Episode 268
August 24, 2022

Web3 Provides a Mechanism for Loyalty

In this episode, we dive into some of the best moments of the last year and a half of Future Commerce as it pertains to Web3. Tune in now!

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this episode sponsored by

Giving Consumers Control Over Their Identity 

  • “Like everything else with new technology, the technology's awesome, but until you find creative people to use it in really interesting ways, it doesn't do a whole lot.” – Michael Janiak
  • Mags is someone who is thinking about the future of the startup ecosystem. She’s passionate about why and how people spend their time, money, and attention
  • “I don't think I'm a consumer brands investor. I don't think I'm a consumer tech investor. I'm a consumer needs investor..” – Magdalena Kala
  • The journey of NFTs is still early. In many ways, they’re very similar to DTC brands as they become easy to launch, and the early movers have made a lot of money
  • NFTs signal loyalty. They’re a way to assign value to what it means to be associated with a brand.
  • “Hype alone isn’t enough to build an enduring brand or community.” 
  • There has to be a non-monetary reason that people are engaged in community — for sneakerheads this is the love of the culture and nostalgia that endures well past childhood. Sneakerheads come from many different backgrounds and walks of life. A digital goods community around sneakers may be much more durable than any other PFP (Picture for Proof) project.
  • NFT Project creators are doxxing themselves now to increase optionality. There’s a lot more to gain by having a trusted reputation as a person than there is as a cartoon avatar.
  • “I think of the community from which sneakers actually emanate. How can I make it so that anybody can be rewarded even for their participation, for their love of and the passion of whatever that community represents?” – Brandon Martinez
  • “Everything we're doing online has an offline analog. We're reinventing a lot of our everyday normal commerce experiences, but we're doing it in a digital realm. And this is what Web3 unlocks for us; there's nothing new under the sun.” –Phillip

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Phillip: [00:00:08] Hello and welcome to Future Commerce, the podcast about the next generation of commerce. I'm Phillip. Today we are going to dive into some of the best moments of the last year and a half of Future Commerce as it pertains to Web3. Now, don't touch that dial. Before you go moving on thinking you've probably heard these interviews, you haven't. I guarantee that some of you have missed some of these conversations and mostly because it didn't all take place on the Future Commerce podcast. Some of these conversations were had on Infinite Shelf, and some of these were had in other channels that maybe you just missed. So today we're going to actually sit down, we're going to have four discrete conversations that we're pulling from the last 18 months of archives. And we're going to build a case as to why I believe that Web3 does actually provide a new sense of utility and purpose and identity on the Web. But it's not going to happen with Bored Apes or Doodles, Monkey pictures and avatars, the pseudonymous future, utility-driven tokens, crypto replacing everything, Bitcoin Maxi... None of those things I think are going to be the actual end state of what Web3 is. I do believe that Web3 provides brands a mechanism for loyalty and gives consumers control of their identity. And so I believe that building up this case, we found some great speakers from the last 18 months of Future Commerce to help make that case here on the show today. So without any further ado, our first conversation will be with Ingrid Milman Cordy, who's the venerable and honored host of our Infinite Shelf podcast. And she did an entire series this last year that was just getting up to speed on Web3. Then we'll move into a section where we're speaking with Magdalena Kala from our episode, "I'm a Consumer Needs and Wants Investor," and she's going to talk about how the FOMO era of Web3 led to some really interesting innovations, but ultimately, that's not going to be the basis of how we build in the future. Then we're going to speak with Brandon Martinez, who is the Founder of SNKRHUD, and he's going to tell us a little bit about the future of how communities are developing that help to innovate and bring capabilities to brands and how those communities are beginning to actually provide real, useful, and novel approaches to problem solving amongst themselves that are happening both in the technology space and without, so both IRL and online. And then lastly, we're going to sit down with Seyi Taylor from an episode just two weeks ago, and he's going to tell us what his thoughts are about Web3 and loyalty and identity and putting the customer in the driver's seat. It's going to be an awesome hour, with great action-packed content. Stick with us. Let's get into the show.

