Welcome to the Block & Mortar newsletter! Every week, I bring you the top stories and my analysis on where business meets web3: blockchain, cryptocurrencies, NFTs, and metaverse. Brought to you by Q McCallum.
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I usually mention podcasts at the last segment, as a way to close out a newsletter. This one stood out so I’ve put it front and center:
“The origins of Odyssey: Adam Brotman interview on Empire”
Thanks to my years of work in the ML/AI space, I’ve become rather adept at spotting Corporate FOMO™ in action. The usual tip-off is when I see a company roll out a lot of The Fancy New Thing with no clear purpose behind it, followed by the company desperately spray-painting We’re Doing The Fancy New Thing over their services and products.
So when I first read about Odyssey (newsletter #22), the web3 evolution of the Starbucks loyalty program, it struck me as the exact opposite of Corporate FOMO™. Odyssey’s design is thoughtful, deliberate, and strategic – everything from choosing a (relatively) environmentally-friendly blockchain, to shielding customers from the underlying technology, to really injecting the Starbucks brand into the product. It hit me that Odyssey wasn’t so much a blockchain project, but a Starbucks project.
Odyssey started with Adam Brotman, who had created the original Starbucks Rewards program. This interview with Brotman on the Empire podcast traces his journey from his original efforts on Rewards, to a web3 startup, then back to Starbucks to build on the power of NFTs.
(If you’re short on time: The full episode runs about an hour, but the interview with Brotman is the first 25 minutes. This is definitely short enough to fit into a quick walk or bike ride.)
No spoilers here. I’ll just highlight that while Brotman came to this adventure with plenty of executive-level experience in marketing and loyalty, he was new to web3. He took the time to research blockchain and NFTs, seeing them through the lens of his professional background, in order to surface use cases for this new technology. And that’s how he came to understand the power of NFTs: Loyalty – Community – Storytelling – Access pass.
If you’re curious about Brotman’s story, I’d encourage you to take a listen. There are some great thoughts in there.
If you’re sorting out how web3 fits into your business model, listen twice. Follow Brotman’s path of studying up on web3 – perhaps your favorite weekly newsletter is the place to start? – and develop some use cases.
And if you plan to integrate NFTs into your loyalty program, do yourself a favor and put this on repeat. Play it for your team. Make “Loyalty – Community – Storytelling – Access pass” your mantra.
You can thank me later.
“This is my membership card. There are many like it. But this one is mine.”
Related to the previous segment, web3 infrastructure company Moonpay – you may remember them from the Universal Studios scavenger hunt, or their work on crypto payment rails – is rolling out a new NFT-based loyalty program:
Dubbed the “Web3 Passport,” the [NFT] will grant its owner access to exclusive events, the firm is set to announce at Art Basel in Miami. The benefits of this program would be related to ticketing for fashion, art, sports, music and entertainment, and rolled out early next year.
The interesting thing about Passport is that it implements soulbound tokens, which are NFTs that cannot be transferred. As described in newsletter #5:
NFTs mostly have a reputation as assets to be traded for profit. Maybe you grab something for a quick flip opportunity, or you try a slower, buy-and-hold approach.
What does it mean for a token to instead be treated as an indicator of achievement or status, or something else that is meant to be tied to an entity? Something that can’t be traded? Using crypto tokens for certificates is not new but a recent paper, “Decentralized Society: Finding Web3’s Soul,” takes a deeper look into soulbound tokens (SBTs) and their use in decentralized society (DeSoc).
Passport’s use of SBTs raises some interesting questions around the idea of assignment versus ownership. SBTs make sense for credentials that are assigned, because they are a proxy for an individual. Think ID cards or diplomas. Compare that to assets, which are acquired through trade or development. A person who purchases or creates artwork would likely want the option to sell it down the road. (And they may acquire the asset with the express purpose of selling it.)
Membership in a loyalty program? That sits somewhere in-between. That membership card identifies someone as being part of a group, yes. It also represents status and perks that the person has developed through, say, flying some number of miles or buying a lot of chicken sandwiches.
John Smith is a specific individual. An ID card with that name on it had best be in the hands of John Smith.
Super Mega Platinum Member Status is an attribute. And a fungible one, at that.
Digital ownership is a pillar of web3. By bundling the record of the individual with the attribute, NFT-based loyalty programs will likely encounter frictions if they forbid the account-holder from expressing that ownership through sale. As I mentioned in newsletter #23:
The idea of customers selling loyalty status is an uncomfortable question for many companies, because they are accustomed to holding all of the proverbial cards. It will be tempting to simply declare status as non-transferable. But that runs contrary to the idea of digital ownership that is core to web3.
[…]
Blockchain technology allows marketplaces to spring up anywhere, and for anything. If an item is on-chain it’s best to assume that people will want to trade it. The best companies will account for this when designing their web3-based loyalty programs, and they’ll develop rules that allow for transfer of status while keeping things fair for everyone involved. They’ll also develop loyalty perks that people will be less eager to sell. In other words, these companies skip over the Napster moment of suing fans, and go straight to the iTunes era of providing an official framework for what customers want.
