How Gen Z is Driving the Future of Work, Commerce and Living
They may be the future’s great hope, the generation driving their Gen X parents crazy, or both.
September 6, 2022
While it’s hard to generalize about any generation, there are a few clear themes about Generation Z (Gen Z) that are driving innovation across how we work, shop, socialize, and live. Read on to learn more about Gen Z and how their attitudes toward money, shopping, dating, communication, and more are influencing the future of work and everything else. Plus, see how TikTok fits into the mix and why it's not going anywhere anytime soon.
Who is Gen Z?
Members of Gen Z are the youngest adults, generally defined as those born between 1997 and 2012. Gen Z now ranges in age from 10 to 25, and as more of them enter the workforce and exercise their spending power ($143B today), their impact will grow.
As much focus as Gen Z gets in the media, most of this generation’s members are not yet in the workforce, which means there’s a big wave of change coming as they start their first “grownup” jobs.
This is the largest generation in history. Gen Z makes up 30% of the global population and it will be one third of the workforce by 2025, so their impact on the workplace will be significant.
What does Gen Z care about?
Gen Z-ers (or “zoomers” as they’re sometimes called) grew up in the digital age, and they’ve experienced the pandemic across a much greater percentage of their lives than earlier generations.
They may not have had a formal job yet, but while growing up, they’ve learned that one can earn income from activities that don’t come from a formal job, such as monetizing an online audience.
They’ve also learned that what were once commonly considered stable jobs may not be so stable. Half of all members of Gen Z had a household member who was affected by job loss during the pandemic, according to the Pew Research Institute.
Gen Z is learning to fend for themselves. They’re also self-determinative, highly values-driven, and they appreciate collaborative environments over hierarchical ones.
How is Gen Z shaping the future?
Gen Z communicates differently. Video is their medium of choice, and they expect responses instantly. Some trend forecasters call Gen Z the “Snapchat generation” since Snapchat (and now TikTok) are at the center of their social lives.
Many Gen Zers have social circles they feel closely connected to, which they’ve developed entirely online. For Gen Z, a social night may consist of chatting on FaceTime while playing an online game with friends, or visiting the metaverse together.
Gen Z is mobile-first in every way—they use their phones to buy things, transfer money, sign documents, and seek advice. This is perfectly normal to them, whereas earlier generations may feel that a relationship built entirely online is somehow less real or they may shy away from making important purchases on a mobile device. A common thread across platforms targeting this audience is their “TikTok like” feature set: heavy use of short form video, one-motion swipe, authentic user generated content and curation by trusted influencers.
Gen Z & work
Like Millenials before them, Gen Z would rather be unemployed than unhappy in a job. Culture and values matter to them. These youngest workers are twice as likely as older generations to look for a new job within a year if they do not feel connected at work, a Bankrate survey revealed.
Many of them have multiple income streams. We believe this will be the first generation that may define “income security” not as one job but as a diversified portfolio of income-generating activities. And the data bears that out. One recent study found that 70% of Gen Zs have some kind of second job. More than one in three (34%) said their side hustle takes up 20 hours or more each week. Many of these second or third income streams happen entirely online. The internet’s scalability, zero marginal costs, and global nature enable them.
Their online social life extends to their work social life - this generation has the confidence to build an entire network of online connections, without feeling the need for meeting in person.
We know Gen Z is not as active on LinkedIn as previous generations. A recent Bixa study found that while “over 50% of young adults in the US aged 19-24 have a LinkedIn account, 96% of this group rarely or never uses it.”
If not LinkedIn, where will Gen Z find their next job? What will they use as their professional network? How will they showcase their achievements? We think these are big opportunities for innovation.
How Gen Z works
Gen Z has the biggest percentage of freelancers of any generation, and we are seeing businesses creating “on-ramps” to the freelance lifestyle. A UK-based company, Passionfruit, is focused on helping early career professionals build a freelance life in growth marketing. Mission.dev and a.team are pursuing a similar strategy, focused on top engineering talent. Other platforms that help independents navigate the freelancer journey include Contra and Home from College.
