In my previous post on the rise of B2C SaaS I said that ‘there is a change in the way people consume digital content and services across age groups and verticals.’ In this post I will deep dive on one age demographic, those aged over 60. For more details and interesting data points, please have a look at our full Mangrove report here: ‘Silver Tech: Emerging Opportunities in The Third Age Economy’.
Most VCs are talking about how millennials reshape lifestyles through their extreme adoption of mobile. With millennials controlling the largest share of disposable income by the end of next decade, this trend will of course continue and force companies to examine how they do business for decades to come.
While I agree of course that these new customer behaviours of my generation are disrupting nearly every industry, I wonder however why nobody is talking about the needs of the many Boomers and Gen X? 🤔 An excellent example are my parents – they are extremely comfortable using technology even though they are NOT the most tech savvy people in the world…
‘The number of these silvers (those aged over 60) is set to rise sharply over the next 30 years and they will drive 60%+ consumption growth in the Western world over the next decade.’
Besides being many, this demographic has the cash to spend contrary to the millennials and Gen Z. As the graph above shows they will dominate the world in terms of wealth for the next two decades.
‘If Americans aged 50 and above were their own country, it would rank third in economic activity in the world after China and the United States.’
The silvers are also expected to live longer and in better health than ever before. However, we face a shortage of companies serving this exploding sector. When you do a quick search, you will find all kinds of elderly care startups and incumbents (a huge and important market as well of course - here some players) but very few that sell products or services catered to the healthy and digital savvy elderly, those focused on living and spending rather than ageing.
So… does this healthy and ageing population represent one of the biggest overlooked opportunities in the tech world?
Why now? Is the timing ripe for silver tech startups? Well, everyone has a smartphone by now, also the silvers! As the chart below shows, smartphone penetration among seniors in the US has already reached 50%+ with social media exceeding an adoption level of 40%... and the trend is positive of course. Again, if I look at my parents, they have a better smartphone than mine and understand very well how to order stuff online and stalk me on Instagram or Safe365 😜
However, brands AND ad agencies seem to misunderstand and underserve this demographic… As millennials, these silvers have their own particular needs and will influence up their very own ways of consumption. However, a majority of silvers believe brands aren’t interested in them and feel ignored.
Besides being under targeted by marketing dollars, the silvers are extremely sticky! I looked at couple of B2C SaaS businesses in the space and the best products have an exceptional long term and stable customer retention of 45%+ across cohorts.
So they are cheaper to acquire and more loyal than the millennials and GenZs… a promising starting point for launching great consumer businesses, be it B2C SaaS products or D2C product brands. In a world where new brands are struggling (1) to rise above the noise facing a exploding CAC dictated by the new middlemen Facebook and Google and (2) to retain customers, the silvers seem to be a perfect opportunity. Combine their appealing retention metrics with the vast and underserved online and offline touch points where you could acquire them cheaply (here a good podcast where Andrew Dudum, the founder of the success story Hims, reviews the world of online and offline marketing in the D2C space) and you might be able to build the next Warby Parker, Hims or Zola. Overall, this demographic seems to have many of the characteristics needed to build a big and successful D2C brand:
A big market, an attractive and loyal customer segment, the ability to rise above the noise and the lack of competition signals the opportunity to build a big brand platform with multiple products…
The Mangrove report gives an excellent overview of some of the most exciting areas in the third age economy: leisure, work and longevity.
The potential of the silvers for the gig economy is another exciting area I would like to highlight. On top of having well developed skills and the aspiration to be self-employed and work independently (see chart below), they are extremely flexible when it comes to working hours.
Source: Mangrove Report, Office of National Statistics - UK
They might represent a perfect pool of workers to build the next scalable marketplace. Remember that the supply side is always king 👑! And the silvers seem to nail all of the characteristics needed to build the next scalable gig economy marketplace… As Andrew Chen put it in this great blog post:
‘Where a lot of “Uber for x” companies fall down – valet parking, car washing, massages, etc – is that demand is often infrequent and there’s spikes at a few points in the day. What’s your supply side supposed to do the rest of the time? In other words, “Uber for x” cos often have the same cost of acquisition and cost of labor as rideshare, but can’t fill their time with work as smoothly / profitably.
So what kind of “Uber for x” ideas can work? Ultimately the ones that go for a completely different pool of labor. Folks who prefer to work from home. People who don’t live near a city with rideshare. People who don’t own cars. Etc.
If you can find a different pool of labor, they still have the same motivations around flexible schedules and easy earning potential. You can use the same techniques as Uber – simple UX, transparent pricing, etc – and apply them to these marketplace opportunities…’
I am super excited about the great startups that the next generation of bold entrepreneurs will launch in the coming years. More on our recent investment in the space in a later post. Thanks a lot for reading and stay tuned!
If you’re are building a business in the silver tech space, please feel free to reach out. As always, I am happy to share my thoughts and insights in more detail. If you are an investor and just curious about the space, feel free to reach out as well. Looking forward to hearing from you! 🚀