Author: Adam Levy

Listen on: Spotify | Apple Podcast | Google Podcast

Background

Mint Season 2 episode 12 welcomes founder & Builder of Shenanigan, Victor Ginelli. Shenanigan or SHE for short, is a social token issuance platform for athletes.

In this episode, we talk about:

• 2:30 – Getting Into Crypto
• 6:02 – Building a Career Beyond Sports
• 10:26 – Shenanigan DAO
• 12:07 – Working for an Algorithm
• 16:42 – Earning Through Participation 
• 20:15 – Social Tokenomics
• 26:16 – Post Mortem Social Tokens – Retroactive Earning
• 32:17 – Integrating Token Models
• 35:40 – Outro – Closing Out

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Thank you to Season 2’s NFT sponsors!

1. Coinvise – https://coinvise.co/

2. POAP – https://poap.xyz/

3. Socialstack – https://socialstack.co/

4. Celo – https://celo.org/

5. PrimeDAO – https://www.prime.xyz/

Interested in becoming an NFT sponsor? Get in touch here!

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Let’s start with: who are you? What are you building?

I’m Victor, young kid warrior on the coding realms, and I work and found and summoned shenanigan, which is a DAO for athletes. We believe that the internet is horribly set up for athletes. And we believe web 2.0 has kind of made it worse. So we have a great NFT social token DAO model. Where we set these athletes up, that is slowly in development. 

How long have you been working on SHE? 

It’s been about a year and a half now. My personal, you know, it gets a little muddled. Like I kind of picked it up, put it down. I always wanted to help people incentivize themselves over the internet. Clicks, likes views, just don’t quite do it for me. I want to touch what they actually achieve. And I think really that’s what people like gravitate to. Yeah, you can check us out and she.energy, that’s our website. Join our discord. The app will be launching in three to five months. We just had this huge decentralized restructuring. We started decentralized, but with the space of web 3.0 tech that’s come out in the last year, it’s just going to be revolutionizing how data is stored. And how data is retrieved from the blockchain. And we want to be caught up, so we did this restructuring. And then from there, it’s onto what we want to talk about today. 

What were you doing before crypto and how did you kind of make your way into it?

 Yeah. Let’s start from a little bit back into the college years. I was an athlete. I was a competitive diver. You see me here. Like 220, 6 foot, no one ever believes that I was a diver. First thoughts, like, you’re a rugby player right? I did flips, jumped off high shit and landed in water. And so from there I graduated with a physics computer science degree. And basically taught for two years while I developed, you know, apps on the side. Got a job at a small startup called rain. Five months later, the pandemic hit pretty much worked on the blockchain full-time right after that, I said, you know what, I’m gonna be at home all day, I might as well get into crypto full-time as a developer. I had known about it probably since 2017. I bought my first ETH at like $80 and then a big dip before it went to 200 and then back down and now, yeah. 

So you got started by buying some Ethereum, but how did you get so obsessed with the creator side of things? Because Shenanigans is reimagining monetization for a specific class of creators, or we can categorize them as creators, but they’re athletes. I get the athlete portion, but how did you get into the social token and NFT route?

You know, it’s a cliche that, I’m in it for the tech. I’ve always been in it for the tech. I heard about DAOs really early on. You know, I was a developer, so most of the time I spent just reading medium articles and not really talking to people at the beginning. And I was like, this is going to change everything, dude. Like the structures you can build for society is just huge. So that got me really interested in what does a company look like on the blockchain? And then that got me interested in, okay, well what does the code look like? What can I build to utilize these new companies on the blockchain? And I kind of didn’t have anything. I didn’t know what to build. And I was just like new developer budding three years ago. Not new, but not seasoned. Woke up one morning, didn’t want to get out of bed. And it was like, knowing if someone else had money on me doing this, if I had investors it would get me out of bed. I didn’t do it. But if I had money on myself, I would not. I would just stay in bed all day, but I realized that’s a great incentivization model. It’s like, well, if you have fans and you have someone else’s money on you or invested in you, you’re going to want to do a lot more. And that’s actually what athletes do right now. So it’s just a way to get me out of bed originally. 

Interesting. So what’s your motivation as an individual? 

Well, as an athlete, I’ve experienced what it’s like trying to make it past 18. You know, everyone does a sport, almost everyone for 18 years of their life and they work almost a full-time job. And then they have nothing to show for it. It’s you know, great mental fortitude, great job, now you’re gonna go pack boxes at home Depot. Or you’re gonna work at a desk job. So my motivation is like, I’ve been there. I’ve done that. And I want to incentivize people to make it pass where I did, which was college. Monetize yourself and improve at the same time. It was probably the main thing. 

