Why Gen-Z Isn't Buying What Millennials Are Selling in a K-Shaped Economy ft. Eugene Healey

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0:34This is the 1600. This country was stone cold dead. We're going to take a little bit of a break today from our political coverage, our coverage of the war and of all things Donald Trump. We're going to focus a little bit more on the culture part of this show and my job title. People always say, Carla, your job title in your email signatures is Director of Politics and Culture for Newsweek. What does that mean? And I say, I don't have any idea, but if you can figure it out, please do let me know. I know the politics part, but the culture part is another part of my job. So with that said, today we're talking brands, brand strategy, trends, forecasting, as well as the attention economy, which is where a lot of us live all of our, most of our days at least now in the digital realm.

1:20And to that end, my guest today is Eugene Healy. Eugene is a brand strategy consultant. He's an independent creator. You may have seen him. His recent stuff on TikTok has gone mega viral. He has this series that sort of chronicles the decay of what he calls the millennial brand era. And as I said, it's really struck a chord online. Here's a clip from one of those posts. The elevated millennial lifestyle brand is dead. Now, for years, there was a clear formula to building a millennial brand. Take some ordinary product like razors or mattresses and disrupt the category by turning it into an aspirational lifestyle good.

1:52Complete with design-led imagery, a web-native shopping experience, and an aspirational but still accessible price point. Just enough to feel better than other plebs for using it, but still affordable enough to be treated as an everyday purchase. The problem is, in this economy, the target consumer for this type of brand narrative is disappearing. These are not luxury brands, they are targeted at the aspirational middle. In a K-shaped economy that is increasingly rewarding only the wealthy. Either you are part of this lucky few, in which case you are reaching for true luxury brands. Or you are drowning in ever-increasing rental and mortgage repayments for your s***box studio apartment, in which case aspirational brands become completely farcical.

2:27Because you can only sell aspiration to a society that believes in the idea of aspiration itself. In this economy, Costco is the new true middle class brand. Eugene, welcome. Thanks so much for coming on. Thank you for having me. So you're coming to us from the future down in Melbourne, Australia, so I appreciate you waking up early for us here. Eugene, what was the millennial brand, and when was the millennial brand era that we're discussing today? Yeah, look, it's always interesting. You never quite know which posts are going to go viral. I originally made that video as what I consider to be a relatively prosaic set of insights that really came from all these client conversations that I had back in 2023, 2024.

3:13They kept bringing me these reference brands for how they wanted to look. and you know it was like the harry's the caspers in australia there was one called go to which is like the reference skincare brand and okay this video was basically my way of saying to them and then to the world what works for these brands in their era when they were coming up is not necessarily going to work for you so these brands came up in the era of cheap digital marketing but they came up in an era of even cheaper money right so they sold this sort of variety of consumer of goods it could be anything from away lifestyle luggage to like to razors to all birds sneakers etc but if you look a level high they're actually also they were actually all saying and they were all selling the same thing so these were lifestyle brands they but the lifestyle they sold with this kind of like almost proto silicon valley techno utopian yuppie dream like it was very earnest right yeah very earnest it was also about the internet like it was about this idea of it was a techno-utopian idea of the internet as this kind of democratizing space that would help you see and cut through the bull****, discover truth and transparency.

4:22You know, Everlane was a part of this as well. And of course, this was all because it was the direct-to-consumer era. So it was the internet was how you were discovering these brands. And I think like, what was interesting for me, you know, looking at this, not just from the lens of design trends, but these brands all sold a lifestyle that was a, it was a complete fiction, right? Like they were all part of this wave of the millennial lifestyle subsidy. So many of these business models, at least, certainly a huge portion of them were loss-leading or they were only possible through huge amounts of venture capital money that itself was only possible due to quantitative easing and near zero interest rates.

