24 Predictions for 2024 (Part II)
From AI Marketplaces to AI Search, College Enrollment to Mental Health
Weekly writing about how technology and people intersect. By day, I’m building Daybreak to partner with early-stage founders. By night, I’m writing Digital Native about market trends and startup opportunities.
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24 Predictions for 2024 (Part II)
Hey Everyone,
This is my last piece of 2023. After today, it’s a wrap on Year 4 of Digital Native ✅
It’s been a good year, with ~50 long-form pieces totaling ~120,000 words. The best part of writing is building this community of readers, and this community has grown +60% in 2023. Thank you for being part of it.
To close out the year, 24 predictions for what’s ahead in 2024. Last week we covered the first 12 predictions in Part I, ranging from a breakout dating app to Apple Vision Pro sales.
This week, we’ll tackle the final 12. Without further ado…
13) Decline in College & Return to Trade Professions
From fall 2019 to fall 2021, undergrad programs saw a 6.6% decline in total enrollment. This decline is sharper because of COVID, sure, but it also continues a long-term trend: college enrollment has declined for 11 years straight.
For many people, college is simply unaffordable. Student loan debt has ballooned, doubling to ~$1.5 trillion from 2008 to 2018.
The cost of education is growing 8x faster than real wages. In the 1950s, 30% of household income was enough to pay for college. Today, people need to shell out 80% of their household income. Tuition costs have swelled +1,184% since 1980.
And college is less accessible to the less privileged: children born in the bottom income quartile in the US have just a 9% chance of achieving a college degree by age 25.
College is becoming untenable. And younger people are waking up to that fact. As a result, 2024 will see a continued decline in college enrollment and an uptick in skill-based education—including training for skilled trades.
A January 2022 survey from the ECMC Group found that only 51% of Gen Zs want to pursue a four-year college, down from 71% just two years ago. Meanwhile, 56% believe that a skill-based education makes more sense in today’s world. My view—which may be controversial—is that most people shouldn’t go to college. The return on investment just doesn’t make sense any more. For many, a skill-based program may be a better option.
And interestingly, Gen Z has a uniquely high opinion of skilled trades like plumbers and electricians. A recent survey found that 73% of Gen Zs say they respect skilled trade as a career, putting it second only to medicine (77%); 47% were interested in pursuing a career in a trade. One potential reason: 74% say they believe skilled trade jobs won’t be replaced by AI. Another recent survey found that 52% of university students worry more broadly about AI taking their jobs. From one woman in college: “I’m too disconcerted by the growth of this technology to even look at the positives.”
Here’s the extent of automation Goldman Sachs Research expects across industries:
If you work in maintenance, repair, or construction, you’re pretty safe.
I expect we’ll see more young people pursue trade jobs—a reaction to both AI automation and the younger generation’s more general backlash to technology.
14) We’ll See the First Breakout AI Marketplace
Marketplaces are an elegant business model. At its simplest, the classic two-sided marketplace connects two parties to deliver a product or service. Often, one or both of those parties is a human—Airbnb, for instance, connecting a guest and a host, or Uber connecting a passenger and a driver.
But what happens when one party is an AI?
This may be especially present in services marketplaces, which remain less-developed than product marketplaces. None of the 10 public U.S. marketplaces with $10B+ market caps are in services (you could make an argument for Uber, but that’s about it); none of the 10-largest private marketplaces are either. As Faire’s Dan Hockenmaier puts it, “You can buy a lightbulb in one click on Amazon, but hiring an electrician is still about as hard as it was 100 years ago.”
This is because services are more diverse than products, and thus more difficult to categorize. Services also include humans, leading to a lot of back-and-forth. Anyone who’s tried to hire a plumber on Thumbtack, a furniture-assembler on TaskRabbit, or a housecleaner on Handy understands this: 37 messages later, and you’re still trying to pin down the person who can come on Thursday and do the job for under $100.
AI will first reinvent marketplaces by helping with the matching process; LLMs trained on those 37 messages (multiplied by millions of customers) can get good at delivering the best service-provider quickly. This should unlock innovation in service marketplaces.
But what also interests me is the service marketplace that matches you to AI. I wrote about this back in September’s When AI Begins to Replace Humans.
Essentially, many digital services are vulnerable to automation. Tutoring; web design; translation; animation; website creation. Today on Fiverr, I might search for a logo designer to make a new logo for Daybreak. What if a marketplace instead matched me with an AI that could do the job cheaply and effectively? The demand-side is still a human, but the supply-side becomes AI.
