The difference between Gen Z and Millennial online culture, resulting in DAOs, decentralization, and creative financial communities

Hi Fintech futurists --

This week, we cover the following:

• Thesis: Gen Z is becoming a cultural force, reshaping culture and online society. This is starting to echo in fintech startups and crypto protocols. We explore how financial communities are beginning to congeal into DAOs, their nature and structure, and potential longer terms outcomes. The analysis identifies the differences in Millennial and Gen Z approaches — however imperfectly — to explain the frontier of social tokens and why ShapeShift chose decentralization, while Revolut chose decacorn funding.
• Companies: Revolut, Ethereum, SoftBank, Tiger, Mirror.xyz, BanklessDAO, PleasrDAO, Not Boring, ShapeShift, Seed Club HQ
• Topics: Generational change, Gen Z, marketing, creator economy, identity economics, social tokens, DAOs, DeFi, community

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Long Take

It’s embarrassing to be out of touch. As Millennials, we are used to being *in touch*, having our pulse on the finger of the DNA of Internet innovation. We had packaged Silicon Valley into a grenade, and threw it squarely at Wall Street’s skyscrapers. We took all that paperwork and phone conversation, and squeezed it straight into the website and the phone. Or at least, that’s what we tell ourselves.

But there is change in the wind, as there always should be.

Today, Millennials set the cultural flavor of digital platforms (link here). Our increasingly uncool Facebook permeates the world with 3 billion users, tentacled into the rest of social media and its payments rails. While the rails of the web were created to be open and utopian, Gen X and Millennials have clothed them the robes of glittery attention monopoly, shorting out dopamine circuits and writing down frameworks of zero to one, blitz scaling, and other capitalist hyper growth.

Thanks Peter Thiel!

A perfect example of an attempted Thiel monopoly company is Revolut. The neobank raised $800 million on a $33 billion valuation, led by SoftBank and Tiger. Its 16 million users are priced at $2,000 per user, despite generating less than $30 per person. It used all the fintech tools in the box — from crowdfunding early in its journey, to mobile-first design and marketing a super-app concept, to giga marketing for market share far ahead of its profitability. It is as natively fintech as fintech gets, in all its excess.

Reminder — poor Deutsche Bank idles away at its $20 billion public market valuation, while sweating out €7.2 billion in revenue per quarter. Or look even at Nubank, with 3x Revolut’s revenue and customers, barely holding parity. Have we learned nothing from WeWork?

As we know, for every action there is an equal and opposite reaction. And we are starting to see the sprouts of that opposite reaction take root in Gen Z. As fintech and DeFi entrepreneurs, we have to spend time staring deeply at customers, psychographics, and generational shifts. This analysis will attempt to describe our early intuitions.

The Fashions

The New York Times and the Guardian both seem to be fretting a lot about what Gen Z are wearing, and how they are communicating. Those papers fret a lot anyway, but something about the simultaneous publication of these themes now seems to be a signal.

From Do I look cheugy in this? What can a gen Z makeover teach me about life? —

For me, the appeal of the gen-Z lifestyle turns out not to be about the clothes, but the mindset. I have enjoyed being unashamedly more serious, thoughtful and engaged. I have felt as though I had permission to talk about issues I care about without feeling as if I am being a bummer. It feels a bit heavy to be generation Z, but it also feels brimming with possibility. And, having walked a mile in their Crocs, I can see why being chill is the state to which they aspire. They must be knackered.

Or from Logos Lose Their Power on the New ‘Gossip Girl’ —

Big brand logos will be rare sights on the new show. Large logos don’t “feel authentic to what’s going on with this generation,” Mr. Daman said. “They’re less faithful to brands and less cliquey about them.” Logos used to signify status and a certain level of wealth, but today logos are often meant to convey political or social values. In the reboot, Zoya carries a tote from Revolution Books, a progressive indie bookstore in Harlem, as well as a “Recycling Black Dollars” tote bag from Melanin Apparel. Zoya’s bags are “all from really, really cool stores,” said Whitney Peak, who plays Zoya. “The bags very much speak to who she is.”

And perhaps most embarrassing to us, Could Gen Z Free the World From Email? —

According to a 2020 study from the consulting firm Creative Strategies, there’s a generational gap in primary work tools. The survey found that for those 30 and above, email was among the top tools they used for collaboration. For those under 30, Google Docs was the app workers associated most with collaboration, followed by Zoom and iMessage. Adam Simmons, 24, prefers to communicate using “literally anything but email.” Mr. Simmons, who is based in Los Angeles, started his own video production company after graduating from the University of Oregon in 2019. He primarily communicates with his eight employees and his clients, which are mostly sports teams, over text, Instagram messages and Zoom calls.

