GZV #9: Lululemon vs. Peloton
Startups. Trends. News. All From a Gen Z view.
Themes of the week
the flow
Where's money been flowing?
Here's a scale for reference:
1/10: Would never see a kid my age use this product
2/10: The idea may have 1-5% of Gen Z engagement
3/10: The idea is not going to have a big reach, shift is needed in business model
4/10: The idea will have low percentage of Gen Z using this service
5/10: The idea could swing both ways. Too soon to tell
6/10: The idea has potential, but may need an extra feature or two
7/10: The idea is solid, investors looking at a 1-5x return as long as the execution is there
8/10: The idea should capture around 60-80% of the market
9/10: The only people who won’t be using the service are Gen Z stragglers and really aren’t up-to-date
10/10: I’m going to use this and so will everyone I know. Massive success.
EEON
Currently raising seed round.
If interested, please contact me at thomas@genzvoice.com
Score: 8.3
What is it?
I have been in the stock market for a little over four years now. Historically I have been using tradingview and yahoo finance for my research. I’ve used every research tool imaginable, even Bloomberg, and I can honestly say EEON provides the best value for your dollar. To sum EEON up, they provide advanced stock research tools for the everyday investor.
Gen Z relationship:
As I mentioned in the last newsletter, Gen Z is making brokerage accounts faster than any period of time before. With all these new investors coming on the scene, they will begin to learn and become more sophisticated in the market. When Gen Z investors become more sophisticated they will need sophisticated research tools, this is where EEON comes in. The key for EEON is to target this new investor market, so then Gen Z will know where to go when looking for research tools. I recommend making another subscription level called “students” that sells for around $4.99 a month. This package would not include everything at the investor level, but just enough to entice students.
Why the 8.3?
Gen Z is all mobile. We love things to be easily accessible through our phone. EEON started by building an amazing product that is available through an app. This will be the first step into attracting the Gen Z market. Yahoo finance obviously hasn't spent a ton of time on their mobile app as it is nowhere near the makes of EEON’s app. Better product in the end will equal more users.
Karat
Seed round of $4.6 mil on June 25th
Score: 7.8
What is it?
I’ve mentioned in previous newsletters, influencers are the future of brand marketing. With this rise of the influencer market, which is currently worth $15 bil, influencers are making dramatically more money. This is where Karat comes in. They are the first bank card that caters towards influencers' needs.
Gen Z relationship:
The black card for influencers makes sense. Banks are having trouble understanding the income of influencers, as it can vary greatly. With more and more Gen z kids becoming influencers and earning money off of social media platforms, Karat has a great opportunity to hit this market hard. There are two keys to this recipe. First, is to build a great product that will gain customers naturally by referrals. The second, is to partner with an influencer that loves your product. This will have a great impact on your lead generation sales.
Why the 7.8?
This is truly an untapped market, but it is risky. Influencers have become the new way for brands to market, and they are willing to pay a pretty dollar for people who have a good following. The issue is that this form of income is relatively new and there is a little bit of uncertainty to it. Karat is the first black card I have heard of that is venturing into this space and I believe they have to team to conquer this land that banks haven’t been able to yet.
Koji
Series A round of $10 mil
Score: 9.1
What is it?
On first look, I wasn’t very impressed with this app, it definitely takes a second to understand. But after taking a few minutes to dive into their website, I was amazed at what they are making. I'll try to sum it up in a few words; Koji is a platform that allows average users to remake and remix simple apps, memes, or videos.
Gen Z relationship:
We are all over every social media platform there is. The more creative we get the more people like our content. Koji allows users to easily remake and remix any idea or project they see in Koji’s massive template base. We are on social media for one reason; entertainment. We consume this entertainment by communicating with friends or watching amusing content. Koji will now allow this content to be made by almost anyone, allowing for endless sources of content and entertainment.
Why the 9.1?
I personally see this app taking off in the 18 and under market. Kids will always try to out-meme eachother or make new popular games. Like an article about Koji said, “imagine being able to remake Flappy Bird, but instead of a bird, it’s a floating head”. This creative power will not only entertain kids but allow them to use the creative muscle in their brain, being advantageous for both parties.
Links:
https://www.youtube.com/watch?time_continue=386&v=ZZWArj-zlkQ&feature=emb_title
https://www.youtube.com/watch?time_continue=141&v=Seopc2K1XQ8&feature=emb_title
Lululemon vs. Peloton
Tom Lombardozzi
As everyone has probably heard, Lululemon bought the fitness-startup, Mirror, for $500 mil. In probably one of the biggest M&A deals this year, people started to think that Lululemon may be getting into the home fitness market. This bears the question, who will win this fight, Lululemon or Peloton? And better yet, who will Gen Z choose?
Let’s check out this matchup, starting with Lululemon. This $38 billion dollar behemoth already has a pretty big reach into the fitness market. Lululemon is well known throughout generations, including Gen Z, that “Lulu” stands for high-quality athletic and casual apparel. With this reach, it makes sense for Lululemon to break into the home-fitness market. With Covid-19, we saw Peloton have a massive jump in sales and online users. During the same time, we saw the possibility of people joining a gym after Covid shoot dramatically lower. Lululmeon may have seen this as an opportunity to expand their business from apparel and go into the technology sector.
As for Peloton, we have all heard about them. A few years ago they launched their at-home bike and it exploded. People loved, and I mean loved the bike. Anyone who got the bike would always tell all of their friends how awesome it was. Now, they have expanded. By adding a treadmill and digital gym program, they now have the ability to increase their revenue streams. Since Covid, they have seen a massive increase in their online gym, which costs only $40/month. I’ve talked to a few users… It's the same situation as the bike, everyone I’ve talked to loves them and will never use a gym again. Let face the fact, Covid may have delivered a big blow to the gym industry. Peloton is positioned in a great place to expand their reach and have many products in the pipeline they will be launching soon, according to a recent earnings call.
So who's going to win? Well first, here’s how I think the companies will operate. In terms of Lululemon, I think they will pursue an acquisition strategy and buy another 1 or 2 fitness startups. In terms of Peloton, I believe they will keep launching new amazing products and continue to diversify their revenue stream.
From the Gen Z view, I believe that people will be mixed. Those people who have been wearing Lululemon since high school will most likely go with Lululemon, this is all due to brand loyalty. Those whose parents have a Peloton will likely go with Peloton. Here is the trick to grabbing the Gen Z audience, make the products more accessible. Lululemon has the lead in this arena, some of their products are affordable for kids and when we wear them we love them. Peloton on the other hand, does not have a big reach into college students, no kid can afford a $2000 bike. They have taken steps by adding Peloton digital, but $40/month is still too much money. I recommend partnering with universities in some matter, maybe sending bikes for gyms, or giving a student pass, this will expand their reach into the Gen Z market and help them win the battle.
In this fight, I think the markets are up grabs. So... Round 1, Fight! (*bell rings*).
the lookout
Something new is coming in social media... it's time.
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-GZV