The next movement in the era of tech products is about experience. Let me explain.
TL;DR: The next generation of consumer products will design, sell, and build technology around selling engineered experiences and experience based products.
The conversation about the next generation of innovation includes topics such as: Artificial General Intelligence, Augmented Reality/Virtual Reality, Machine Learning, Autonomous Vehicles, Space Travel, Extending Life, Genome Engineering, Effortless Communication, New modes of Transportation, Clean Energy, Decentralized Web, Cryptocurrencies, Saving The Planet tech, and the list goes on…
Of the few things in common within these topics is that they are backed by the idea that human life is always progressing and must continue to progress, and progress towards a future that gives us a better experience of life itself, be it communication, travel, or happiness. Fair to say, humans yearn experiences.
We want to perceive everything we do through the lens of being in an experience-based world. Many question, what is reality? Reality could be argued as only the things we perceive and believe to be true. If someone is in a room with no windows and no access to a clock, how do they know if it’s day or night? What if someone is in a room with a window that has some sort of light coming through it but without seeing the source of the light(sun or a powerful halogen), they would probably think it’s day. It’s natural, that’s an objective observation of humans. Fair to say, reality is what we make of it.
The great Marcus Aurelius even once said “Our world is what we perceive our thoughts to be.” Certainly some timeless words of wisdom and an insane human observation for someone who was born in 121 AD. How did you wake up this morning? Was your day in correlation to how it went? What exactly is that experience?
The word experience is defined as “an event or occurrence which leaves an impression on someone” by the Oxford dictionary and for the context of this article it holds the same definition. If you look at the graphs below, you will notice a trend since the past few hundred years that the word usage in books has been gradually rising. Though that’s the most recent data I could retrieve, you can safely incur that the sharp rise in the 21st century can be related to the birth of the consumer startups and the app-store coming up to slowly conquer the world. With the likes of Uber, Airbnb, Whatsapp, Spotify, Twitter starting, this is when the word “experience”started to pop up in conversations particularly within the mass tech product context. We can infer in 2018 that the graph might have continued to rise rapidly.
Experience in context of this blog is defined as the same as the oxford dictionary’s noted above.
So how will the next gen of products look like?
Let’s look at a few key observations first (hallmark companies backed by Warren Buffett)
Why does Coke always market experiences in their ads where a coke bottle just happens to be present in the best and most memorable moments? Why doesn’t it recommend something that is relevant to the drink itself like the taste etc? You see, Coke has tied itself on a psychological level with happiness. Not only that but, Coke also has a tasteless memory! See the remarkable quote below by Warren Buffet in his annual shareholder letter.
One thing that people don’t understand… Cola has no taste memory. You can drink one of these [Coca Colas] at 9:00, 11:00, 3:00 in the afternoon, 5:00. The one at 5:00 will taste just as good to you as the one you drank earlier in the morning. You can’t do that with cream soda, root beer, orange, grape, you name it. All of those things accumulate on you. Most foods do. And beverages. You get sick of them after a while… There is no taste memory to Cola. And that means that you get people around the world that are heavy users, that will drink five a day… They’ll never do that with other products. So you get this incredible per capita consumption.
So we’ve been made to tie drinking coke with just about anywhere that might seem special. Just try to think of all the things Coke sponsors including the World Cup, Olympics, movies, events, etc. The idea is that Coke being present might give you a happy experience while doing those things. Fair to say, drinking Coke is an experience.
Here is a super interesting one. Why is it a big deal to attend the World Cup or the Olympics? I think everyone knows the basic answer: because they only happen every four years and the best team is crowned the winner! The deeper answer is that it’s our imagination giving it importance. It’s not just another game or a state competition, its the WORLD CUP! So when you’re there in person or even if you’re watching from home, you’re part of the experience. You’re witnessing “history” and taking part in the coveted games. I bet you know someone who drank Coca Cola while watching these games 😃
While Coca Cola made Berkshire Hathaway tons of money, Buffet’s dream business was See’s Candy. Far more profitable than Coke. I was surprised when I first found out. When was the last time you went to See’s? Do you remember the look and the feel of the store? Elegant white walls that give the perfect background to the various shades of bright chocolate wrappings. Cordial happy staff that always hand out amazing samples that pretty much force you to buy the sweet piece of heaven if you have a “sweet” spot for sweets. Oh. The store is also small. In a few glances, you can see all the offerings and options. So how is something like this more profitable than Coke? Here is how Buffett broke down that experience.