AI is coming to reinvent marketplaces, and I expect that marketplaces selling digital products—Fiverr, Preply, Upwork, Cambly, etc.—are the first to be disrupted.
2024 will bring the first breakout AI-native marketplace.
15) Vanity Continues in Full Force
One long-held investment thesis of mine: “the selfie thesis.”
The selfie thesis is tangential to another thesis—the idea that all great consumer companies build on one of the Seven Deadly Sins. (See: last year’s The Seven Deadly Sins of Consumer Technology.)
Arguably the most potent sin is Vanity, which isn’t technically one of the “traditional” seven recognized sins, but which is a close sister to Envy. The rise of mobile phone cameras and social media 15 years ago supercharged Vanity. And they in tandem supercharged any business that makes our selfies look better.
The selfie thesis means that we care more and more about how we look—first in a selfie, more recently in a close-up TikTok video. Any product that helps us look better in selfies—or just makes us look better, period—is arguably a good investment. In the 2010s this may have been Lightricks, the maker of FaceTune; Curology, a customized skincare startup; or Instagram itself.
The FaceTune-powered, airbrushed perfection of 2010s-era social media has faded. Gen Zs and Millennials now favor “authenticity” (though usually with some air of performance).
FaceTune—which was Apple’s most-popular paid app in 2017 and which in 2018 had 20M times and 500,000 paying users—is down meaningfully in app downloads.
Yet while overly-curated feeds are out, Vanity continues it’s up-and-to-the-right trajectory. Heavy color cosmetics have been replaced by more natural-looking “no-makeup makeup.” But make no mistake, Vanity forges on, undeterred. In 2024, Vanity will reach new heights. What are the new areas to follow?
I find the rise of Medspas fascinating. Medspas provide nonsurgical aesthetic treatments—think Botox, microdermabrasion, or laser hair removal. And they’re growing fast.
The U.S. Bureau of Labor Statistics predicts that employment of estheticians is going to grow 29% in the next decade. No surprise there. Startup plays here include vertical SaaS for medspas like Moxie, and we’ll see more picks and shovels emerge.
There’s also no reason that men need to be flying to Turkey to get hair transplants. I expect companies to pop up to make such treatments more cost effective in the U.S. Any cosmetic treatment will become more accessible, more affordable, and—crucially—more acceptable. Stigmas toward plastic surgery and other aesthetic procedures are fading—fast.
Other major categories to watch: sleep, beauty, and skincare. Anti-aging, in particular, is on fire and showing no signs of abating.
Vanity isn’t going anywhere. The selfie thesis will hold strong for 2024 and beyond.
16) Gen Z Mental Health Worsens
By early 2024, there will be more Gen Zs working full-time than Baby Boomers working full time.
And Gen Zs will bring the youth mental health crisis to the workplace. A 2022 survey by Calm—bit of a biased source, but still—found that 58% of Gen Zs feel anxious frequently or all the time. A Deloitte survey of 22,000 people found a similar result: half of Gen Zs reported feeling anxious and stressed almost all the time, compared to only 39% of Millennials. Gallup found that Gen Zs are most stressed up at work:
Derek Thompson had a good recent piece in The Atlantic—“How Anxiety Became Content”—that argued that so much online discourse about anxiety might be contributing to deteriorating mental health. It’s difficult to parse how the destigmatization of mental health is changing reported levels of mental health conditions. On the hand, it’s easier than ever to discuss depression or anxiety; on the other hand, being surrounded by a language of mental health means that everyday challenges may all of a sudden be categorized as a mental health condition.
2024 will bring the mental health crisis to new levels; we’ll reach a breaking point. There will be AI chatbots—Woebot, for instance—that offer mental health support, and there will be a societal debate about whether these chatbots are helping the crisis (more support and companionship) or exacerbating it (replacing offline connections with dystopian online connections).
17) A Gaming Resurgence
Gaming is seeping into broader culture. The 2nd-highest-grossing movie of the year, behind only Barbie, was The Super Mario Bros. Movie. It raked in $1.4B at the global box office.
Meanwhile The Last of Us, an adaptation of a 2013 video game, broke HBO records. The series averaged 30M viewers across episodes, and its Week 2 episode broke a 50-year-old HBO record for largest week-over-week growth in the second week.
As content proliferates, IP becomes more important. We’re going to see a lot more film and TV adaptations of gaming content. Brace yourself.
