a16z Podcast - Designing for, Marketing to, and Partnering With Gen Z

Episode Date: October 19, 2020

Gen Z—those born between 1995 and 2010—now makes up 35 percent of the population and represent $143 billion dollars in spending power. This episode is all about how brands can better understand, collaborate with, and resonate with this hugely influential segment of consumers. Our guest, Tiffany Zhong, is the 24-year-old CEO of Zebra IQ, a company that helps brands interpret the wants of Gen Z consumers and helps Gen Z creators turn their content into businesses. In its recent Gen Z Trends Report, her company highlights important cultural trends and Gen Z behaviors based on a trove of proprietary research. In this conversation, Tiffany and a16z general partner Connie Chan discuss the key differences between Gen Z and millennials, the growing power of short-form video on platforms like TikTok and YouTube, our changing perception of luxury, and how Gen Z is shifting the paradigm around money, education, and work.The pair breaks down how brands can partner with Gen Z influencers in a way that’s compelling, not cringeworthy, and why when it comes to memes and the art of emoji, you’re probably doing it wrong.

The content here is for informational purposes only, should not be taken as legal business tax or investment advice or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. Hi and welcome to the A16Z podcast. I'm Lauren Murrow. Gen Z, those born between 1995 and 2010, now make up 35% of the population represent $143 billion in spending power. This episode is about how brands can better understand, collaborate with, and resonate with this hugely influential segment of consumers. Our guest, Tiffany Zong, is the 24-year-old CEO of Zebra IQ, a company that helps brands interpret the wants of Gen Z consumers and helps

Gen Z creators turn their content into businesses. In this conversation, Tiffany and A16Z general partner Connie Chan discuss the key differences between Gen Z and millennials, the growing power of short form video on platforms like TikTok and YouTube, are changing perception of luxury, and how Gen Z is shifting the paradigm around money, education, and work. The pair breaks down how brands can partner with Gen Z influencers in a way that's compelling, not cringeworthy, and why when it comes to memes and the art of emoji, you're probably doing it wrong. The first voice you'll hear is Tiffany, followed by Connie. If you don't have the youth using your product or talking about your product or sharing your

product, hate to break it to you, you're irrelevant. And so that's why every single company that is targeting consumers needs to care about Gen Z, whether you're a Fortune 500 company or whether you're a startup. Are there perceptions that Gen Z has around millennials? Gen Z considers anyone who is not really speaking their language or not understanding their trends of boomer. It doesn't matter if you're millennial. It doesn't matter if you're Gen X, It doesn't matter if you're a boomer. Gen Z are going to call you boomers anyway. Do you think, though, given how personalized Gen Z has preferences on, that there is a definitive, this is cool, this is not cool?

It changes weekly. So you have to keep up if you want to understand what's cool or not. That's really hard on the wardrobe, man. Will you say that the difference between Gen Z and millennials is a much bigger gap than between millennials and older generations? I would say so because Gen Z is the first generation that's mobile first and mobile native. I totally agree. Millennials will say we're mobile first, but there's a lot of stuff that we still feel much more comfortable going to a computer to do.

Big ticket purchases, we still feel like we're safer on the browser for some reason. Whereas Gen Zs do everything from their phone, right? It's like we're used to that. We're used to buying things from our phone, signing documents from our phone, for better or for worse. requiring much more instant gratification, I'd say. The YouTube videos, even now, to me, feel too long if the first minute is the person apologizing and trying to be politically correct. They just need to get to the point or the ROI has to be real. Yeah, if it's good content, if it's entertaining content, then boom, we're out and you've lost us. When people say, okay, I want to go be an

influencer now. Before, for millennials, it was you became a YouTube star. Now is it more desirable to be a TikTok influencer versus a YouTube one. Certain ones are clearly more easy to go viral on. 29% of youth in America want to become vloggers or YouTubers versus 23% want to become professional athletes. So more people want to become YouTubers than athletes, which is a massive shift.

On the platforms that Gen Z wants to be an influencer on, TikTok seems the easiest for people because we've obviously seen Charlie DeMilio becoming one of the biggest influencers in under a year. Totally. The conversations around the actual TikToks right now are like living on other platforms, but it's super valuable. TikTok stars are all spending time on YouTube now. It's a natural growth phase.

