People will choose to be closer to each other, physically and digitally.
We need Social Closening
Though stigma is changing, mental health is still in crisis – in June 2020 40% of US Adults struggled with mental health. Not only are healthcare workers on the front lines of today’s mental and physical health crises, but teachers have been thrust into the limelight of helping their students more than ever before. The city of San Francisco, a comparatively strict follower of pandemic protocols, is in the process of suing its own schools for not reopening in light of 75% higher mental health hospitalizations amongst children. Not only do these treatable conditions affect lives and families, but they also impact trillions of dollars of GDP when the true costs of mental health are factored in.
On the subject of loneliness, 66% of young adults think dating apps take away from the intimacy of meeting someone. In a move that could spruce up its dating scene, New York has already launched New York Arts Revival, a public-private partnership to bring back cultural happenings and organizations. Compared to the massive excitement for NYC’s reopening of indoor dining on Valentine’s day, only 13% of people list “ordering from their favorite take-out/delivery app” as important when ordering out. People really miss movie theaters, live music and festivals, and they will crave them much more once they’re truly accessible. Although people are not entertaining themselves in the same way, they aren’t staying put either – Airbnb is already up 25% YoY and has 41k Experiences on its platform even after the pandemic.
Recent social networks have focused on the collective, not the individual. Interest-based Slack, Discord, and Telegram groups are on the rise, spurring ancillary companies like Memberful. Nextdoor has amassed 10M+ signups and Clubhouse is at 2M+. Sid Yadav recently founded Circle.so to power membership communities, after helping Teachable scale to a jaw-dropping $125M in revenue. Gagan Biyani, former founder of Udemy ($100M+ revenue) and Wes Kao, co-founder of AltMBA, are doubling down on communal education by founding “the NewCo formerly known as the cohort-based-courses company.” Another exemplar of social closening in the digital realm is Saga – an app that helps families record their oral history via a local phone number. When these modern, collectivist social networks are contrasted against the previous eras’ (MySpace), things seem to be closening quite a bit.
How Social Closening could present
As we socially closen, mental health services will continue to see unprecedented adoption across all ages of the population. Parents will invest in their children’s mental health perhaps more than violin lessons. Teens and adults will make it a point to work on their self-development, and the future of mental health providers will meet the elderly where they are to improve their state of mind.
In-person entertainment will see explosive growth, and entertainment will be found in unprecedented places. Maybe Bowling Alleys? What about Basketball courts? Escape rooms? Axe Throws? Go Kart Tracks? VR Parks? Drone racing stadiums? Theme parks? Nightclubs? Music Festivals? It’s worth noting that because commercial real estate is currently a tenant’s market, development of physical spaces could accelerate faster than some may think once there’s relaxed distancing policies and/or increased vaccination levels.
“Third spaces” (spaces outside work and home) will see unprecedented membership, at all ages. Whatever coffee shops remain won’t handle the influx of post-pandemic coffee chats. Gen-Z will build a more inclusive Soho House; women-focused collective The Wing is patiently waiting for the storm to pass. Fractional home ownership app Fractional could power de novo resorts, similar to what Powder Mountain has bootstrapped. In a $40B+ educational franchising industry, a post-pandemic startup could threaten incumbent behemoths like Kumon. Selfishly, I pray a less environmentally-destructive alternative to golf clubs gains membership from the elderly. In-home gyms will definitely be a staple of the future, but working out alone isn’t always a blast. Platforms to support team sports and group fitness will take hold. New leagues and games will be created, following Spikeball’s trajectory.
Travel will resume its previous CAGR, just like it did after 9/11, but the destinations will look different – DoubleTree just isn’t going to cut it any more. Soul Community Planet raised $200M+ to expand their hotel/coworking/restaurant/fitness combo-destinations. You heard it here first – the all-inclusive resort is going to be Gen-Z-ified and it will explode. Elsewhere, millenials will take out Viator, who was aiming toward $100M in revenue (albeit pre-pandemic). Travel “guides” will have new interfaces, even more personalized and human than The Nudge. It’s pretty conceivable too that Gen-Z won’t use the same travel lounges of the last 50 years. Maybe b8ta will lean harder into airports.
Following Facebook Marketplace’s explosion, Popshop raising at a $100M valuation and 30k beauty products reviewed by the Supergreat community, commerce too will look more communal than ever. Right about here is also where I’d do my obligatory plug of Pinduoduo’s last quarter revenue of $2.1B.