The size and appeal of gaming is a frequent topic in Digital Native. A piece titled How Gaming Became the New Social Network, Theme Park, and Music Festival is 3.5 years old, and opens with this visual:
Yet as gaming has gone mainstream, the sector has been struggling.
2023 wasn’t kind to gaming. VC funding is down meaningfully. Engagement has shrunk from pandemic highs and iOS privacy changes have battered game publishers. What’s more, people seem to be at concerts and on vacations rather than playing video games (see the Experience Economy section below).
I expect this to reverse course in 2024. Gaming won’t be back to its COVID-era highs, but the sector remains the most attractive segment of media and entertainment. Gaming is a monetization machine, and there are over 3B gamers globally. For many people, gaming conjures the image of a teenage boy isolated in his mom’s basement. The reality is that the average age of a U.S. gamer is 35; that close to half (45%) of gamers are women; and that gaming is deeply social.
AI will enable unique gameplay experiences, and I expect new tools to emerge for game developers to build with AI. Inworld AI, for instance, powers AI non-player characters (NPCs). NPCs will have complex, nuanced personalities that ebb and flow based on gameplay. They’ll begin to feel more and more like real people.
AI will also drop barriers to creation. Building experiences in Roblox is still a pain; not everyone knows Luau. AI will broaden access to game creation, and we’ll soon have infinite games.
VC funding into gaming should tick up for early-stage, and AI + gaming will become a buzzy intersection.
18) Humane Will Be a Massive Flop
Last month, the tech startup Humane revealed its much-hyped AI Pin. The Pin is a $699 wearable device that comes in two parts: a square device and a battery pack that magnetically attaches to your clothes or other surfaces. Beyond the $699 hardware price tag, Humane comes with a $24 monthly fee.
Humane is led by Imran Chaudhri, best known for creating the user interface and interaction designs for the iPhone. And the device bills itself as a phone replacement: you interact with the device using your voice, and a projector displays things on the palm of your hand.
I think Humane will be a tremendous flop.
The thing is: people like screens. The way we interact with content has been through screens for a long, long time. Films appeared on big screens across the country 100 years ago. Then TVs shrunk down screens into our living rooms. Computers made screens even more portable and accessible, and mobile phones then did the same.
I don’t think Humane’s design is the right one. And beyond the wrong product design, the Pin is orthogonal to today’s culture. Most people don’t want an AI device listening to them. You can imagine a scenario: you’re excited to gossip with your friend, but they’re wearing their Humane Pin. All of a sudden, you’re paranoid and won’t speak freely. I expect Humane—and related hardware plays—will bear the brunt of AI backlash.
Humane’s AI Pin to go more the direction of Google Glass than the iPhone.
19) Experience Economy Roars Back
2023 was the year of Taylor Swift. I think we’ll look back at December 2023 as the month that Swift peaked—Time Person of the Year, an entire episode of The Daily, The Eras Tour movie dropping on streaming services. All within a few weeks. Then again, I thought Swift was peaking during the 1989 era in Summer 2015, and she’s topped that—so we’ll see what she does next.
The Eras Tour is already the highest-grossing tour of all-time—and the tour isn’t even halfway over. Swift played 60 shows in 24 cities in 2023. In 2024, she’ll play another 83 shows (!). The tour will gross well over $2B before all is said and done—over double the next highest-grossing tour in history.
![OC] Highest Grossing Music Tours Of All-Time : r/dataisbeautiful](https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fe5ce95cb-58e8-4083-b2aa-7b66c51de5f2_640x640.jpeg "OC] Highest Grossing Music Tours Of All-Time : r/dataisbeautiful")
(This chart leaves out Beyoncé’s Renaissance Tour, which is a new entrant into the top 5 tours of all time and was also a mainstay of 2023 culture.)
The Eras Tour and Renaissance Tour embody a broader trend: the resurgence of the “Experience Economy.” Experiences, including music concerts, exploded in 2023, topping record highs from 2022 after pent-up COVID demand.
A new report from StubHub (another somewhat biased source, but still) found that 60% of Gen Zs would skip a major life event—a friend’s wedding, the birth of a new family member—if they could be front row for their favorite artist’s concert. A June report from Experian, meanwhile, found that 63% of Gen Zs and 59% of Millennials said they would prefer spending money on “life experiences,” ranging from concerts to travel, rather than invest in their retirement.
Spending on experiences isn’t anything new. A few years ago I wrote:
Instagram got its start as a literal filtered version of reality. It was a highlight reel—a place to showcase your life with a glossy sheen. And as one of the first mobile-native social apps, Instagram was always with us; social media became 24/7. The app catalyzed the “Experience Economy”—80% of Millennials said they’d rather spend money on experiences than on things. Symbols of status shifted: a Coach bag became an Instagram photo from Coachella.
