Q&A: Millennial Impacts on the Entrepreneurial Ecosystem

They are America’s largest generation and they are soon to be the most educated generation ever, making up the largest share of the American labor force.

Renting over owning; work/life balance; meaningful work over meaningless profits; a propensity for waiting longer to marry or not marrying at all — this is a small sampling of the kind of preferences and values brought on by millennials, who have created major changes in our culture. They also are having a profound impact on our nation’s economic models for employment, job creativity, entrepreneurship and the entire startup ecosystem.

We interviewed ff Venture Capital’s founding partner, John Frankel, to get his perspective on the implications for technology and investing due to today’s millennial-driven shifts in thinking and behavior.

How do millennials impact your investment decisions at ffVC?

Our job as seed- and early-stage technology investors is to decode and decipher the difference between those elements of society that will be affected by trends only in the short-term and those that will be systemic and drive new behaviors on a permanent and a massive scale. We then use this perspective to make investments. Do we get it wrong? Yes, but hopefully we get it right often enough :)

We invest in both enterprise- and consumer-focused technologies. In the latter category, our investment decisions are formed around human behaviors, that is, how we see behaviors incorporating emerging technologies for a lasting impact such as how millennials buy/rent products and services, seek jobs, engage with one another and in their homes and social environments.

Making predictions on people’s future preferences is one thing, but how do you start to predict that behaviors will change?

We invest in founders with big visions and in whom we absolutely believe have the potential to change the way large populations in society engage in varying aspects of the world around them. It is more about creating new capabilities that build on existing behaviors and remove friction, rather than adding a new layer of friction.

Certainly, many of these changes in behavior can often be short term fads, so we focus and research many factors to determine what may have a lasting impact, such as providing a substantially lower cost and higher value of interaction. Social networks, crowdsourcing, meal kit delivery, instant communications, ride sharing, etc., all have been huge change agents, so now we need to look for the next set of technologies to have broad application and impact.

What company in your portfolio exemplifies that idea?

One example is our investment in UniKey, a pioneer of the smart lock. It is a secure mobile platform that lock manufacturers now use to turn your cell phone into a passive key and allow users to create permissions and create temporary keys. We were impressed with the technology that makes a cell phone a passive key based on proximity; no need to open an app or touch your screen.

UniKey has the potential to enable a massive behavioral shift in one of the most mundane tasks in the world: unlocking your front door. Today, the company’s door lock, Kevo from Kwikset, is the bestselling and most popular smart lock in the market. Now, Unikey is expanding to become the Passive Access as a Service (“PAaaS”) infrastructure provider for lock manufacturers across multiple markets, residential, commercial, industrial, car/fleet, etc.

What other startups are reflecting the shift brought by millennials?

Again, the common thread for us is that successful seed- and early-stage companies will create or adapt technology in a manner that incorporates the needs and preferences of millennials, eliminates frictions of expense and/or time, and enables new behaviors for millions of people. Among the most promising investments are in companies that solve the problem in a millennial-friendly way. Some examples are:

Plated. The company recognized the growing desire for healthy lifestyles and quality meals, but that many people lack the time to shop and prep for them. Plated solves that problem by delivering quality, ready-to-cook, pre-portioned ingredients straight to your door. What they have done, which is totally different than their completion, is to offer choice and customization out of the box. Plated’s mass customization and logistics capabilities have created industry-leading customer retention rates.

Wade & Wendy. The company’s mission is to make hiring more personalized by employing two distinct artificial intelligence (AI) personalities; one that learns about a candidate’s preferences and skills and provides advice on their job search, and a second that learns from recruiters about the needs and parameters of job openings and the goals for cultural fit and mission. In essence, the company is a virtual recruiting firm that reduces the costs and difficulties of recruiting by employing friendly conversation, information sharing and intelligent data analytics.

Sure. The millennial generation is shaking up the insurance industry by their absence, so Sure has created an easy-to-use, mobile-first technology to help insurance companies provide to millennials on-demand, episodic insurance products for instant coverage for when they want it and how they want it; that is, when they rent, fly, travel, etc. The company bridges the existing gap between the insurance industry and millennials who, because they rent, not own, or use on-demand services, are not current insurance industry customers.

Why do you think millennials and the startup ecosystem are so intertwined?

The entrepreneurial eco-system is pretty conducive to the millennial mindset: as a founder you can work for yourself, make your own rules (more or less), and invest your blood, sweat and tears into an idea that really matters to you. It is the joining of passion, purpose and self-reliance. The startup eco-system also tends to be skewed to millennial customers and employees, so there is the additional element of an entire generation working together, or separately but at the same time, to make improvements and a positive change in our world.

Looking forward, how can we expect millennials and more recent generations to impact the tech industry?

Pinterest, Facebook, DropBox, AirBnB, Instagram, Snapchat and Stripe are just a few examples of household names born of the talents and demands of this millennial generation. As early adopters and creators of technology, and as impact agents of change, Gen Y has been responsible for a greater number of transformative companies and new behaviors in living and working than any other generation. Looking before, however, we can respect that the Gen Y millennials are deeply indebted to the cutting edge technologies in silicon chips, software and communications first created by the leaders in Gen X. Looking ahead, we’re excited by the potential of Gen Z to expand in the years ahead both the pace and magnitude of the change. In our view, the technology developments of the future will be bigger and better than anything we have seen before.

How and why Gen Z will continue to create and apply technology to solve the problems of today is something we’re looking at closely — expect more thoughts from us on that topic soon.