Adam: So the argument here is, the reality is like people go from high school into college sports, whether it’s D1 D2, and they’re able to build really good university careers for them. And like the percentage of transfers from high school to college is already slim. And then from college to like the professional leagues is even slimmer. And when you’re an athlete in college, like you said, it’s a full-time job. And you’re taking classes you have to pass and do your shit. But like you’re betting on yourself and betting on you kind of going to that next level beyond college. At least a lot of sports people are right. A lot of athletes are.

So you’re coming from the point of view, like, whether you’re a college athlete, whether you’re a collegiate D1 or a D2, or playing in the major leagues, then this social token route is for you. And the reason is, why? 

Well, the reason is like, as an athlete, you don’t start making money until you get sponsored. There’s no structure for people to invest early in on you. Your parents paid for private practice, especially as a college athlete, especially as you have to pay for school, you know, unless you are signed in to a D one as a scholarship, which you know is great, but you’re essentially as a slave to a scholarship. And you don’t own that money, like you get injured, it’s over. And really what social tokens allow for is you to well social tokens and shenanigan platform, I should say, because I think there’s a lot more to this for athletes, but social tokens are a part of it, is make your own athletic journey on the blockchain with results and, structure it however you want. And however, your life pans out. If you have a community that supports you, it doesn’t matter if you’re injured and recovering. It doesn’t matter if you change sports. It doesn’t matter if you go on to be the next Elon Musk, and you just did sports in high school, or you did professional athleticism beforehand, right? It allows for a much more particular atomic granular support system where it’s not like, “Hey, you can dribble a basketball, let me make you a walking billboard”. 

You know, the most recent example that comes to mind with an athlete messing around with social tokens. And we were talking about this before the recording, is that UCLA basketball player, who’s also a vlogger, who also has like 220,000 subscribers on YouTube and just launched $JROCK. Right. Let me pull up his name real quick. I’m blanking out. Jaylen Clark and I’m pulling it up over here, so UCLA basketball player Jaylen Clark is releasing his own cryptocurrency called $JROCK. I’m reading this from the LA times. He is a type of individual who is like a part-time creator and part-time athlete. All of his content on YouTube is him being an athlete.

Do you think that these athletic creators need to pivot more into the vlogging route, the TikTok route, like building up that huge, hardcore fan base for this thing to work or could it work with a micro-fan base too?

Well, what I really hate, and I think that’s what I’m fighting, is we don’t want athletes going the entertainment route. Because very few athletes can do it. And it’s not built for athletes. It’s still for entertainers. You know, some people are really good entertainers and they can do both. But I really think that we should build incentive mechanisms to focus on improving what they’re already doing. Like Focus on what will make them better. What are their goals? Athletics is all . About setting goals, achieving a goal, and going to the next one, right? That’s a great model. Why are we using, you know, these web 2.0, Tik Tok Instagram when we have such a great power with web 3.0 and like earning themselves by proving themselves every day. And we’re still early on in this social token stuff, and this is definitely a huge step in the right direction. All the power to this. Like, this is cool. We have to innovate, we have to try. 

But you’re imagining it from a different angle. 

I think the future is bright for athletes on the internet, especially with Shenanigan. 

Shameless plug. So you talked about something behind the scenses, and you just plugged it. And I’ll sum it up as working for an algorithm. But you added more flavor, more context to it. And this is something, again, we talked about behind the scenes, which is why I wanted to have this conversation. Because it was a new concept, I came across how it works right now, across many platforms, there is no right or wrong way to do this, right? Everybody’s just throwing shit at the fan and seeing what sticks. I want to highlight this model because it’s a little bit different. And the way it works currently is you can mint a certain amount of tokens. Typically it’s 10 million tokens, that sit in a wallet with a multi-sig. And creators allocate funds to their fans, create utility around that, whatever it may be. But you’re approaching it kind of from a different angle. You’re talking about working for an algorithm and based off that,- I don’t want to butcher it. What’s the other side? 

You did a great job, you know. It’s funny that you’re talking about working for an algorithm because people think algorithms are this almost static unchanging, you know, input, output. But I think really, what I imagine for these social tokens is this malleable ever-growing algorithm that changes based on what you’re putting out. It’s not just one piece of code that does the same thing. It’s like we have to plug in sports athletes to this algorithm, and then an artist app algorithm. And actually like we can even go deeper, maybe a sculptor would go into this algorithm and then a music artist would go into this. Creating an algorithm that’s customizable to the person is really what we’re doing or what I’m imagining.