But Gen Z is taking experiences to even higher heights than Millennials did during the mid-2010s Museum of Ice Cream heyday. (Remember that? 🤳🍦)
I expect 2024 to set new records for experiences. The growth of experiences isn’t going anywhere—it’s partly driven by Gen Z nihilism and the resulting “treat yourself” culture we observe.
In addition to concert-going, travel is surging: as airfares rose faster than inflation, the International Air Transport Association declared earlier this year that they now expect airlines to boast $9.8B in net income this year, more than double the amount initially forecast. Global tourism will hit 95% of pre-pandemic levels in 2023, up from 63% in 2022. Airbnb revenue in the quarter ending June 30th was $2.5B, +18% year-over-year; last-twelve-months revenue in the period ending June 30th was $9.1B, +23% year-over-year.
The Experience Economy, though, is largely dominated by much-loathed incumbents. Ticketmaster is the subject of much ire—particularly after the Taylor Swift ticket debacle—but the company continues to own the market; its parent, Live Nation, is a $20B market cap business. Travel, meanwhile, belongs to the OTAs (online travel agencies): Booking Holdings (which owns Booking.com, Priceline, Kayak, etc.) boasts $20B in revenue and a $109B market cap; Expedia Group (which owns Expedia.com, Hotels.com, VRBO, Orbitz, etc.) boasts $12B in revenue and a $15B market cap.
(To digress for a minute: the reason Booking trades much higher than Expedia is due to margins—Booking has 23% profit margins compared to Expedia’s 7%. How can margins be so different for similar businesses? Expedia competes mainly in America, while Booking dominates Europe. America’s hotel market is dominated by powerful chains like Marriott and Hilton, which have strong bargaining power and resultingly cut down Expedia’s commission. Europe’s hotel market, meanwhile, is fragmented and made up of primarily independent hotels; this gives Booking more power and thus higher commissions.)
Back to the point: dominance by incumbents creates opportunity for disruptors. More experiences + loathed incumbents = more startup opportunities.
We’re beginning to see some innovation in stale, massive categories. Alex Rodriguez and Marc Lore (founder of Jet.com), for instance, are behind a new ticketing startup called Jump that aims to take on Ticketmaster. Safara, meanwhile, is a startup taking on the OTAs.
Whenever I find myself on Booking.com or Expedia.com or Hotels.com, I find myself thinking: this feels like an early-2000s internet experience. Everything is clunky and unfriendly to the end user; we’re forced to wade through pop-up ads and spammy deals. Clearly, there’s an opportunity to innovate. Safara aggregates top hotels into an intuitive, well-designed app—then it gives users 10% cashback on bookings. The idea is to take on the OTA Goliaths with a simple, consumer-friendly app.
AI will clearly offer another opportunity in travel—the travel agent industry was already disrupted by the OTAs, but what happens when someone can say, “Book me a one-week trip to Paris and stay within my $200-a-night budget” and have an AI travel companion seamlessly carry out the booking? We’re already seeing AI trip planners like Tripnotes.ai and Wonderplan.ai promise personalized itineraries; other companies go B2B, like Amelia.ai offering hotels and resorts an AI companion for guests. Soon, everyone will have a copilot for every aspect of their trip.
Swift might go on to set more records in 2024, but I expect we’ll also see more companies ride the wave of Experiences.
20) “Constantly Online” Breaks 50% Barrier
I always like Pew’s annual report on teenagers’ online habits. The survey is helpful for understanding how teens are spending their time online. YouTube continues to reign supreme, far above the pack. TikTok comes in second, and Snap edged out Instagram for third-place.
The data is also helpful for tracking what apps are out of favor: Facebook’s precipitous fall from 71% a decade ago is painful to watch.
One stat from the survey that always stands out to me: the percent of teens who report being online “almost constantly.” This year, 46% of teens (13- to 17-year-olds) reported that they’re online “almost constantly.” This is the same figure as last year, though up roughly double since 2014.
I expect 2024 will be the first year we cross the 50% threshold—and we’ll never look back.
21) How We Search For Things Will Change
During the first few decades of the internet, we were taught to search for things in a certain way. We might type in “blue jeans,” for instance, or “black dress.”
Search is changing rapidly, as search gets smarter and more contextual. Observing younger people browse and shop, we see changes in real time. It’s becoming more common to search something like “going out outfit,” for instance—here are SHEIN’s search results for that query.