4:59The ZERP phenomenon. Yes, exactly. Where these millennials in big cities who couldn't really afford these lifestyles, they're experiencing wage stagnation, rising house prices, et cetera. They could rent access to these particularly aspirational class products through these products and services. And I think, yeah, the video was really about saying even more than the design era being over, this earnest flat lay designed to be on an Instagram grid in an Instagram feed that is no longer linear. The economic narrative has now collapsed. When we've realized effectively for the vast majority of us, things are not getting better.

5:38Like when we talk about this idea of the K-shaped economy, we're talking about an economy that is pre-1950s, where a few people do incredibly well and the rest do more and more poorly. And so I think for these brands, the ontological belief that they are premised on is collapsing. Like you can only sell the idea of aspiration itself to a society that believes in aspiration. So I think like the, and this is kind of the thing that I put back to people is who is the target consumer? Who's, who are the brands actually for anymore? Like if there is any consumer left, they're probably shopping these, you know, these, these brands that have been here since the 2010s.

6:22There isn't any room for new entrants. I think like that is kind of the, that's the point that I wanted to impress. Cause again, you know, I made this video for clients that were like, we're this, we're a towels brand, but you know, we're, we're a little bit elevated and we're a little bit. Right. We're the human towel brand. Yes, exactly. So I think you do a very nice job sort of laying the groundwork here. And I want to go back to the K-shaped economy and sort of the macroeconomics of this. But I want to spend a little bit more on just another minute on sort of like this aesthetic, which you've described as look nice, say nothing, which I think is a very apt way of putting it.

6:58But, you know, and again, let's talk more about what this actually looks like, right? Lots of emojis, lots of pastels, this sort of like minimalist, you know, look, very earnest slogans, again, about things like being human, doing good, doing things, right? That's the outdoor voices slogan. Which brands specifically that are still around today are sort of, in your estimation, the purest expression of this aesthetic? it's funny because the one that i would say is the purest expression is an australian brand called go to um which is led by a woman called zoe foster blake it's actually doing incredibly well just like away by the way is doing incredibly well so it's not to say that again with all of this it's not to say that a lot of these brands are um it's not possible it's that there's less room there's only room for new entrance right yeah there's no room for new entrance anymore The target consumer is effectively like the total addressable market has shrunk to the point where only a few significant incumbents are the ones that can occupy the space anymore.

8:02It's not that, you know, as I said, back in like the 2010s, there was huge, huge sweats of this, like this aspirational digital first consumer that were willing to buy into this idea of the sort of like the elevated basics brand. and so yeah I think there are a couple that are still able to do it to do it really well because they captured a particular market and they've got ongoing consumers like again and and their tone of voice they were able to distinctively own that particular tone of voice that now we may consider to be the category voice or they have some interesting source of truth so um uh for go-to in Australia it's Zoe Foster Blake herself who is the the founder of the brand who you know in a way she pioneered a tone of voice, which was her tone of voice, which then became everybody else's tone of voice.

8:50But she's the only one that has an authentic claim to it because that's how she sounds. And then sometimes there just happens to be a little bit of product market fit as well. Away at the end of the day, it still provides its luggage. So it's for an aspirational class that are themselves able to travel. So it still has a segmentation strategy that allows it to occupy a space that potentially a lot of these other brands don't. Right. It's funny, right? Because I'm thinking about all this and I'm like, man, people are so easy to get to sell to. And then I look at myself and it's like, I'm case in point, right?

9:27I'm wearing Warby Parker glasses right now, right? When I go to bed tonight, I will go to bed on a Casper mattress. When I wake up tomorrow, I will shave with a Harry's razor. I will next time I fly, I will lug my away suitcase, which, by the way, is a great suitcase. Right. I even bought a second one. So whether intentionally or not. Right. I fully bought into this aesthetic, which I think a lot of younger the Zoomers now call choogy. Or maybe that was even maybe that's even long in the tooth now. Even calling yourself even using the word choogy. Right. It's like it's hell. Right. But how much of this is just like, yeah, man, like trends change, like tastes change.