So, when you say our TikTok stars, the new YouTube stars, there's a whole correlation there in the sense that if you're big on TikTok, the way you can really continuously build your audience that is sustainable is on YouTube. But many have not been able to be as successful on YouTube. It's more likely they will not be successful, actually. Because they haven't really adapted on how to make long-form content. They're used to making 60-second videos, which doesn't translate well to YouTube. You want to be making 10-minute videos because that's how you monetize. There is no easy virality factor. You just got to be really good at distribution and marketing, honestly.

Especially in TikTok, there's so much remix meme culture. It's not necessarily original 100%. And maybe that's part of why it's so hard when they translate to YouTube. For the most part, you have to come up with something completely. People who are really, really good storytellers will be able to, able to do so across different mediums, whether it's TikTok, whether it's YouTube, whether it's Instagram, whether it's Twitch. I think the short-form video, especially the stuff on TikTok, it's what's the punchline,

what's the actual point of the video that makes it interesting? And why it's so democratizes video creation is you don't need a ring light to be a good TikTok creator. You literally just need your phone. Yeah. On TikTok, you get 30 seconds. You can record it with your phone. You can have whatever quality of video.

And as long as you have a good storyline, people will watch it and people will share it, or if you're adding value to the viewer's life. Yeah, I mean, short videos are not just jokes. I mean, I cringe whenever people say TikTok is a bunch of people dancing to music because I'm like, you clearly have not used this thing, right? And there's educational stuff on it. There's financial advice on TikTok. There is stuff that teaches you how to cook. So short video is a really powerful format, I think, and it's basically getting rid of the fluff that you don't need. and delivering maximum value per second, literally per second,

because you can lose the person after like three, four seconds if it's not good enough. To your point, people think TikTok is just a fun lip-sinking app or dancing app. And it's not. It's a place where you can learn anything you ever wanted to learn, whether it's cars, whether it's how to take photos, how to model. I've watched so many TikTok videos about videography tips, and iPhone tricks and all sorts of stuff. And it's just endless amounts of short-form education.

I think that phrase has never been used to describe TikTok short-form education. I'd be curious on your thoughts on the kind of content that historically people would argue were better in text. And how does Gen Z react to that super thoughtful op-ed on the New York Times or product reviews that your eyes can actually read much faster than you can watch? Gen Z's prefer video over text for like 99% of things. How do you balance that though with the efficiency where you can actually read much faster than you can watch for some of these things?

True. But not only do we want to be able to consume the content in a reasonable amount of time, we also want to be entertained at the same time, which is why video is such a huge format for Gen Z. Text is less relevant because there's less emotions. You can't see someone talking. 65% of Jan Z prefers FaceTime to end. any other form of communication to keep in touch with friends.

And what people don't realize is when Genzi is doing a FaceTime phone call, it's not like they have to hold the phone the whole time. Oh, yeah. They might be video chatting their friend or their parents while simultaneously doing like three other things. Multitasking is what we were bored into because of smartphones. We're used to switching between tabs quickly, switching between apps quickly. I definitely see different communication behaviors

across different generations. One thing I think people don't realize is just how many young folks have multiple Instagram accounts, for example, or multiple Twitter accounts because they have to show different aspects of their personality and segment parts of their lives. Every person has dual personalities. You have a personality that you bring to work. You have a personality that you bring to your friends. You have a personality that you bring to your family. I have many more than that, but yes. And so that's how Jezies has started to establish themselves. They want to be able to be super fluid and switch across these different identities. This Finsta, fake Insta account, which is really just for personal friends, is for this set of friends. Or this one's for this set

of interest-based friends. This one's for this community. That's how these Finstas start becoming created. But it's more like on TikTok, they can be a different version of themselves. On Instagram, they might still keep that polished version of themselves, where you have different personas on different spectrums of that authenticity scale. And then on different ones, you're going to reveal more information or less information about yourself too. Some, you'll reveal your actual name where you live. Some, it's all random usernames on purpose. There's more control over what people can see and how they would use it. Jan Z is definitely very smart about the perception that they put out there across different social media networks. Gen Z's are brand strategists from age 10. They learn, okay, my Instagram

needs to be like this. My YouTube needs to be like this. My TikTok needs to be like this. My Twitter needs to be like this. It's like so different than how millennials and Gen X perceive content. I definitely think millennials, the way that we grew up on social was to put our best foot forward, right? You always wanted to make sure the photos that you were posting reflected well on you or you would untag yourself on the Facebook photo. So it wouldn't be like linked back to your profile, right? We used to all do that. And then just think about all the filters that we use on our photos, all the photo apps. But I do feel like there is this change swinging back to don't put a filter on everything or it doesn't have to be in the most flattering angle.

