One of my biggest personal fears is how to handle my parents getting older. I don’t live nearby and one day I know things will get harder. Yet, my parents - even in their seventies - would never stand for anyone - especially me - suggesting they are old. They don’t feel, act, or look that way because they don’t think they are.
My mom has more screens than I do and must be one of the top local users of NextDoor. She stays in Airbnbs, wears an Apple watch, and has multiple pairs of Allbirds. And she’s not alone. Users over 55 makeup more than 20% of on-demand companies (Airbnb and Uber) and according to a Pew Research study only 35% of people over 75 say they feel old. To date, well paid marketers have taught society to think that later stages of life were filled with depressing AARP ads or at best a lot of golfing. They have told us that people over a certain age are consumers rather than producers and that the word old means “sick and poor.” It’s no wonder my parents, and most older Americans, don’t think of themselves that way.
It’s time advertisers and entrepreneurs pop that illusion bubble.
The baby boomer generation is one that fought wars, empowered women, and redefined the financial markets. They have always demanded more and created progress. And now they are doing the same thing as they face new life obstacles of getting physically older. Low tech solutions are no longer sufficient - and new business and markets will be unlocked to serve this demand.
There’s a huge opportunity to rethink how we create products and services which will delight this generation. The segmentation around “aging” or “elder care” is too-broad of a heuristic and frankly lazy. We don’t design the most innovative products for 0-25 year olds, so why would it be okay to permit that for a similar size population more advanced in age?
Instead, aging adults want innovative solutions that solve specific problems but are adapted - or expanded - to include them whatever their interests and needs may be. Designing and marketing products designed for an “old person” population is the fastest way to make sure this group of Boomers ignores you.
Some companies that have done this well: Apple created Airpods as a great solution for personal hearing, which could, in time, incorporate hearing amplification technology too. Ride sharing companies made it easier for everyone to get around, and has also created transportation flexibility for older adults who can no longer drive. Further, Lyft is now partnering with healthcare providers to get older people to medical appointments, expanding the original business model.
Nextdoor started as a way to connect local communities - and many have configured their usage to bring aging neighbors out of isolation, leading to positive health effects. Alexa and other smart speakers make it simple for everyone to play audio feeds, order items and get the news. Perfect for people who can’t locate their glasses right now but need to find out whether to grab an umbrella.
The companies that are already attracting the attention of the Boomers are ones that have an “and” - meaning they solve problems for many ages, and for aging adults.
For clarity, certainly products will need to exist to service exclusively older populations and this “and” argument is not intended to diminish any of those. Instead it’s meant to push the thinking and challenge the traditional messaging and communicating to those customers - few of whom are buying those products with pride.
As investors, we push entrepreneurs to define the segmentation of their target users beyond age and gender. So, for completeness, here’s how I’d define the psychographics of the Boomers I’m talking about: aspirational, active, and have flexible time and money. They love a good deal and are looking for ways to keep doing whatever they want for as long as possible. They don’t identify as old and are reluctant AARP members.
The business case around having this group as customers is fairly well documented, but here’s a quick recap:
The size of the population is growing quickly. The Social Security Administration has recently updated its guidance on life expectancy: predicting men age 65 will live until 84.3, and women to 86.7. Contrast that with figures from a hundred years ago, when both men and women were unlikely to survive beyond 56. As of 2019, according to Deutsche Bank research, for the first time ever there are more people in the world over 65 than under 5 years old. And by 2030, according to the US Census, 1 in 5 US residents will be of retirement age, and there will be more people over 65 than under 18.
They have capital. Unlike cash-poor millennials, many (but not all) baby boomers have disposable income and savings. In his book, The Longevity Economy, MIT professor, Dr. Joe Coughlin, reported that the aging boomer market represents about $8 trillion in wealth today. Interestingly enough, much of that wealth is owned, or managed, by women who outnumber men, control household spending and finances, and are fast rewriting the narrative of aging.
And their desire to spend on consumer goods is only growing. In addition, a recent report by Morgan Stanley found that, with most major life purchases already accounted for (education, offspring, property, business apparel, transport), baby boomer’s discretionary spending is set to increase by 58 percent. But many will stay in the employment sector, rather than face a long retirement, continuing to add to cash reserves. In an AARP research study, more than one-third of working Americans say they want to stay employed or transition to new careers rather than retire.
Marketers are ignoring them today. According to Nielsen, less than 5% of marketing dollars today target older populations. That may have made sense in the low-tech past, but, today, Facebook has become one of the largest marketing channels - and the largest growing group of users is those over 55. Today the average user is 45 years old and the 65+ crowd spends materially longer on the site vs. younger populations. I’m confident that startups which figure out how to speak to older populations through scalable channels, in ways they embrace, will find outlier success.