So, let’s talk about an example. So I’m imagining this: people working for an algorithm get rewarded based on their actions. So you have to determine what that action is and do it in a way where you can verify that action, which then triggers the smart contract to mint an x amount of tokens.

Let me give an example of what we’re talking about, what’s kind of happening in the current space, and what would it look like? So, I think the big thing, like red herring or whatever you want to call it with social tokens, is the rug pull ability. It’s not a real word, but the rug pull. If we mint 10,000, 100,000 Adam tokens, what’s stopping Adam who controls them all from just saying “You know what, I made $20,000. I’m good. I just want to pull it all out and just dump”. 

Nothing. Like technically my incentive is to not do that because I’ll fuck up my personal brand. But the reality is like, things are in place for it to happen. And it may be beyond my control too. Someone might hack and dump on top. So a hundred percent.

Right and in the world we live in, people could flip that into an entire business. So just pump it, dump it and then start another token. And I’m sure they would. And you have vesting. I hate vesting with a passion. And like, I think everyone kind of hates vesting with a passion. Sorry, if you like vesting. You should be able to do what you want with the tokens you earn and like putting it behind like a static time wall does not create much movement. It doesn’t create any like opportunity for adjustment, movement, change. It’s so boring. It’s a start though. What would be really cool, is instead of mentioning all of them at once. We start at zero. And we grow the brand over time. As the athlete or the markets or the social influencer grows, the token should grow with them. 

Let’s pause right there. And that’s a very goal-driven approach. And that goes back to actually what you’re talking about earlier, like athletes, set goals, athletes, set milestones. And a lot of us operate like that. That’s like human nature to an extent, at least certain types of individuals. Okay, continue. I’m just reflecting. 

It’s easy with athletes, right? And I think the reason why it’s easier to think about, and I want to structure this kind of conversation around athletes probably, is in the case of athletes, the athlete is the product. You can’t really get around that the physical human being is the product that they sell. So when you set the goal, the social token kind of wraps into that really well. And it falls in, like, let’s say the athlete actually goes off to become a professional NBA athlete. They don’t want to take over the NBA. We’re trying to give them a better path to get there for now. But let’s say they do that. Their social token follows them through that. So why should it not grow and move around with those things happening in their lives? Like goal-oriented, but also like social tokens will capture everything else as well. So let’s say the athlete, you know, Gets accepted to a D1 college after having one of the greatest seasons of their life. We’ll have NFTs of all the stuff you did that season. Physical proof on the blockchain, goals, bam, bam, bam. But the social token will capture everything that happens outside of that as well. So, it’s not only like, “oh, the number goes up”. It’s actually like,” Hey, I’m set to earn this token and my community is set to earn this token, and now this token just got way more valuable to earn. And you have people coming together behind this athlete. There’s like fans coming together to set it up, which gets me to my main point and I think your main point is, how do you set it to earn? You’re talking about working for an algorithm. How do you set a token up for positive incentives? I can have him be like, you know, tap this button a hundred times and then you earn a token. Probably a really bad model. But I wouldn’t think it would work well for an athlete, but maybe we can think of something like, the athlete earns a token in one way, the fans earn the token in another. The athlete has to get a goal out on the blockchain. They have to get some kind of proof. In Shenanigan, we use a live stream. And we wrap that live stream into an NFT, but let’s say we want to use live stats that we can pull from an Oracle that follows that. Or let’s say we want to use, like a blockchain game. 

Any action, any contribution that can be tracked and verified is something that can be basically rewarded. That’s very much like a play-to-earn model. That’s what it is. It’s a twist to play to earn rather than gaming. And doing what Axie is doing for example, or there’s another one I’m blanking on. That’s like a real-world example right there, because you’re like mixing the physical with the digital and gamifying that entire experience. What do you call it? 

