predicting the future of consumer tech
Using YC's W24 consumer tech batch to evaluate trends and interviewing Janice Tam to learn more about a tech founder's lifestyle
I can’t even tell you how much better writing this piece was without juggling school, clubs, and work. I took a creative approach for this piece by looking at Y Combinator’s W24 batch of companies to extract consumer tech trends. Of course, while one accelerator does not define a trend, YC’s investment trends help us understand where consumer technology is headed, given that this space is rapidly changing daily. To stay in line with the topic of consumer tech, I had the opportunity to interview Janice Tam, co-founder of TrueToForm. Using sensor technology, Tam is working to solve a pertinent problem in fashion: finding the right clothes to fit a customer’s body type. During the interview, she shared what her life looked like before becoming a founder and how she supports TrueToForm’s growth and funding operations. Happy reading!
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Startup Events & News
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Here’s today’s breakdown:
Evaluating macro trends with YC’s W24 consumer tech companies
Interview highlights from Janice Tam, founder of TrueToForm
What’s Happening in Consumer
From a Macro View
macroeconomic consumer trends, shifts in consumer behavior, industry deep dives
Y Combinator (YC), a renowned startup accelerator for early-stage startups, is known for identifying disruptive startups well before they achieve scale. I decided to look at YC’s most recent batch of companies, Winter of 2024, to assess consumer tech trends that YC felt bullish about. After almost 15 hours of analyzing and dissecting trends from the 25 consumer tech companies in the W24 batch, here’s what I found:
Almost 70% of the companies have an AI component in this batch, roughly the same proportion of AI companies in the previous batch of consumer tech firms. It’s no surprise that AI startups are becoming more attractive, given that AI is changing the way we live and work every day.
I identified three consumer tech trends YC W24 batch: content creation tools (36%), search (20%), and services (12%).
1. Content Creation
Content creation tools appear to be the most attractive products to invest in right now, applicable to a range of personas — from individual content creators to marketers to media executives. Back in December, several reports bet on the growth of Generative AI to personalize and create marketing content for consumers. These tools aren’t a threat to marketers; instead, they will facilitate higher productivity. Even Sam Altman, CEO of OpenAI, makes it clear that AI-generated content will reduce costs and labor for marketers. He states, “95% of what marketers use agencies, strategists, and creative professionals for today will easily, nearly instantly, and at almost no cost be handled by the AI”. Minimizing communication and work across many stakeholders will increase efficiency for brands.
Fortunately, as marketers are more inclined to use AI, consumers are more receptive to AI-generated content. 60% of consumers prefer generative AI content over traditional creator content. This statistic applies to visual content; however, brands that use AI-generated written content are likely to face more scrutiny if the copy feels impersonal and misaligned with the brand.
Not only does content creation impact marketing operations, but it also supports the growth of the arts & entertainment industry. Magic Hour offers a range of services to create AI-generated videos, from video-to-video to face swap to lip sync. The wide range of offerings allows media companies to push the boundaries of production and easily manipulate pictures/videos. It’s working well, as the chart below shows that Magic Hour receives the highest monthly traffic out of all the W24 companies. Infinity AI and HeartByte are equally impactful for this industry, as these models only need a simple script or plot to generate a movie or story, respectively.
These tools will also support individual creators and artists. No longer will micro-artists be burdened by production costs; instead, micro-artists can focus on the broader vision of their content and let AI piece the details together.
2. Search
The race for the best search engine is still going. Tech giants Microsoft and Google are each developing a robust AI-powered search engine with their respective models, OpenAI and Gemini. However, new startups are challenging the incumbents. Perplexity, founded by ex-Open AI and Meta employees, has captured the eyes of tech enthusiasts and investors with its unique query responses. The model provides an AI summary to answer your query, link annotations to support its answer, and suggested follow-up questions. Despite these attractive features, Perplexity has a long way to go before reaching the scale that Google currently operates in.
Emerging companies like Perplexity bring attention to a greater demand for effective search, AI-powered or not, across distinct industries. For example, Lumina, a W24 company, is building an AI search engine to find answers within scientific literature. Similarly, happenstance is an AI search platform to search for people. When it comes to AI search models, Perplexity is a generalist. YC betting on AI models built for specialized needs could be in anticipation of lucrative acquisition opportunities by Google or Microsoft.
Tech companies and startups are also improving search through recommendations. In a previous newsletter piece, I discuss TikTok’s rivalry with Google in search because consumers can find product or service recommendations directly from people on TikTok. A study found that 43% of consumers browse social media — Facebook, Instagram, and TikTok — to find goods and services. To avoid the detrimental effects of social media and still use product recommendations, Lumona, a W24 startup, is building a product search engine that makes recommendations based on creators you trust. Below you’ll see a visual output result by searching “sunscreen for oily skin that is fragrance-free”. As shown, there is a summary description of the product on the left and aggregated consumer reviews on the right.
With 20-50% of all purchasing decisions driven by word-of-mouth advertising, consumers lean towards channels that can directly source recommendations from people instead of ads. This is why brands are investing less in advertisements and more towards influencers.
3. Services
YC invested in distinct consumer service platforms: voice editing, food delivery, and property management.
