Make Money off Millennials

An interesting thread appeared on the popular site Reddit yesterday that should be of special interest to anyone investing in the tech sector. It was titled, “Investing in a millennial economy: what spending habits will drive the new economy?”

The post made four major points: First, millennials have no money, so they’re part of a developing “sharing economy.” Second, they’re not expected to buy homes, but instead will buy cars and car tech. Third, they spend money on socially and environmentally responsible companies. Finally, they comparison shop online and buy online.

Most of these observations are based on stereotypes and trends of the last five years, and while they have some truth to them, they’re not particularly prescient. The poster admitted he was no expert on the topic and was just looking for input on the subject.

That’s really the question on everyone’s mind, isn’t it? How are millennials going to spend their money?

I’m here to let you know, my dear reader, that the question is fundamentally flawed.

The term “millennial” wasn’t widely adopted until two years ago, when Time magazine applied it to people born between 1980 and 2000. That means the oldest millennial is currently 35 and the youngest is 15.

Let that sink in for a second, and you’ll see the flaw with the question.

Of course, if you know anything about marketing, you probably saw the problem right away. That particular range of ages (15 to 35) actually contains FOUR separate demographic groups, each with different needs and habits.

As someone born in the late ’70s myself, I was placed on the trailing end of Generation X. My wife, born just four years after me, is on the leading edge of the millennial generation. Together, we fall between the generational cracks as a group sometimes called “cuspers,” yet we exist within the same demographic.

Though we may use different apps and different services and different products, our consumption habits are loosely similar.

If you want to profit from the millennial generation, the first step is acknowledging that it comprises four or more independent demographics, and there is such a thing as “Peak Millennial.”

According to the U.S. Census, the most densely populated of the millennial ages is currently 25 and 26 years. This is the group to follow. Generally speaking, this is the group that will push the trends that define millennials.

I’m writing this today as a warning. Though the tech sector has been defined by gadgets over the last 10 years (computers, smartphones, tablets, wearables, etc.), the culture that has developed in the millennial soup is not about gadgets — it is about heightened function.

Older tech adopters sometimes can’t see the forest for the trees. The important thing is not the new smartphone, smartwatch, smart car, or wearable biosensor. The important thing is how these devices augment life.

The MP3 player that transformed Apple (NASDAQ: AAPL) from an aging personal computer company into the king of the modern portable tech empire is essentially dead. Playing MP3s is a function, not a device. With cloud music accounts, users can access their music library across all of their devices.

The same goes for document composition and storage. CAD files formerly relegated to workstations can now be passed from device to device with ease, and projects can be shared and updated instantly irrespective of location.

All things in technology move from uniqueness to ubiquity, and it’s happening more quickly than it ever has. The devices you see millennials using today will not be the ones they’ll be using in just a few years, but their functionality will be canonized.

Good Investing,

Tim Conneally

 @TimConneally on Twitter

For the last seven years, Tim Conneally has covered the world of mobile and wireless technology, enterprise software, network hardware, and next generation consumer technology. Tim has previously written for long-running software news outlet Betanews and for financial media powerhouse Forbes.