Ingrid Milman Cordy: [00:04:20] And so the way that blockchain was designed and this is a little bit of what I already know, but I think putting it into this lens is, is actually really eye-opening for me. Blockchain was designed entirely with the fundamental of security and decentralization. And what sort of security unlocks the ability to be decentralized. So it's really important to distinguish the difference between a server design and a blockchain design because one was connected, one was created for connection, and then, therefore, all of these things that were added on top of it were about sharing. And that's where you get into the world of drones, feeling like the real-world equivalent would be drones following you and you demonstrating who you are at all times to all people, even without your consent or knowledge. Does that make sense?

Michael Janiak: [00:05:21] Yeah. 100%.

Ingrid Milman Cordy: [00:05:23] Cool. So then that is fascinating because now we have to think about the phases in which people start moving toward blockchain versus shared servers. So who do you see or who already has been the first movers to use blockchains instead of servers?

Michael Janiak: [00:05:47] Yeah. This is where to me, as a creative person, as a designer, and as generally an artist, is where it gets like super, super cool. So the early, the early adopters, blockchain was basically invented with Bitcoin with cryptocurrency. So those two things are intricately tied together.

Ingrid Milman Cordy: [00:06:12] Right.

Michael Janiak: [00:06:12] And so the earliest adopters were the super early Bitcoin enthusiasts and the people who created the original concept of blockchain as a way to power crypto. And so definitely [00:06:27] the crypto people were are the earliest but where it really broke into, I'm not sure it's mainstream culture yet, but where it really broke open I think starting last year and then the floodgates are really starting to open toward the middle and end of this year is when artists started coming out with Nfts and started minting their art on the blockchain and selling it as Nfts. And so, in my opinion, it's like everything else with new technology, the technology's awesome, but until you find creative people to use it in really interesting ways, it doesn't do a whole lot. And so I think the second wave is definitely... And I mean artists like all sorts of artists, like visual artists, 3D artists, video artists, and musicians are now getting into Nfts. And by extension, there have been some just incredible communities built around Nfts and collecting nfts and lifting up artists and creatives [00:07:34] to the point now where you've got Adidas doing collaborations with the Bored Ape Yacht Club and the Metaverse, and you've got other brands trying to kind of dip their toe into Web3 and Nfts and things like that. Some big ones, like some really big brands doing that.

Ingrid Milman Cordy: [00:07:51] Yeah, Nike just acquired RTFKT.

Michael Janiak: [00:07:55] RTFKT (Artifact)

Ingrid Milman Cordy: [00:07:55] Yeah. I'm like, I don't even know I'm not cool enough to know if I say "Artifact" or "RTFKT."

Michael Janiak: [00:08:00] I honestly don't either. {laughter}

Ingrid Milman Cordy: [00:08:03] Let's go with both, right? We'll kind of cover our bases. But yeah, I mean, it's gotten even I think that there were some NFT plays by like Burger King and McDonald's.

Michael Janiak: [00:08:13] Burger King did them. Pepsi did. Mcdonald's did them. Adidas, I think there's a dropping today. There's a collab with a couple of different, The Bored Ape Yacht Club is probably one of the best-known NFT projects out there, but there are a few others, The Punks, CryptoPunks, and things like that. So yeah, I mean, [00:08:34] it's all starting to open up and I think it's going to be really, really interesting because when brands start to adopt is when their consumers start to adopt. So I think that it's going to be a very interesting couple of years to see what happens and what the public, generally speaking, thinks about all of this and how they'll engage. [00:08:54]

Phillip: [00:08:56] This next section that you're going to hear is a conversation that we had in West Palm Beach, Florida with our good friend Magdalena Kala, and she has had many roles over the last few years. She had a wonderful newsletter many, many years ago called ReTales when she was a consumer investor. And then she went on to do some really transformational work with Richard Branson and Virgin Voyages and launching that. She spent some time at Bain, and she has done some incredible work herself in raising a fund recently for investing in the future of the Web and Web3. She has considered herself to be dGen. She says she's been crypto-pilled. I think she has a pretty level head on what the future might look like. Let's go to that interview with Magdalena Kala.