“Guilt, guilt, guilt — guys are veering off the highway right and left. They won’t dare go home without a box of chocolates by the time we get through with them on our radio ads. So that Valentine’s Day is the biggest day. Can you imagine going home on Valentine’s Day — our See’s Candy is now $11 a pound thanks to my brilliance. And let’s say there is [competitor]candy available at $6 a pound. Do you really want to walk in on Valentine’s Day and hand — she has all these positive images of See’s Candy over the years — and say, ‘Honey, this year I took the low bid.’ And hand her a box of candy. It just isn’t going to work. So in a sense, there is untapped pricing power — it is not price dependent.” “What we did know was that they had share of mind in California. There was something special. Every person in California has something in mind about See’s Candy and overwhelmingly it was favorable. They had taken a box on Valentine‘s Day to some girl and she had kissed him. If she slapped him, we would have no business. As long as she kisses him, that is what we want in their minds. See’s Candy means getting kissed. If we can get that in the minds of people, we can raise prices.
While I have not personally tried this approach yet, it certainly is enticing and sells the experience well. The candy is obviously great but what is being sold here is the experience of warmth, sweetness, love, and happy moments. An incredible observation by the Oracle of Omaha.
He did raise the prices. In 1972, See’s had sold 17 million pounds of candy, and by 1984, that number rose to 25 million pounds, roughly 50% gain. Yet it went from having $31 million in revenue to $136 million, an increase of 333%. Look at the chart from the annual letters.
Investing in this manner is referred to as value investing. Defined as “an investment strategy where stocks are selected that trade for less than their intrinsic values.” They’re placing their bets on the value that the company offers in the long term, not what market prices it to be. Won’t dive into this deeply but the important thing is to understand the concept.
Let’s look at one more quickly. Berkshire Hathaway recently invested in Apple(Berkshire’s largest investment now) which holds over 200 million shares.
While I can talk all day about Apple and their ingenuity in product making, if you look at Apple holistically, it’s more than just tech products. I’ve heard people describe them as a fashion company, brand company, health company, lifestyle company, among many others that might not be intuitive. When all their products are in sync, their ecosystem is nothing short of magic. The seamless experience of information coupled with the captivating physical design surely makes it much more than a tech product. From my personal experience, Apple products are seen as a status symbol especially outside the United States. I’ve also even been told that the blue bubble of shame does not impress. Here’s the best way to give you a first hand example. How are you reading this article? On Android or Apple? Why not buy Android or HP next if you currently own an iPhone or a Mac? Whatever reason it may be, deep down it falls into craving that Apple experience. That wholeness that the product gives. People are willing to pay premium for that experience.
That is exactly why Berkshire invested in many of these remarkable companies. Charlie Munger in an incredible speech given at USC in 1994 gave his secret formula away to finding and investing in companies that offer more than just products. He said…
“There are actually businesses, that you will find a few times in a lifetime, where any manager could raise the return enormously just by raising prices — and yet they haven’t done it. So they have huge untapped pricing power that they’re not using. That is the ultimate no-brainer.
That makes so much sense now. If Apple changes their prices tomorrow a few dollars higher for iCloud, iPad, Mac, doesn’t mean people will switch over to competing products. They will stay loyal for the simplicity and the elegant experience that they offer.
The very reason why Disneyland will perhaps be around for a very long time. Heck, they call it “the happiest place on Earth” They’re selling that experience. The experience of you bonding with your family, on rides, eating overpriced pizza, photos with Mickey, and finishing the night with spectacular fireworks against the backdrop of imaginary cities and characters.
So where does this all fit in with the future of tech products? Notice the small things that have become part of our lives.
Why does every party need to have a good Spotify playlist playing in the background for it be to a great party?
Why is space travel exciting all of the sudden and why is there a need for mankind to look above and perhaps settle amongst the stars? Certainly at a glance you would think we have everything we need here on Earth.
I am unable to recall where I heard this but there is a saying that human behavior may be altered but human nature cannot. Maybe it is part of the innate nature of man to crave experiences and venture into the unknown.
I really do believe that the next generation of consumer products will design, sell, and build technology around selling engineered experiences and experience based products.
Perhaps we have already seen some in their nascent stages. This experience can be anything from being connected to the world, witnessing a phenomenon, being part of a movement, wanting to be part of a story, to the idea of FOMO(fear of missing out). If you ask yourself or another individual “why” enough times, you will eventually get down to the root causes of why we choose to do certain things. Life is itself an addiction, a good one to say the least. I would like to think that the things we do on a daily basis is so we can live our life to it’s fullest potential.
Here is a quick example: I had a simple conversation with a friend. Usually asking why enough times helps get to the core. Why do you workout? So I can be in good shape and be healthy. Why do you want to look good & be healthy? So I can enjoy life without being prone to sickness and get the pleasures of life. Why that? Life itself has too many good things to offer and I want to get as much as I can. Though he was a bit annoyed, even he was surprised with his answer.
In summary, working out leads to being in good shape, being in good shape makes you healthy, being healthy means living life with less physical problems, less physical problems gives you a longer chance at living a long life. Life is itself an addiction, use it to your advantage. On a reasonable day, have you ever went to sleep thinking that I hope I don’t wake up tomorrow? Probably not, in fact, very much the opposite.
