The 1099 Economy is Making us Psyched about the Tattoo Industry

We’ve thought a lot about the impacts an increasingly independent workforce will have on how we behave and spend.

One theme we’ve begun to dig into is increased self expression made possible by self employment. While unions, the industrial revolution and 20th century work environments drove us towards a uniform disposition— an independent, contracted, entrepreneurial economy is able to express itself more creatively.

We think the tattoo industry has started to and will continue to benefit because of this.

*Before I get started: Zack Schildhorn, from Lux Capital, was the one who got me interested in the Tattoo Industry, so I have to thank him for that. He still almost certainly has a better grasp on it than I do.

Some Crazy Facts:

(1) In the US, you are more likely to have a tattoo than an iPhone.

(1) According to Yelp, there are >50,000 tattoo shops in the US

(2) According to Yelp and various other associations, there are >500,000 shops globally

(3) $3.4B was spent on Tattoos in 2014 in the US

(4) Hugely global market, potentially >$50 billion global spend (average revenue/shop multiplied by shops publicly listed)

(5) >84% of shops independently owned

An Intro to the Tattoo Industry

Tattoos were introduced to the western world in the 18th century by explorer, James Cook upon his return from trips to Tahiti and New Zealand. He and his fellow explorers, Sir Joseph Banks and artist Sydney Parkinson came back with tattoos of their own.

Cook commented that tattoos were marks of one’s humor or disposition. And while they are, they also represent much more both historically and to those who have them. They serve as an extension of self, a static strong-hold of identity against a rapidly changing world, and as markers of time.

Tattoos are a form of body modification made by inserting indelible ink into the dermis layer of the skin to change the pigment. They are a form of body art that’s crossed both centuries and cultures. They do mark one’s humor or disposition, but they are also part of an enormous business and of a movement.

Why Do We Have a Negative Sentiment Against Tattoos?

Tattoos, in many ways, have a dark past. They’ve been used to mark individuals as outcast, or as slaves. They’ve been employed by gangs to mark membership and even in today’s world those who have tattoos are more likely to be associated with risk-taking behaviors including smoking, having a greater number of sexual partners and with suffering from depression.

People have been forcibly tattoo’d in Nazi concentration camps, tattoos have been commonly found in freak shows and in the Zhou dynasty face tattoos were employed on people for punishment of crimes.

In ancient Roman times tattoos were employed on a soldiers’ hands to make desertion difficult and the Second Council of Necaea banned all tattoo markings as a pagan practice in 787 AD.

But while parts of history have perverted our perception, tattoos also have a beautiful past. They’ve been tellers of history, they’ve represented belonging and have been designed to remember lost loved ones. Since 4th millenium BC they’ve existed in mostly peaceful context.

Tattoos Becoming Popular in the United States

The first recorded professional tattoo artist in the United States was a German man named Martin Hildebrandt. He helped make them popular during the Civil War when he traveled to tattoo both confederate and Union soldiers. But while receiving increasing acceptance through World War 1, tattoos fell out of favor upon the advent of electronic tattooing. The new electronic tattooing machines made getting a tattoo less expensive and more accessible, thus eliminating its function as a status symbol.

But starting in the 1970's Tattoos started to find themselves back in mainstream culture. Publications and research institutions have started to pay attention.

Although tattoos have been around for millennia, they’re more popular now than ever. In 1960, there were approximately 500 professional tattoo artists operating in the United States. By 1995, that number had risen to over 10,000. Nearly 20 years later, demand continues to surge, and by the latest estimates, roughly 20 percent of Americans have a tattoo. What’s more, 40 percent of the people in that group are Millennials, which some academics argue isn’t a coincidence.

-The Atlantic

And the reasons for getting tattoos are becoming more intimate. While “flash tattoos” were previously in vogue (pre-designed tattoos made to popular taste) an increasingly high percentage of tattoos are being custom designed — they are becoming uniquely relevant.

Tattoos previously marked identity or ownership, today they mark self expression and serve as permanent affirmation to core values.

In 1998, Velliquette and colleagues conducted an interview-based study that found people use tattoos as a way to cement aspects of their current selves. “We were hoping to look at the postmodern identity, and really what we found is that we were in this modern era where people did know who they were,” she said. “They had a sense of their core self.” Eight years later, the team revisited the idea. The second study, like the first, found that people used tattoos as a means to express their past and present selves. But the people interviewed in the second group also seemed to need proof that their identities existed at all. They relied on tattoos as a way to establish some understanding of who they actually were.

The Internet age has helped fuel the proliferation of tattoos.

“The result is a loss of personal anchors needed for identity. We found that tattoos provide this anchor. Their popularity reflects a need for stability, predictability, permanence.”

-University of Arkansas

In a poll done by Fox News in 2014, 20% of voters had tattoos. That was up from just 13% in 2007 — a 53% increase in 7 years!

Not only do I believe more people are getting tattoos, but I also believe the consumer is now a wealthier one. Those who get one tattoo are likely to get more (customer loyalty) and spend hundreds to thousands of dollars per session. 18% of people who have tattoos, have 6 or more. Talk about LTV!

Where Should We Be Looking For Investment Opportunity?

As mentioned, Zack Schildhorn got me started looking at the tattoo industry. He’s been paying attention to hardcore technology related to tattoo removal & temporary tattooing. Both are likely great spaces that I know very little about.

I’ve been more focused on software based solutions and some problems I’ve found are as follows:

(1) Tattoo artists spend a lot of time sketching tattoos for people who don’t have the money to pay. There’s no current way to put money in escrow to make sure a potential client is a warm lead.

(2) Booking software in general is lacking.

(3) Tattoo discovery totally sucks. It’s hard to discover artists as Yelp mostly reviews at the “shop-level” as opposed to the “artist-level.” (I could see this being a problem in other industries as well).

(4) There are huge “no-show” rates

(5) Most tattoo shop activities are tracked via paper and pen

(6) While formerly an artisinal industry, there will be more demand for safety and trust — neither Yelp nor Pinterest currently offers that

For more on the history of tattoos check out this post.

[5'9", ~170 lbs, male, New York, NY]. I blog about investing. And usually about things I’ve learned the hard way. Opinions are my own, not CoVenture’s

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