categories

HOT TOPICS

NEWSLETTER

If you are considering becoming a 1M/1M premium member and would like to join our mailing list to receive ongoing information, please sign up here.

Subscribe to our Feed

Affluenza

Posted on Monday, May 30th 2005

America in general and Silicon Valley in particular used to be on the ball. It used to operate at Silicon speed, work really hard, and produce extremely interesting innovations. A hungry, driven work-ethic permeated the culture.

Today, along with outsourcing and off-shoring, that superb work-ethic has also been shipped off to India and China. America suffers from Affluenza, while the Asian giants ride their enormous growth cycles and develop at a frantic pace.

The Internet era of the nineties gave us a fundamental discontinuity around which America organized itself. All the youthful optimism, risk-taking, willingness to work hard kicked in gear. For about six years (1994-1999) the world ate out of America’s hands, until in 2000 the Internet bubble was punctured. 2000-2005 were years ridden with terrorism and war, and an atmosphere of caution, fear, retrenching, pessimism and anger set in. The political firmament of the world saw George Bush’s closed world-view replacing Bill Clinton’s charismatic, inviting and open world-view. The economic impact of technology made globalization pick up pace, and created new markets, took jobs away from America, and created a vacuum in America’s long-standng innovation-driven hegemony.

In 2005, what then is the state of innovation? Is there a chance to recover from the lull?

I believe, the same Affluenza that is plaguing America’s work-ethic – can be tapped into, to find the next generation consumer markets.

The teenage kids of high-achieving wealthy parents (many of whom were first-generation immigrants) are chronic spenders. These are the HAVEs of America. Many of these kids have acute Affluenza and they neither work hard, nor aspire to achieve much in life. They HAVE everything. That resources in the world are finite – is a foreign concept to these kids. They all have Attention Deficit Disorder (ADD), and hence have to be constantly entertained which creates new opportunities for marketeers to sell them new things. The iPod is a classic success story that has done a fantastic job of tapping into this segment, and its desire for the next “cool” thing.

My challenge to today’s innovators is to come up with “Edutainment” products that this segment can consume in abundance, and make you rich. But in the process, I submit, you can impart some sorely needed education to these chronic consumers. Marketeers: convince the parents of your products’ educational value, and convince the kids of the coolness value. Parents will surely open their wallets, if you can engage this perpetually distracted segment, and give them something that will serve them well in preparing for life!

Hacker News
() Comments

Featured Videos

Comments

I agree that there is a sizable market opportunity for companies in edutainment. It is based on a dual anxiety and fear:

– by the parents who do not know how to much real learning is taking place in school and who know that their kids will have to perform on increasingly competitive college admission tests

– by the kids who want to be engaged to learn more and know that good college admission is not easy

These two fears have the potential to align in new products that engage the kids to learn in a creative and interesting way.

George Roberts, from KKR, told me that he invested a couple of years ago in Voyager, a start up that was teaching kids to read. Voyager developed a proprietary solution and sky-rocketed to $100M in revenue in 3 years, with high profitability. It was recently sold for something like $800M.

Great double bottom line business: do good and make it a very profitable business.

Dominique Trempont Tuesday, May 31, 2005 at 11:33 AM PT

I agree that the parents’ fear and anxiety around test scores is a key psychographic factor to tap into.

For the kids, however, I think the marketing / positioning challenge is more complex and sophisticated: Is it the psychology of fear and anxiety, or is it the enticement of coolness?

Voyager has followed a “seduction” process with the children, and has effectively tapped into the fear-psychosis of the schools, No Child Left Behind (NCLB) threats, etc. and is reaping the benefits of the Supplemental Educational Services (SES) funding offered under NCLB.

In “Edutainment” opportunities, I think, this combination of seduction (kids) and anxiety (parents / schools) is perhaps the right one.

Sramana Mitra Tuesday, May 31, 2005 at 3:11 PM PT

[…] ts, and baseball musings Affluenza or inventions of an idle mind? Sramana Mitra: America in general and Silicon Valley in particular used to be on the ball. It used to operate at […]

Om Malik’s Broadband Blog » Affluenza or inventions of an idle mind? Monday, June 6, 2005 at 12:37 AM PT

This is a good, thought-provoking post, marred only by your gratuitous, irrelevant, and completely unnecessary political outburst. ‘Affluenza’ started under Clinton and has continued under Bush, and the occupant of the White House has absolutely nothing to do with it.

Roland Dobbins Monday, June 6, 2005 at 1:35 AM PT

Om – This opportunity of building engaging Edutainment products and services is by no means achievable by any idle mind!

