From Needs to Desires: How to Think About Consumer Software Opportunities

The most consistent trait of consumer behavior is that consistently changes. No one category bears the brunt of the ever-changing consumer preferences more than consumer software. Switching costs are typically low, and options are seemingly endless. Large transitions typically tend to occur during generational shifts. Different generations of consumers have experienced varied versions our internet enabled world. However, there is a model that can be applied cross-generationally, when determining what types of consumer products to create, and potentially build viable businesses around—Maslow’s hierarchy of needs. This model can be a useful tool for identifying potential consumer software opportunities, as it helps to understand the different needs and desires of users at different stages of their lives.

How should today’s builders in this space think about opportunities in the market? Most successful consumer software products tend to tap into one, or more of the needs listed below.

Examples

• Self-Actualization: TikTok, Snapchat, and Day One App allow us to express creativity, be spontaneous, and tap into our purpose and inner potential, respectively.
• Self-Esteem: All for better or worse—Instagram, TikTok, Twitter tap into our innate need for recognition, status, and sadly, respect.
• Love and Belonging: Raya, Tinder, Bumble, Reddit are bringing people together for the purposes of creating new relationships (of all types) as well as connecting around shared interests.
• Safety and Security: Fitbod, Oura (wearable + software), Calm are example companies targeting physical and mental well-being.
• Physiological Needs: Companies like Instacart, Doordash, and Depop enable consumer procurement of food, water, and clothing.

All of the companies mentioned above have created amazing businesses. They've crossed the generational hurdle in many cases. However, most consumer companies are focusing on the highly coveted group we know as Gen-Z. This generation is much different than its predecessors. Most approaches to product building for this specific group will call for first principles thinking.

Consumer's Golden Child

I had the opportunity to work on a product (Dispo) primarily focused on Gen-Z users for the last couple of years. From what I've observed, they are optimistic, inclusive, entrepreneurial and value independence. Not to mention, they are also extremely tech-savvy. So, how do these traits manifest themselves in the future consumer software products that they will flock to?

Let's consider how their behavioral habits may influence these products. Obviously, this generation has been raised to think mobile first, but they yearn for the individual experiences provided by mobile products to be personalized. The expectation is that the product should fit their moods and needs at any given point in time. Your product should be adaptable yet easy to use—a?tough challenge.

This generation values meaningful relationships and connections. They are more likely to prioritize quality over quantity in their social lives, and they place a high value on authenticity and emotional intelligence in their relationships. Covid, for much of this group, affected a pivotal period of social interaction in the real world—transitioning from high school to college and from college to post grad. This moved many social interactions online, but as we have seen in the last year or so, those online spaces will probably be more of a supplement than a replacement to those in the physical world. I believe this generation will increasingly long for mobile software that facilitates, or enhances, IRL social experiences—with different products used for smaller friend group offshoots.

When it comes to privacy and data security, this group may have this at the top of their priority list. They have grown increasingly weary of how consumer tech companies have, in some cases carelessly, dealt with user data. This may mean, that when it comes to how consumer software companies monetize, subscription models will be preferred to giving companies access to your data for them to package and sell to advertisers.

Current Companies to Watch

Over the last few months I've gotten the opportunity to connect and chat with founders working on different consumer software products, all seeming to key in on multiple levels of Maslow's model. I discuss several of them below. Some are mainly focused on Gen-Z, while others are somewhat cross generational. As for companies in the latter category, I believe Gen-Z will end up driving most of their value creation.

I also want to note that I have no financial interest in any of these companies. I am simply excited about what they are doing and where I think they can go.

Sincerely

(Self-Esteem, Love and Belonging, Safety and Security)

Many social spaces on the internet have become increasingly focused on sharing your life highlights, and also tearing others down due to the "safety" of not being face to face with the people on the receiving end—read: Twitter Fingers. A kinder, more accepting version of consumer social products has been a focus area for many in the last few years.

Sincerely is taking a interesting approach to achieving the aforementioned goal by allowing users to receive 3 letters every day from people looking to vent about a relationship issue, talk about their day, or simply send out words of encouragement to the rest of the Sincerely community. One of the key features of the app is that this is all done anonymously. This enables users to be much more vulnerable and willing not only to share, but to help others. Anonymous social products have run into issues in the past, making a lot of them unusable. Sincerely's UX—from the focus on one-on-one interactions to the copy that they choose to use throughout the app—deters a lot of the negative behavior you see on other platforms like Instagram and Twitter.

I'm excited to see where Zibo Gao and his team take this. If anyone reading this interested, you can download the app here.

FEAST

(Love and Belong, Safety and Security, Self-Actualization)

Feast was started by a long-time friend of mine, Amanda Marmer . The company is focusing on providing a safe digital space for young adults from varied social, gender, and racial backgrounds to learn and have positive conversations around sexual education.

In my opinion, this is exactly the type of niche community that aligns with Gen-Z's preference for authentic connections centered around an important shared interest.

Learn more about Feast here.

Bridge

(Safety and Security, Self-Esteem)

Bridge (ironically) feels like what LinkedIn should be. I've always been a proponent of utilizing strong network connections to source and land desired job opportunities. Though not specifically aimed at Gen-Z, Bridge's approach is community oriented; focusing on finding the right people in your network to help connect you to the right opportunities. They are looking to help people shrink the degrees of separation to one another, while making the introduction process much more efficient.

I really enjoyed connecting and speaking with Connor Murphy ?? about where Bridge is heading. You can check out the product here.

Opportunity

I believe the majority of the successful future consumer software companies will have community at their core. Community-centric businesses help facilitate trust—and the higher the level of trust, the larger the competitive moat.

It is also entirely possible for the next generation of community-centric consumer companies to build large profitable businesses, without selling member data, due to Gen-Z's willingness to pay for subscription services.** Now, the current services they shell out for are mainly entertainment (music, tv, gaming) focused. However, Gen-Z consumers prefer subscription services to ad-related models because they offer more control, personalization, convenience, and value.

Currently, Gen-Z makes up approximately 40% of global consumers, and their purchasing power is estimated to be around $143 billion in the United States alone. However, as Gen-Z continues to age and enter the workforce, their purchasing power is expected to increase dramatically.

By 2025, Gen-Z is projected to make up approximately 27% of the global workforce, and their income is expected to grow by more than 70% over the next decade. This means that by 2025, Gen-Z is expected to have a purchasing power of over $33 trillion globally, representing a significant opportunity across the board.

Community-led growth coupled with an extreme value focused subscription model should help future consumer software/software-enabled businesses to flourish. How to identify these new potential opportunities using Maslow's model makes for an interesting thought exercise...

**Gen-Z Subscription Service Stats

• According to a survey by McKinsey & Company, 92% of Gen-Z consumers have a subscription service for streaming media, compared to 78% of Millennials, 64% of Gen X, and 47% of Baby Boomers.
• A survey by YPulse found that 80% of Gen-Z consumers have a subscription to a music streaming service, compared to 70% of Millennials.
• The same YPulse survey also found that 77% of Gen-Z consumers have a subscription to a gaming service, compared to 61% of Millennials.
• A survey by Adweek found that 77% of Gen-Z consumers have a subscription to at least one entertainment service, such as Netflix, Hulu, or Disney+.
• According to a report by Nielsen, Gen-Z consumers are the most likely to have a subscription to an online education service, with 46% of Gen-Z consumers reporting a subscription, compared to 34% of Millennials and 28% of Gen X.