We call it the meet space, to be a part of the Ethereum. Be a part of the smart contracts. Getting the things we do in real life to be immutably stored, retroactively searchable on the blockchain where they can never go away, it’s part history, is the goal. And I think for example, when we’re drawing these earning mechanisms, like you can start simple. Like, “Hey, we want to keep the athlete with 50% of the supply of the token”. Let’s just start with that. As he or she does the tasks at hand, the token will actually deflate until another task is minted, and then, well actually inflate, excuse me. It will inflate as the community gets it. But then the athlete will do a task and receive a reward that virtually gets it back to it’s 50%. It’s only simple like that. I should prefaced. See, this is really stuff that is still theory crap. It’s just really alpha, alpha. So coming back to the example, we keep the athlete at 50%, or you have some burning mechanism on the the community side where you say have a staking protocol and NFTs where the athlete has some sort of product in shenanigans to give them NFTs where they can stake their tokens in the NFT using a standard called ERC -998 by Nick Mudge and a couple other really smart guys. Great people, you should check it out. Staking these tokens and burning them well, they are improving their score with the athlete and giving them some DeFi rewards or, you know how it works. The opportunities could just be endless which brings me to actually another point I wanted to make. Coming back, talking about the usual blockchain historical lens. And we’re talking about working for algorithms that are ever changing and adapting. Retroactively rewarding things is what I think is so important. So social tokens and especially burn based like working for an algorithm then social tokens. We can look. Let’s say someone starts their token mints 5,000 a week. And it’s just based off of like very rudimentary metrics of like, did he put this out? Is the community buying? Boom. But let’s say down the line, an Oracle comes out or some great tech comes out or the athlete has a great idea and they want to adjust their algorithm a little bit, which you should be able to look back on all that data that already happened, and retroactively update the current percentages of each person that has tokens. And then mint tokens according to those new percentages, right. Go towards that model. So instead of having, “Hey, everything’s static, you have this much to buy more or earn more”. It’s actually like, “Hey, you have this percentage right now that you might be over or underrepresented with and we’re working towards this percentage. And as we grow your percentage changes and adapts. Does that make sense? 

Yeah, it’s a lot to wrap your head around. Yeah, it’s a variable process. Right now, many social tokens are great as how they work. It’s very static. Platforms, maintain X amount or a variable amount, depending on what the standards or details of that creator are. And there’s a treasury and people try to fund that treasury with a certain amount of capital to give that token value. And this, what you’re talking about, is more dynamic. It’s way more dynamic. We’re dynamic humans, so why aren’t our token models the same? I’m trying to think, what are the pros and cons? I know what the pros are. What are the cons of doing something like that? 

There are cons, right? I mean, nothing’s perfect. I think the main con is that it’s slow growing. You have to build. And of course, early on, that growth is going to be really slow. Cause no one’s done it before. And you don’t have an example of what a successful growth token looks like. We’re just starting with growth tokens or whatever you wanna call them. These like earn based economies with DAOs. Our DAO, Shenanigans, is earned based and we use it for various things inside the app. You can come by our discord and you do something for us you earn our token. We’re just starting with DAOs, and so it’s a slow growth. It’s not like minting 10,000 tokens matching it and then making millions. Just like humans, it’s got to grow. Just like who we are, it takes some dedication and it takes your time. 

It’s very much a long game, right? And for creators and athletes who understand the value of building something long term, it’s going to click with them. And the issue is with retail investors and many private investors that they want to see money now. Making a bet, like a five-year, ten-year bet, a 12 year bet, seeing the development of an individual over time, especially as an athlete, there’s a lot of risks about being an athlete to begin with. Like what’s the average career length for an athlete, for example? What does that look like? It’s like 3, 5 years or something? In the sport. You know, so what happens after that? Then you start your coaching league , you know, and your incentives are based off how many people you coach and how many people you get to like the NFL. You know what I mean? Like what does that kind of look like? How does that kind of carry on beyond being an athlete? So that’s one of the cons, not a con, just like a gray area of like, what’s the answer? How do we fill that answer? So the slow growth, that’s one con. What’s another con? 

I would say that’s the main con man. It’s complicated to explain maybe but, I do want to expand a little bit. When you said, like where an athlete’s career stops after, you know, five, 10 years. I don’t know if I believe that. I do think that an athlete is an athlete for the rest of the time that they are alive on this earth. It’s just how you structure your athleticism. That’s what we’re trying to change in shenanigans. It’s not about actually, if you’re a professional or not. What we’re trying to do is focus on the improvement, right? Have people invest in your improvement whether or not you are improving your field goal kicks, or you’re improving as an older athlete in a different league with your field work. You hear what I’m saying?

Yea and you know where my mind is going right now? Like, how do you track these things now? Now you’re talking about IOT sensors kind of verifying. Otherwise, you’re now relying on human judgment to kind of tell or depending if it’s like a live game or if it’s like an in practice thing, are there IOT sensors now attached to balls and goals to kind of determine which ones you missed. You know what I mean? How do you automate this? So people don’t have to constantly logging their stuff or sharing it, you know what I mean? 

