GZV #6: Clubhouse should use FOMO on Gen Z
Startups. Trends. News. All from a Gen Z view.
themes of the week
Gen Z has major FOMO; companies should take advantage of this.
Current social media ads targeting gen z are inefficient.
Our generation is starting to invest and be smart with our money.
the flow
Where's money been flowing?
May 20th, 2020
Insense Crowdfunding on republic.co
One liner: Redesigning social ads with data-driven creativity
Score: 8.1
Advertising towards Gen Z is so inefficient it’s kind of funny. We are peppered with ads everywhere we go it has become white noise, nowadays we know how to block it out. The only way ads catch our attention is if they are short, creative, and look phenomenal.
This is why I love Insense. They are using data driven technology and AI to predict and recommend which ads will perform best in the market. In the end, this will lead to more efficient advertising that companies are likely willing to pay a premium for. I’ve asked many Gen Z kids and most agree that ads these days suck at targeting us, and company’s click through rates and impression numbers are probably showing the same.
Insense is already helping massive brands like L’oreal improve their video advertising. Efficiency when advertising is key, and recently, companies are wasting loads of money on crappy ads (*cough* Quibi *cough*). A platform that uses machine learning and curates video creators for use, is bound to perform well once companies compare the numbers on current ads to ads run through Insense.
Featured in Accelerated Liftoff List
HighKey
Unknown last funding round
One liner: Highkey is a College Event App that highlights interesting events at and around your college. It helps you quickly decide where to celebrate, listen to guest speakers, network or just enjoy a night out.
Score: 7.0
Gen Z kids have FOMO. We want to know every event or party that is being hosted on any particular night in order to have the best night possible. This is why Highkey is able to come in and capture over 50% of the campuses.
For a school like USC, where this app was launched, Highkey makes sense. The university has 40,000 kids and a city built around it. It is pretty impossible to figure out what the best event is going to be that night. At large schools, this app does very well and expects to see great retention rates during future campus launches.
Unfortunately, a problem may occur when Highkey runs out of large campuses. Small schools, like Elon, don’t need this app because we know all the events/parties that are planned. In order for Highkey to be a long term winner, they will need to adjust their business model to either suit these smaller schools, or expand into new markets.
Featured in Accelerated Liftoff List
Sleek
Most recent round: Jan 11th seed round of $1.2 mil
One liner: Sleek operates as an AI-based virtual queuing platform that saves customers the headache of standing in long lines.
Score: 7.8
I always order Starbucks through my mobile app, why? Because I hate waiting in lines. This is not an uncommon theme among gen z kids. We are impatient, and it all goes back to the psychological theory that Amazon has ruined us with 2-day shipping.
Sleek has an excellent win-win model to solve the age-old line problem. They allow you to essentially wait in line on your phone, and if you want to skip the line, just pay a variable fee. This is awesome for a few reasons. One, the consumer doesn’t actually have to wait in line, and if they want to, they can just skip it entirely. For the seller, they now have high customer satisfaction, diverse revenue streams, and up to 30% more in sales.
Additional benefits include data collection. As a retailer, there is a vast amount of data you can gather from the app in order to gain insights on your consumers. To highlight the Gen Z part of this app it’s really simple. We love getting things quick, and if we can get our food in 5 minutes vs 45 minutes, we may pay that extra few bucks.
Public.com
Recent round: Series B round of $15 mil
One liner: Follow other investors, discover companies to believe in, invest with any amount of money.
Score: 6.8
Personally, I have been investing in the stock market for 5 years, and over that 5 years I have been very social about my investing trend. Fast forward to today and I recieve 1-3 texts a week asking how to invest, what to invest in, or what I’m invested in.
With this pandemic, and my friends maturing, everyone has started to look toward investing. When looking at Robinhood's 2020 customer sign ups, I would guess over 50% of new customers are Gen Z. Another thing Gen Z loves? Being social, we rarely do things alone and we love to talk about what we are doing. This is where Public.com hits two sweet spots; Gen Z starting to invest, and our innate need to be social.
The reason for the low rating is just because of Robinhood’s presence. Everyone knows them as a beginner investment platform, so when kids think about investing, they think Robinhood. Public.com can change this through heavy marketing, especially pushing their fractional investing feature. They also may want to consider making a fake investing game. Most finance classes through high school and college run stock market games, and if Public.com offers this, it could be a great way to get those beginning investors. They already know of your platform, so it would be logical for them to look to public.com first for investing.
Why Clubhouse should continue to use FOMO in order to attract the Gen Z market
Tom Lombardozzi
You know what psychological principle people hate? The fear of missing out, or FOMO. Let me tell you, Gen Z absolutely hates the idea of FOMO more than any generation. It brings feelings of anxiety, self worth, insecurity, good/bad decision making …(the list goes on), all into play.
This is why Clubhouse needs to continue to use FOMO in order to acquire customers when they launch their new audio-focused social media app. If you haven’t been following VC and startup twitter recently, you probably don’t know about Clubhouse. This is because Clubhouse used a unique strategy where they had a little under 5000 beta testers, where most were VC investors and some celebrities.
One of the pros of only having VC investors as beta testers? You can essentially have a sweepstakes for who is leading your Series A round. In this case A16Z won, leaving Clubhouse with a $100 million pre-launch valuation. Read that again in case you missed it.
One of the biggest components of clubhouse was the human psychology behind the beta testing. Those who were on the app felt important and powerful, they were in an exclusive club that was invite-only. Those who weren't on the app, were begging for invites, because all we saw were people preaching how amazing it was.
This same principle could be key for Gen Z customer acquisition. Use our own psychological makeup against us. The idea of making Clubhouse a closed community, sort of like a frat or a bar, would result in having gen z kids begging to join.
Once you’ve been able to attract them, keep them waiting. A great idea may be to have people use invite codes just like the beta testers used. Another idea would let people join in waves, maybe 1,000 users a day. The idea that there is a social media app out there that is cool, yet we can’t join, would kill us. Like I said before,we are impatient and when we want something, we want it now. Some people would be practically begging to join.
Clubhouse has lightning in a bottle and the launch will be exciting.
the lookout
Nothing on the lookout this week!
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-GZV