AquaVoice is a voice text editor that can transform and edit text using natural language. At first, it doesn’t seem any different from existing software such as Otter.ai or Google’s dictation feature on Docs. But the table below shares that Aquavoice is significantly more accurate in professional notes, book passages, and work emails relative to other software applications.
While the platform has seen relative success, AquaVoice is likely to face significant barriers in improving the model at a pace faster than incumbents Google and Apple. If AquaVoice can expand its use to creating and manipulating data tables or visual decks, the software has a better chance of leading this market need.
BiteSight is a video-based food delivery app. Simply put, TikTok meets DoorDash. Local restaurants will publish curated short-form videos for you to scroll through before deciding which restaurant to order from. Short-form video content has been found to have the highest return on investment. While BiteSight clearly understands that short-form videos will help local restaurants attract more customers, DoorDash could also just build out this feature and promote it to its existing 32 million customers.
It will be difficult for BiteSight to outpace the growth of existing delivery platforms. However, the startup could be an attractive acquisition opportunity if it is able to gather sufficient video content from the local restaurants. I imagine that local restaurants will feel burdened to create high-quality video content for the app, so BiteSight will need to support the small businesses in creating content for the app to hold value.
The last company is heypurple, an AI property manager for landlords and homeowners. As someone that has stayed at a couple apartments in college, I can imagine that the leasing process is annoying for both the renter and the property manager. I usually have a long thread of emails with the property manager before making a decision and booking a tour. The idea of having an automated system to book tours and answer repetitive questions is efficient. That way, the renter can ask all the standardized questions first before booking a tour.
Property managers are in — a survey of 5,300 property management professionals indicates that nearly half either currently use AI or plan to adopt AI. Other startup founders in this sector have noted the importance of AI in this sector. The founder of Guesty, a property management platform, stated that “AI helps facilitate fast responses and lower the amount of workload necessary from the host, and that’s true whether you have one property or 10,000”.
More people are breaking into property management for a source of passive income, so having platforms like heypurple and Guesty is crucial for the growth of this sector.
Founder Interview: Janice Tam
📈🩺 Janice Tam was studying economics and biology at Dartmouth, on a pre-med track to become a doctor eventually. However, she wanted to explore an underlying interest in business before committing to medical school.
👩🏻💼💼 Janice Tam, founder of TrueToForm, started her career in healthcare consulting. As one of the youngest members of management, she led the analytics team and helped to grow the company as the co-chair of the recruiting program. Quickly realizing her strengths in business growth, she wanted to learn more about how to apply this in the startup world.
🎓💸So she applied to many MBA programs, eventually choosing to study entrepreneurship at Booth full-time. Interest in venture capital led her to work at a local VC firm, where she loved her role in early-stage investing.
👗📱But around this time, she was also exploring a solution to an all too familiar problem of “fit” in the fashion space. In August 2020, as more people shopped for clothes online due to the pandemic, this led to an increase in returns. A survey reported that the number one reason for this was because the clothes didn’t fit the consumers. Tam and her sister sought to solve this problem by creating technology that measures an individual’s body dimensions to better assess garment fit across several brands.
👩🏻💻📚So, while Tam was a full-time student and working in VC, she was also building a company with her sister. A typical week for Tam looked like 2 days jam-packed with entrepreneurship classes, with the rest of her days spent working at the VC firm and building TrueToForm. Talk about hustle!!
In 2021, after receiving positive feedback on their 3D avatar prototype from apparel designers and faculty from top fashion schools, Janice knew to ditch her initial plan of working in VC post-MBA and focus on her startup full-time. Fortunately, with supportive parents and professors at Booth, she felt confident in her decision and successfully raised a small friends & family round to continue building the prototype.
👚💲For any early-stage startup, fundraising is a challenge, and Tam can attest to this. As a female-founded team, Tam initially found it difficult to attract the right investors who understand the scope of this issue, stating that “most investors don’t touch fashion tech” relative to crypto or generative AI. Despite this, Tam has become more aware of how to identify the right investors for the company and which investors are worth pitching to.
💻🛍️When thinking about the fashion & retail sector more broadly, Tam is confident that there are going to be more companies building technology in this space. She describes that there continues to be a demand for a personalized e-commerce experience. TrueToForm tackles the challenge of “fit”, while other startups tackle style or recommendations. This isn’t seen as competition. Instead, these startups are likely to complement TrueToForm’s technology effectively, says Tam, to create an all-around positive online shopping experience for the consumer.
What I’m Working On:
I’m hoping that this section can humanize this blog more by getting to know more about my life and goals. I feel like most people can relate to this, but figuring out what post-grad life looks like is hard. Yes, we’ll all be working at some point, but there’s so much more to life than work! It’s been nice to explore the interests that I would just think about in class instead of actually working on them (i.e. Consumer Girl).
I’ve also been in my ✨reading era✨, so here’s a few books that I’ve read so far:
In terms of Consumer Girl, I want to host a female founder brunch in the Twin Cities, so if you are a female founder working in consumer / consumer tech or an interested sponsor who would be excited about this opportunity, please fill out this form!!
As always, I’m excited to continue working on this newsletter and bring more people to the space!
Thanks for reading,
Sanjana