Yet major life moments are when people are most likely to change their behavior. Retirement, the birth of children or grandchildren, sickness, or moving are all major life phases encountered by older adults. Typically we as consumers are creatures of habit, yet older populations actually go through many life stages that drive behavior change. Identifying moments of behavior change is a theme Alpha Edison has invested in many times so far - notably around having a child, buying a house, and changing jobs.
This isn’t just a US phenomenon. The HR consulting firm, Mercer, released a 12-country report, which found that “people in China [now] expect to spend 20-25 years in retirement—above the global average of 15-20 years.” And interestingly many of this generation are now emigrating to the West because they’ve aged out of the employment pool in China but still want or need to work.
Generational shifts are happening. Baby boomers are living longer, and dealing with issues not faced by previous generations. They’re the first cohort to handle empty nesting (or boomerang children who return home). They are frequently taking on student loans of their children as co-signers. Technology advances have lead to greater mobility of workforces, styles of working, and applications which lead to improved mobility and health. Relative to 10 years ago, Boomers have adopted technology more readily and technology savvy users have aged into the 55+ demographic.
So where do we see opportunity in this space? Here’s a list of a few areas of interest.
Boring things, with better and more inclusive branding which embrace the power of community. If you’ve seen an AARP ad or watched the commercials of the Sunday morning talk shows recently, you’ve some terrifying slip and fall or health ads. Many of these products are highly needed and interesting businesses, but increasingly with missed marketing messages these company’s can’t build brands. Ro, Keeps, Hims have raised hundreds of millions of dollars making topics like erectile dysfunction and hair loss mainstream because they build compelling brands. There are far more taboo topics related to older populations that hold similar opportunity. As evidence of that, Ro recently launched Rory a direct-to-consumer brand for women experiencing health conditions associated with menopause.
Look to Maslow. To date, most products directed at older populations have served the bottom layer of Maslow’s Hierarchy of Needs - as in the basic needs of survival - health, safety, and security. But as Joseph Coughlin points out in The Longevity Economy, the top layers of psychological and self-fulfillment needs have been largely ignored. Older populations desire for esteem, respect, love, ambition, and self actualization don’t disappear when calendars turn over.
Embrace the unbundling the nursing home. 87% of those over 65 say they prefer to age in place - meaning in their homes. Combined with the fact that most families under-budget for care related expenses, families are looking for creative solutions to keep older adults in their homes. We view technology as the bridge. Aside for caring for the sickest and the oldest of people, many of the services traditionally performed by care homes can now be solved by technology for a much lower cost per day. Groceries, home repair, errands, transportation, and even young people can be delivered on demand. Prescription medications have become easier to fill and understand, and connection and community is easier than ever to cultivate. As more families piece together their own solutions, we’d expect aging adults to delay entering care homes (most of which are pretty depressing btw).
Reframing caregiving. Even the words “caregiving” or “caregiver” sound old (meaning sick and poor). My mom, sporting her Allbirds, just became Chief Baby Officer for her first granddaughter - and under no circumstances does she want to be called a caregiver. But further this circular relationships of taking care of each other is a practice most of us hold even at young ages - to siblings, family members, friends, and neighbors. We all need help in different ways and connecting each other to help and services, employing technology, and providing transparency will only become more important as the world’s population ages.
Under-utilized talent. It seems pretty crazy that at retirement we let some of the most networked and experienced people out of the workforce. To date, flexible work models have targeted the on-demand world and therefore typically younger users. Creating a structure and normative behavior for flexible working solutions for older adults should unlock a similarly interesting talent pool.
Better financial products. In the last 5 years, fintech companies have raised billions of dollars defining better banking products, insurance, and investing accounts. All of these cater to a tech informed crowd and optimize a small subset of financial products. Older populations are increasingly managing their children’s (and their own) student loan debt, considering equity releases, reverse mortgages, annuity products, social security payments, complicated accumulated tax implications, trusts, and facing other more complex financial decisions that have yet to be tackled by fintech players. As people live longer, the existing actuarial tables and structures will need to be reworked so that we properly save for longer lives. Finding financial solutions so that living longer doesn’t impact the quality of life of older adults already is an enormous opportunity.
We see an entirely new vocabulary around tech-enabled aging - much of which is yet to be defined. Through our research we know Boomers are going to decide to live differently as they enter their next life stage. This will open up so many different businesses and services and we’re eager to see what those might be. So, if you’re an entrepreneur working on something in this area, please reach out to me: [brittATalphaedisonDOTcom].