Andreesen Horowitz, the “invest in companies that will change the world” venture capital firm produces an annual Marketplace 100 ranking of start-up businesses. This year 75% of the 100 are in Shopping, Food, Travel and Therapy, in a marketplace that is now 85% “bricks and mortar” and 15% online. There are two key conclusions of the Report that reveal that we really are in a PeopleFirst economy, notwithstanding the purported ascendancy of AI-based business that a16z (there are sixteen letters between the “a” in Andreessen and the “z” in Horowitz) invests in.
“It’s not just a transaction: Consumers seek out personalized and entertaining shopping experiences.”
PeopleFirst demands are driving both IRL (in real life) and online shopping to be human relationship oriented. Curation, interactive features, including gaming and follow up, are a few ways that the online shopping is trying to offer a personal interaction between the platform and the viewer + consumer. The IRL world has come to see the truth that return visits are a function of the personal connection the consumer has with the people in the store. In both instances, shopping is far more than a transaction; it is a human affirming experience.
Think about the shopping that you truly enjoy – that you want to return to. Yes, convenience is a factor to be sure. But the differentiating reason is the interaction you have with the salesperson who is tremendously helpful, the car mechanic who takes the time to explain to you why you need new brake lines, the bank teller who makes it easy to do the SWIFT transfer. In each instance, the distinguishing feature is the human-to-human experience. Shopping is personal; yes because it is about satisfying a personal need, but also great shopping is when you receive a product plus a personal connection. (Perhaps we start a new term: PplusP is the key to enduring purchase.)
But this is a surprising conclusion from a techno-optimist firm that invests in breakthrough “unicorn” business ideas. In an extensive profile of Marc Andreesen in The New Yorker (May 2015), entitled TheAdvance Man, Marc Andreesen says great VCs (venture capitalists) need to have “Dumbo ears” so they can see how the ideas that might look outrageous today will be winners in the future. Looking beyond the conventional, Andreesen, the person and the firm, invests in what is to come. Andreesen says that this requires ferocious intelligence, contrarian investment and prescience. This prescience is now telling us that we need to people first.
The fastest growing category? Mental health, by a long shot.
The growth in mental health struggles, and offered solutions, seems to be incontrovertible. A recent piece by Jamie Smyth and Hanna Murphy, The Teen Mental Health Crisis: A Reckoning for Big Tech (Financial Times March 26, 2023) summarizes the statistics of the increases in mental health incidences and consequences amongst teenagers, and the arguments for how the tech industry is, whether intentionally or not, a potent causal factor. Algorithm-driven platforms offer “highly addictive products that expose young people to harmful material”, rewire brains and shape a viciously comparative world where we all feel inadequate. In an interesting social hedging, Andreesen, and others, are now investing in businesses that address the consequences of techno addiction and social meanness. Notwithstanding the criticisms that have been levelled at VC firms for what they invest in, Farhad Manjoo, in a recent editorial (NY Times March 26, 2023), notes that VCs might help solve the problems they have been complicit, if not instrumental, in creating.
Andreesen recommends investing in people. The businesses that make it personal will win; the businesses that take care of the person is what we need, and so will win. Andreesen is signalling that we really are in a PeopleFirst economy.
Andreesen notes that Michael Ovitz, Founder of Creative Artists, was an important advisor. His first recommendation was to “take the long view, not the transactional one” – which clearly Andreesen is now advising all of us to follow. Transaction is out, the personal is in.
Ovitz’s second counsel was that you always need to “disrupt to differentiate the dream-execution machine”. It is fascinating that disruption today is making it personal, which one could argue has always been the essence of our dreams.
Success is now about returning to the origins of all market action – the human-to-human connection that matches need with product, aloneness with support and the individual with people. Welcome to the future where People matter most.