In tandem, chatbots are making search more conversational—fewer keywords, more questions.
2024 will accelerate radical changes in search.
22) Distribution Remains King
Speaking of search: a year ago, there was talk of Bing taking on Google. After all, Bing had OpenAI on its side. Fast forward to today, and Bing has made hardly a dent. Google (which, of course, is also strong in AI) maintains its stranglehold on search with a 90%+ market share.
This has an important lesson: distribution is everything.
A better product might not win if it doesn’t have strong distribution. In 2024, how does a productivity startup compete with Microsoft Office 365 or Google Workspace, both of which have 1B+ users? How does any AI startup compete with the existing players in its category?
The answer is by being savvy and creative with distribution, which will remain both more difficult and more important heading into 2024. Big Tech has never been bigger, wielding built-in distribution to fend off startups. Incumbents seem all-too-aware that AI is a potential death knell, and they’re moving fast. In 2024, the battle for distribution will heat up.
23) The Rise of AI App Stores
This one builds on last week’s prediction that 2024 will be the year of the application layer. From last week:
Next year, focus will shift from AI’s infrastructure layer to AI’s application layer. So far, we’ve seen breakout apps build on their own models—Midjourney, for instance, or Character AI. But many foundation models are now available via API, and open source models are improving at a rapid pace. I expect the next breakout applications will build on someone else’s model, instead winning on verticalization (with a resulting data advantage) or by offering a better user experience.
We’ll see a swarm of AI apps emerge, just as we saw mobile apps emerge a decade ago.
Interestingly, both internet and mobile applications emerged in two main “clusters.” The chart below shows how 2008-2011 gave us apps like Uber, Instagram, and WhatsApp, while 2012-2016 gave us DoorDash, Instacart, and TikTok.
Even though it seems like AI is already mainstream (at least in the startup and venture capital echo chamber), we’re still early. While 58% of American adults have heard of ChatGPT, only 18% have used it. I expect we’ll need more vertical-specific, user-friendly LLM applications for the technology to really break through. Many of those applications are being built or dreamt up right now. We’re about to see the first “cluster” of apps come into focus in 2024.
More people will access AI apps through some sort of AI app store—just as we learned to try out new mobile apps. Low-code tools will allow people to build their own AI applications, and we’ll all be flooded with apps. Yet despite that, we’ll still end the year with sub-50% ChatGPT penetration and with most people still relatively unaware of the breakthrough AI apps.
24) Black Mirror Becomes Reality
One of Black Mirror’s most moving episodes is “Be Right Back,” which tells the story of a young woman whose husband dies in a car crash. In her grief, the woman signs up for a service that creates a digital version of her dead husband by digesting all of his past online communications and social media profiles. She’s able to message with him, with the AI predicting his likely responses and humor:
Predictably, this goes south: the widow becomes addicted to this AI replica of her late husband and fails to move on in her life. But there are also silver linings: she allows her young daughter to talk with the AI sporadically, as a way to get to know the dad she’ll grow up without.
This fictional plot line is now possible less than a decade after the episode’s 2013 airing. Startups like You Only Virtual allow people to construct facsimiles of their dead relatives to chat to.
Other Black Mirror plot lines are just around the corner. In 2019’s “Rachel, Jack, and Ashley Too,” Miley Cyrus plays a famous pop star who has been digitally cloned into a toy robot for her fans.
The storyline is similar to Meta’s new celebrity AI chatbots that launched in September—you can use Messenger to chat with Kendall Jenner or Tom Brady. The Meta release was met with a muted, confused, and somewhat-disturbed public response. (Sub-prediction for 2024: Meta shuts down this AI initiative.)
Other Black Mirror plots have flavors of other upcoming products. “The Entire History of You” covers a memory implant that records a person’s entire memories—useful for tracing infidelity or crimes. It’s not dissimilar to some of the dystopian elements of the Humane Pin. “Hang the DJ,” meanwhile, covers dating simulation technology that uses an algorithm to find your perfect match—not unlike what LLMs can do for dating, and relevant to our first prediction in this series for a breakout AI dating app in 2024.
The point is: next year, Black Mirror will creep closer to reality. A surprising number of technologies—ones that seemed far-fetched even a few years ago—now seem shockingly close, and 2024 will blur the lines between sci-fi and everyday life.
That’s a wrap on Part I and Part II. Let me know your own predictions for tech and culture in 2024.
Happy Holidays and see you next year 👋
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