10:02And, you know, the older you get, the less the less down you are with the current hot thing. I think, look, and I'm very careful of making broad generational classifications because I think it leads us into the sort of like weird deterministic thing. Like, you know, we talk about Gen Z, like they came out of the womb this way. Like, you know, some kind of like Alex Jones things. They're like, they're putting iPhones in the placenta. But I do think what there is is a real significant prevailing sentiment around the economic and the social environment that is the reality for a broader section of Gen Z than it is millennials.

10:42So like millennials, us, we were alive to witness the setting sun of the golden age of capitalism, right? Some of us absconded with extraordinary wealth due to the Silicon Valley tech boom. And some of us still are, right? You know, like open AI salaries of 1 million plus. For Gen Z, the sun has well and truly set. You know, like for them, like aspiration is dead. They're well and truly living in the zombie times. And so I think for sure, like, yes, there is a broader cultural change here. Young people don't need the sort of earnest aspirational. I think COVID really killed all of these narratives off.

11:19This idea of like, yeah, we're all in this together. We just want our brands to feel human. We want our brands to make us feel sane. I really believe for young people, brands need to be useful. So I do believe the role of brands is changing because for the past half century, 70 years, ever since the 50s, the societal role of brands was in great part to function as a vehicle for self-expression and aspiration in a world that was dissolving traditional identity and bonding structures so brands were themselves part of this if you like identity scaffold you climbed the ladder of aspiration and that was represented externally through aspirational brand consumption today if you look at young people nearly half of gen z run out of money each month like 30 % of them feel financially sustainable.

12:0728 % of them, something like that, believe that the economy is going to improve next year. I suspect that number will be even lower now due to the conflict. And meanwhile - The little excursion, yeah. Yes, the excursion, yeah. Meanwhile, how hard you work is untethering from reward. We go online and we effectively see this idea of go to uni, accrue a significant amount of student debt that is then paid off through a long, stable and successful corporate career. That narrative is a complete and utter fabrication, right? And even with artificial intelligence may now prove to be a fabrication even for the highest achieving white collar workers.

12:50So what do we have? Again, to take this back to the brand lens, it's no longer enough for a brand to see or understand your position as a young person. Really, we are beyond that. Like where we want to go now is like, you need to help me get out. We are, we are beyond what is really truly scarce is progress. So you really need me to escape the straight jacket that I've been placed in. And this is by the way, why the prediction market brands are doing so well right now. They are tapped into the spirit of the times. Like they're so tapped into the cultural zeitgeist. this by the way is absolutely not an endorsement of prediction market brands what i'm saying is that they they are really capturing a spirit of how we feel right now and which is which is gamble gamble exactly you know gamble on when you think that ayatollah's gonna die why not when you think economy is a casino well i may as well play it like a con man right and i think the thing the question that I'm trying to put back to brands now, or at least, is why should these vampires be the only ones that get to own this narrative?

13:59And so I think there is really a role for some brands that are like, okay, how can we be more useful to young people? Even if you look at a brand like Depop, which is a brand that I really love. It is not just a brand that is about clothing and self-expression and culture. It is really about creating infrastructure for young people to monetize their taste and alleviate financial pressure and environmental guilt without having to opt out of culture altogether. So even brands that are fundamentally about self-expression, which is fashion, they are themselves also about infrastructure these days.

14:30And I really think that's a quite significant cultural shift. To the me I used to be before texting 988. When another argument with mom felt like the end of the world and school got too stressful, I felt alone. But when I texted 988, a real person texted back. Someone listened without judgment. I'm still here and I'm stronger than I thought. We hear you. Call, text or chat 988. It's free, confidential and here for you 24-7. Brought to you by the New York State Office of Mental Health. That's interesting because to me, Depop is just, you know, an eBay ripoff. But you're right. There's more to these brands than meets the eye, at least to an old fogey like me.