Yeah. There’s a lot going on in my mind about that. It probably has to do with Oracle’s and the blockchain and large systems. Like you say, IOT. Let me tell you what we do at the start of Shenanigan and how we were sharing and hosting a live stream for these athletes, right? So it’s something that can be verified with live. And then we use our DAO, which has a great version of uniqueness for the token, we use our Dao to vote on what actually happened in that live stream. And the idea is we want as many people to vote and give their opinions on what actually happened for these very simple, rudimentary questions. Did the field goal go in between the poles? What’s a real push up? Did he do 10 pushups? Did he make the cake flip satisfying enough? And it’s kind of relying on athletes to be particular with what they want to do as well. Because if they’re like, “oh, I’m going to jump off this bridge and the water”. He does five flips? It’s like, well fine. You know what I mean? It relies on them, just being creative. You have to be very specific with what you want to do and what you’re doing. But having these like general votes of what happened on the live stream is probably, it encompasses a lot. You can do a lot with that, right? So that’s how we do that. Using the DAOs and a quadratic vote. This like flattened out vote to get as many opinions that are human certifiably unique into an NFT that says, “Hey, this is what happened at this point in time in history for this individual”. And then social token just kind of fits right in there.

Wow. So is there a capped supply on these social tokens?

So with this, think earned based, there is no capped supply. You can have a capped supply. I don’t know what’s best. My DAO shenanigan, I shouldn’t call it my DAO. The DAO I summoned has no cap at the moment. Someone told me there’s nothing wrong with inflation. Like it’s a stigma, but inflation can be very, very good. But I do know other communities like one hive or other social token communities using a static model, where they just allocate a certain amount of tokens to their distribution, to that earn base. So it can be done both ways. I don’t know what’s best for social tokens. To me, my vision and stuff that I’m working on has an infinite cap. So I’ll say that.

Which makes sense for this model, because your coin is dynamic and evolves as you grow and evolve. And with that, if you cap at 10 million, you’re like 46 years old, and you’ve reached all your milestones. Like you run out, you know, what’s next? You issue a new token? Like, no, it doesn’t make sense. What happens when the athlete dies? So let’s apply this from the Kobe point of view.

Well, speculation never ends, right? I guess. Kobe with him, it was so sudden. Like, I feel like it’s almost two different things of legacy as like, if you live all like dying old and die young, right? So with Kobe’s Example, you have this, for lack of better words, this hype, that builds rarity. Like people want his stuff because he’s no longer around and the speculation doesn’t end. It just is like, it gets rarer and rarer and rarer the older it gets. So it’s almost like you’re leaving a piece of history behind. You’re leaving your legacy behind. It’s like, I guess you’re quantifying how much your athletic career was worth to people. But instead of it being a static quantification of like, “Hey, he made $200 million playing for the Lakers”. Now there are markets for it. And like, you know, your children see that and your children’s children and you have this legacy that’s immutable. And when an athlete dies I guess like, you know, it’s tragic to people’s emotions and lock into that, like collectable kind of like, the community is still there. I know people who wear Kobe shirts everywhere. 

Yeah. It’s like Queen, it’s like Freddie Mercury dying, the movie coming out around him. And like the bands meetup at the bars and like the legacy of queen continues, right. The legacy of Kobe continues. How does it tie into the speculation of a token though?

It’s interesting to think like what about undervalued athletes at a time? And then people realize, oh, they are really cool. Like they did something really cool or innovative, you know. Now when they can retroactively go back and let’s say this athlete put their stuff on the blockchain, but let’s say he was overlooked, it happens all the time. But you know, let’s say not a well-known guy innovates on like hit and swing. You can go back and say, “Hey, we have all this history, this hype, and who knows who that benefits, you know what I mean? 

Could people unlock their tokens by their past achievements? If the community comes to consensus, for example? It’s like a play to earn point of view. The more milestones you hit, the more you earn, the more tokens get up and your wallet. Could he do a pitch where like, “Alright guys, like I’m already in the middle of my career, look at all the milestones I hit, will you guys allow me to receive some of my tokens in advance”? Does that even make sense? This is just a thought.

Well, I think we talked about this a little bit. Like kind of where we’re able to retroactively adjust the weights. We can take a token model and then say, maybe Kobe’s family is like, “Hey, let’s actually like respect, you know, his greatest dunks. And so let’s weigh those higher, but let’s give it like a more meaningful collectible or it’s probably a bad example for dying to throw the dunks, but you get what I mean. It could be anything. So you could. I don’t know if the minting stops when the athlete dies. I guess you could. 

Adam: Something to think about. Which by the way, quick plug, if anybody that’s listening and has thoughts, like tweet at us. We want to continue the conversation because this is just us two, and there’s much smarter people thinking about this stuff and that can contribute. So this is the first time I hear of a model like this. That’s why I was so excited to kind of share it and put it out there, because it makes a lot of sense. And it piggybacks off a play-to-earn model that’s already being validated in the gaming side of things. But now you’re applying this into the real world. And you’re tracking and collecting and picking up on every little thing that someone does and his fans kind of get to join him for that journey, and the creator is incentivized to build long-term versus just mint 10 million tokens. Which again, there’s nothing wrong with that, right? Every single creator has their own model. Every single creator has their own way of doing things. It’s use case-dependent, not financial advice.

