Investing With PEACE in Mind
As we collectively navigate the ongoing economic uncertainty, here’s why we’re excited to double down on the “why” that has stood the test of time.
School might be out for summer, but fears of a long, blustery winter are rising for investors and operators alike. With the NASDAQ down almost 30 percent year-to-date, hiring freeze and layoff announcements accelerating by the day, and consumer sentiment plunging to post crisis lows, we cannot help but acknowledge that a new era of discretionary consumption is upon us. Today, we find ourselves at a consequential inflection: the establishment of a new “new normal” that is likely to define the coming years. While what consumers seek out in these times appears to be changing, the why has actually stood the test of time. From The Beatles to Bieber, the mall to the metaverse, pantsuits to sweatpants, one truth that has endured is consumers’ collective pursuit of PEACE (and by this, I mean Physical + Emotional + Aesthetic + Cultural + Economic enlightenment). Moving forward, we at Redpoint are excited to unpack the 5 Pillars of PEACE as we remain students of our environment in the face of the ongoing correction.
The 5 Pillars of PEACE
Physical: Physical enlightenment involves optimizing the efficiency, health, and longevity of your brain and body. Feeling your best is essential to living your best life. As consumers are increasingly reminded that their online identities alone are not enough to unlock holistic happiness, we suspect they’ll increasingly seek wealth in the form of physical health.
With COVID’s domestic death count approaching 1 million and mental health crises galore driving up overdoses and teen suicide rates alike, we’ve all been forced to face our own mortality. It would appear that our skyrocketing screen time and sugar-saturated soul foods have come at a quantifiable cost. So how can we get back to a better baseline and reshape these statistics? We’ve learned that consumers more than clinicians control holistic health outcomes, and that elements of accountability (think observable outcomes, quantifiable metrics, and social support) are essential to driving engagement.
Looking ahead, we envision a future where consumers’ approach to physical health is personalized, preventative, data-driven, and gamified. While physical fitness has served as an effective on-ramp for many, we suspect that the future will be far more multimodal in nature. Armed with a diverse set of insights and an expanding range of offerings (think food, sleep, medication, supplements, coaching, and community, among others), consumers have never been more motivated — or able — to invest in their physical wellbeing. From longevity support to metabolic interventions, we’re excited to underwrite the coming wave of applications paving the path to physical enlightenment as many consumers re-explore the real world after two years of what has felt like a digital daze.
Emotional: Emotional enlightenment requires feeling acknowledged, understood, and supported by yourself and those around you. Such emotional elasticity allows consumers to both experience a deeper sense of joy and rebound from adversity in a more dynamic way. While online communities — from groups of gamers to crypto cabals — have brought together many millions of purpose seekers, the connection chasm continues to expand at an alarming rate.
Rates of anxiety and depression among US adults have quadrupled, with even more expansive subclinical concerns brewing beneath the surface. A starting 61% of young people today report feeling lonely “frequently” or “almost all of the time.” Despite the $225Bn annual spending on mental health treatment and services, we are learning that therapy alone is not enough. Support we provide to one another through socially oriented engagement is a critical key to unlocking a greater sense of emotional wellbeing.
Coming out of COVID, we believe the next wave of emotionally engaging applications will look and feel increasingly omnisocial, meaning they’ll straddle online and in-person activation. It is our hope that the next generation of market leaders will effectively open up access to a broader base of consumers by leveraging psychographically-aligned engagement efforts (think curated community platforms, content initiatives, and peer-to-peer marketplaces) that drive long-term lifestyle shifts, rather than isolated, acute interventions. With today’s toolkits for transformation far from complete, we’re eager to invest in omnisocial opportunities that are cultivating community and connection with a deeper sense of intentionality than ever before.
Aesthetic: Aesthetic enlightenment entails an immersion in beauty and art as well as their material manifestations. While seemingly materialistic on the surface, aesthetic experiences have been proven to lower stress, increase social connection, and make us happier, underscoring the consumer pull and propensity to spend on the category.
Aesthetic experiences afford an escape from the monotony of everyday life — particularly during times of struggle. And the desire and need for such stimulation has never been more acute, given the recession-related angst, worries of war, and climate crises that have come to define our new normal. Be it the unprecedented demand for aesthetically oriented plastic surgery, or the 20 percent uptick in home spending we’ve seen over the course of the pandemic, the case for increasing aesthetic investment across categories is clear, as consumers seek to bring tranquility and delight back into their lives. Long heralded as the lipstick effect, consumers have been known to continue investing in themselves in small ways during periods of economic instability and we suspect that the coming quarters will present similar spending behavior.