But it's not necessarily that they will do that across all social media. Your main Instagram, you still care about your follow account. You still care about your likes. You still care about your comments. For Finst does, it doesn't matter as much. You can get one like and it doesn't matter because it's really just where you can be your real self. Something I've noticed on Gen Z, and I think TikTok is there's less of a fear of being on video. There's less of a fear around creating in general. Totally. TikTok has made people really comfortable with being themselves. Like showing the no filter life. Yeah, because the weirder you are, the more chances you will go viral. This YouTuber Emma Chamberlain, one of the fastest growing

Gen Z influencers, who has one of the highest engagement rates across young influencers. Now, her content is all very authentic. She's very much herself. She mixes in that very relatable aspect with very aspirational. And I think the best influencers are able to be both aspirational and relatable. That's why raw photos, raw videos are actually bridging the connection between influencer, creator, and fans more so than a really polished version of yourself. That doesn't seem very attainable. When you're a fan sitting at home, you want to feel like you could be that influencer too someday. How do you find the right influencer to work with?

Historically, people just look at, okay, how big is you're following? What should they be thinking? You look at the type of content they're posting. Is that similar to the type of content you post on your social media? Is it on brand? Are they in your niche? Are they already talking about products in your space or your space in general? And then there's the checking if they have real fans and authentic fans

by looking at their engagement rate. Social Blade is a really simple website which lets you look at any accounts, any pages on social media across YouTube, Twitch, Twitter, TikTok, Instagram, and see how fast someone is growing, see how many followers they got yesterday, how many followers they got seven days ago, 30 days ago, how many followers they lost as well. And so that's a really authentic way to go and track how fast an account is really growing. You see their relevance, their growth, and their through that. And I think you will see that a lot of these smaller influencers actually have really, really high engagement rates because they have more time to spend. So the fans reciprocate.

Recently, an influencer called Bella Porch started becoming super relevant with her headbobbing TikTok videos. She's really blown up. Now, you could have spotted that a couple months ago if you just looked at Social Blade and watched how she literally grew exponentially. So how would you balance for Gen Z, choosing influencers versus traditional celebrities, people from movies, TV shows. You're laughing because I feel like you have an answer probably contrary to what a lot of marketers probably believe today. Celebrities still give you that legitimacy factor to a certain extent, but it better be extremely on brand to be working with this very specific celebrity that you choose, not because of their fame, but because maybe they've talked about your brand already

or they drink your brand or wear your brand or use your brand or eat at your restaurant, whatever it is. There has to be something like that there. Do not pay a celebrity a million dollars to promote a brand that they don't give a shit about by seeing many brands who have just burned money on celebrities. Influencers are good for more authentic collaborations that are closer to home for the fans. Celebrities are not relatable. And so I think there's a good way to mix in both celebrities,

massive influencers and also micro-influencers if you really want to be strategic in how you utilize your money. So celebrities and superstars still exist. It's just the ones that you think have lasting power are really the ones that feel like they're your friend and have some level of being relatable. Aspirational and relatable. Got to be both. On the influencer side, do you believe that the lifespan of someone's popularity has also shortened in length? where previously you might have a celebrity or an influencer that you love and you follow for like 10, 20 years, do you feel this new generation is going through them quicker? How do you think about the lifespan of content, movies, TV, influencers, and selves?