It’s funny when you get it, you get it. And it’s like, so there’s much power. Cause all you do is imagine what you would do with it, and if it’s something that grows with you and you’re familiar with web 3.0 tokens and how this works, you’re like, oh my gosh.

Adam: Dude, this is like me basically saying, “if I launch the Levy coin, I only get the $LEVY coin if I stick up to my posting schedule”. So when I post on Tuesday, I get airdropped. And when I post on Thursday, I get airdropped. When I post those newsletters three times per week, and it keeps me committed.

It’s keeping you away from rug pulling. It’s giving your investors a great incentive to keep investing in you and you can even bring in other variables, like certifiable likes. So, let’s say you say, “alright, I posted this Tuesday, but on this post, we got this many views, so we’re going to get, you know, less of my token this time. Because it didn’t get as many as this one. And there’s problems with that. How do you know that you’re not gaming with bots and things like that, but maybe there’s a scoring system that we can create. There’s so many variables, but just keep adding. As the tech gets better, as web 3.0 becomes more universal. Like even in the two years I’ve built shenanigan, it’s just like so many options have opened up. 

From my point of view, like I know I need to do as a podcaster to mint more tokens. How can I integrate that, like the views through my community? What can they do to enable more token printing? 

So you know, again, alpha thoughts here. We do have a blog post about this in our substack. What we do is, let me tell you what we do at shenanigan. And this is not static yet. I definitely have more to iterate on it, but the general gist is, we have a product, like an NFT that these fans can own and buy and kind of use to invest in the athlete. And then by holding the NFT, they can actually start retroactively earning these social tokens by holding and staking more social tokens in the NFT or with the NFT. Or backing it with liquidity. Things like that. The way it works is, we use, like I said, this ERC -988 model. So when the user buys the NFT, it actually doesn’t accrue any social tokens. Then they can use the social token to unlock the NFT, to start accruing at a base rate. And then what they can do is start charging that NFT by adding liquidity tokens for the social tokens. It’s a lot like that because you get it already. You can have the quiddity tokens into the NFT that will make it have a multiplier on social tokens. And then what you can do is you can take the NFTs that the athletes put out for their goals, or maybe the NFTs that they put out for your blogs. And you can actually put them into those stakeable NFTs that we’re talking about. So, if you have a full collection, you get to like a platinum NFT. And then what you can do is that burns like 10 X rewards in social tokens. You can increase the multiplier or you can increase the base rate. And then what you can do is actually go take all the social tokens, all the NFTs inside of this big NFT and sell it on Open Sea or sell it in one batch, one transaction. You’re curating, so there’s this incentive, as a fan, to increase the rarity of these NFTs. So increasing the rarity helps you make social tokens and it’s increasing the value as it generates, and then the athlete is wanting you to increase it because they will earn revenue with every sale. Every transfer they’ll earn royalties back. So both parties want the same thing. And now I’m realizing actually that you would have a great model here for a podcaster. I didn’t even put it together like that. I was more into sports.

It’s very much, very much applicable to any creator. Anybody. It’s not just for an athlete, but it makes sense for an athlete, but it makes a lot of sense for many, many other creators. Whether you’re a TikTok person, whether you’re a musician. 

Chase your drink, don’t chase the money.

And get rewarded for chasing your dream. That’s a tagline, right there. That’s shenanigan’s tagline. 

That’s what my dance teacher used to say. 

I love it. I think that’s a perfect place to end off. Really guys, anybody that’s listening to this, like hit us up DM us, contribute to the conversation. If it gets big enough, cause I think this is like a conversation that might spike a lot of interest, I’ll even open a discord channel. And we’ll just like back and forth echo and share ideas. But yeah, dude, anything you want to add before I kind of let you go? 

 I will plug Shenanigan on Twitter.

Plug anything you want. Where can we find you? 

Me, @ginelliunit. That’s my Twitter handle. Follow shenanigan, @she_dapp. We tweet fairly often and you can actually join our discord and start earning particle right away. You don’t have to do anything. Well you earn, so as much time as you want to put in, you know, you don’t have to spend any money. You just have to spend your time. And we are partnered with Bright ID. We actually developed a Bright ID discord bot for our server. It currently has 3000 users. You can look it up on a bright id.org. Get verified with Bright ID and you will actually earn the tokens that you have been accumulating in our discord. So check that out. She.Energy again.She.energy/join. 