15:15But I have like a little pet theory that I want to ask you about because you're the expert here. To me, this all started with the Dove Real Beauty campaign, which was in, I believe I was in college because I remember we did like a case study on this. And this is the campaign. It was like one of the first times that a big brand put, you know, unairbrushed or allegedly unairbrushed women in ads, you know, of all, again, allegedly all shapes and sizes to sell deodorant and lotion and soap or whatever. Now, of course, it was always ironic, right? Because Dove is owned by Unilever, which also owns or at least did own Axe, which is, you know, another brand that specifically uses, you know, misogyny and, you know, beautiful, stunning size zero models to sell the same soap just to instead of women to men.

16:05Right. So anyway, yeah, I don't know. I just that that to me was sort of like the beginning of this idea of like the brand as a social justice, you know, continuum. Does that, does that make sense? Does that resonate? Yeah, I think you can, you can, they're separate but linked concepts in that what I think Dove really, and you can even, you can probably even trace this back to Patagonia, although I think Patagonia has a much more authentic claim to the source of truth and value, is about brands that market themselves, not just on the basis of first we had product features right so dove contains one quarter cup uh moisturizing cream that was the original point of difference in every soap bar then we had brands that were about identity and a lot of millennial brands were very much about identity and then we have brands that started to be about these even more um conceptual uh these even more conceptual things so brands that started to be about community as well like was this idea of who are we and then as part of this the the dove you know what what that was really like the first if you like the progenitor of was this idea of uh selling on the basis of values so the asking the existential question who are we and the question framed back to the consumer is do i support x and right yeah yes i think there are like there are a number of problems that i think came out of that because what what that did remember that the the main purpose of brand is not just to be remembered to remember for the right things is to be able to establish a premium that allows you to charge more for products and to establish superior pricing power.

17:39And so effectively what we were doing with that is we were turning values into aspirational goods that confirmed the aspirational or elevated status of the person that was purchasing them. And when we especially started to link that with socially progressive values, what effectively we did was turn socially progressive values into luxury lifestyle goods. And that's all very well and good when you have a society in which everyone is starting to do better and better, like the middle is increasing. But in a society where everyone's starting to do worse and worse, what you're effectively saying is that progressive social values are for a rarefied few.

18:19And I've made comments about this before. effectively, it had a role to play in allowing the far right in the mid to late 2010s to position itself as the countercultural force that was fighting back as corporate America. Yeah. No, I think that's the crux of it, right? And to me, again, as a non-expert in this, the problem with this marketing strategy of trying to part people like me with their disposable income is that there's fewer and fewer of these types of consumers, right? You just spoke to this. Either you've got you money and you're buying real luxury goods, which are not things that are promoted on advertised on Instagram.

19:00Right. Or you're struggling and you don't have the cash to shell out for an overpriced suitcase or some aspirational good. This is what. So to get back to your work, you've argued that Costco is now the real middle middle class lifestyle brand. Can you talk a little bit about that? Yeah, I mean, I and of course, Costco is a lifestyle brand. right? Literally, like you have a membership to it. It's a member-based organization. Yeah, I really believe like as the economy bifurcates, brands themselves have to pick a position as well. Either, you know, if you're a consumer that's part of the rarefied few, you're reaching upwards towards luxury.

19:37And the luxury industry in some, not literally luxury brands, but some parts of the luxury economy are doing better than they ever have, right? It's easier to sell luxury than it is to sell aspiration because there's less aspiration in the economy, but there are a couple of very rich people that are doing incredibly well. Or you have to drill down to a more focused niche, like being able to, you know, like a lot of these, there are a lot of premium running brands right now that are doing really well because they represent this niche really successfully. They are of the community and they're able to tell a very authentic performance story and that allows them to justify a premium pricing.