Magdalena Kala: [00:10:39] I don't think I'm a consumer brands investor. I don't think I'm a consumer tech investor. I'm a consumer needs investor. And so where that kind of connects with Web3 is flexing is a need. Status signaling is a need. And I think actually the proper classification there is really collecting versus speculating. I think art collecting is actually flexing. And speculating in many ways, you can speculate on your collection. To me, it's you either keep it or you expect to flip it for profit and obviously shades of gray. But [00:11:18] where Web3 and NFTs, in particular, are going are actual utilities, actual benefits to the users that go beyond just one of those two things, collecting or speculating. I love... I think it was a couple of days ago that Andrea actually tweeted about what if a company like Eight Sleep dropped tokens for people based on how much sleep you get. So for every night that you actually got 8 hours of sleep, you get a token drop. And then thinking through like those things and how it incentivizes people to actually achieve the goals that they have, but they need a little extra push, a little bit more like a dopamine hit for doing that rather than because it's good for me. I love interactive applications. I love thinking through how brands can actually use some of these technologies for better rewards to their customers and to their community. We keep talking about communities all the time, community kind of build brands, etc., but most brands actually get built with the classic 80/20 rule. The 20% of your customers, fans, etc. are actually responsible for 80% of everything, of word of mouth, of excitement, of sales volume. And so how do you think about rewarding that 20% and giving them a share of the upside, especially as an early-stage brand? So I'm thinking through a lot of those real utilities from a brand standpoint and from the consumer standpoint. [00:12:40]

Brian: [00:12:40] You sort of differentiated two types of people there, which I found really interesting. And actually, I wrote an article on this. Sort of those that are investing and speculating in what you're putting out and those that are enjoying it for the sake of enjoyment and want to keep it. And it actually brings them personal delight and that's why they're buying in. And I think that's a huge point to make. Obviously, there's crossover. There are going to be people who buy things because they want to invest in it and they also enjoy it. And maybe some of the best investors do that. Like, that's their whole shtick. They find things that they really enjoy and they invest in them and maybe they'll flip them and maybe they'll consume them or keep them. But I think that that is part of the human experience. So I think you're dead on. And I think that when you say you're about consumer needs, what you really mean is that you're about human needs, right?

Phillip: [00:13:43] Well to live is to consume, right, Brian?

Brian: [00:13:46] Right.

Phillip: [00:13:47] Well, at least that's our default. Actually, and to your point, from the article that you wrote, sorry to interrupt. One of the points you made was that there's this symbiotic relationship that you need the speculative investor. You need someone who's looking to profit monetarily or someone to speculate to profit as in their social status and like the outward display of their group affiliation. They're going to profit in some way from whatever it is that they consume or buy. They're intrinsically linked, I think, was the point you made in that piece.

Brian: [00:14:27] Yeah, totally. Definitely. They're linked. And also, I think that what we missed is when we see wild purchasing behaviors is that collectors actually are the ones that set the stage. Without them, we lose, we get ungrounded and we lose track of what's real and what people actually care about. And so we have to know what people care about in order to speculate. And so, yes, they are intrinsically linked.

Phillip: [00:16:27] Back in June, there was a big conference that happened called NFT NYC. People from all over the ecosystem came out to attend, but it followed just weeks after a crypto crash. There was a crypto winter, if you will, in the spring, and wouldn't you know, lots of people still came to the NFT NYC event. And in fact, there were some star-studded after parties that took place at that event and it seemed like actually, spirits were quite high. When we sat down with Brandon Martinez, who's the Founder of SNKRHUD, he told us that what he witnessed was that some of the resiliency and some of the communities are still very active and people have fairly resilient attitudes when it comes to the future of crypto. He talks a little bit about how his thinking has changed around how communities provide value to each other, how businesses are being built right now in this downturn in the market, and how people are actually getting to work. And he talks a little bit about how maybe we all are going to make it after all. Let's take a listen.

Brandon Martinez: [00:17:49]  [00:17:49]...buys in very immaculate condition, that [00:17:54] is a super, super, super rare sneaker. And so, again, it's sort of like the value of what you're saying, the collector versus investor. There is the... I have it because I love it and it's in my size. Everything I have is in my size. I don't buy anything just for the sake of buying it. It's also I can actually wear it. But there is inherent value if you wait it out long enough that that will be valuable to somebody down the line.

Phillip: [00:18:20] I take umbrage at the fact that you said that you have a big foot. We have the exact same size foot. And I think it's a very average size.

