Name: Investor Roundtable 2022: Millennials and gen z choose physical (and digital) experiences over possessions
Uploaded: 2021-11-29
Duration: 13 min 39 s
Description: Goldman Sachs' Katie Koch: 'Social media, in a way' turns experiences into a material item.

Goldman Sachs' Katie Koch: "Social media, in a way" turns experiences into a material item. 

Investor Roundtable 2022: Millennials and gen z choose physical (and digital) experiences over possessions

Finance

New generations choose experiences over possessions

Investor Roundtable 2022: New generations choose physical (and digital) experiences over possessions

I think one assumption that all of us share all of you share and I share is one that fortunately at least in the United States and europe, we seem to have passed the worst of Covid help them not jinxing anything by saying this, but there's a confidence that some elements of the, of the economy are headed towards real normalization perhaps especially uh consumer experiences that are happening in person, whether it's uh live entertainment or as dan was referencing earlier, people going back to restaurants, shopping in person, travel, coming back somewhat um, from everybody in the panel. What kind of opportunities you're seeing uh in that world dan. I'll start with you because I know you've given us a lot of thought were very focused on, on that reopening opportunity. Experiences is a big trend actually within that, which is a lot of consumers uh, for for decades have been sort of replacing material things with experiences. So when we say experiences, we mean things like travel, uh concerts. So actually live nation as a company we like a lot. I mean this is amazon proof and brick and mortar proof. If you want to go see your favorite musician, uh, you know, nothing replaces seeing them live and people do like the audience is there just as much as they like going to see the NFL live, not on tv every time. And these are the kinds of things that if you think about demographics, you have interestingly not only baby boomers who are, you know, in the prime of their lives with you all enjoying things and probably differ some of this. They had to during Covid, but you also have the rise of the millennials. I mean, this is the most experiential base uh youthful group that we've ever had. They are they are not as focused on, for example, you know, job, home car have kids, they're much more focused on travel experiences, concerts and of course I should name, I should, I do want to do just one thing and it's sort of interesting non material things but seems to be an emerging trend again, which is the metaverse. I mean, we are finding that this generation is really adopting just like they adopted mobile first and then social media first. Uh they seem to be very aggressively and very uh enthusiastically adopting sort of the idea of experiencing things through the metaverse. I don't think it's gonna replace real world experiences. I think it's a compliment to the lives of many, many of the younger millennials, you know, the older half of millennials are probably more like the baby boomers if you will, but the younger half is quite interesting as well because they're actually an extremely large population there actually, they they have equipped inside the baby boomers who of course, in terms of numbers are beginning to decline. So I'll pick up there because they, and then we're in agreement again here on this. Um, but on millennials in general. Um, also we have to play small cap it to stick with millennials for a second. Um We are very, very big believers in the enduring power of the preference for experience over things for that generation. Just two things I would add to an 85% of the world's millennials actually live in emerging markets. So a lot of these trends around live experiences traveled great outdoors is something that we try and own globally and in particular in places um in in Asia and latin America in addition to what we own in the US. Um the other point I would make about it, which I think sometimes gets lost on people, but we, one of the reasons that they can take experiences over things is that social media has enabled um Millennial and Gen Z consumers and I was born in 1980s. So I'm a geriatric millennials. So I have uh, I'm told by my piece a bit of perspective on this, you can take your pictures of your experiences that you're having and post them to social media and that in a way it transforms it into a thing. So instead of showing off luxury goods um which people previously did and there's still some of that, but not definitely not as much of that from this generation, they can actually take experiences and do the same thing through social media and kind of translate it in some ways and Sabina into being a thing. Um and then the final comment um I would make about this generation is uh we talked about traveling, talked about travel related names. I've mentioned it earlier but want to emphasize this idea of being in the great outdoors that we have been heavily invested in. There's a lot of ways to access that in small cap, whether it's yeti whether it's cool companies, whether its owning the RV companies because people are buying that boat ownership um now hiring millennials and other generations. So there's a lot that you can get into there, that's about experiences and also being outside and I'll leave it to dance comments on the metaverse because I'm I'm liking forms there the same very much same we want to talk about. I mean I think the universe is really interesting. It's also tied to the Cryptocurrency uh trend. It's not really tied to it directly, but I view it as like very uh sort of parallel track, but what we're seeing is a rapid adoption of brand, for example, hosting events, you know, in the metaverse. Now, I mean maybe to simplify what you just sort of virtual reality, right? But they're gamifying creating environments that can be visually experienced. Obviously, better visual experience if you use something like an octopus, like a VR headset. But the idea, you know, is um that a lot of them letters are gonna transfer sort of what they've been doing on social media into this more three dimensional, more experiential environment and we've seen some really interesting things like um I think it was Gucci created like a one of a kind digital that's the digital, not a real bag. And I think they have managed to sell it for thousands of dollars. I don't remember. This is the same thing like non fungible tokens, N. F. T. Tom brady for example has got an N. F. T. You know, it's a digital, it's basically a digital football card. You know, it's a like a trading card. Um uh Some people have told me that just seems really crazy and I said, well just remember, you know one day, thousands of years ago somebody showed up at the marketplace and instead of bringing sheeps and pigs to trade for chickens and corn, you know, it brought something called a coin and you know, probably the other vendors looked at him and said, I don't want that piece of metal. Where's my chicken? You know, if you want my corn, I want my chicken. Um so I think, you