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Capitalism 2021-2030: The new normal deal


Millenial-startups vs X-changing companies



Roberto F. Salazar-Córdova, ADN@+







The Zoom Case


ZOOMING with a global audience was not an obvious tool for enhancing the power of small firms; nevertheless, when confronted with the need for clients or investors after unemployment, small startups have boomed using that tool.


Zoom has claimed to have pulled in more than 200 million daily video users during worldwide lockdowns. According to Reuters, in a talk with the video conferencing app’s boss Eric Yuan, “Zoom’s daily users ballooned to more than 200 million in March from a previous maximum total of 10 million”.


According to FORBES, the 293rd position in their ranking is for Eric Yuan & family, with a real-time net worth of $13.3B. His Zoom went public in April 2019. He was previously a manager of WebEx at Cisco, which acquired the video conferencing company in 2007.


Born in China, Yuan move to Silicon Valley in 1997 after eight failed attempts to obtain a visa. At the IPO, Yuan owned 22% of Zoom, which was valued at just over $9 billion before trading began. An avid basketball fan, Yuan attends his children's games and counted Golden State Warriors player Andre Iguodala as an investor.


His age: 50.



Is a 50-year-old a millennial?


Nope… It is a Gen X: Gen X was born between 1965 and 1980 and are currently between 40-55 years old (65.2 million people in the U.S.) Gen Y: Gen Y, or Millennials, were born between 1980 and 1994. They are currently between 24-39 years old (72.1 million in the U.S.) Gen Y.



X Generation and Investment Acceleration


It took Gen X’s Zoom ½ a year to accelerate from 100 to 300 in NASDAQ. It took 8 times more (4 years) to Millenials´ (Gen Y’s) Facebook to do the same.


The new corporations before the new normal were tech-boutiques and small traders or manufacturers ordered to create appealing electronic marketplaces for their products and instant services. For them, to have a stable economy is and was vital.


For Facebook, it took 4 years to go (January 2016 to January 2020) from 100 to 200 and took 3 months to go down to 150. Fortunately, after the entrance of Zoom, they copied and coped, and were able (only) to recover to their long-run trend.



Nope, it was not centennials who defied and won a share of the market from Millenials.


It was the generation of the Grand-Sons of the Silent Generation:

  • the ones who learned from their grand-parents, what is it to grow in crisis,

  • the ones who heard the favorite tales and story-tellings of their grandparents,

  • the ones who were protected by their parents from the crisis of the previous Spanish-Flu in the last century.


Values for creating value


According to FORBES, the Generation of the 80s inherited three key values from their old guys: the value of resilience, the value of sacrifice, and last but not least, the value of silence:

  1. “The Silent Generation (born 1925-42) comprises roughly 20 million adults over their 70s and 90s. Their age location in history sandwiches them awkwardly between two better-known generations: They were born just too late to be World War II heroes and just too early to be New Age firebrands. In their personal lives, this age location has been a source of tension. By the time the Silent was entering midlife, they spearheaded the divorce revolution and popularized (thanks, Gail Sheehy) the term “midlife crisis.” But in their economic lives, this age location has been very good to them—and given them a lifetime ride on the up-escalator coming off the American High.”

  2. “The Silent started out as the children of crisis. They grew up while older people were fighting wars and making great sacrifices on their behalf. Childrearing in America, already more protective for the G.I.s, approached the point of suffocation.”

  3. “When the Silent began coming of age after World War II, they tiptoed cautiously in a post-crisis social order that no one wanted to disturb. Unlike the G.I.s, they rarely talked about “changing the system,” but instead about “working within the system.” Because they didn’t want anything to go on their “permanent records” and kept their heads down during the McCarthy era, Time gave them the label “Silent” in a famous 1951 essay”.

Millennials clearly did not have to grow under those circumstances.


They were (luckily) free to enjoy the boom created in the 80s by the X generation that inherited values from their grand-parents in a different society.


The typical story of a company lately was that one of a company doing research since the 2000s, the one of any company with more than 10 clients in 10 countries considering its fourth or third round of financing after 2 or 3 cycles of acceleration of 1 to 2 years each.


Attending social events helped Y Gen´s business to take stock of what investors wanted. That enabled them to confront an enduring inefficiency of the market: aligning the interests of investors and owners. That is where now, the interests have changed, and where the new-normal is set.


Investors’ opinions matter hugely to young firms, and that explains the boom of Zoom and other companies able to connect the reality with the business once again, after the crisis.


After the crisis, judgments abound and diverge on the value of a startup without the ability to test it not only in an open market but on a new set of values created in the ultimate “lab”: home.



What Investors want now


Now, investors will push the startups to think about a dreaded “down-round”, basing new fund-raising on a reduced valuation of the company. The question is: will the companies survive?


McKinsey described five qualities that will be critical for business leaders to find their way to the next normal: “resolve, resilience, return, reimagination, and reform”. They noted that “there would likely be overlap among these stages, and the order might differ, depending on the business, the sector, and the country”.



What is the new game


Cooperation is the new game, in order to find route maps, allocate stages and prioritizing, finding feasibility, timing in industries, factors in each sector, and actors in each country.


Some investors, when well-informed will be eager to invest at a higher valuation or buy the company outright in a third or the second round. By controlling the purse strings, investors have a great deal to say about the future growth of tiny new-normal endeavors.


Most probably, young Millenials are again in the hands of old X Generations.


If you are a Millenial, please, do show some respect to those who used to dance as teens with “Footloose”.


 

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