Your shelf life can actually be extremely long if you think about it from a very strategic standpoint of brand building as an influencer. Now, a lot of influencers aren't really thinking about a 10-year lifespan. They're thinking about how can I make as much money in the next year as possible. And I think that is a huge problem because they aren't treating themselves like they are their own media companies. They aren't treating themselves like they are a company and that they are the CEO of it. The people who have had really long shelf lives, people who have adapted with their audience, the people who listen to their audience, the people who engage with their audience and make their fans feel like they are being heard. And as your audience grows older,

your content adapts with that as well. You grow older, your content matures a little, and your fans grow older as well. It's more important to have longer-term customer retention and lifetime value than customer growth. It is more important to have a thousand super fans than 10 million fans who will never buy anything from you. Especially as kind of these short video platforms potentially go into commerce. What are your thoughts around these creators, influencers, making merchandise themselves and becoming stores, really? I think creators are starting the new billion dollar commerce brands and the new billion dollar media companies. We're seeing that with people building tech companies, David Dobrick. He built an app, raised venture financing for it. His merch brand is

doing incredibly well. But you would also have to say like one of the top YouTubers. He's not indicative of most influencers. He's not. But he is a really good role model for a lot of creators and what they can do. Yeah. Any creator that has a really strong fan base can establish their own commerce brands. They are a media brand already because they're creating content. How can they parlay that into something that is relevant to their audience. And it's also very dependent on how the platforms allow you to monetize, either through on-commerce capabilities or more gifting, more memberships, you name it. The platforms so far in the Western world have not done very much. A skew might be a phone call, a skew might be shoes that they

have designed, all sorts of different product lines that they're coming out with. The YouTuber that I mentioned, Emma Chamberlain, really young, really big audience. She started her. her own coffee brand. And it's doing really well with Gen Z's. What are kind of the big misconceptions or the big mistakes that brands have made when they're trying to target Gen Z? I think the biggest mess-ups is when brands randomly jump onto bandwagon or trends without fully understanding where the trend has come from, what the trend means. And how long it can last. And how it is relevant to Gen Z. If you don't speak in Gen Z's language, but you try to without actually spending the time to understand it,

you get laughed at and mocked on the internet and turned into a meme negatively. That is when you become like a very cringe-worthy brand. I find when brands try to use memes, though, it's cringe. Sometimes they get it wrong. They very often get it wrong. So I would say like for a brand,

if you want to use a meme, see what the community first comes up with and then just retweet that kind of stuff. Do not attempt to create. your own version of it. Reproduce it, and it comes out cringe. It comes out awful. You have to understand the origin of it. How long does memory of that cringe reaction last?

Depends on how viral it goes. If it goes really viral and there are press articles about how bad it is, then it may take longer to recover. Recognition I have for anyone who is trying to understand Gen Z trends per se is open TikTok, don't just want. watch the TikToks, make one.

Make a TikTok, read the comments. Yeah. That is how you understand Gen Z's really, really quickly. Put in the work and you'll actually be able to do an awesome campaign. Reading the comments on Gen Z TikTok pages, reading the comments on TikTok gossip pages like TikTok Room on Instagram are all Gen Zs. That means all the comments you read that are posted by Gen Z's, And that means that is how they're talking, whether it's trends they're talking about, whether it's slang terms they're using, whether it's emojis they're using to express themselves.

So the art of texting. One of my favorite slides in your deck was actually the emoji dictionary, where it was showing that the traditional happy face is actually not a good thing to send to a Gen Z because it can be an extremely passive, aggressive smile. It's like part of our personality to be self-deprecating and to be really honest. but masquerade that honesty in a joke. This is why sarcasm is now so hard to read through text. It seems very easy to misread a text, and now misread the emoji. I did not know that the cowboy emoji, in your opinion, is actually a negative thing, too. Oh, yeah. It's very surprising for a lot of people.

I've actually converted a few Gen X friends into Gen Z-style texting. I had to teach a Gen X about how to do text reactions. Text reactions. As far as I know, it's okay. texting the thumbs up emoji is like... It's an acknowledgement. Passive aggressive. Oh, my gosh. So you talk about like meeting to experiment and being willing to figure out like how to talk to this generation or else you could be laughed at.