know, a lot of these things digital literally digital are uh at least a very big and important trend to watch. And it's certainly um you know, the big experience of adoption of new things uh in our ages at the time to 50% penetration has rapidly accelerated Um consistently over many, many decades afterwards. It took, you know, 100 years to get 50% of America with the telephone. It took half that time to get them with these. And I think you know, Facebook got adopted by 50%, you know, in probably like less than two years and we're just seeing rapid rapid adoption and that is a phenomenon of our time. But I think you know all investors need to be kind of focused on. So I I just note that the metaverse sidestepped, I don't have any particular investments to, I mean I can name some like roadblocks and unity and of course facebook itself now called meta to watch what we do. An interesting outcome. Is there going to be some traditional company? So for example, to power the metaverse, the amount of computing power needed is going to be amazing. So there are companies like AMC and NVIDIA, um, you know in semiconductors, they're going to be needed to power this stuff. Yeah, chips and servers and the whole works. Lori I apologize, I cut you off. Please please go ahead. Oh no, I just wanted to add one further point on the millennials that we were discussing. I think one thing to really highlight is they're really approaching their peak earning years when you think about coming up to that 45-55 year earnings cycle for millennials. And one of the areas certainly uh services are going to be a big area but I think one of their biggest purchases are gonna be on home and financing their homes but also investing their homes, repairing their homes And so we see, you know, a big opportunity to play into that theme in terms of the really the longevity of spending money on your home's over really the next decade by millennials. And you know, I'd highlight one quick example would be a company like Angie, Angie's is the dominant platform provider of On online home services contracting services, a $900 billion dollar market, uh that they operate across. And we think, you know, there's a very significant opportunity for further penetration and millennials really going to be much more inclined to identify contractors that can come into the home online versus historically, what we all did. Um pulling something out of yellow pages or uh some other route of doing that. We think there's really almost a catch up trade here in the sunset, you know, they've they've not benefited during the pandemic because there was A lack of contractors available and you know, some other brand repositioning issues, but we think, you know, that's a great example of one that has a really asymmetric risk reward as we look at 2022. Yeah, absolutely Leslie you are you are, I was just gonna ask you to chime in please. Yeah. Yeah. It's so funny. I haven't spent this much time thinking about millennials and a while because I think in metric are like, I think a lot about the edge, the two edges of the population of one is um baby boomers like the caring economy and and how to create technologies that can be um for that population, but more importantly, is gen z. So I actually spent a lot of time trying to figure out what gen z is doing. These are, you know, the first digital natives, completely different attitude to life, question everything, you know, and they take a very different approach to uh community to to really everything to how they relate to one another. So I'm not a huge investor in uh, crypto and members and like those, those edge technologies and edge behaviors. But I do think that they are coming. Um, I think it's important for investors to pay attention to start learning about it because I think 5, 10 years on the road, this is gonna be a lot of what we talk about them in day to day, we're gonna be talking about not just trading securities and trading points, but also trading fractional ownership of digital goods, fractional ownership of physical goods in a digital token form. Um, and I do think that it's really important for people to really start paying attention to what is happening in those, like edge parts of the economy right now. It looks a lot like claim. I mean, it looks very speculative, right, Like certainly should not be investing anything that you're not prepared to lose, but it is uh, learning. So I have a, I have an investment company that I think is doing something really interesting investigate uh called Macara and what McAra does is creating investment basket essentially their E. S. T. S. Made up of cryptocurrencies that the retail investor canonical and investment. So it's kind of packaging all of this up in a way that uh you know, geriatric millennials and and gen expert. Uh I understand and get behind and not have to be quite so like worried about like you know um Yeah, she's like like what's open sea and why should I buy it? You know, care for a animal. That looks really weird, like you know, why is that on people sort of problems? So don't worry about all that. Start paying attention to what is happening in those cases the economy. I think you know more people need to be involved. I um I saw a tweet this morning, I wish that I had come up with it, but I did not. Uh but I do want to share it that you know, I really wish that um more science fiction literature was read as cautionary guide and not a how to manual, but I actually think that a lot of what is happening is that Edge World is approaching things like ready cleared one, approaching things that you know like the movies like somebody has to come up with it before it can be also invested. So pay attention, Start taking a look at what is happening in cryptocurrencies and FTS in um it's like digital ownership, digital community, digital investment world because I think it's gonna be a big part of the conversation five or 10 years down the line. One thing that really strikes me with everybody's comments I just wanted to bring up in terms of how to inform oneself about this space. Um, so roadblocks down by the way the company were invested into. And I just, we talk about diversity a lot in this industry and I think it's very, very important for crowd on our team that half the assets are run by fortunately managers that happen to be women. We talk about a lot around gender and race and we should. But the other thing is also demographic diversity on your own investing team. And certainly for us, I would say having younger investors has been very helpful for understanding these trends, like when you're trying to figure out why someone wants to buy a burrito from Chipotle through roadblocks in the metaverse, Like you need young people on the team, at least I do to help us understand that. So that's important for us. And I say for people watching this at home to have young kids and their family. I totally agree with those comments that you want to educate yourself about it, you want to understand and use cases and you probably can get pretty far in doing that by speaking to the digital natives in your life, particularly. Um, uh, gen z