In fact, here is something interesting that I recently learned(there’s so much I still don't know). Our memories are built around remembering things, stories, feelings, experiences, and things that aren’t simply cold data.In Cal Newport’s book Deep Work he shares a technique used by Ron White, a former USA Memory Champion and world record holder in card memorization about how our memory works. He says “we’re not wired to quickly internalize abstract information.” Abstract information is cold data that you might not be able to relate with or even understand. He does mention that “we are, however, really good at remembering scenes.” This is how books were written based on stories that were verbally passed on for generations thousands of years ago. To prove that point, note, the very reason why a considerable amount of people still don’t understand the meaning of climate change is because they aren’t able to understand or retain objective data about the effects of climate change(Planet’s temperature is rising above 1°C which is extremely high and alarming when you look at the historical data of Earth). While rational and logic based debates are the better route in building a better future, often times the argument I hear in explaining climate change to those who don’t understand it is by saying things like “we want to leave the world a better place for our kids so they too can enjoy nature as much as I did. I want them to live healthy and happily without having to worry about food shortages, droughts, land wars, etc…
Heck everything I do, as a Gen Z is based upon the notion of living an experience based satisfying life. You can even call it a gamification of our world. What do people say if you ask them what they would do if they won a big lottery? A good size of them say they would use the funds in some way shape or form, to go explore and experience the beauty of our world.
Let’s take a look at a few startup companies ushering in this new era of experience based society and perhaps a look into the future of how products will evolve.
Affirm — a fintech company focusing on payments. Here is a great example from Affirm’s platform that prioritizes simplicity and transparency. There is a clear breakdown of the payment plan with easy to use options followed by a detailed description of the entire amount and how it is broken down.
What if payment designs today focused on the lead user that shows a
different scenario that we might not face today but in the future. Things like minimal user interface with utmost transparency and superior analytics that better understand the user lifestyle whether you are a millennial coming of age or baby boomer about to retire.The interface that the user engages with matters by region and lifestyle.
Warby Parker — a lifestyle brand that offers designer eye-wear at a revolutionary low price. In the comforts of your home you can try on 3 designer glasses for free. You can order these prescription glasses for about $95 while market substitutes easily run upwards of $300 on average. At the third of the price you get designer glasses that you can choose from the comforts of your home. Their website and store locations even offer recommendations according to your facial structure. The point here is you are saving time with the convenience, get to enjoy buying the product, and the price is super affordable for the average customer. It’s a great engineered experience that was never done before for prescriptive eye-wear.
Amazon Wardrobe — a prime exclusive product where you get to try on various clothing, shoes, and accessories all within the comforts of your home. Here’s how it works. You fill your “box” with at least 3 items, you then have a 7 day period to try on the items, and simply return what you don’t want to keep. The box is resealable and comes with a printed return label. This is a quite remarkable innovation that takes on the typical retail store head on. In your house, you can try on the items as much as you want and try various combinations with the things you already own. Saving massive time and best of all, giving you the best buying experience. It’s in your house and you haven’t bought it. Can it get any easier?
Uber — the car ride services where you can catch a ride in just a few clicks to be carried to your destination within minutes. Engineering a robust infrastructure that supports the vast supply and demand fostered by an incentive to both the parties is brilliant. They recently passed 10 billion rides given milestone with half of those coming within just the last year. Uber engineered an experience that isn’t just a great utility that saves times and offers convenience but an experience that offers a piece of mind with their services(what do you when you drank at a party you weren’t supposed too, Uber it!)
Stripe — offers a set of unified API’s and tools that instantly enables businesses to accept and manage online payments. They regard themselves as “the best software platform for running an internet business.” They are expanding internet commerce from supporting startups to Fortune 500 and it’s never been easier to run a e-commerce company. They’ve basically made the entire back end process so intuitive and simple with their service that your focus solely falls on the core business. With the power of code, they’ve engineered a super simple and effective way for people to experience the power of starting a company and improving their life drastically.
Virgin Galactic —a company that is set to offer suborbital spaceflights to the paying public. While I do agree that this is initially for those who can afford such luxuries but I really do believe that within our lifetime, the middle class public will have and should have the ability to experience the darkness of space and see the curve of humanity(earth) from an engineered vehicle. Such life changing moments can bring a lot of things to perspective plus it’s perhaps a business model that sells itself. Think of it as the world’s best roller coaster if you will.