One takeaway would be to notice that Gen Z is just, unironically, more authentic online. Whereas Millennials are constantly *fronting*, pretending to have this or that on Instagram in artificial shots, carefully composing their precious “electronic mail letters” with corporate signatures, and putting their intergenerational struggle with Baby Boomers on a pedestal of suffering, Gen Z is just wearing fat pants and getting on with it (source here).

So what exactly are they getting on with?

There are two emerging things you should watch. First is the concept of a creator economy. Some crazy stats are floating around about how many young people want to become content creators — meaning to set up YouTube channels or become Instagram influencers. We would compare this to the social pressure that used to exist for become an investment banker in the early 2000s, or to join a tech company in the 2010s. See this report for a deeper dive.

And second, we are seeing a trend around online communities and decentralized autonomous organizations that feels different from before. Millennials were explorers in the social media waters. We came to digital networking with a curiosity for building new forms of social capital. To some extent, we excluded the older generations through labyrinthian mechanisms, but did not make it so difficult as to be impenetrable. Using Snap is easier than using BitClout.

But we were always coming to the Internet from our home in the physical realm. We hung out in person, and logged in to a pretend, theatrical world online. We made glossy brands, stood them up with growth hacking, and counted our followers in a land of artifice.

Gen Z did not have the luxury of ever being off social media. Rather, they *hang out* online in digitally native communities — a playground one never truly leaves. Yes, you may switch allegiances from one social cluster to another. But the core socializing is inside the panopticon. Thus, personal identities splinter, anonymity and pseudonymity are valuable tools, privacy is deeply valuable rather than fringe. Each person has many masks they wear for different occasions, the financialization of which leads to the outcome of multiple crypto assets and economic communities.

Engagement and conversation, rather than follower count, is what signals success. And success is a combination of social belonging and organized populism — to be a leader of a naturally occurring tribe, rather than a golden idol to be worshipped. Digital social money, reflecting the flows of information and value — rather than its passive accrual — hits this nail on the head (source here).

The Redistribution

The economic Oedipus complex between generations has been labeled as “intergenerational wealth transfer”. The framing and meaning of this has also shifted with the cultural zeitgeist. The most narrow version is to state the facts simply — at some point Baby Boomers will pass on, and Gen X will inherit their wealth. And after that Millennials stand to inherit the trillions. Nearly $60 trillion will be in motion over the next five decades. But this is just an observation about the flow of the river of time.

However, there is also a reckoning around life duration and expected retirement support from the government, funded by taxes on those employed. People are now having fewer kids, and the age pyramid is going in the wrong direction to absorb the costs of pensions. Fewer young people are around to be taxed relative to the number of retirees. And as people live longer, it is possible they will find less political support and fewer benefits from their progeny — who are fixated on saving the planet from climate change for their own children.

But it’s also possible that the Great Redistribution will be aided by inflation or loan forgiveness or some other economic magic trick. You could, for example, change tax rates to be much more progressive, and that would generally help the young, who have lower incomes on average. Or, you could drum up support for a wealth tax, and implement it on top of economic asset prices. That’s pretty strong redistribution, and supported by two thirds of voters in the United States!

Or, you could just change the definition of money, and opt out of the old system in an attempt to devalue it. That means that for a particular community, the community prints the unit of account and medium of exchange, and uses it to organize and function. It means that you create social, contextual value for you and your friends, and bankrupt the obligations that society attempts to place on your back. Further, you may be allergic to the values and flags of your predecessors, and your adoption of your money is a rejection of their money — something we dubbed Identity Economics.

The above narrative is not necessarily true, but it has a revolutionary undertone that is attractive to many. And it plugs in directly into the vectors of decentralization and DAOs. For a further take on DAOs, check out the article here from which the below landscape chart is sourced.

This is a world that has decided against the banking system, and against the corporate structure, in favor for a digitally native community that — like we highlighted — is always hanging out online.

For examples, consider BanklessDAO decentralizing its newsletter by putting readers into the driver’s seat, or PleasrDAO using its NFT assets as collateral in loans from a DeFi protocol, or SeedClub DAO launching to help creators get funding for NFT-based work on Mirror.xyz (the Web3 version of Substack).

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