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1/ THREAD — Understanding the millennial (born 1980+) and their spending patterns is going to be the toughest thing for public market investors. Simply because most investors today are either Gen X or Y
2/ I am one of the earlier millennials and while I can relate to the ‘80s cohort, it’s tough to understand the ‘90s crowd, forget the 2000s teens. I say this because as part of a teen/young adult mentoring initiative I am privy to the experiences of fellow mentors and my own exp
3/ While the above could be a bit of selection bias, the kids are across income strata so I’ll go with my thought. If you are a middle aged investor and have trouble understanding your teen kids choices you will probably relate to what I am saying
4/ A Gen X,Y investor is likely to be influenced by successful investors before them who used well defined strategies. They are likely to miss Modern Monopolies — “MM” (also the title of the book I am currently reading)
5/ MM makes a pt that historically value has always flown in a predefined direction. Today value flows both ways in platforms where communities get built and transact. My take is that value growth here is not linear / formulaic but more like biological cell division
6/ Being significantly influenced by time tested investment principles I have found it hard to comprehend the value in scaled up platforms. I have mostly used the excuse of “circle of competence” to not look at them
7/ But can you ignore the millennial who spends 3-7 hours a day on a screen? which probably will become the most valuable real estate in the world. Whoever gets there first will probably build much deeper engagement which could last years
8/ Millennials will be a third of India’s population in 10y. They will also be well informed (or misinformed! thanks internet) and will form the bulk of the increase in per capita income. How they think, feel and spend will significantly impact anything remotely consumer facing.
9/ The big fat multiple you pay today could de-rate significantly in 5-10y if the Gen X,Y CEO is formulating strategies based on their understanding of the world. That puts enormous pressure on profits to keep the compounding machine going. I’m not saying it will, it could.
10/ Someone quoted “vision to see, courage to buy & patience to hold” as a mantra for investing success. Gen X, Y investors (excl VC types) and traditional minded investors like me are likely to be challenged on all three as these new businesses become a larger part of our lives
11/ The Internet & smartphone have spawned multiple businesses who have scaled from 0 to 100+ cr in revs in 3-5y. Something that took ages in traditional distribution. Even if some of them are unprofitable today could profits also follow the same steep curve, and when?
12/ My closing point is that investors need to be open to rethink how value gets created which in my view could redefine edge in the years to come. This is esp true if the biz has some customer facing angle. May not apply to commodities, industrials /end
