Insights from Pi Volume 01, Issue 02: "Gen Z Matters More than Millennials"
"By the time I go to college, I want to save enough to make a down payment for a house. I’m not going to school in New York City, so I figure about $70K should be enough,”
said Gregory, a participant in one of the New York Gen Z focus groups. He is a high-school senior, and like some of his peers, Gregory re-sells clothes on Instagram. For Gen Z, social media, such as Instagram and Facebook, can be not only the place to connect with friends, get their news, and find entertainment, but also a platform to earn some pocket cash, or even build a successful business.
Taking a broader look at Gen Z’s relationships with money, perhaps the two most defining factors for this generation were the Great Recession and the technological advancements of the past twenty years. Let us start with the recession. When it hit, the older representatives of Gen Z were on the cusp of their teenage years. They saw parents lose their jobs and savings, and older siblings struggle to find their first full-time employment. These early-life influences shaped the mindset of the generation. According to 2017 research by the Center for Generational Kinetics, 23 percent of Gen Z respondents believe personal debt should be avoided at all costs. Among Millennials, who are on average fifteen years older than Gen Z, 21 percent of respondents shared this opinion. Both generations drew the same lessons from experiencing the recession, but Gen Z adopted the frugality mentality before they had a chance to accumulate debt.
The drive to frugality following a major financial crisis is hardly a surprising trend. Your author, a proud Millennial, grew up in the inflation-ridden Ukraine of the ’90s following the collapse of the Soviet Union. Our parents with advanced degrees worked odd jobs re-selling clothes at local street markets, unloading trucks, or sweeping floors. During that time, everyone was a millionaire, albeit ten million in local currency could hardly buy a loaf of bread. As a result, our generation became obsessed with savings and financial security, but with frugality came risk aversion. On average, we tend to choose a career with better income expectations rather than the one we are passionate about, and seek jobs in government and large private organizations rather than start our own businesses.
This is where Gen Z is different. Early data indicates that even if the financial crisis made them more risk averse, the entrepreneurial spirit of Gen Z is high. According to the 2017-2018 Global Entrepreneurship Monitor (GEM) report, nearly half of Gen Zers plan to become entrepreneurs - 41 percent plan to start their own businesses and 45 percent say they will invent something world changing.
Why do we see this trend? One theory is that necessity fuels post-crisis entrepreneurship—there are simply not enough jobs available, especially for young people. However, in the US, the economy is booming, and there are plenty of jobs at all levels, from short-term summer gigs to entry-level post- college positions. After talking with more than am hundred Gen Z representatives, we think there is an alternative explanation for the rise of entrepreneurship: digital economy and social media.
The modern business success story does not involve large upfront investments, heavy equipment, brick and mortar stores, container ships, or railway tracks. It does not even require a garage in Silicon Valley. Today’s success is shaped in the form of hearts and thumbs up. It revolves around the number of followers, views, and subscribers, and what is more important—it is much more visible and relatable than ever before.
the audience they have built to help bigger brands market products and services, a product placement of sorts. Both business models require time, discipline, and deliberate effort to build and maintain an audience of thousands of followers. The larger the audience, the more views one gets for a given post. In this respect, it is similar to the TV advertising model in which the show’s audience size commands a price for an advertising spot.
Millennials were inspired by the rise of Google and Facebook, but they did not hang out in the garage of Larry Page and Sergey Brin, nor did they study with Mark Zuckerberg before he dropped out from their class at Harvard. In contrast, Gen Zers are intimately familiar with people like Gregory, who runs a side business that will allow him to buy his first house at the age of eighteen. They go to the same school, play video games, and hang out online together. Then, they see the number of followers on their friends’ Instagram pages grow from hundreds to tens of thousands.
“Anybody can go viral. Why not me?”
mused a freshman from the University of Washington in an interview about Social media can be, and for some is, a full-time job. But can it be a career? Gen Zers are split on this question. Most influencers we have met are pursuing college and traditional careers in parallel with their social media activity, while some question the value of formal education and the corporate world when they can already make enough money, be independent, and do what they like. For the creative community, doing business on social media can be “a necessary evil.” As one songwriter from Los Angeles put it: “I wish I could spend more time making the actual music rather than promoting it on Instagram.”
“I wish I could spend more time making the actual music rather than promoting it on Instagram.”
Social media democratized marketing and enabled new business models. The low barriers to entry and success of people “just like me” encouraged Gen Z to take their chances. As the social media services mature, however, their users start facing issues similar to the ones entrepreneurs encounter in the offline world and across older online industries. For newcomers, it becomes more and more difficult to reach the critical mass (build the audience) necessary for a successful business, while the existing influencers with large audiences become even bigger. Unlike in the offline world, social media companies (Facebook, Alphabet, Twitter, and so on) write the rules of the game on their platforms. If someone comes up with better rules that will make it easier for newcomers to win, Gen Z will switch allegiance away from Instagram and YouTube. What those rules will be and how the existing YouTube. What those rules will be and how the existing players will react is, potentially, a trillion dollar question.
Evgeniy Kozhemiakin, Sr. Product Manager, Alexa Communications
Curator of Pi // Patterns & Insights, Cameron Campbell, is a Design Forecaster, Curator and Strategist. Her key driver in life is to engage people and inspire creative growth through context, speculation, art, literature, objects, and technology. Want to know more about Pi? firstname.lastname@example.org