Just Throwing It Out There is a 2x/month newsletter that provides deep thoughts on shallow things: fashion, luxury, eCommerce and the future of retail. If you enjoy this issue, subscribe below:
“No matter where you go, there you are.”
This phrase, the antidote for millennial wanderlust, has never been truer than now—now that we’re grounded.
But what if, instead of attempting to escape ourselves through travel and experiences, we could stay put and simply reinvent ourselves? What if we could address all of the things that we believe are blocking us from happiness, without concern for time or effort?
If this sounds appealing to you, then you don’t know anything about happiness. But we’re already well down this path, and the evolution of technology will soon enable us to go further and faster in this direction.
To understand how and why, we need to revisit the scientific understanding of addiction. Addiction to various substances and activities is a problem as old as humanity, but until 2013 there was no entry for addiction in the Diagnostic and Statistical Manual of Mental Disorders. Addiction was considered a personal failing, not an illness. And specific addictions were siloed—alcoholism had nothing to do with gambling addiction, which had nothing to do with less “scary” compulsive behaviors.
Our understanding of how addiction plays out in the brain and the body has deepened, and it turns out that all types of addiction light up similar regions of the brain.
To oversimplify for the sake of time: neurons are cells that make up the circuitry of the brain. Drugs physically alter the groups of neurons that are responsible for both positive feedback and anxiety. Drugs hijack these regions of the brain to produce sensations that are stronger than IRL natural stimuli are capable of.
In time, the real world can’t measure up to these synthetic sensations so the body begins to become dependent on these substances—real happiness becomes too dull and non-chemical methods of coping with anxiety become ineffective. That’s physical addiction. But you can also become psychologically addicted—the reliable feeling of pleasure you get from an activity becomes a crutch.
Addiction is now considered a single phenomenon with different manifestations, or objects of fixation.
Understanding addiction is important because arbitrage abhors a vacuum—the market is always seeking out new low hanging fruit. And one of the best businesses to be in is pedaling lightly regulated, poorly understood addictive substances. Just ask Starbucks, Dunkin’ Donuts, TJ Maxx, or your favorite social media or gaming company.
Deeper understanding of addiction allows us to fight it better, but it also allows us to reverse engineer it and covertly build it into the DNA of new products and services. 90’s kids may remember the “tommacco” episode of The Simpsons, when the family discovers a cross between a tomato and a tobacco plant that produces a new, poorly understood addictive substance. If it looks like a vegetable, how could it be bad? It’s organic!
Entertainment purveyors have been working to make their products more “sticky” (aka addictive) for close to a century, but technology and the drive to break things into parts provides more and better data about how to do this. Technology companies admit that they’re doing this. Psychologists have even created a protocol that builds on cognitive behavioral therapy to dial back compulsive scrolling.
The best way to predict what this is building towards is to dig into Generation Z’s relationship with technology and entertainment and compare it to prior generations.
Former Starbucks CEO Howard Schultz capitalized on the idea of the “third place”—a place other than work or school where people come together to live and socialize. In the 1980’s and early 1990’s, the “third place” was the mall. Starbucks became an $86B company by providing broad distribution of a third place—and also by selling a lightly regulated addictive substance.
What may come as a surprise to some of you—Gen Z’s “third place” is online. According to a 2018 Pew Research Center survey, 95% of 13- to 17-year-olds have access to a smartphone, and a similar share (97%) use at least one of seven major online platforms including Instagram and Tik Tok.
We’re seeing more and more virtual, location-independent “cultural moments” that rival the IRL cultural moments of decades past. Our parents had Woodstock, we had Coachella, and the next generation has a Travis Scott concert in Fortnite and AOC talking politics while streaming the game Among Us on Twitch.
COVID-19 has accelerated the move to an online “third place” by flipping the script on what we “should do”. Mom used to tell you to get off the video games and go outside, but no one is going outside anymore. Some parts of the country are making moves to return to normalcy, but there’s always a sense of unease about it, especially when you hear about acquaintances and loved ones getting hospitalized.
The urge to reach out and touch each other still exists, but a repulsion/fear response is being programmed in. Simple acts of humanity are triggering a guilt response. Our relationship to what is normal is going to change in ways that are hard to anticipate, especially for Gen Z, who has less of what we now consider “normal” to contextualize against.
Through this lens we can see a world where “online” becomes the primary mode of socialization, or at least steals increasing share from IRL socialization, to the point where it begins to impact the composition of the consumer economy. Trends in teen spending are a soft signal that this is already happening. Spending on clothing and accessories (IRL identity) is down, and spending on in-game or in-app purchases (virtual identity) has been increasing steadily.
Virtual reality has all the makings of a perfect coping mechanism, and we have more to cope with than ever.
This is the part of the Future Trendz newsletter where I share ideas for making money on these trends, or fighting them. The decision is up to you.
If people, especially young people, devote increasing time and importance to their lives in virtual worlds it will reshape the consumer economy. Virtual worlds will become a new venue for self expression, relationship building and status games. If you’re a physical goods brand, you should start thinking about your strategy for maintaining relevance in virtual worlds and what kind of products and experiences your brand will provide there.
Virtual worlds and identities are currently fractured across a lot of different platforms that wax and wane in popularity. Nascent markets always consolidate eventually. Who is building the technology for a unified virtual identity (picks and shovels)?
Pre-Covid, spending time online was mostly restricted to leisure activity. During lockdown, work also became part of our “virtual identity”, although the activities and ways we present ourselves are different for work vs leisure. Spending time in online worlds/communities will become more acceptable as virtual activity becomes more closely tied to economic productivity. Will we see a world where playing a video game is considered a mainstream, economically productive activity? Probably, but I’m not smart enough to guess how.
There will probably be groups of people who recognize this trend before it reaches critical mass and who work to maintain engagement with the physical world. There will be opportunities to reposition and re-market IRL activities that seem common place to those who are Millennial and older. Think about how the DTC movement forced us to make commodity products “aesthetic”, and that trend eventually trickled down to mass retailers.
Header Image: Requiem For A Dream (no link, you probably should not watch that movie)