Do you believe there is correlation between Gen Z, cancel culture, and increased fear of speaking incorrectly to this group? A hundred percent. I think with this year has come an increased fear of becoming canceled on social media, especially when many brands acted incorrectly, where brands who had never thought about how they would engage in a political discussion were suddenly forced to do so. And many just didn't adapt fast enough, although some did and some were applauded for it by Jan Z's. I'd be curious your thoughts around the need for company. to be transparent on either how they're making their money or how much money they're making. Janzey's very perceptive of the brands that they buy from and that they shop from and also the places that they want to work at. And so they're very value driven around

human rights and the environment and political reform and education. With that, brands need to figure out what they stand for and live by it. Do you think brands are able to stay out of that discussion and not have a stance? Not having a stance is taking a stance. Not having a stance means you don't care about these things. If you really want to appeal to a wide range of Gen Z's, figure out what your values are and live by it. Talk about it. Make that part of your brand. Lean into it and make that part of your whole brand marketing strategy. But don't jump from value to value really quickly just because it is trendy. Gen Z's will see right through that. One thing that people often talk about is like Genzi is really good at figuring out how to make money on their own to buy the things they want at a younger age versus relying on parents.

I would love to hear your thoughts on money and work as a category. I think there's going to be a future where work is more project-based. The new American dream for Gen Z is being able to work wherever we want, whenever we want. Now, Gen Zies is a side hustle generation because from a young age, we realize that we can hustle to. to make money online. I really break it down into like three categories of freelancing. So Fiverr, graphic design, etc., making strategic investments, building a goat and grailed store, building meme pages,

selling ads on the meme pages or flipping the meme pages, buying and selling the right kinds of streetware, getting 10x what you paid for. And then third category is creating content, becoming a full-time content creator, on TikTok, YouTube, Instagram, Twitch. Gen Z's are realizing that we could make money in all sorts of different ways.

And we also don't have to be tied to one place. We don't have to be tied to one nine to five. And this has to expand to college too. As people look on college student debt and do you want to take that on? One big question has been, what is higher education going to look like as people don't always see the return on investment?

There's no shortage of curriculum. I do think that a lot of kids benefit from higher education. I'm not sure if these prestigious colleges are exactly where they should be spending their time and their money, both for opportunity costs, but also debt-wise. You're spending four years getting a degree that you may or may not end up having your lifetime career in, and you have that debt that you have to pay off for the next 10 years, which is crazy to me. So I think gap years are interesting. I think all these alternatives, apprenticeships, internships. Do you think that desire to try different things also expands to post-college, potentially more job hopping? With Silicon Valley and millennials, specifically. It is common to be in a job for two years and switch to another one. I think the good economy is going to become even more relevant for Gen Z's

because it gives Gen Z's the freedom to do whatever they want. And so not having to sit inside an office from 9 a.m. to 5 p.m. every single day. Having to request for paid time off, if you work for yourself and if you are in the gig economy or if you're flipping shoes or doing these side hustles or turning these side hustles into real businesses, then you might have more time to travel or become a content creator. Genzi really wants to be able to explore different categories, different types of work. Yeah, and they need the freedom to do it. Let's also talk about shopping. Like, what does luxury even mean now? Streetwear can be very, very expensive, actually.

A black baseball hat can be very expensive. What do you think about the future of luxury? Yeah, so thrifting is becoming cool and relevant again. A lot of sponsors who are wealthy are thrift shopping, and they're showing their thrift halls. But like that value needed for content, like it better be good value per second. Is that also extending to actual person? purchases. Value is important, but so is convenience and so is staying on trend. To a certain

extent, Gen Z is voting with their dollars, but there's always that convenience factor that also comes into play. And so brands like Boohoo and Shane are really relevant with Gen Z and really popping off with Gen Z because of the fast fashion nature of it. I get these ads from Shane and it's like $10 for like a sweater. This is crazy. Where is this even from? But what you ever grow up and then say, okay, I'm now cool paying $600 for that sweater.

Not that sweater, but a sweatshirture. I think that the future of fashion is going to be a mix. It's going to be a mix, in my opinion, of like people being able to put together things that they buy at the thrift store combined with the latest off white shoes, the latest yeezy shoes. But that's not that different, right? Like, millennials also spent a lot on a purse or a belt.