Brandon Martinez: [00:18:28] That's what makes it... Phillip, my favorite pairs are my pairs from Japan. I lived in Japan as a kid, so I'm a huge Japanaphile. That makes it that much rarer because 11 1/2 over there is an absolute giant. Like 12, get out of here. 13, definitely not. So that's how I look at it.

Phillip: [00:18:51] Oh, I see. By Japanese standards, it's a large.

Brandon Martinez: [00:18:51] By Japanese standards, it's a large foot.

Phillip: [00:18:55] I can live with that.

Brian: [00:18:56] The thing that I think was very interesting and we were talking about this a little bit pre-show, Brandon, is we do have all these investors that have mixed into these markets. Like they're in it because there is opportunity.

Phillip: [00:19:08] In some ways, the market wouldn't exist without them.

Brian: [00:19:10] Correct. Exactly. And so while collectors sort of set the tone and set the pace, investors have come in and sort of gone after both the NFT market and the sneaker market, which is like the two markets that you're in. And I was lamenting digital assets and sneakers, they're a thing. They're a thing that's here to stay. Digital assets are going to be a part of our future. Now, how those digital assets are created and so on is still, that's why the hype is here because we've found this incredible way, NFTs and using the blockchain to create them... What I was lamenting is the hype cycle if it got so high and people hit it so hard that this crash that we just had, and it was inevitable and you just minted like right in the middle of all of this.

Phillip: [00:20:11] What timing.

Brian: [00:20:11] Yeah. And so I love to hear your perspective on being invested in something that is a part of our future. But you're in the middle of that head to the trough of disillusionment.

Phillip: [00:20:27] Brian's shouting, he's so excited. He needs to know.

Brian: [00:20:31] So, yeah, no, I would love to just hear you're like feeling and your take as we kind of head... Are we headed further down? Or are we at the bottom right now?

Brandon Martinez: [00:20:42] For sure. So mint day for us was almost two months ago. Now at this point, the beginning I think of when we all accepted a crash was upon us and we grew, I think by like 300 people in our Discord that day alone. Just because people were mad. They were mad about NFTs, they were mad about Web3, they were mad at Dapper, they were mad at Flow, their amount of Top Shot... You name it, they were upset. But it did spark a really good conversation. A lot of what we're talking about now, like what is the value? What is it that we're really trying to do? Just a lot of interesting things that we still continue to talk about as well. So I think a couple of things come to mind. One is we're talking about pre-show, sort of I was saying how much I love newsletters, you guys included. So one of my favorites is called The Milk Road and it's really just an everyday understanding about Web3 for people. And so they talked about a couple of weeks ago this sort of like three phases of the bear market crypto winter that we're now definitely in. And so phase one was sort of that like the rumblings, you know, you're hearing some things you're starting to feel you get a little, little pit in your stomach, a little uneasiness, a little queasiness thinking about this, the fun might be coming to an end soon. Phase two is, oh, there are some ramifications from this. This is definitely happening. Luna was definitely the tipping point of that for sure. Now Three Arrows and some other fallouts are beginning to happen from there. And I think we're about squarely in the middle of phase two. We've still got more to come in phase two. Phase three is the bloodshed. That is the absolute like a lot of companies are going to go away. A lot of founders are going to go back to day jobs, maybe not forever, but definitely the end of the good times. Now that said, I think that what I'm not maybe not excited for, but I think that [00:22:46] the good point of all of this is that there are builders, there are people that are true entrepreneurs that came out of the housing market crash in 2008, Airbnb and several other companies as well, where we'll build things that also have value. Part of what hype is is that it's taking advantage of people having stimulus money and other just money to spend is really what contributes to the hype. So now it's going to be if you're building, you really have to have to build value and something that also generates revenue and monetizes on its own without that hype, basically. So I think that's what we're definitely focused on and what we're trying to do right now, not just selling people things, but really offering value before you try and sell them something and building community from that as well. Because the strongest communities are the ones that proselytize you to other people because they're shouting about the value that you offer to them. [00:23:44]

