Investing Insight

Finding “product-human need fit” in the post-Covid era

Eurie Kim, Partner

June 2021

6 min read

Psychologist Abraham Maslow introduced the concept of a “hierarchy of needs” in his 1943 article, “A theory of human motivation,” proposing that certain basic needs drive humans, and subsequently, human behavior. Since that initial publication, the framework has seemingly transcended space and time, becoming an immovable cornerstone of understanding human psychology and behavior. 

However, Maslow did not actually illustrate his theory as a pyramid; it was psychologist Charles McDermid who first referenced Maslow’s hierarchy in the form of a pyramid in his paper, “How Money Motivates Men.” From here, the symbolism stuck. The pyramid suggests that the human journey is one of striving towards the highest level of the hierarchy—self-actualization or self-transcendence, becoming more than ourselves—as Maslow later asserted before his death in 1970. 

Human Needs > Boundless Opportunity

So why the CliffsNotes version of a psychology theory in a VC blog post? It’s more integral to consumer investing than you might realize. At Forerunner, we always consider human needs when exploring underlying shifts in consumer behavior that undoubtedly provide a call-to-action for new companies to emerge. As the world changes, people adjust, and needs evolve. New opportunities come to life. 

The last generation of consumer tech winners are often characterized as addressing massive markets in transition: transportation, finance, healthcare, social networking, even space travel.

But digging into the human motivation behind the consumers these companies serve, I would argue that "product-market fit" should really be called "product-human need fit." 

Uber, Lyft, and Doordash and other freelance marketplaces not only provide essential services that meet consumers’ Physiological needs, but also address Safety needs by enabling anyone to secure, flexible employment, no matter what their background or experience. Zoom, Slack, and Bumble enable communication and collaboration--but, more importantly, they fuel Relationships in our personal and professional lives. Social media platforms like TikTok, LinkedIn, and Instagram promote inspiration, credibility, and community, all of which boost our Esteem. Airbnb, Netflix, and SpaceX lure us to Self-Actualize through experiences, beauty, entertainment, creativity, or even transcending space (literally). 

Covid-19 Leveled Our Hierarchy of Needs

Maslow’s original concept proposed that humans move progressively through the levels of the hierarchy. Today, many acknowledge that our needs ebb and flow, leading to growth in one area and decline or stagnation in others at the same time. But Covid’s far-reaching impact brought about a different storm altogether: We saw a rare time in modern history when people were universally forced to descend to the most primal levels of the pyramid, no matter what stage they may have attained before. 

The pandemic turned the world upside down. In the earliest stages of the lockdown, basic food, water and necessities were limited. We were isolated from family and friends. Weeks into the crisis, the unemployment rate reached nearly 15% amidst a nationwide lockdown, the highest since the government began tracking such data in 1948. Businesses closed down. Streets were abandoned. Every level of our basic physical and psychological needs were under threat. Even the air itself was compromised. 

Emerging from the chronic duress of the past 15 months, we are sorting through the aftermath that comes after any catastrophic event—looking through the rubble, uncovering the damage, planning how to get back on our feet. But the reality is, while the impact of the pandemic was felt by all, under-represented communities bore an undue proportion of the pain. 

Minorities and women have seen higher peaks in unemployment and a slower recovery as we inch past the pandemic. In February 2021, about a year into lockdown, total employment for Black women and Latinx women was down 9.7% and 8.6% respectively from one year before, compared to 5% down for white men.  According to Pew Research, Black and Latinx adults were more likely to say they’d dipped into their savings or retirement accounts, used a food bank, and had trouble paying bills and rent during the pandemic than the average American. Nearly two million women have left the workforce and not returned since the start of the pandemic. The economic fallout has set society’s progress back generations. 

Amidst the physical traumas we endured, many communities endured further emotional and psychological trauma—represented in movements like Black Lives Matter, Stop AAPI Violence, Transgender Rights. These and other social and political movements have added to an already unsustainable level of deprivation of basic human needs for many people.

Maslow spent much of his later career wondering why more people don’t self-actualize. As the pandemic revealed what it looks like when basic needs are not met on a mass scale—how some people have a stable safety net, while others can instantly drop into despair—it’s clear that self-actualization is a privilege that is out of reach for too many. This all begs for real change.

The next generation of innovation must extend not just to those with access, privilege, and power, but to those whose basic needs have been overlooked for too long. And, what better moment than coming out of crisis to be ambitious in our goals for leveraging technology to support all humans’ needs? 

Back to Basics: Building a Strong Foundation for All

The last decade saw a wave of new companies that leveraged fresh, digitally-native voices to speak to the new Millennial consumer. In the early days, the Millennial generation was most differentiated by their fully-digital orientation, but leaned towards a white, urban, upwardly mobile, coastal audience, given this demographic was earliest in shifting their spend and engagement online. Many modern brands have come a long way to serve more diverse consumers in the interim; but today, the opportunity for recognizing broader customer segments from the beginning is not only expansive, but urgent. 

Post-Covid, individuals have stronger voices than ever. They are demanding products and experiences that reflect their unique identities and values. From DTC brands to health and telemedicine, finance to employment opportunities, education to entertainment, people are refusing to let their needs be ignored.

There is a meaningful opportunity for new brands and businesses to acknowledge and embrace consumers as human beings, not just Facebook look-alikes, DAUs, or conversion numbers.

To do this, business models and technology must evolve to enable scalability in addressing wider audiences and our nuanced needs. 

I am hopeful that our universal struggle during the pandemic has allowed people to experience a vulnerability and empathy that has been lacking over the past two decades as technology has advanced at the detriment of human connection. Our constant ambition for more efficiency, performance, and achievement is impressive, but has blinded us to the fact that we can’t advance humankind if part of our community is struggling to meet basic human needs. We also can’t advance if we focus only on achieving higher esteem and actualization levels of the pyramid without repairing the foundation of meaningful relationships and connection that all humans need to survive. 

These themes of democratized access to modern basics and human-first technology have been top of mind at Forerunner since well before Covid hit the stage, with investments like Chime, Hims, Juni Learning, Real, Revel, Curated, Dumpling that all acknowledge the humanity of their consumers (both buyers and sellers) and their ever-evolving basic needs. They leverage technology to power better human experiences in the most foundational parts of the pyramid: health, education, employment, and relationships. 

But investments like these are just the tip of the iceberg. We look forward to announcing other investments in the coming months that reflect the wealth of opportunity we see in broadening access to essential products and services to a more distributed audience, and empowering people, brands, and businesses to develop deeper connections with their customers that bring humanity back into focus. 

Unique people. Unique approaches.

We’re a diverse team of visionaries and veterans who looked at the VC industry and said: “We can do more.” Together, we’re redefining what VC can be — for consumers who deserve better.

We’re a diverse team of visionaries and veterans who looked at the VC industry and said: “We can do more.” Together, we’re redefining what VC can be — for consumers who deserve better.