Same thing. Right, but you get embarrassed to wear, like, cheap clothes, though, as a millennial. I'm cold doing it. Which I think is becoming less of a thing. You don't get shamed for wearing cheap clothes. But would also just hear your thoughts overall on how shopping behaviors change. How do you make shopping fun? In regards to shopping, there's more stores doing pop-ups and doing these,

limited addition or like time-based activations that are really cool, really relevant to lure these gen Zs to come in, try out their products, take some cool photos. You're seeing a lot of direct-to-consumer brands, making pop-up stores or even just getting brick and mortar, more as a marketing expense as opposed to a place to drive sales, which is very interesting. There's obviously a massive paradigm shift there when you see these consumer brands that are backed by VC firms, they're spending the capital that they otherwise would have spent on ads to do in-person activations because they realize that having people be able to tangibly see something, touch something is still just as impactful as being able to order stuff online.

So brick and mortar still matters. There's obviously lots of ways to make your brand fun and interact. reactive. For Gen Zs, their third places are all digital, which makes sense. It's Fortnite. It's discord. It's house party. It's Twitch. It's even apps like squad. Those are the places where Gen Zs are making new friends. They're hanging out with their old friends. So gone are the days where all of your best friends have to be within a mile of you. You could have a best friend who is 4,000 miles from you. I could still have as intimate of a connection as someone who is a block away from you. And only the internet has made this possible for us. And technology has made this a lot

easier for us to make friends with people who are also interested in gaming or fashion or basketball, really as niche as you want to go. When you're finding friends, how much of it is people who like the same influencers, the same brands, how much of it is interest-based? Has that changed? How do you even go about finding your tribe online? Jensis are finding their tribe. through being able to search in specific hashtags or specific rooms of people who are interested in the same things, going into subreddits. That subreddit leading to a Discord community of people who came from Reddit to wanting to chat in a room. So there's lots of Gen Zs who are tweeting a list of their favorite influencers. And in that tweet, it includes, hey, if you're also interested

in insert influencer's name, DME, and we'll add you to our group chat. So brands, influencers, they all fall under interest now. Like that is an interest. This is the modern day Facebook pages. You're co-signing it by buying the merch, by tweeting about it, by making stand pages on Twitter and Instagram. I'm curious because I look at trends that are happening in developing countries, specifically China, Southeast Asia, and they're very, very.

mobile first too. Even older generations are mobile first there. And I think that has led to the development of more things like the super app model where you have one app that does multiple things. Do you think Gen Z would be more receptive to something like that versus older generations in the Western world seem to prefer for now still one app that does one thing? For this generation, we're optimizing for convenience. And so if things are bundled together, that saves us time. And I think that's really important for Gen Z. You are taps to do the same thing.

Yeah, I mean, we're consumed by so many notifications, so many products every day, so many apps every day, so much content to consume, that I do think that there is going to be a massive bundling of things. It's going to be really tricky to get right, but we're already seeing a lot of bundling happening for Instagram, including Reels, commerce, shopping, et cetera. that they would not have done five years ago, even three years ago.

They wanted separate apps for each kind of function because that's how we thought about apps. I want to talk about texting as a potential new channel. More and more when I'm shopping on a site, I'm getting a text that gives me a discount code if I purchase it right away or it tells me when something's being shipped. And you also hear about Gen Z, not opening email. Talk about texting as a channel.

Texting is now becoming a report. placement for email, but does that mean that texting is actually becoming less personal of a communication format now that advertisers and brands are texting us? Yeah. So as that increases, do you see the same issues as email where you're going to want to filter this stuff out eventually? 100%. Once we start getting bombarded, we're going to become more selective or a new medium will become more relevant for us. SMS shouldn't be our email inbox. Because it's weird, right? You can do far less on a text than on email, and it's actually much more invasive. I barely even give people my number, let alone companies, my number.

But then at the same time, when I receive these texts, they definitely work on me. And I do click in, and I sometimes do complete that purchase. I guess it's for the brands that you really, really, really, really love. If they're texting you, you don't feel a sense of invasion. Now, you would only feel comfortable for that with very select brands that you're a huge fan of. where you want to get notified when something is launched. You want to get alerted before it goes out to the public. You can use SMS as a way to facilitate that intimacy

between a brand or an influencer and an individual, dealing with two-way communication. And so you offer some sort of value, whether it's discounts, whether it's getting something exclusive that others can't get or will get later on. So you're a super fan of those brands. Thank you so much.

It's been so much fun chatting about Gen Z. And I will be much more self-aware now the next time I text you with an emoji.