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A weekly(-ish) newsletter on commerce, media, science, tech, investing, & internet culture by Alex Taussig of Lightspeed.

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A weekly(-ish) newsletter on commerce, media, science, tech, investing, & internet culture by Alex Taussig. I am a partner at Lightspeed in Silicon Valley.

Follow along with Alex:

Drinking from the Firehose #147

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Piper Jaffray released its annual teen survey, revealing some surprising insights into how Gen Z spends its time and money. Unfortunately, the survey itself is hidden behind a registration wall, so I extracted a few highlights below.

Gen Z consists of 67M Americans born from 1997-2012. Its constituents are notably the first "digitally native" generation, and also the first "mobile native" generation. Its oldest members were just 10 years old when the iPhone launched. Gen Z is also the most diverse generation of Americans (nearly half non-Caucasian).

In aggregate, Gen Z spends $70B annually. The top categories of spend are food and fashion. In apparel, the top brands are athletic (Nike, Lululemon). 75% of females and 87% of males prefer athletic footwear to alternatives. Surprisingly, in 2019, Crocs seem to be making a comeback with teens. For food, fast causal dominates (Chick-fil-A, Starbucks), although teens claim to be more health conscious today than in prior years.

Cosmetics is also a large category for teens, although the top brand (Neutrogena) is less aspirational than functional. Female teens strongly prefer (91%) to shop in stores for cosmetics vs. online. Ulta is the #1 destination for this category. While they prefer to shop offline, Gen Z is heavily influenced in cosmetics by online personalities. 89% of female teens say they depend on online influencers for brand discovery in cosmetics (vs. 75% friends and 44% retailers).

YouTube is the most dominant media channel for Gen Z, with 37% of daily video consumption (vs. 35% for Netflix). The influence of YouTube extends into social media behavior. Of the top 10 social accounts for Gen Z, 4 are YouTubers.

Cable TV is on a monotonic decline for Gen Z, dropping from 26% to 12% of daily video consumption from early 2016 to late 2019. Gen Z has more "cord nevers" than any other generation (32%, up from 17% in late 2015). Instagram and Snapchat* are both used at least once per month by 80%+ of Gen Z, while Snapchat remains the favorite social media platform (44% vs. 35% for Instagram). Only 4% of teens ranked TikTok as a favorite, although that's up from 0% earlier this year.

Lastly, Gen Z is distinguished by nearly universal concern about the environment (89% of respondents). While small groups of teens have catalyzed activism on environmental issues in 2019 (e.g. Sunrise Movement), unfortunately, we've given teens very few tools to address this concern en masse. The top behavior changes mentioned are marginal: recycling more and using metal straws.

As Gen Z matures, I am interested to see if their cultural norms and behaviors bleed over into other generations. Its members' spending habits will evolve as they start consuming the boring, but necessary products of adulthood: homes, cars, furniture, diapers, and the like. But, their media habits and issues they are about will only magnify. Gen Z's combined comfort with advocacy and digital fluency makes it a potent cultural amplifier. Whatever Gen Z craves, we may all end up consuming down the road.

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#commerce

Food map.

Researchers at University of Illinois published the first comprehensive, public map of the U.S. food supply chain. It reveals how critical California is to the nation's food supply. The state accounted for 9 of the top 10 counties ranked by mass of food outflows.

LAXit.

Los Angeles Airport got a little more inconvenient recently when it moved rideshare pickups to an offsite lot. One more reason to fly Southwest to Burbank!

Airport authorities around the country are struggling with the crippling growth in aviation traffic married with persistent underinvestment in aviation infrastructure. According to an executive at Boston's Logan airport, "We’ve grown by millions of passengers, but we haven’t added even one foot of curb."

The last major airport built in the U.S. was Denver International, and that was 20 years ago. That's pitiful compared to progress in other countries like China, where Beijing Daxing just opened after only 5 years of construction to serve 72 million passengers.

#media

Shots fired in the streaming wars (video).

Reed Hastings of Netflix* was interviewed on stage at the Dealbook conference. Host Andrew Ross Sorkin immediately started digging into the arms race in streaming and pushing Hastings on competitive threats from new entrants Disney and Apple. 

Hastings' answer was compelling: "The real measure [of success] will be time, [not subscribers]. How do consumers vote with their evenings?"

He views the battle as a fight for each minute of each day for consumers. Those minutes are coming free from the decline of linear TV. As such, the market is still in growth mode and is not yet zero sum.

I also liked this nugget, which speaks to why you can cancel Netflix any time: "We focus on building a service that people want more over time, so we don't lock them in."

BB on board (video).

Hideo Kojima, famed creator of the popular Metal Gear franchise and inventor of the "stealth" genre of gaming, finally released Death Stranding this week. The reviews have been varied, but generally positive, and occasionally effusive. This one says it's "unlike any game you've played before."

#tech

Renewable cost declines.

Energy projects are benchmarked using a cost equation called the "levelized cost of energy" (LCOE). This metric takes into account capital and operating costs, anticipated performance metrics, and the cost of capital in both debt and equity. With subsidies, onshore wind and utility-scale solar are now comparable to coal and nuclear LCOE's of $30-40/MWh. Solar costs, in particular, continue to drop at 13%/yr.

#science

Solving the three body problem.

In physics, very few practical problems are solvable in closed form. Even a system as simple as three stars moving under each other's mutual gravitational attraction cannot be solved analytically in all cases. The so-called "three body problem" admits chaotic solutions under most conditions. As a result, expensive computer simulations must be applied to gain any non-trivial insight.

Researchers at Edinburgh recently trained a neural network to solve the three body problem "a hundred million times faster than a state-of-the-art solver." It's hopefully the first of many applications of neural nets to solve previously intractable computational questions in physics. 

#culture

Feel the burn (podcast).

Slate's Slow Burn podcast covered the Nixon and Clinton impeachments in its first two seasons and had some of the best writing and original interviews out there.

Season 3 has moved away from politics and into pop culture. It focuses on the intertwined, tragic stories of hip-hop icons Notorious B.I.G. and Tupac Shakur. I am really enjoying the new season so far.

Disclaimer: * indicates a Lightspeed portfolio company, or other company in which I have economic interest. I also own stock directly in AAPL, ADBE, AMZN, CRM, FB, FTCH, GOOG/GOOGL, NFLX, SNAP, SPOT, SQ, and TWLO.

Lightspeed Venture Partners, 2200 Sand Hill Rd, Ste 100, Menlo Park, CA 94025 USA Sent to ataussig@gmail.com — Unsubscribe