The Consumer Renaissance - by Rex Woodbury - Digital Native
From Predicting Consumer AI Applications to Analyzing Consumer Spend
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The Renaissance of Consumer Technology: Building and Investing in the Consumer Space
- Consumer startups are currently receiving a smaller share of seed capital, but this makes it an attractive space for building and investing as it is contrarian and not following the herd.
- Consumer technology is not limited to consumer social or consumer brands, but also includes businesses that sell to consumers and rely on consumer spending.
- Some of the biggest technology companies in history, such as Google, Facebook, Apple, and Amazon, started as consumer businesses.
- Recent consumer tech IPOs have resulted in significant returns, with consumer wins comparing favorably to big enterprise wins.
- While it is important to balance consumer outcomes with B2B SaaS and B2B marketplaces, the line between consumer and enterprise has been blurring.
- This week's article will explore the data supporting the argument for consumer tech and delve into three categories of consumer tech that are particularly interesting.
- The categories to watch include consumer spend, AI applications, shopping, and consumer health.
Consumer Spending Trends and the Potential for Strong Consumer IPOs
- Prices of lower-priced goods are up, particularly in groceries and fast food, causing concern among consumers.
- Despite this, consumer spending remains strong, with credit and debit card spending rising in 2022.
- Millennials are actually thriving financially, with higher household incomes compared to previous generations.
- In venture capital, short-term fluctuations in consumer spend should not be a major concern as consumer spend historically increases over time.
- Consumer startups are more likely to go public and have higher valuations compared to enterprise startups.
- Canva, a consumer-oriented company, generates significant revenue and has been profitable for several years, highlighting the potential for strong consumer IPOs in the future.
Potential IPO Candidates and Opportunities in AI Consumer Apps
- Several interesting companies are emerging in the AI space, including Amori, Can of Soup, Suno, and Perplexity.
- AI-powered avatars, such as Praktika, offer language learning with real-time tutoring at a fraction of the cost.
- AI avatars have potential beyond language learning, with opportunities in various industries.
- Major consumer internet incumbents are vulnerable to disruption due to the seismic technological change brought by AI.
- There is a possibility of a major shake-up in the consumer internet industry as a result of big technology shifts.
- ChatGPT and Midjourney have already achieved significant success in the consumer AI space.
- Generative AI tools like Midjourney, DALL-E, and Firefly are being used by companies like Klarna to save costs and improve efficiency.
- Image and video models are rapidly improving, augmenting human teams and expanding use cases.
What to Watch in Shopping and Consumer Health
- Part II of the article will cover categories #4-6.
- The article will focus on two categories: Shopping and Consumer Health.
- It will analyze patterns in consumer spending to identify startup opportunities.
- The rule of thumb is to follow the spend.
- The article also mentions an upcoming NYC event on Tuesday.
The Potential and Opportunities in the Consumer Tech Space
- Consumer startups are receiving a smaller share of seed capital, making it an attractive space for building and investing.
- Consumer technology includes businesses that sell to consumers and rely on consumer spending.
- Recent consumer tech IPOs have resulted in significant returns, comparable to big enterprise wins.
- The line between consumer and enterprise tech is blurring.
- Consumer spend, AI applications, shopping, and consumer health are categories to watch in the consumer tech space.
- Despite concerns about rising prices, consumer spending remains strong, with credit and debit card spending rising in 2022.
- Millennials have higher household incomes compared to previous generations and are financially thriving.
- Consumer startups are more likely to go public and have higher valuations compared to enterprise startups.
- Canva, a consumer-oriented company, has been profitable for several years, highlighting the potential for strong consumer IPOs.