As the world continues to open up, we’re excited for an expanding range of day-to-day pursuits to drive a greater degree of variability in consumers’ aesthetic experimentation. As consumers navigate their new normals, they are likely to act with greater intention when it comes to investing in aesthetics, both as a reaction to the pandemic-related absences of such indulgences as well as a real time response to their evolving financial footing, which is likely to drive more creative and cost conscious consumption. From investments in physical and environmental appearance to the pursuit of sensory stimulation (think music, museums, travel, the outdoors, and more), we’re eager to explore new avenues of aesthetic self-expression as a new era of identity-aligned investment takes hold.
Cultural: Cultural enlightenment involves experiencing the world — be it virtual or irl — as an aggregation of the attitudes, identities, values, and customs of those around you. To be culturally engaged is to feel part of something bigger than yourself. As the ups and downs of the market serve as a stark reminder that there’s more to life than money alone, we expect to see greater intentionality surrounding how consumers both culturally contribute and consume.
Without the luxuries and interactions of pre-COVID life, we have been left alone to mull our own identities. This introspection has left millions, particularly millennials and Gen Z, rethinking their motivations and direction. Today, many are actively seeking closer interpersonal relationships, a greater sense of impact and purpose in their community, and a reorientation towards more identity-aligned professional pursuits. Whether it’s the 67 percent of millennials and Gen Z who have asserted that climate change should be a top priority or crypto king Vitalik Buterin’s new Soulbound Token (SBT), which hopes to foster a world where NFTs can represent much more of who you are and not just what you can afford, we’ve seen a marked shift in the intention with which Americans are culturally connecting.
Moving forward, we’re interested to see how the cultural conversation evolves, particularly in the context of conscious consumerism. Similarly, with online interactions reaching all time highs, we’re keen to watch digital platforms, specifically web3 applications, continue to expand their jurisdiction within the cultural conversation, as use cases multiply and a widening range of participants join the party. From Main Street to the metaverse, we suspect that society is approaching a meaningful inflection in the broad-based formation and activation of culture-centric communities, and we’re intrigued by the opportunity to build upon this societal shift, be it via the consumer-facing platforms themselves or through the underlying enablers of innovation.
Economic: Economic enlightenment entails feeling comfort and control in your relationship with money. From personal portfolios to professional prospects, our relationship between wealth and wellbeing is inextricably connected, and our incorporation of the two into the same equation is evolving at an accelerating pace.
Despite the hard hitting and widespread economic impact for lower income populations during the early stage of the pandemic, the several subsequent quarters afforded varying degrees of financial prosperity to Americans across all walks of life. Much of this momentum came from questioning the status quo. Over the course of COVID, four in ten millennials reported changing their savings and investment approaches. These shifts accelerated the adoption of new platforms with new priorities, oriented around alternative asset allocation, entrepreneurial endeavors, and even the crypto craze. Supported by frictionless and low-cost access to the capital markets, record-low interest rates, elevated consumer savings levels, and government-sponsored stimulus programs, conditions could not have been more conducive to such a retail renaissance. And then the music stopped. With roughly $2Tn of global market cap having evaporated across big tech and crypto alone over the past several weeks, many people are now questioning what comes next.
Today, with consumers counting their cash — and finding much less in their portfolios than they perhaps planned for — we expect to see a reorientation towards real assets (think real estate, cash-generating businesses, and art) and a doubling down on entrepreneurial endeavors of all kinds. Through these endeavors, we suspect that consumers will be reminded that it takes money to make money, creating all sorts of financing opportunities for embedded and consumer-facing applications alike. We believe that we will continue to see increasing interconnectedness between personal and professional offerings as the wall between these worlds continues to dissipate. As millions seek out new economic opportunities through the ongoing correction, we’re eager to uncover the next generation of automated, interoperable, and easy-to-understand consumer and prosumer applications driving delight — and dollars into individuals’ accounts — day in and day out.
As Buddha, the OG PEACE seeker, once reflected in the Dhammapada, “With our thoughts, we make the world.” Thus, as we face elevated levels of economic, environmental, and emotional uncertainty, we could not be more excited to support entrepreneurs building a better tomorrow. From Galileo to Guild, and Netflix to Nextdoor, Redpoint has a storied track record of backing category-defining consumer companies. And with prior pullbacks producing platforms ranging from Airbnb and Uber, to Pinterest and Instagram, we could not be more optimistic about the transformation that will inevitably emerge through the twists and turns of the tumultuous quarters ahead.