20:17Or you have to accept a more down market position that is more mass market that has value messaging at its core somewhere and you trade off lower margins for more significant volume but i think again as a reflection of just like this is where the economy is at i'm not making any value judgments by the way about the death of aspiration certainly sure sure it's it's it's just like yeah i suppose there's a sense of pragmatism about like do you want your brand to survive because i think like this is actually the biggest risk here is actually for smaller brands, not bigger brands. Incumbents have the advantage that they are big.

20:52They command excess share of mind and share of voice, and they are natural choices for people. It's the smaller brands that are run by people like you and me that are at the greatest risk of this shift. Right. Well, because if the opening for a brand like that in the 2010s is what you said, which is you're in this zero interest rate economy, so you can borrow a ton of money and spend like crazy on acquiring customers through advertising, right? I mean, the joke here in New York City is the subway was always just plastered with these ads for companies like Hymns and Rowe and Allbirds and the ones that we've talked about.

21:31But back to what you were saying about the K-shaped economy, right, where this is essentially where the rich are doing very well, as you just mentioned. Everyone else is struggling to keep up. I mean, there was this insane statistic that I think came from Bloomberg recently. The top 10 % of earners in America now account for half of all consumer spending, right? Consumer spending makes up something like 70 % of our economic activity. If you have an economy that's built on consumer spending and consumers stop spending because they just can't, what happens, right? Yeah. Look, I'm not an... Let's be clear is that I'm not an economist.

22:07Sure, neither am I. I'm a brand. I'm a brand strategist and a cultural analyst. Yes, I think that puts us in a very difficult, like I can work through this through the lens of, okay, here is how as a brand you need to respond, which is what I just said. I will leave those kind of questions. Sure. Fair enough. Fair enough. But so we're millennials, right? And again, you briefly touched on this. We straddle these sort of like two worlds, right? We came of age in the 90s. This is the Francis Fukuyama, you know, the end of history era. all of this promise surrounding the new millennium, the internet.

22:43And of course, I remember that, right? It wasn't that long ago. I was a sentient human remembering that feeling of like, oh my God, anything is possible in this new world. Then of course, you have 9-11, right? You have the financial crisis, the bottom falls out of the economy, the failures of the Bush era, the disappointments of the Obama era, the rise of Trump. So talk a little bit about Gen Z because they came of age either in the middle of that or after it. They didn't get the good stuff, right? Isn't that sort of the thesis here of like why as consumers they are, you know, they just don't buy into some of the stuff that we millennials might?

23:21yeah as i said like i think if there is a if there is a difference between us as um us as generations it's that we got to see the sun setting so we still got to fear we still got to feel the rays on our skin right um we're not doing great right like housing prices still completely out of control wage stagnation is really significant we're all facing the threats of maybe our skill sets needing to potentially be extinct in the next five to 10 years and needing to retrain. But I think there is potentially still some prevailing millennial attitudes that if you work hard, you're able to get ahead. I think that that idea, that Protestant work ethic still is contained within a lot of the generation.

24:07Whereas for the younger generation, I think they see an economy and a political situation that is entirely stacked against them. and so like what do you have you know there was all this stuff about the gen z quiet quitting blah blah like i don't but like first off of course things that are true at a macro level are not necessarily true at a micro level of course i work with i have two gen z's in my team and they're brilliant like not only are they like relatively hard working but they're also like incredibly intelligent incredibly astute they teach me things every day um and they're independent as well and they're like they're fantastic people to work with um and so like i you know i don't necessarily believe all of the stuff at a top level but i like again these people are like they're a really high performance but i also you know all of these if you want to call them pathologies like they are downstream of the fact that the economic contract has been broken there is no guarantee that if you work or work hard you'll get ahead or actually you'll even get somewhere slightly in the middle.

