople don’t seem to be building anything. “Like acting, sales works best when hidden.” Selling and delivering a product is at least as important as the product itself. See the failures of Cleantech.
  • Don’t underestimate the media: “Selling your company to the media is a necessary part of selling it to everyone else.” 

* * *

// As published on LinkedIn.

Filed Under: Prose Tagged With: Entrepreneurship, startups

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