Startup Industries With An Unfair Advantage
Startup Industries With An Unfair Advantage
“So what do you think, do you think this is a good idea?”
I frequently receive this question when I first speak to an entrepreneur about working with them on their business plan. Quite often, this is a question that’s impossible for me to answer because a startup’s success rarely has to do with the startup itself (the idea, target market, industry, etc.) and more to do with the founding team’s grit, persistence, and open-mindedness. Determining each team member’s score in each of these characteristics is hard to measure in a short, 30 minute conversation.
However, there are occasional scenarios where a startup has a slight advantage in succeeding over other startups, purely because of the industry they’re in. These industries may have sustained and sizable demand, or are beautifully anchored to nurture and satiate the identities of major consumer groups. These are the industries that I call “leg-up” startup industries because of the demand boost they possess (in comparison to other startup industries). Although this list of leg-up startups is not comprehensive, these are the top that have stood out to me in the past year:
Pet Industry
The US pet industry has thus far proven to be a recession-proof market (it survived the 2001 and 2008 US recessions). By the end of the decade, the pet industry is projected to reach $100 billion and is estimated by one source to be growing 50% faster than the overall retail sector. This rapid and continued growth of the pet industry has been driven by “pet parenting” which has become popular amongst millennials who are delaying parenthood more than previous generations, and treating their pets as surrogate children — 75% of millennials in their 30s have dogs and 51% have cats. With a large chunk of millennials still due to enter their 30s, pet parenting will only continue to contribute to the growth of the pet industry.
Women Over 50
Women over 50 spend 250% of what the general population does, possess a net worth of $19 trillion, and will control 66% of consumer wealth within the next decade. They are also avid online shoppers and possess spending power projected to rise to $15 trillion by 2020. Despite this segment’s tremendous spending power, less than 5% of advertising dollars are spent on adults between 35–64. According to a 2013 survey, 53% of baby boomer women feel overlooked by main stream advertising and marketing because of their age.
The brands that do speak directly to women in these age brackets have historically shown to reap huge payoffs — in 2004, Dove saw a 600% increase in sales after prominently displaying advertisements of female models over the age of 40. Even better news for startups — 70% of baby boomer women are willing to try a new brand, even if it costs them more money.
Millennial Travel
Millennials are driving the growth of the travel industry due to the demographic’s strong identity with unique experiences, transformation, and exploration of the unknown. For many millennials, travel encapsulates all of these identity points, and helps individuals in this age group actualize their full potential. Millennials’ love for travel is confirmed by the numbers — millennials take 3.1 leisure vacations per year, whereas Xers and Boomers average only 2.3 leisure vacations per year, and 48% of millennials have gone on a cruise, versus 39% of older generations.
Millennials’ high prioritization of travel is also redefining how the age group spends their money — 78% of millennials choose to spend money on experiences rather than products, and 47% of millennials would rather spend their money on traveling than buying a house.
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