Phillip: [00:23:45] Finally today, we get into this interview. This is one of my favorite conversations with one of my favorite people that we've had in a really long time. Not to pick favorites, but Seyi Taylor is one of those people who I consider to be prolific. Seyi has an amazing voice on Twitter, really runs the gamut, can do everything from speak Web3 and crypto talk, and is certainly a leader in those communities. Has been a founder at times and a consultant at others. Is well known as being a leader in the tech and Fintech space, but also can quote Hillsong lyrics. A man of many talents. One thing that I love about Seyi is his incredibly resilient attitude with how really the consumer needs on ramps and the consumer has to see the utility in buying into the world of crypto. And so our conversation with Seyi a couple of weeks ago on the podcast was really discussing the fact that everything we're doing online has an offline analog. We're kind of reinventing a lot of our everyday normal commerce experiences, but we're doing it in a digital realm. And this is actually what Web3 unlocks for us is that really there's nothing new under the sun. We're just bringing more of that capability to the digital space. Let's take a listen in this last segment, our interview with Seyi Taylor, the Founder of Shopthru.

Phillip: [00:25:20] Well, there's nothing new under the sun.

Seyi Taylor: [00:25:21] There's really nothing new under the sun. And then it just turns out also that when stripped away a little more, when you think about it a little more, the first version of it kind of feels familiar before it starts to feel really new. So if you think about how we write emails now, so emails started essentially and by name, you know, it was like e-mail. It's like this is mail, but it's electronic. But it's mail. And people would write like Dear X because it starts like this. It's signatures and sign-offs. Etiquette around it, and paragraphs and in many ways, email works that way still today, but you have a lot of like conventions now that people accept as the one line email also works between friends. Email as a notification system with apps like lets you know, essentially. Email as like a folder for receipts. Email addresses as IDs. Email as a way to essentially log into applications with like one-time passwords. All right. If you'd gone back to like initially and be like, "Oh, well, email is meant to do all of that stuff." Like crazy. It's like, okay, well, first of all, let's go back. Like sending stuff. The fundamental thing about blockchain is that. The reason I use email is that I think the blockchain feels most like email. Of all the innovations that you and I are talking about, it truly feels the most like email, which is you have something that is practically permissionless, which is if I know your email address, I can send you one, and it will be in your inbox. You can't really reject email. You can put it in spam, but you can't like exactly block email. It turns out that even though it's an open system, we almost all use Google emails as we use like a few emails, which because I think that essentially the client became super important, like the way you approach that. And I think that's why I think that wallets are actually very interesting because the way we enter email works, it's like very different. We think it's super powerful and it's going to form the center of this. But if you think about the blockchain, essentially it's like this huge, massive database where every item is like when you think of Nfts is every single NFT is unique. The images might not be unique, but the contract address, ID combination, whatever, that's unique. There are no two of the same. And so it means that if I say I want to do something with OX ABCD token 2 from like Brian's contract and I want to do something else with like Phillip's contract is that I will always be able to identify those two and almost impossible to spoof it. And so [00:28:20] that token essentially becomes an almost universally verifiable identity. And then that's why we say tokens enable customers to raise their hands and the brands to say, "I know who you are," without having stored your name on a database, without you having to give data. So it's just like "I have this token," and the brand says, "Yeah, sure, for sure. I know who you are." And so, therefore, you have the mark, the card, whatever you're in. [00:28:50]

Brian: [00:29:53] The idea of comparing it to email is one that I haven't heard before. I think it's super smart, especially given where we're at in the cycle with Web3 at the moment. So we just came through this insane hype cycle where we're now down in the trough of disillusionment.

Phillip: [00:30:12] It depends on who you ask, but yeah.

Seyi Taylor: [00:30:13] {laughter}

Brian: [00:30:13] That's true. And you've got people who are illusioned as well, I guess. {laughter}

Phillip: [00:30:24] That's true.

Brian: [00:30:25] And I think... We were talking in the pre-show about where this is headed. You just said it. There are all kinds of use cases for tokens. I think what's interesting though is I do see the word token sticking around in our vernacular for a long time, but we're not going to think about it like this Web3 hype thing that we think about it as right now. It's just going to become part of like, "Oh yeah, we use tokens to do that." It's not going to be a hype thing. It's going to be how we get stuff done.