Always do your own research.

Not investment advice. Just earn, do your own earning, right? D Y O E. 

3, 4, 5, 6 months from now a year from now, you got to come back on. We got to do a recap. I feel like from there you’ll have more actual case studies of this kind of like being implemented. We should even do a joint session with you and a creator and kind of walk through this. But yeah, man, thank you for being on. 

No, thank you. You approached me with this podcast. I actually was flattered. Thanks for having me on. And like being such a homie.

Listen on: Spotify | Apple Podcast | Google Podcast

Background

Mint Season 2 episode 11 welcomes pet3rpan, a DAO and NFT thought-leader whose work is widely known across the early-stage token investment firm 1kx. He’s also a Community organizer and summoner at MetaCartel, as well as the Co-founder & blood mage at MetaCartel Ventures. 

In this episode, we talk about:

• 1kx’s investment thesis
• Understanding the role of leadership in DAOs
• How to eliminate or prevent bad actors
• Strategies for growing decentralized communities
• His take on JPEG Summer
• His NFT investment strategy
• What will eat Web 3?

…and so much more.

Links: How To Grow Decentralized Communities + reference below for the funnel pet3rpan and I break down.

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Thank you to Season 2’s NFT sponsors!

1. Coinvise – https://coinvise.co/

2. POAP – https://poap.xyz/

3. Socialstack – https://socialstack.co/

4. Celo – https://celo.org/

5. PrimeDAO – https://www.prime.xyz/

Interested in becoming an NFT sponsor? Get in touch here!

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Give me a quick brief about yourself. Who are you and what were you doing before crypto? 

Yeah, I’m currently at 1KX investment. Yeah, we invest across all of DeFi, NFTs, social tokens really have this thesis that, you know, the key innovation in crypto is really with this idea that you can take logic out of technology and then distribute that ownership of those. And, you know, we sort of invested really early in each sort of area. So we’re not really like a general DeFi fund. We’re not an NFT fund. We really see our core competency spread across everything. Mostly like, you know, leading seed deals and series a rounds right now. Last couple of years, mostly. I worked in DAOs most notably creating sort of Moloch DAO and you know, helping foster the DAO ecosystem. There were DAOs that sort of emerged from that. Created a venture DAO or Metacartel ventures was the first investment DAO on Ethereum and really questioning how groups of people invest together. Before crypto was really just like a designer doing product design, UX design, and user research was like talking to users. Yeah, that’s really what I’ve been up to , I guess.

Do you remember the first crypto that you bought? 

Yeah, but like ETH or something in 2012/13? Well technically, the first crypto I ever touched was like in 2012 or 2013, where I was collecting Bitcoin from Bitcoin faucets, like daily. Like I had it in a separate wallet and it’s like I got $70 of Bitcoin in it. But it was like cents back then. I was just playing with it.

Where does your obsession with DAOs stem from? Did you have a bad work experience at a corporation and you were like, fuck this shit, we need to do it differently. Where did this excitement for decentralized organizations come from? 

Yeah, honestly, I didn’t like didn’t really care too much about DAOs until I wanted to join Moloch DAO and I was rejected from it. So for those that don’t know, like the first of a real DAO on Ethereum. Like there was The DAO which was created in 2016, 2015, and it was hacked right and it didn’t really exist anymore, but Moloch DAO was really the DAO that really was born in early 2019 and yeah, like created a lot of the DAO movement. Tried to join it. It builds sort of like a mini elite club of ETH insiders is I guess, rich ETH insiders who were sort of a bit popular. And I wanted to join the experiment, and I didn’t really think too much of it until I ultimately was not allowed to let in.

Do you know why they didn’t let you in?

Because I was poor and no one knew who I was. So basically a lot of the, you know, being highly sarcastic, but I mean, it was funny, like, you know, a lot of the pledges were really from ETH whales, like 100 ETH pledges at the time back then it was only 20 grand. But it still was like quite a lot of money compared to someone who was like, pretty much broke at that time. I had like, maybe like, I don’t know, maybe had like 20 -30 ETH and I was like, okay, I’m going to try to pledge like a third of like my savings in ETH into like this random DAO just to learn, right? And just aside from a meme, like no one really knew who I was and it was just too little money so they just rejected me. Like a charity DAO, you know, sort of. Amin and I had this chat afterwards. It was like, why don’t you create your own Dao fork Moloch? And I’m like, that’d be hilarious. And foster the adventure began. 

What’s the current state of the DAO that you forked. Where is it now? How many members? What do you guys do? Give me the rundown. 

