While it is not a secret Hispanics represent unprecedented growth opportunities for the US economy, most startups don't realize that Hispanic youth means an abundance of years of spending (translation: dollars for businesses). The average age of a Hispanic who lives in the United States is 28 years old. Meanwhile, the average age of their white counterpart is 42. Almost one in five people in the United States identify themselves as Hispanic.
Those few companies that Hispanics notice and their huge purchasing power ( ~ $ 1.5 trillion ) tend to be legacy companies that do poor work in catching the Hispanic consumer. They also don't target the most valuable member of the Hispanic community: what I call " Hyper-cultural Latinx ". They are where tons of unspent dollars are found.
As an investor and member of the Hispanic community, I am confident that startups that solve problems for this member of Hypercultural Latinx will have the potential to create companies with returns similar to those of a business.
Who is the hyper-cultural Latinx?
Hypercultural Latinx is a second generation Hispanic who is 100% Hispanic and 100% American. And while this can sometimes lead to misunderstandings and conflicts with its white counterparts, it also means that it excels by creating a pseudo culture where it can thrive better. It brings its unique characteristics to this self-created culture - a culture in which its customs, language and values shine. In addition, this person, who often identifies himself as Gen Zer or young millennial, is a fanatic of furniture. After all, among the socioeconomic classes, their disposable income goes disproportionately towards screens (of all types) and technological toys.
I mean, just go to your Hispanic friend's house: they are likely to have more TV screens than people who reside in that family. In fact, a puzzling one 29% of the US Hispanics planned to buy a new TV right in front of the Super Bowl (guilty as accused). For reference, only 30% of the total Americans who planned to buy a TV in 2017 2.8% purchased in the days before the Super Bowl. Heck, when my family moved in, we bought TV screens for every room even before the living room was furnished. Technology, especially the latest one, is significantly more tempting to Hispanics.
Hypercultural Latinx should be the priority for venture capital investors and founders. He wants to test the untested, and therefore, is likely to cross the abyss before the early majority. This makes it an ideal customer segment for consumer startups.
Startup founders and VCs are also getting lost. As an investor, I often find myself frustrated by the lack of founders and investors committed to exploring audiences outside of the cookie-cutter audience. We may not need another vertical consumer product that will fix a sore spot for the highly educated white female with a $ 100,000 + salary living in New York, San Francisco or Los Angeles. However, we need more products intended for the Latinx hyper-cultural which, by the way, outperforms their white counterparts in most categories. Alike Fenty Beauty it exists to solve the makeup needs of mainly black women, we need it for the hyper-cultural population of Latinx.
Aside from the numbers, investors should be interested in Hypercultural Latinx because we are technological trend-forwards that adopt social media at higher rates than their white peers. For example, he is a Hispanic youth 87% more likely to use WhatsApp. They also produce an exorbitant amount of videos on Tik Tok. Several hashtags focusing on the Tik Tok Hispanic, such as #hispanicmom, are very popular and increase over 44 million views. For reference, the most popular Tik Tok stars, like Addison Rae , have just over 47 million followers. In fact, a Hispanic queen from Tik Tok, Pink , has already achieved peak of pop culture .
Facebook ad experiment
If you are more guided by quantitative data, know that the expenditure paid for this Hypercultural Latinx could lead to a reduction in click costs and greater involvement. I ran a two week experiment on Facebook to prove this hypothesis. I created a landing page for a fake sunscreen brand, Bounce Skin, with a first fake product, an SPF mist. I made a couple of ads. So, I posted ads on Facebook to two recipients: young Hispanic girls (the audience of Hypercultural Latinx) and white girls. The average click cost for the young Hispanic girl's audience was $ 0.06 per click; for white girls, it was $ 0.33 per click. Sure, my experiment was limited, but it showed that the Latinx hyper-cultural is out there and craves content that tells the narrative of his life. (For more details, see this support to send ).
Why is the tech community back decades when it comes to this Hispanic segment?
Three main reasons: fear, the poor state of Hispanic marketing and white men cannot relate to the hyper-cultural Latinx.
Fear. There is always a risk of offending the same audience that you are trying to capture. Take a look at the beauty industry and its frequently associated tender problem. The world is not white and the beauty brands that think they have lived through PR nightmares. Even beyond beauty, technology startups fear that negative printing will reduce the life of their business. However, it is this gap that creates opportunities.
I encourage the right set of emerging startups to authentically pursue Latinx hypercultural. Although legacy companies may have heavier balance sheets, they do not have the power to attract this young bicultural consumer. Let's just say that no eighteen year old will rush to the Walmarts of the world in search of aspirational goods. They are also less likely to browse Walmart.com for content.
The state of American Hispanic marketing is ridiculous. Indeed, there is a cemetery of failed marketing attempts in the Hispanic community. More recently, there has been a Kmart announcement for Mother's Day which mixed two Spanish words (Mama + Namaste) to accidentally create a word that translates into a very vulgar and offensive word. Furthermore, given the approach of most companies to Hispanic marketing, it is not surprising that they continue to make mistakes. However, if anyone is in the best position to bring Hispanic marketing since the 20th century, they are small, agile startups with no history of bad marketing or image problems.
Perhaps the main reason why the tech community isn't getting close to Hypercultural Latinx is because most of the founders and investors supported by the firm are white. These white men cannot be linked to the life experiences of young biracial teenagers and young adults living in white America. Last year, a meager less than 2% of risk funds went to Hispanic founders: these are the most suitable founders to be able to genuinely capture the eyeballs and wallets of this Hispanic youth. As for investors, it is even worse with only 1% of venture capital investors identifying themselves as Hispanic.
The solution is complex and, frankly, I cannot clearly provide a solution. However, we can start by building goodwill and nontransactional relationships with those Latinx hypercultural models they admire. I have found that these role models are generally influencers under the radar, like Glenda . As investors, we can also diversify our flow of top funnel operations to include more underrepresented founders. Finally, founders with a reach and a network of young Hispanics should consider diving deep into the pain points of Hypercultural Latinx's life.
The new treasure of the VC world will solve the problems for the hyper-cultural Latinx
To become this new VC treasure, founders approaching Hypercultural Latinx should consider two suggestions: a platform game and an army of social guides.
The platform's approach involves creating a brand organization that will later issue new brands horizontally or vertically. One example is the company behind my overpriced lemon drink, Iris Nova, or spin-off of the Glossier team, Arfa .
The second approach, an army of social guides, is to combine affiliate marketing elements with a referral program to create loyal fans who are financially incentivized to sell your products. Sequoia-backed Stella & Dot built their version of social guides which eventually became his most defensible strategy. Also, in a post-coronavirus world, this strategy is a way for a steadily growing workforce to get back on its feet.
At the end of the day, the Hypercultural Latinx demographic is only increasing, as are its needs. For founders who truly care about the Hispanic American market, pay attention to this hidden generation. For investors, look beyond the solutions for your problems. Conquering the multifaceted Hypercultural Latinx is not easy, but startups that do it successfully attract my attention and my investment in dollars.