Coinbase — a digital currency wallet that allows you to buy various digital assets like bitcoin, ethereum, etc. Now you might think this is a bit odd and perhaps might even be counter intuitive but bringing the ability to participate in the transformation of modern finance to the average consumer is a task no easier than rocket science. When you take a complex technology like bitcoin and merge with an already complex modern financial system, you have an ultra complex system that can only be understood by industry experts. Taking on this challenge head on and wanting to make an open financial system in the world that even elementary children are able to understand is a lofty but a pragmatic goal. Taking modern technology like blockchain that can offer sound and a just system and giving everyone the ability to be a part of that system is a remarkable change to the financial experience.
Boring Company — basically digging tunnels to build an underground network for transportation. Have you ever been stuck in traffic? Better, have you experienced LA’s rush hour traffic? If you have, you already want this to work and if you haven’t, do you remember the jetson’s cartoon? This is where the transportation was rather seamless and a joyful experience where you are able to read, work, do anything, all within relative safer terms than say driving.
Airbnb — an online community marketplace where you can discover the world through the means of traveling and exploring is the perhaps the best example out of them all. 10 years ago, we never had the ability to rent out the empty spaces in our homes to strangers for extra cash let alone imagine something like that. The ability to explore new places and discover new knowledge within the homes and the lens of the locals is something quite remarkable. Their core products that offer homes, restaurants, and most recently, experiences is a pitch that sells itself in the human curiosity of wanting to see and feel new things. Great stuff. More to come.
Lime Bikes — electric scooters that are solving the last mile commuter problems while being Eco-friendly. Enabled through a mobile app and a mobility fleet that also features a pedal bike, Lime and other scooter startups are out to make transportation within cities seamless. The ability to make this affordable for an average user while scaling to cities around the world and dealing with local regulations is no small challenge. I have personalty rode these various times and let me tell you, it’s the best way to go around a city. Plus, you feel like a kid again.
Waymo — autonomous cars at your service. Out of Google’s lab, Waymo became the world’s first fully self-driving car on a public road without a steering wheel or pedals. An autonomous future isn’t that far away! Imagine going in a car anywhere and being able to read, sleep, write, and not worrying about getting to your destination safely. A productive future but also one that is safer for human lives. Currently, Waymo is testing in the Phoenix area with an early ride program that takes people “ from work, to school, to the movies and more.” and they just were granted the first permit in California to operate its self-driving vehicles without a back-up driver!
23 & Me — “a human genome research company enabling users to study their ancestry, genealogy, and inherited traits.” They were the first company to offer direct-to-consumer genetic test with you sending just your saliva in a box to them. Super simple process. The results can be mind blowing though. In return for $69, you get an in-depth report on you global ancestry by percentages, giving you an ability to connect with your unknown DNA relatives, plus discover genetic health risks, wellness numbers, carrier status, and traits that are unique to you! They access, you understand, and ultimately benefit from learning about your human genome. You are indeed special. The thrill of seeking the unknown is attractive in this case.
Lastly, SpaceX — you thought I would leave this out!? 😄 The ultimate experience. Humanity becoming an interplanetary species! Do I need to say more? The first passenger flight for the Big “Falcon” Rocket will be around the moon on a 11 day journey with some of the most prolific artists from our world in 2023. Human nature and curiosity at it’s finest. Humans will be on Mars in our life time and there’s a more than good chance of there being a colony of humans on Mars. What an exciting time to be alive and consumer some ridiculously cool products.
These are just a handful of the companies that are infusing experience of service in industries that never existed before. Authenticity in building these products is the catalyst that will give you a product valued immensely by the users.
So what have we learned so far? Humans are insatiable at least to some level when it comes to experiences. We as a people, have to be continuously innovative.
Gamification, exploration, and unique solutions will give way to new experiences. You see the experience is always present, it’s you, your mindfulness that is temporary(think how happy you are when you go a theme park vs an average day)
There will be a shift in most of the software businesses that are starting to realize that there needs to be an emphasis on pushing objectives that are solving problems faced by customers/offering innovative solutions rather than pushing product roadmaps that are often infested with feature installations.
A great example would be the fusion of VR and roller coasters at Six Flags. A merger of physical thrill enhanced by software imagination.
Perhaps Benjamin Franklin said it best in one of his timeless essays “Man is a sociable being, and it is, for aught I know, one of the worst punishments to be excluded from society.” The quest of connecting the world and bringing incredible experiences is far from over.
With the advent of new tech on the rise, we will see our society gradually transforming into an epic Disneyland where everything is a beautiful experience, perhaps even an addicting one.
Summary: The next generation of consumer products will design, sell, and build technology around selling engineered experiences and experience based products.
If you are reading this, you are the real MVP 😄. Certainly hope you enjoyed it. If you liked this, you would also ❤️ my podcast, Vision Of The People where I interview amazing leaders(Cofounder of Twitter, CEO of Virgin Orbit, MD of General Catalyst, etc running billion dollar companies) and talk about their products, vision, and advice they would share with young folks to make an impact on the world! Looking forward to hearing back from you. Find me on Twitter @LilRushiShah