Roland – Read again. I provided political & historical context, not politics as a cause of Affluenza. And from what I read, as I re-read, there is no outburst …

Sramana Mitra Wednesday, June 8, 2005 at 2:50 PM PT

I completely agree that ‘edutainment’ is or probably could be a sector on the rise. But I have to differ on the count that the ‘cool’ factor and educational value of the product will contribute to its success. I believe, that coolness can alone make a product popular. As you mentioned in your article, American Kids have everything. So if they need that ipod and that too only a pink ipod, they get it. I am Indian and single, there might be a possibility that my perception could change in the future. But from what I have experienced in my childhood, if I cry for it I will get it.

Kumar Thursday, June 9, 2005 at 4:37 PM PT

True, coolness alone can make a product popular. But I dread to envision a population of good-for-nothing teenagers on their rampant spending spree, which is why I suggested that the products provide educational value, not just random coolness value.

Also, I am dead against this notion of “If I cry for it, I will get it!” Life will tell you, as you go along, that there are many things that you can cry for all you want, but you won’t get it!

Sramana Mitra Thursday, June 9, 2005 at 6:46 PM PT

:), I am actually well into that stage in life. What I thought of conveying was pampered kids get whatever they want. All they have to do is just ask

Kumar Friday, June 10, 2005 at 10:39 AM PT

Indeed. This is absolutely true, and that precisely is the Affluenza opportunity I am alluding to!

Sramana Mitra Friday, June 10, 2005 at 11:07 AM PT

Sramana,

How are you? I’m Frank Ruscica, founder of an Amazon.com-/Microsoft-approved startup in the industry that Peter Drucker and others believe will be the world’s biggest within thirty years: customized education and career services.

The centerpiece of our market-entry strategy is a sitcom, Land of OpportuniTV. The pilot episode will be submitted to the upcoming NY TV Festival, which features a who’s-who of network programming execs on the festival’s board.

If our submission is well-received, then, it may usher in a new basis of competition in business: the ability to bring a company to life through profitable entertainment programming (i.e., through ‘startup comedy’).

Better still, the airing of Land should turbocharge the build-out of the industry that is exceedingly likely to be the leading source of good jobs for Americans in the coming years.

Extensive details online at https://Landof.OpportuniTV.com.

Let me know if you have any questions, etc.

Beyond this, I’ve been reading your blog for some time now. Very good stuff.

Enjoy,

Frank Ruscica
Founder/CEO
The Opportunity Services Group :: Have Fun to Get Ready

Frank Ruscica Sunday, June 19, 2005 at 10:31 PM PT

Thanks, Frank! Yes, Education is a very exciting industry-building opportunity, which most of the venture capital world have not had the guts to pursue yet. I am still waiting for the one or two trend-setting VCs who will (a) understand the market opportunity (b) have the guts to bell the cat.

Sramana Mitra Sunday, June 19, 2005 at 11:58 PM PT

Sramana,

As near as I can tell, it will be TV networks that will be the first big backers of companies like mine. Again, my site has the details.

Beyond this, as you understand the fun and upside that can be had in next-gen education, do you have any interest in chatting up possible ways we might be able to work well together? We have a nice nucleus on this end, including an ACM Fellow computer scientist who has been recognized by Google’s Director of Search as the leading researcher in next-gen search.

Enjoy,

Frank

Frank Ruscica Monday, June 20, 2005 at 1:40 PM PT

[…] d qualifies surprisingly well, as a successful Edutainment product that resonates with the Affluenza crowd. A review by Roger Ebert highlights the storyline and the human aspect. To me, the most exci […]

Sramana Mitra on Strategy » Blog Archive » Batman Begins Wednesday, June 22, 2005 at 10:03 AM PT

[…] t.” Esther Dyson seems to have similar concerns as what I had expressed earlier in Affluenza. On the energy topic, I recently went to a fantastic talk by a Professor from MIT, who painted a […]

Sramana Mitra on Strategy » Blog Archive » Fate of Silicon Valley: Random Notes Thursday, November 17, 2005 at 8:17 PM PT

[…] omplishment is an educational outreach program from IBM. In the US, of course, we have an Affluenza generation growing up on computers from the age of 3 or 4. It is, therefore, somewhat disheartening t […]

Sramana Mitra on Strategy » Blog Archive » Teens and Tech Careers Sunday, February 5, 2006 at 8:10 PM PT

[…] wrote a piece called Affluenza about 2 years back, discussing the spending habits of Generation Y, and the opportunity that might […]

Sramana Mitra on Strategy » Blog Archive » Gen Y & Edutainment Sunday, June 17, 2007 at 7:36 AM PT