Phillip: [00:31:00] Let me actually layer on, Brian, because I think you're hitting on something that I was like side chatting you on just now. It's that I don't know that people buy protocols. POP3 or SMTP are like... It's the underpinnings that made email work but people buy Exchange and Gmail, and I think [00:31:21] when we talk about tokens, we're talking about a protocol and wallets like in the chain, like we're talking about protocols. But at the end of the day, people don't buy protocols, they buy products. And so the productization is the thing that endures, that enables the protocol, the success of which wouldn't exist without the protocol. But we have to have things for people to buy and at the end of the day. Shopthru [00:31:46] could be one of those things. When you're trying to solve loyalty and solve problems... Yeah, fingers crossed. And Shopthru is not the only one trying to solve it. We certainly have I have competing investments. You know, I'm invested in Taco. I'm an advisor to Toki. Theoretically, they all can succeed if productization of loyalty or identity becomes something that is what a consumer really wants. Seyi, what do you think?

Seyi Taylor: [00:32:14] I think that you're correct on that. No, because people don't buy protocols. I don't think anyone knows what HTTP is. And that's I think that's fine. I don't want people to know what HTTP is. It's like one of the things that happens in this space is, and this happens every time it's like something really early is people talk about, you know, they get very technical and technical things are, what's the word, differentiators and people talk about L1s and L2s. And the sense obviously in the long term is no one will know what L layer they're on. And no one will even know. In fact there probably will be this am I on chain or am I not on chain? And people might not care, to be honest. So I agree with that. It's going to be definitely like, how does it work and in what ways does it work?

Phillip: [00:33:18] Maybe let's shift gears a little bit because we were also talking in the pre-show. I think this comes back to a protocol versus product. This past month, my kids have gotten really into Pokemon Go and this is over the summer. It wasn't instigated by kids playing Pokemon at middle school. Like this just happens to be a thing that has been around for a long time now. Six years later, we talked about it on the podcast six years ago. Brian. Now they get to listen to my hot takes about Pokemon Go from six years ago. When we talk about whether AR is a thing or will be a consumer desire, I think that that's a good example of what we're talking about here, which is will we buy AR or do we get really engrossed in examples of AR that's layered over top of a reality that we all cohabitate and like, so Pokemon Go is some sort of AR or some experience where they're layering a game on top of a reality. People buy Pokemon, they don't buy AR. And that's I think what it comes back down to is what are some other ways that we're starting to see this take place in the world is this new manifestations of browsers or us understanding that like Chrome profiles are our new identities. How are these things going to slowly kind of evolve over time?

Seyi Taylor: [00:34:38] Yeah, I love that. I love that question. I think one of the things, so just to touch on AR before we move to profiles is we've been using out for a while Snapchat filters. But like the other thing is if you use Google Maps, which I do all the time because I have a terrible sense of direction, you have like the same way you like it's basically put up your phone and it reads the street and it points over there. And it's like the big arrow that says, this is where you need to go. That's AR, and I use that like literally every week. And so we see the technology, just like you said, either improving something that we've done in the past in the case of like Google Maps, creating a new type of like scavenger hunt with like Pokémon Go, creating a new filter from like the old classic Instagram filters to like these new filters, like put things on your face or whatever it is, that's all AR. And we see that now with I think we're definitely start seeing that with tokens where people are going to present tokens as a symbol of identity or they're going to use what's called DIDs, Decentralized identifiers, and essentially like also present those. I think that Chrome also does that. I think we're seeing that at least for a lot of the stuff that's done on desktop. And it's like that Chrome plugin that's in your browser that essentially is like you have given permission to do the work of like following you around. I think that that also will show up in a bunch of other places. I have like my metamask and then like a bunch of other plug ins I use when I used to do walkthroughs, I basically just records my screen. Then you have Loom and all that stuff. So that's definitely going to be a thing. And yeah, the real thing that you actually if we take that idea and go underneath what's actually driving all of this? It's that we've spent the last phase of the Internet in this situation where people really didn't care as to where the data was. In some ways people don't really care. But there's been enough of a narrative shift around "my data, my data" that people are not interested in some version of, like "Give me the opportunity to offer permission," or at least the feeling of control, which is like very different than actual control, but it's like, "Give me something that makes me feel like I have some control over what's actually going on here." And I think that these are some of the, what's the word, manifestations of that.

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