Although it is not a secret Hispanics represent unparalleled growth opportunities for the U.S. economy, most startups do not realize that Hispanic youth means an abundance of years of privileged spending (translation: dollars for business). The average age of a Hispanic living in the United States is 28 years. Meanwhile, the average age of his white counterpart is 42. Almost one in five people in the United States identify as Hispanic.
The few companies that notice Hispanics and their enormous purchasing power ( ~ 1.5 trillion dollars ) tend to be legacy companies that fail to capture the Hispanic consumer. Furthermore, they do not target the most valuable member of the Hispanic community - what I call, the " Latin hypercultural . "This is where there are tons of unspent dollars.
As an investor and member of the Hispanic community, I am confident that startups that solve the problems of this member of Hypercultural Latinx will have the potential to create businesses with returns similar to those of businesses.
Who is the Hypercultural 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 her white counterparts, it also means that she excels in creating a pseudo-culture where she can thrive better. It brings its unique characteristics to this self-created culture - a culture where its customs, language and values shine. In addition, this person, who often identifies as Gen Zer or young millennium, is a fanatic of the mobile. After all, in all socio-economic classes, their disposable income goes disproportionately to screens (of all types) and technological toys.
I mean, go to your Hispanic friend's house: they probably have more TV screens than people living in this household. In fact, a disconcerting 29% of Hispanics planned to buy a new television just before the Super Bowl (guilty as accused). For reference, of the 30% of Americans who planned to buy a television in 2017, only 2.8% purchased in the days leading up to the Super Bowl. Heck, when my family moved, we bought TV screens for each room before the living room was even furnished. Technology - especially new technology, is much more tempting to Hispanics.
The Hypercultural Latinx should be a priority for investors and founders of venture capital. She wishes to test the untested, and therefore is likely to cross the abyss before the early majority. This makes it an ideal client segment for mainstream startups.
The founders of startups and VCs are missing. As an investor, I often find myself reduced to frustration at the lack of founders and investors determined to explore audience segments outside of those who take cookies. We may not need another vertical consumer product to resolve a half-felt pain point for the highly educated white woman with a salary of $ 100,000 + living in New York, SF or Los Angeles. However, we need more products for the Hypercultural Latinx which, by the way, exceeds its white counterparts in most categories. In the same way Fenty Beauty exists to meet the makeup needs of predominantly black women, we need them for the Latinx hypercultural population.
Aside from the numbers, investors should care about the Latinx hypercultural as they are tech trendsetters who adopt social media at higher rates than their white counterparts. For example, a young Hispanic is 87% more likely to use WhatsApp. In addition, they produce an exorbitant amount of videos on Tik Tok. Several Hispanic hashtags centered on Tik Tok, such as #hispanicmom, are extremely popular and generate more than 44 million views. For reference, the most followed Tik Tok stars, such as Addison rae , have just over 47 million followers. In fact, a Hispanic queen Tik Tok, Rosa , has already reached pop culture peak .
Facebook advertising experience
If you are more focused on quantitative data, be aware that paid expenses targeting this hypercultural Latin could lead to lower click cost rates and higher engagement. I conducted 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 created some announcements. Then I ran Facebook ads targeting two audiences: Hispanic girls (the Hypercultural Latinx audience) and white girls. The average cost of clicks to the audience of Hispanic girls was $ 0.06 per click; for white girls, it was $ 0.33 per click. Sure, my experience has been limited, but it has shown that hypercultural Latin is out there and craves content that tells the story of her life. (For more details, please consult this Medium Publish ).
Why is the tech community lagging behind this Hispanic segment for decades?
Three main reasons: fear, the poor state of Hispanic marketing and white men cannot relate to hypercultural Latin.
Fear. There is always a risk of offending the same audience you are trying to capture. Take a look at the beauty industry and its frequently associated race issue. The world is not white and the beauty brands that think it have experienced PR nightmares. Even beyond beauty, tech startups fear that the negative press will cut the life of their business. However, it is this gap that creates opportunities.
I encourage the good set of startups to come to authentically pursue hypercultural Latin. Even if inherited companies may have heavier balance sheets, they do not have the weight necessary to attract this young bicultural consumer. Let's just say that no 18 year old will rush to the Walmarts of the world in search of ambitious products. They are even less likely to browse content from Walmart.com.
The State of American Hispanic Marketing Is Ridiculous. In fact, there is a graveyard of failed marketing attempts to the Hispanic community. More recently, there was a Kmart announcement for Mother's Day who mixed two Spanish words (Mama + Namaste) to accidentally create a word that translates into a very vulgar and offensive word. Also, given most companies' approach to Hispanic marketing, it's no surprise that they continue to be wrong. However, if someone is in the best position to remove Hispanic marketing from the 20th century, these are small, nimble startups with no history of bad marketing or image issues.
Perhaps the main reason the tech community doesn't approach the Hypercultural Latinx is because most of the founders and corporate-funded investors are white men. These white men cannot relate to the life experiences of young biracial adolescents and young adults living in white America. Last year, a meager less than 2% of venture capital funding went to Hispanic founders - these are the founders best placed to truly capture the eyeballs and portfolios of this Hispanic youth. On the investor side, it is even worse with only 1% of venture capitalists identifying themselves as Hispanic.
The solution is complex, and frankly, I cannot provide a solution with clarity. However, we can start by establishing goodwill and non-transactional relationships with these models that the Latin Hypercultural admire. I found that these role models are generally discrete influencers, like Glenda . As investors, we can also diversify our funnel transaction flow 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 life.
The new darling of the VC world will solve the problems of hypercultural Latin
In order to become this new darling VC, the founders who approach the Hypercultural Latinx should consider two suggestions: a platform game and an army of social guides.
The platform approach involves the creation of a brand organization which will then spread new brands horizontally or vertically. An example of this is the company behind my favorite overpriced lemon drink, Iris Nova, or spin-off of the Glossier team, Arfa .
The second approach, an army of social guides, means combining elements of affiliate marketing with a referral program to create loyal fans who are financially motivated to sell your products. Supported by Sequoia Stella & Dot built their version of the social guides which ultimately became his most defensible strategy. In addition, in a post-coronavirus world, this strategy is a means for an ever-growing workforce to recover.
Ultimately, the Latinx Hypercultural demography is only increasing, as are its needs. For founders who really care about the American Hispanic market, watch out for this hidden generation. For investors, look beyond the solutions to your own problems. Winning the multi-faceted Latinx hypercultural is not easy, but the startups that succeed in doing so attract my attention and my investments.