Other companies are focused on helping Gen Z land traditional jobs and build networks in a format specific to their generation. Handshake meets students where they are by engaging them through their career center at college. Pathmatch, an M13 investment, starts engaging with future professionals as early as high school, giving them career aptitude tests and free video training modules on real world skills that they won’t learn in high school or college.
Several companies are working on “Linkedin for Gen Z'' and are attempting to be a hub for networking by incorporating social features, direct messaging, short form video and simple job application processes. Companies like Pineapple and Heroes are all aiming to build a professional network using the format of Gen Z social.
Connectful’s website sums up the appeal of a new professional network for this generation: _“Video is the future of networking. Connecting through video is 10x better than the outdated profile picture and bio. Video makes it fun and engaging, with the ability to naturally show your personality. Networking is seen as more of ‘what does this person do?’ Instead, Connectful strives to show the human qualities that we all have, which ultimately creates better connections.” _
Given the importance of community to this generation and their comfort level with bonding online, there are interesting innovations around hiring through embedded networks. This is the case with Pallet which layers on a hiring marketplace to any existing community. Nova, Candor and Polywork are focused on building communities around interests to enable job search and networking. While these networks are less focused on video first communication, they also aim to build community and job appeal through human qualities and skills outside of just a CV.
Considerations in building the “LinkedIn for Gen Z”
Just as Facebook and LinkedIn mirror each other, we believe there will be a professional network built in the style of TikTok. However, launching the next gen professional network is challenging for several reasons:
Building a user base: Most companies we speak with are using TikTok as a gateway to finding their initial users, however without a large influencer base it is hard to find a large quantity of the ideal user base. There is also the challenge of convincing target users to download a new application instead of relying on TikTok for career related content.
From entertainment to action: When utilizing the format of entertainment style swipe video, it can be challenging to convince users to use the platform as more than just an opportunity to browse. When it comes to the valuable transactional use cases - setting up a profile and applying for a job - trust is key. It remains to be seen if video-first platforms can cross the trust divide.
Content creation education: While Gen Z has grown up with the skills to easily and quickly create compelling content, this is not the case for many hiring entities or hiring managers. There is often an investment required to help produce authentic content displaying the true culture and nature of the workplace.
Considerations in hiring & managing Gen Z
The pandemic drastically impacted the work experience for the oldest members of Gen Z (those born between 1997 and 2012) as many in-person internships and entry-level roles disappeared during the pandemic, and many white-collar jobs remain remote. It has created new barriers for these young professionals as they learn how to navigate workplace norms and foster relationships without a physical connection to their colleagues.
In a world of remote—or even hybrid—work experiences, it's harder to form casual connections. You're not bumping into a department head in the office kitchen and bonding over a shared love of a specific granola brand nor are you impressing coworkers with a suggestion for a great happy hour spot that becomes the go-to office watering hole.
Gen Z workers, who have grown up accustomed to digital social interactions, are twice as likely than Gen Xers and Baby Boomers to look for a new job within a year if they do not feel connected or like their workplace culture, a Bankrate survey revealed.
Instead, many young professionals must rely on Zoom “coffee chats'' with their new colleagues, and it can be a struggle to be engaging and memorable in a sea of virtual faces and meetings. Thus, we have seen a reaction from corporates to try to build culture for these young workers via enhanced engagement tools and social connection.
Companies like Gatheround, Switchboard and Wisq are trying to facilitate more genuine human interactions. And companies like AllVoices are offering employees a way to safely give feedback so their voices can be heard in shaping company culture. Similar to what we have seen in other sectors, the use of short form video is permeating into the corporate toolkit to enable hiring (WorkReels, Wednesday), collaboration (mmhmm), training (Bigspring), and even sales.