Food entrepreneurs, who are usually more artist than businessperson, will continue to opt for modern, turnkey kitchen spaces, but will seek lively, communal spaces that their customers can enjoy in-person, eschewing delivery apps and their fees. Virtual kitchens are efficient, but they simply cannot replicate communal experiences. Also, Travis Kalanick and Softbank will not be the only ones working on it either. UrbanSpace for one is still growing and Zuul is taking all the right steps for virtual restaurants, but with time they could build out hybrid in-person spaces. Google will not own physical place discovery and neither will Yelp or FourSquare. The founders of former fan-favorite Gowalla seem to have re-acquired their company from Facebook to re-build in this very space. Dating too will see a renaissance in light of a new food environment. Who remembers Grouper? Perhaps The Round will be a major source of foodie marriages.
Despite the future of work purportedly being remote, companies are already exciting employees about the return to their offices. With commercial real estate in a lull, employers and co-working providers are going to get crafty in the near future. Nearby, people will move into de-novo housing built with community in mind – Culdesac is already building car-free communities in Tempe. Architects and interior designers, who are also usually more artist than businessperson, will seek new technology and inspiration to physically build the future – perhaps Figma or Frame.io has already inspired builders to build here.
Governments foreign and domestic will create trillion dollar opportunities.
Select recent activity generated by legislation
The Affordable Care Act has increased Ohio’s total economic activity by at least $18.6B from 2014 to 2022. Well after the HITECH Act injected $35B into the EMR industry, telehealth deregulation triggered by the pandemic is driving stepwise growth for digital health companies and their downstream partners. Notwithstanding the dozens of companies that profit from the mere existence of HIPAA, 4,650 US companies have already registered with Privacy Shield, a partnership between the EU and US to help US companies abide by European legislation, GDPR.
NASA just contracted with Blue Origin for $579M and SpaceX for $135M. After going public, Palantir’s annual revenue exceeds $1B, and Anduril is now nearing $100M in revenue too. Though smaller than Japan’s sweeping national legislation in favor of hydrogen fuel cells, California has just approved $39.1M in funding for hydrogen fuel cell infrastructure, and public market goldenchild Plug Power is thrilled to hear it while their TTM revenue is $307M.
At the time of writing, a nearly $2T Stimulus bill is planning to allocate $100B+ directly into schools. Surely this will support companies looking to make educational experiences more inclusive, engaging and beneficial. In further stimulus news, a more proactive remix of the Save Our Stages Act could foster music education, venues and services that are more inclusive and engaging as well. Notably, the Music Modernization Act of 2018 solidified Spotify’s dominance in music streaming, and sets precedents for how startups like Stem and Audiam will operate in the future.
The Organic Foods Production act of 1990 paved the way for almost $10B in organic product sales in 2019. New consumer product certifications could generate new markets of billions in sales much faster. Climate Active, a climate action initiative by Australia’s government, has just given Oat Up, a line of oatmilks from Wide Open Agriculture (ASX:WOA), a brand-new “Carbon Neutral” badge. Partnering with regenerative organic farmers, a former Softbank founder has launched Moonshot Snacks to put climate-friendly crackers on shelves at major grocery chains.
To cement this movement further, the Sustainability legends Patagonia and Dr. Bronner’s have garnered support for their Regenerative Organic Certification (ROC) which certifies food, fibers, and personal care products that help heal the world. A brighter day is ahead.
Following legislation into the future
With a Democrat-controlled senate and public discourse accepting the gravity of trillion-dollar legislation, audacious plans like the “Green New Deal” are less of an impossibility. We could see totally new branches of government built. Just like Space Force, they too could get a Netflix parody starring Steve Carell. The leadership of the DOT is switching from Mitch McConnel’s wife to Pete Buttegieg; a more liberal transportation secretary could signal new possibilities for Flow Labs to automate traffic signals for municipalities. With legislative opportunities, Kiwi’s food delivery bots could expand past a few college campuses. New regulation could even result in entirely new companies spun up just to help mobility players meet compliance and safety requirements. A little bit off the ground, the FAA could help Joby or Archer become VTOL decacorns. Or maybe Boom too will do a Travis Scott collab.
If HUD expands its $47.9B budget, we could see public housing more ambitious than Le Corbusier’s Unité d’habitation, which at a national scale would command innovation from a many unicorns. HUD expansion would create new opportunities in housing, or perhaps even new types of buildings. The US could gain an appetite for federally-supported music venues like other nations. In that case, I’d be first in line to grab the aux.
We’ll definitely see less controversial government contractors emerge, like public benefit corp Nava. Federal initiatives like EQUIP, which I worked on at Hack Reactor, could create billions in opportunities for bootcamps and apprenticeship providers, like Nana, or Multiverse. The billions that already go to Pell Grants, could foreseeably be allocated towards ISAs.
“Medicare 4 More” is almost inevitable, and with startups like Clover and Cityblock catering to government funding sources, companies in their “supply chain of services” could also become billion-dollar companies. Startups, especially in healthcare, will benefit from being on top of legislation, so rest assured startups will put an emphasis on legal and policy hires as synchrony with government will become increasingly advantageous.
