The Experience Economy As a Societal Solution

Evaluating our ability to address society’s greatest fear.

Meow Wolf, as reimagined by Celyn Brazier.

What constitutes the number one fear of young people today? Loneliness. Loneliness rates in the U.S. have doubled in the last 50 years, and more people are feeling alone or lacking social connectedness than ever before.

With only half of Americans reporting meaningful in-person social interactions on a daily basis, studies indicate that Millennials and Gen Z are the hardest hit. In understanding the consequences of such statistics, the blurred line between mental and physical health presents cause for concern. Research suggests that loneliness is associated with reductions in reasoning and creativity, impacts to workplace productivity, a higher likelihood of mental illness, and even premature death.

Given these wide-reaching implications, consumers and consumer-focused businesses should be focused on addressing the root causes of the issue.

One Solution: The Experience Economy

Beyond their Instagram hype, experiences enable consumers to grow, learn, and connect with one another. Today, similarities in our consumption choices (i.e., our shared experiences) connect us because what we experience is central to how we define ourselves. Personally, when I see another Stanford grad overseas or discover that an entrepreneur I’m meeting with is also an avid equestrian, I feel a deeper sense of connectivity. Clinically, social connectivity has been linked to better health outcomes and research from Cornell University suggests “increased sociality associated with experiential purchases, in part, increase happiness.” By embracing the Experience Economy, we can be happier, healthier, and importantly, less lonely.

Consumers agree. According to Eventbrite, almost 70% of Millennials feel that attending events makes them more connected to other individuals, the community, and the world. The same study showed that more than 75% of millennials would spend money on a desirable experience over buying a material item. But why? Studies indicate that our propensity for engaging activities corresponds to our excitement about discussing them — be it on social media or in person — as this drives demonstrable social benefits. As with many other world positive categories in which Obvious Ventures invests, the positive physical and psychological externalities of the Experience Economy are tangible.

Capitalizing on this Structural Shift

Over the past few years, we’ve seen a dramatic shift in consumption with almost 4x more spend directed to experiences than physical goods. A wide array of next generation, category-defining consumer businesses are responding by building brands focused on experiences, ranging from camping curator Tentrr (OV portfolio company) to retail revolutionary Story. Even legacy players like Taco Bell have taken notice with the launch of its pop-up experiential hotel that sold out in 2 minutes!

Whether immersing myself in a Meow Wolf exhibit in Santa Fe or taking The Class by Taryn Toomey in New York, I too find myself constantly orienting my budget and spare time around experiences and their associated communities. As many up-and-coming brands seek to address this lucrative and expanding opportunity, I see three categories of winners emerging:

1. Differentiated strokes for different folks. Individuals are increasingly embracing “Community Consumption” — experiences and communities that align with their own values and identities. With church memberships down 20% since 1999 and the number of country clubs also sitting 20% below 1990’s levels, a market gap exists for communities that better meet the demographic and functional needs of people today. As a result, we’re seeing a reorientation of the “clubhouse model” driven by personalization of communities and programming. I see these next-generation communities orienting themselves along two vectors: population and purpose. Whether targeting family formation like The Wonder, career cultivation like The Wing, or empty nest-hood like Canopy Club, demographically-aligned clubs are leading with strong, curated IRL communities in order to kickstart meaningful relationship formation and an innate sense of affiliation. In a similar effort to fortify platform loyalty, purpose-aligned organizations are driving engagement through their targeted suites of mission-oriented offerings, be they career coaching sessions at Chief or on-demand acupuncture at The Well. By establishing a unique experience (either community or functionally-focused) that their members cannot find elsewhere, emerging leaders are also minimizing their risk of commoditization and disintermediation.
2. 3-dimensional brand engagement. Leading consumer product brands are leveraging “Storefronts as Storytellers” — consumer experiences as immersive theaters — to meaningfully augment their online footprints. In an increasingly digital world, where real life experiences can rarely be matched is in their ability to foster a sense of comradery and uninterrupted immersion. I view offline experiential engagement to be a triple threat as it can provide (i) increased brand awareness and sales, (ii) community establishment and engagement, and (iii) direct opportunities for customer feedback. Traditionally niche brands like Shinola are leveraging physical experiences — in Shinola’s case, a hotel — to drive both interactive brand discovery and upsell opportunities with greater impact than traditional social media impressions. Category leaders like Lululemon are also heavily leveraging community ambassador programs, local events like run clubs and yoga retreats, and a recently opened workout studio to drive depth in their 2-dimensional relationships with online customers. In rounding out the customer conversation, strategic DNVBs (“Digitally Native Vertical Brands”) like Glossier are leveraging live interactions to collect in-depth customer feedback and incorporate such learnings in new product development. As venture investors seek out businesses with the potential to become billion-dollar brands, actualizing this depth of engagement will remain critical to achieving scale.
3. The community connection calling card. A new breed of businesses is winning with “Cultural Cultivation” — authentic connectivity and environmental integration — as traveling consumers increasingly seek a genuine sense of belonging. Today, 72% of travelers value experience over room quality while 65% want to come back having experienced something new. To meet the needs of a population increasingly enthralled by immersive experiences, disruptors are addressing consumers’ two greatest pain points — friction and access. As both business and leisure travelers seek out more culturally enriching experiences, the challenges of discovery and logistical complexity present constraints to the perceived opportunity set. New entrants like Tentrr are addressing this market inefficiency by providing a single point solution for discovery, point of sale, and end-to-end provisions. Once on-site, market leaders like Lyric (OV portfolio company) are then empowering consumers to seamlessly immerse themselves in local culture through curated in-suite art, music, and coffee programs, among other features. By providing local connectivity and frictionless integration, best-in-class brands are capitalizing on the interest in community and cultural connection of today’s consumers to drive market share gains in the large and growing travel market.

80% of Americans believe it’s essential for individuals to come together to promote positive change, and I agree. At Obvious, we’re passionate about investing in entrepreneurs improving the lives and livelihoods of consumers worldwide by fueling the Experience Economy. If you’re equally as committed to the cause, I’d love to hear from you! Find me on Twitter (@itsmeeraclark) or at meera@obviousventures.com.

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