Make the American Consumer Happy

Shared Journey with iFly.vc

Jun 28, 2025

This newsletter is adapted from Han Shen’s Opening Remark at the iFlyVC Consumer Summit on May 7, 2025, in Austin, TX. You can watch it here.

Navigating Uncertainty with Optimism

We are entering uncharted territory, shaped by multiple global disruptions. Key challenges include the realignment of monetary and fiscal policies, escalating geopolitical conflicts, and a widespread reconfiguration of trade and supply chains. At the same time, climate and energy disruptions are redefining resource management, while financial markets continue to face heightened volatility. Adding to this complexity, rapid technological transformation is reshaping industries and societies at an unprecedented pace.

In this environment, as investors and entrepreneurs, we are all confronted with difficult questions and countless uncertainties. The fundamental challenge becomes: What can we control? What actions can we take to drive our own destiny?

One quote I often return to is from John Allen Paulos, Professor of Mathematics:

“Uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security.”

At iFlyVC, we find inspiration in the words of Warren Buffett, who recently announced his retirement. One of his most iconic messages, a line we love to share often, is:

“Never bet against America.”

Or in his own colorful way:

“… I’d negotiate from the womb to be born in the US.”

I came to the United States in 1998 and became a proud U.S. citizen. While every country has its challenges, I genuinely believe this nation offers tremendous opportunity, resilience, and optimism. As seed stage investors, our focus is clear: we double down on anything that makes the American consumer happy.

The US Consumer Market: Massive and Resilient

The US consumer market is the largest and most resilient in the world. With $20 trillion in annual consumer spending and the highest per capita consumption globally, its scale is unmatched.

History shows that even during economic downturns, baseline consumer spending on essentials remains strong. Consumers may cut back on discretionary items, but spending on necessities tends to rise as a share of total consumption. The 2008 recession is a clear example, as many iconic consumer brands emerged from that challenging period by addressing shifting consumer priorities with focus and creativity.

Four Representative Growth Drivers Shaping Consumer Demand

A static market offers little excitement for investors or entrepreneurs. Fortunately, the US consumer market is dynamic and continues to evolve. At iFlyVC, we focus on understanding the structural forces driving this evolution.

Here are four representative growth drivers we believe will define the next decade of consumer demand:

Generational Shifts: The Growing Power of Gen Z
Gen Z is a large, influential, and rapidly growing demographic with increasing purchasing power. Their preferences, values, and expectations are shaped by digital fluency and social awareness. Engaging with this generation requires a fundamentally different approach to product design, brand storytelling, and customer engagement.

The Rise of Ethnic Minorities: Expanding Demographic Influence
Asian American and Hispanic American populations are growing rapidly across many states, both demographically and economically. These groups are not only influencing their own consumption patterns but are also increasingly shaping mainstream consumer behavior across various categories, including food, entertainment, retail, and lifestyle.

Cross-Cultural Influence: From Niche to Mainstream
Cultural exchange continues to redefine consumer behavior. Hispanic and Asian cultures, once niche, are now driving mainstream trends. From Netflix hits like Squid Game and The Three-Body Problem, to food and beverage favorites such as matcha lattes, soup dumplings, and bubble tea, cross-cultural influence is evident everywhere. Even lifestyle brands like Labubu, a designer toy phenomenon, show how culturally inspired products are gaining broad American appeal.

Population Migration: Geographic Shifts in Demand
Over the past five years, millions of Americans have relocated from one state to another, resulting in hundreds of billions of dollars in shifting consumer spending. While e-commerce meets some of this demand, many services, such as dining, coffee, bubble tea, auto care, child care, and pet care, still require local, in-person delivery. Service-oriented brick-and-mortar businesses are well-positioned to benefit from these population trends.

Technology Enablement: The Other Half of the Equation

While these four structural drivers define where demand is going, technology enablement defines how businesses meet that demand.

Consider Uber. Often viewed as a technology company, Uber did not create the need for transportation provided by 3rd-party drivers (e.g., taxi hailing). Instead, it transformed an existing market by utilizing GPS, smartphone data, and algorithms to match supply and demand in real-time. The result was a scalable, cost-efficient solution that provided a significantly improved consumer experience.

This is the power of technology enablement: lowering structural costs while delivering better consumer value. Similar patterns are emerging across sectors as SaaS tools and tech infrastructure enhance end-to-end efficiency, from marketing to fulfillment.

Thanks to years of investment by SaaS providers, today’s entrepreneurs can build with far less capital than they could in the past. Twenty-five years ago, startups needed server engineers from day one. Now, with cloud platforms like AWS and a wide range of enterprise tools, founders can focus on understanding consumer behavior and delivering stronger customer engagement, without needing to be based in Silicon Valley.

The Founder Profile We Look For: Consumer Insightful, Tech Savvy, and Operationally Rigorous

In this environment of technological change and shifting consumer behavior, we look for founders who combine technical fluency, operational rigor, and deep consumer insight.

They do not need to write every line of code, but they must know how to select and integrate the right tools to drive productivity and improve margins. When necessary, they can still build the right tech-enabled tools for internal use. These founders run tight operations, listen to their customers, and continually refine their products based on consumer feedback and behavioral trends.

We see these characteristics in many of our portfolio companies such as Weee! And UMe Tea and in several well-known consumer brands that have gone public in recent years. Founders who bring this combination of strengths are the ones who consistently build enduring businesses.

Why We Remain Excited About US Consumer Innovation

In conclusion, we remain deeply excited about the US consumer innovation. The market is large, resilient, and backed by the world’s strongest consumer spending power, with a proven track record of durability even during economic downturns. Powerful drivers of change, from shifting demographics to evolving consumer preferences, continue to create new opportunities. Thanks to advances in technology infrastructure and SaaS tools, the cost of proving product market fit has dropped significantly, allowing companies to scale more efficiently while improving operational margins. We are seeing a new generation of tech-savvy, consumer-insightful founders who bring both passion and executional rigor. These entrepreneurs are building businesses with stronger unit economics and less dependence on external capital, making them better equipped to navigate capital market cycles. Combined with mature valuation benchmarks and clear exit pathways, whether through IPOs or strategic acquisitions, these factors make US consumer innovation one of the most compelling and enduring investment themes for the years ahead.

In our upcoming newsletters, we will share related topics such as how iFlyVC invests in a crowded and highly competitive venture market and selling SaaS vs building tech-enabled full-stack retail services.