With a video-first future, it’s only natural that a crop of interesting infrastructure companies would emerge to support the creation of communication methods inspired by Gen Z. Whether it’s facilitating customer testimonials for your business like Laudable or creating branded videos at scale with Capsule, these new platforms will facilitate the incorporation of short form video across aspects of work, commerce and health. We’re looking forward to seeing the next wave of infrastructure tools coming onto the market.
Gen Z & dating
Speaking of TikTok, the most adjacent companies have been built in the dating world (e.g., Snack, Feels, and Lolly). With these companies, Gen Z users can use short-form videos to better express their personalities in the hopes of meeting a match.
M13 recently invested in a stealth company in this space that lets daters browse social media videos as a way to get to know potential partners better. From several interviews, Gen Z appears to be comfortable dating in a completely virtual world. Companies like Nevermet, Dovey, and Planet Theta are building dating in the metaverse.
Gen Z & shopping
Live shopping platforms, such as ShopShops and Popshops, have helped the world of online shopping evolve. On these platforms, hosts and creators entertain viewers while selling a steady stream of current fashion, vintage, and collectibles.
We’re also seeing the live shopping model expand to new categories. New entrant Flip has embraced the TikTok video format with a focus on selling beauty products. M13 also recently invested in sogood, which exclusively serves independent artisan food brands that want to stream to their audience.
People are also discovering new products on TikTok, which is why we invested in Bounty—a company that enables everyday creators to earn money by supporting the brands they love.
We believe video will become more prevalent in the post-purchase experience, as well. That’s why M13 recently invested in Hark, a company that allows customers to send in a video as their customer service ticket.
Finally, shopping is entering a brand new realm, as well—the metaverse. While it’s early days, we see interesting potential for platforms like Dressx, RSTLSS, Space Runners, and Flickplay to create new venues for the youngest fashion collectors to express themselves.
Gen Z & money
We’ve seen interesting new fintech models targeted at Gen Z. They’re mostly focused on social trading, financial learnings by way of short-form video, and banking for teens.
When it comes to finances, Gen Z trusts influencers more than they would a traditional financial advisor, and they want to collaborate on investment strategies with their peers.
Treasury.app, for example, empowers financial influencers to help their audience invest during a livestream. Bullz is an app that allows creators to share their crypto recommendations. And Frich is a budgeting app that is turning personal finance into social finance by helping friends set goals together and hold each other accountable.
On the social trading front, companies like Squads, Public, and Commonstock are all built to help friends collaborate on trading ideas.
Gen Z & mental health
When we talk about Gen Z, we have to talk about mental health. Life as this generation knew it was upended by the pandemic. The oldest members missed their college graduations or spent their first year in a new job online. Others missed out on prom and on crucial years of social experiences you only get from the halls of a high school.
While Gen Z adapted and built community online, their mental health suffered. This generation is more likely to cite mental health challenges with 9 out of 10 Gen Z reporting symptoms of stress - such as feeling depressed or sad (58%) or lacking motivation (55%), according to the American Psychological Association.
We’re following startups that are addressing mental health with a focus on Gen Z. Diall, Wave, and BeMe are all addressing mental health in teens with on-the-go content, short form videos, and on-demand coaching. Blue Fever and Chill Pill are anonymous social apps for Gen Z, specifically designed for those seeking social support around mental health.
We’re also starting to see the earliest signs of a healthcare services layer being built in the metaverse. Companies like Innerworld and others in stealth are embedding mental health support inside of gaming worlds.
Mental health has also been a popular category on TikTok, and companies like Frame are enabling therapists to become creators in order to reach Gen Z.
We’ve just begun to see the impact of Gen Z on our culture. As more of this generation begins to participate in the economy and the workforce, we expect to see their preferences reflected in the products and platforms that emerge as the new standard. We estimate that half of our investments in 2022 have been into companies targeting new consumer behaviors that Gen Z is driving - whether it’s how they like to work, socialize, shop or communicate. If you are building, investing, writing about, or just curious about the space, we hope you’ll join us.
How to get in touch
We’d love to hear your thoughts on the future of Gen Z. Share them with Anna Barber and Morgan Blumberg.