Consider, interestingly enough, the Bored Ape Yacht Club (BAYC) collection. These NFTs are items that may be bought and sold, making them tradable assets. Buying a BAYC NFT also grants you membership and perks. Membership? You become part of the BAYC community – the bragging rights of getting to say that you have something in common with Snoop Dogg and Eminem. Perks? You get access to events and other NFT projects which require proof of BAYC ownership. Say what you will about “those silly ape JPEGs,” but buying thatNFT grants you a lot more than just an image.
(Hopefully you never join the other community, People Whose BAYC NFTs Have Been Stolen. Membership there is higher than anyone would like.)
Could you argue that owning a BAYC NFT counts as “membership in a loyalty program?” That depends. If your definition of a loyalty program requires a connection to a specific business entity, probably not. But if you’re still chanting “Loyalty – Community – Storytelling – Access pass” from the previous segment then … You see where this is going.
As far as I know, Moonpay’s Passport is the first loyalty program to use soulbound NFTs. I’ll keep an eye on it to see how that implementation detail plays out.
“Stacked”
“Use a hardware wallet to manage your crypto” is the kind of phrase that is simultaneously good advice and easier said than done. Hardware wallets aren’t always the most intuitive tools to use. People new to crypto therefore skip that step, leaving themselves open to a variety of scams. (Please see the aforementioned People Whose BAYC NFTs Have Been Stolen.)
Ledger, the company behind the eponymous hardware wallet, is releasing a new device that should simplify crypto safety:
The Ledger Stax sports a black-and-white E-ink display, similar to that of Amazon’s Kindle e-readers. It also includes magnets, so that multiple devices can be stacked on top of each other, like a pile of books or cash — hence the name Stax. Users can connect it to their laptop through a USB cable or their phone via Bluetooth.
Based on the videos I’ve seen, the Stax looks sort of like a spiffed-up touchscreen iPod. I’m sure that’s sheer coincidence, even though the Stax was designed by Tony Fadell. You know, the guy who designed the iPod.
I plan to revisit this story in a few months, after the Stax has been released into the wild. By that point we’ll also see whether the Ledger crew has received anything on legal letterhead from Cupertino. (Or, in a more positive twist, maybe Apple will just buy Ledger outright?)
“How do you do, fellow kids?”
In another example of The Headline Is The Story, Business Insider recently published a piece entitled: “The EU hosted a 24-hour party in its $400,000 metaverse to appeal to young people, but pretty much no one showed up.”
I’ll get to that shortly. But first I’d like to address all the aspiring writers out there. Please recognize that this is how you write a headline. This is not clickbait. It didn’t get my attention through the cheap ploy of leaving out a key piece of information only to disappoint me later. No, no, no. This headline put the key information right there, as though to say: “Come on in! There’s even more to see.” And there was more. So much more.
(Also, can we take a moment to appreciate that EUR/USD exchange rate? When $400k is €387, it’s time to travel. Just sayin’.)
Insider’s source piece, a Devex article by Vince Chadwick, offered additional detail:
According to the spokesperson, the promotional post’s purpose is “to intrigue [people aged 18-35], primarily on TikTok and Instagram, and to encourage them to engage with the broader substance of the campaign, which will increase awareness of what the EU does on the world stage among an audience that is not typically exposed to such information.”
Maybe I did too many word problems in math class? I feel like the answer was right there in the question. If you already know that your target audience hangs out on TikTok and Instagram you could … y’know … connect with them on TikTok and Instagram? Seems cheaper than building out a big metaverse gathering.
It gets worse:
Once logged on, users adopt an avatar resembling a multicolored paperclip
I’m sorry to stop in mid-quote, but … What?
and roam around a surreal tropical island. Stories about EU development cooperation are playing on video screens in various locations. There is a 24-hour beach party pumping four-on-the-floor beats while presumably computer-generated figures dance on elevated platforms. A giant red statue prepares to hurl what looks like a coronavirus molecule.
Did I pick up a copy of The Onion by mistake?
Dolphins jump through the air. Drones hover, carrying multiple screens flashing words such as “education” and “public health.” There is an open book art installation on a liquid floor as a “symbol of the human journey towards knowledge”. You can walk on water.
I have … so many questions. But I can’t get to them because I’m trying to wrap my head around the EU’s response to Chadwick’s piece:
The EU’s executive disputed that claim Friday, telling Devex that around 300 visitors attended the event, which featured avatars dancing to house music. The Commission said it had confirmed the numbers with the site’s developers Journee.
Dear readers: I’m just a guy who likes emerging tech. I spend my evenings and weekends telling people “that’s how web3 works” to balance out my day job of telling people “that’s not how AI works.” I hardly feel qualified to explain to a governmental body how to manage their comms strategy.
But I do know math. And how to price out a technology spend. So I can see that 300 participants comes to €1.3k per person. Much better than five participants at a whopping €77k each, but … still … not very good.
The wrap-up
This was an issue of Block & Mortar.
Who’s behind Block & Mortar? I'm Q McCallum. I've spent the past two decades in the emerging-tech space. And I'm very interested in web3 use cases.
Credit where it's due. Big thanks to Shane Glynn for reviewing early drafts. Any mistakes that remain are mine.
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