STARTUPS DISPROPRTIONATELY CREATE APPS FOR THE YOUNG AND WELL-OFF... AND THEY'RE MISSING OUT ON PROFITS AND INNOVATION BY IGNORING OTHER GROUPS
If you're young and poor in America, odds are you use a smartphone. Back in 2010, Nielsen found that the majority of Americans 34 and under who made less than $35,000 owned smartphones. These smartphones, it turns out, are also the main way many users access the Internet. But despite the fact that tens of millions of American Android and iPhone owners are struggling to make ends meet--and that there are even more who are senior citizens, who live in rural areas, lack college or high school degrees, or are financially excluded--startups disproportionately target the young, suburban/urban, and middle-to-upper-class. Because of that, the technology world is missing out on a lot of innovation--and, even more importantly to the companies behind technology, missing out on potential profits.
Mobile is the fastest-growing segment of the tech market, but mobile startups tend to avoid making products aimed at 65+ users. Makowka notes a solid financial reason for this: Seniors have low smartphone ownership rates compared to other demographics. In addition, many newly launched apps are buggy and need their kinks worked out. There's a conception, right or wrong, that older users who aren't longtime tech geeks may become more frustrated with apps that aren't ready for prime time and move on quickly.
In a phone conversation, Shader said there are opportunities for companies to serve that market, and that services which appeal to the underbanked can serve other demographics like teenagers and people trying to avoid the use of conventional credit or debit cards because of account limits or other restrictions.
There are structural and economic factors at work here too. Writing over at the New York Daily News last year, Anjali Mullany (now of Fast Company) noted that there are very few black VCs, for instance--which can cause obstacles in the clubby world of early-stage investment. There's also the fact that, due to these aforementioned inclusion programs, there are often simply more opportunities to earn more money and scale the hierarchy at large tech firms rather than small startups.
This is a repost of an article that appeared on http://www.fastcompany.com on July 18, 2013