It’s not just about companies and politicians getting roasted for being opaque. It’s about opting for transparency because it’s a better strategy – for building brands, driving traffic, earning sales, acquiring & retaining talent, and overall, doing the right thing.
People are hangry for transparency
Following a global pandemic, people might be a little more inclined to take to the streets, 20 million deep. Folks are clearly ready to take out clandestine hedge funds on a YOLOstonk. In the carnage of the Reddit wars of 2021, Public.com announced they will be abandoning Payment for Order Flow (PFOF) in an effort to appeal to appetites for transparency. Meanwhile, grocery delivery startups showing the real side of food – Misfits Market and Imperfect Produce – are becoming major players.
For another data point, the US is quite far behind Europe in salary benchmarking. Maybe we’ll import more than UK Grime from our friends across the Atlantic. A case in point, Glassdoor’s 2017 Revenue was $170M and they were later acquired for $1.2B. On the other hand, Facebook has made multiple billionaires who publicly denounce it. In a move that creates further ammo in an offensive against Facebook, Apple just launched a privacy nutrition label. But they shouldn’t get too comfortable, as mainstream adoption of Blind has cultivated fertile ground for whistle-blowing and grievance-airing.
A staggering 42% of surveyed consumers will not view an influencer’s content if it’s sponsored, while non-fiction docu-series are surging in popularity. At the furthest end of the non-fiction spectrum, some entrepreneurs are opting to document the internals of their companies for the public to see. Media outlets like Indie Hackers and Nathan Latka have built successful brands around sharing often hard-to-find financial metrics of startups like Baremetrics, ConvertKit and Buffer. These folks are at the cutting edge of transparency, realizing that the masses will gravitate when all your cards are on the table for them to see.
What could a more transparent world look like?
Music lovers fed up with artists’ inability to make minimum wage could opt for streaming services like Marine Snow that place artist finances in the spotlight. After founding the behemoth non-fiction TV channel Discovery in the 80s, John Hendricks has already taken his newest non-fiction venture, CuriosityStream, public. Transparent media, both community-generated and editorial, will continue to flourish alongside the continued destigmatization of dialogue around touchy subjects like compensation and ethics. With transparent media platforms creating new ad real estate, and brands’ insatiable appetite for ad spend destinations, new advertising networks premised on transparency will emerge. On a spectrum of invasiveness from Facebook ads to bus stop ads, the middle will be very interesting. In powering transparent advertising infrastructure, data intermediaries like Segment are already seeing increased competition from competitors like Rudderstack and Posthog that are doubling down on transparent, open-source platforms.
Imagine being so transparent with your customers that you told them your software has no marginal cost to you, and as such, there really isn’t a cost to your service. With 80% of their users opting to leave a tip for their free payday advance service, Earnin is already making almost $100M in revenue a year. Public.com too is opting towards tipping. Signs are pointing toward tipping being the ultimate monetization engine for transparent NewCos. In the future, tipping will show up where it’s least expected.
Consumers will increasingly demand transparent physical goods, like direct trade food and clothing. Clothing brands will pick up where promises of Everlane’s Radical Transparency fell flat. Companies looking to build transparent supply chains already have a leg up on the companies that came before them with databases and APIs like HowGood, WolfDe and Craft.co that can make lifecycle analyses (LCAs) 10x more accurate and easier to publish. Over time producers will have their hand forced on publishing LCAs of all of their products, shipping methods and overhead infrastructure. Begrudgingly, here and here only will I make any mention of the power of blockchains in building a transparent future.
Like their public counterparts, private corporate communications departments will grow accustomed to hosting more town halls and public briefings for which Zoom or PR Newswire won’t cut it. For companies to stay competitive in the talent market, they’ll need to be more publicly transparent about compensation, which companies like Pave will power. Further, the original transparency forcing function, going public, has never been easier, thus more companies will do it sooner. Continued emergence of managed services like Transcend will make it easier than ever for companies to remain transparent. Companies that adopt, maintain and advance transparency practices as a core competency will be the winners of future markets.
In closing, trends can take 10+ years of retrospect to identify, but the same can be said for successful angel and seed investments. With that said, ideally a startup can trudge through most of those years with some level of product-market fit. Thus, to find promising companies in their early days, speculators should try to see the trends of the present very clearly, but bet on superlinear growth, rather than expecting step-wise adoption of something from a bit too far in the future. The opportunities presented by Social Closening, Legislation and Transparency are certainly in today’s frame, but entrepreneurs and investors will have to do a bit of focus and dolly work to really get the picture ready for the silver screen.