25:06I think like it's not - Even keep up, right. Exactly. If you work extremely hard, you may still not find yourself in a position of even basic security. So we're using, like talking about Maslow's hierarchy now, you may not even make it down to the bottom rungs. Right. So why would you? So effectively, of course, you have the situation where a couple of them are just like, and you can see the appeal of both prediction market brands and Manosphere, et cetera. Like all of this idea, basically you got to escape the matrix right like which involves lying cheating stealing doing basically whatever you can to get out like and and certainly is it's quite a ferocious situation and i'm not justifying any of those attitudes i'm saying you can understand exactly why they're there or you have this kind of like if you want to call it like the lie flat corporate culture which is effectively like yeah i'll do it but i'm quite quitting i'm just i'm not going to work that hard I'll do the bare minimum, right.

26:00Yeah, I'll do the bare minimum. And why wouldn't you? Like what is the, I would say, again, to use an economic theory, it's like from the perspective of behavioral economics, it is the utility maximizing option to not work that hard because the incentives to work harder are simply not compelling enough. And if you want, again, if you want people to aspire, you have to create, you know, economics of aspiration. It's just funny because when we were, again, coming of age, even just within the last 20 years, really, it really was sort of a hustle culture, right? That was the kind of thing that was drilled into us.

26:41You do the opposite of what you just said, right? You work your a** off because it's the people who are staying late at the office. Those are the ones who are going to get the promotions, the people coming in on the weekends, yada, yada. Now it's more of this like, LOL, nothing matters. I'm just going to sort of bed rot, doom scroll my life away. And again, we're making generalizations. I know Zoomers who aren't like this at all. But if you're a brand, right, and people come to you for this advice and you're trying to cater to that demographic, right, if you're trying to sell whatever, towels, cutlery to Gen Z, to Zoomers, how do you – what's the strategy?

27:18look it's a good i i honestly think it's this idea of just like just be just be useful like i really do that's it's kind of to go back to everything that i was saying at the beginning i just don't believe any of these aspirational products are really and the narratives that sustain them and like let's call them elevated elevated lifestyle products and brands i just don't think they make sense for this to consume and you know to say nothing of the fact that they're aspirationally priced so you're already priced out a bunch of these if you want to if you want to be that kind of brand you're going to look older what i'm saying like you can't you're not supposed to be a young cool brand anymore like look to the consumer segments that have money which are like older wealthy people that have paid off their houses that are not facing right sorry actually in australia in australia our interest rates are rising again so um i'm not quite sure what the situation is in the u.s but um same if you're looking towards if you're looking towards as i say like the younger demographic like if you want to sell all these goods like just be like useful i think is the is the more solve a problem yeah so like solving a solve an actual problem which is an is a quite dire economic problem i think or it's like a it's a skills problem as well like as i said like depop is a really interesting brand because it solves it really does solve a problem and it solves both problems because it also solves the problem like Like there is an archetype of the Depop girly, right?

28:41And I think it's an interesting archetype because she's very fashionable. She's very clued in. She's been able to monetize her taste. But she's also savvy at the same time. And I think that's really beautiful. And I think even IBM the other day went out and said they're tripling the number of interns that they hire. So they're saying, okay, in the age of artificial intelligence, we're still making a bet on junior intelligence. And you've got brands like Notion as well. that are starting to say we're not just going to be about this like weird productivity hill we're going to be this entire productivity infrastructure that's going to be able to help you coordinate your entire life so there are room i think for brands still to cater to young people but again the narrative has to shift from just this idea of like aspiration which is very high level hey like things again things are getting better and you're going to get carried up on this to a little again it has to be a little bit more hard edge like here is how we solve this very real problem that is right in front of you?

29:38So it's become a little bit of like a cliche to say, I want to talk about social media, the social media aspect of this, but I was going to say like, it's a cliche to say that we live in an attention economy. Everybody knows that. Whether you're a brand or you're an independent creator like yourself or like me working for an established media outlet, we're all competing for the same set of eyeballs, right? I mean, at least that's the rep. And I'm thinking like TikToks, they will come to us. They will give us advice on, you know, formats that work. But it's still it's what works for them. Do you see what I'm trying to say?