Yeah, I mean, we created a Metacartel DAO the first fork of Moloch, launched in like, you know, mid to early 2019 then. Created the first. Out of that we gave grants and experiments at DAOs , created the fuss about, you know, server scaled DAO that provided services, which is like devshop And designed work. We created the first investment DAO on Ethereum, Metacartel ventures. We created some of the first experimentation on a decentralized brand economy, like decentralized brand DAOs with Meta factory. It was originally called swag DAO. We worked in like decentralized reputation systems. We worked on the first ever part DAO that was supposed to like coordinate our parties in real life. It was actually supposed to be about sponsoring events, but just quickly devolved into like let’s throw whiskey parties. You know, and that was called Orochi DAO created by the coder from kickback. So I would say like, back then, it was just like a group of like I wouldn’t be able to say how many people. a meta cartel DAO, over a hundred easily. And you’re part of the ecosystem. Probably like 200-300 people, like totally across the Meta Cartel DAO ecosystem in all. And it was just like a bunch of people who like wanted to experiment with DAOs, like back then. And this was the community where we we hung out. And hindsight, it was just like a really nice time where like, you know, nothing was worth anything. You know, no one was making money. It was just like pure experimentation for the sake of it. I think we’ve grown really close as a community.

When you were starting your DAO, how did you approach leadership? Did you run into problems in the beginning? Walk me through that. 

Yeah. I mean the whole pattern was just create more leaders. I think my mental model was just like, yeah, get more people to start things and champion them and give them more responsibility, you know? And give people responsibility that they usually would not be given. And that’s sort of like why as part of Meta Cartel’s values, one of them is, bet on each other better than others in the community. That was a heuristic that really led to I think like, or at least a set of values, that really led to this proliferation of all of these DAOs. Because like, when someone was thinking about like, Hey, should I create a DAO to like, you know create a pretty decentralized like brand? Or like create a DAO for like, you know, I don’t know services. We were basically, all in unison, like yeah, let’s do it. And we pushed the people behind them to go and experiment. I think that was a big part of. It was just like we did things, we supported each other. We really pushed this culture of experimenting and just doing. I think a lot of people were just talking about things and building infrastructure while we really want it to just like run and gun pretty much.

When you think of organizational structure, what are the core hats that need to be worn when initially starting it DAO? 

Yeah, you need leadership. I guess you need a chef in the kitchen, who’s like really directing everyone who maybe own other responsibilities, right? Like in a kitchen you have like the head chef, they manage the menu, the produce the menu. But like there’s line cooks as sous chefs. Which have responsibility over working on several of the dishes or key areas of the menu. So, you know, different people may own different pieces of responsibility, but you always need a central coordinator around that. Usually how these things scale is that, at least how we scaled, it was just like, you know, me. I was coding a lot until a group of people who like took over and that was known as like the Paladins, right. We set up like different roles within the DAO. And then Paladins ran operations and that group took over. And then, you know, with each separate DAO, it was just like, you know, pushing people to like into coordination roles. They usually set the tone of what is a DAO, collecting resources, setting goals and tasks, and then usually once they’ve created initial group of people running in the same direction, you sort of then want to basically set up processes and systems to decentralize that central point of coordination. But to bootstrap any sort of DAO community, I really do think you need that like central you know, wall effectively or seminar, right. To just drive things forward. I mean, like centralized coordination is effective and efficient. It’s fast. And I think you should definitely like rely on it when you can, because when you’re big enough, you can’t really, you know, run in the same way and operate in the same way. So I think you want to make the most of those early days. Because early on you have like all this autonomy to craft and curate. As I saw, like I saw the early stage of Meta Cartel, where it was highly important like, who was involved, who I wanted to bring in, who we wanted to bring in. And we could do it very surgically as a group, less so. And today, like I’m meeting people who are part of the Meta Cartel ecosystem who like, I’ve never met before, but like a part of radio. And it sort of walks because each group that’s spun out like has sort of maintained the overarching Meta Cartel culture. Even though DAOs are wildly different things. And it’s definitely a lot less curated, but that’s sort of how I think DAOs really get to become curated later on. It’s just well coordinated. It’s like just the fractionalization right. And the other one who, you know, as a coordinator in the beginning, you’re the one who sets a tone, like creates like the DNA. The double helix in which it spawns everything else. 

How do you think about contributor reputation with all of your experience managing and starting DAOs? 

Reputation, I guess it like allows you to trust others a lot easily, a lot more, right. It’s basically like, I guess social coordination duct tape, right? A lot of it exists, like without really it being formalized. Like early on for a lot of DAOs, it’s like, I think whoever’s coordinating is really just like a central ledger book of like reputation for each of its like contributing members. And as you grow over time, I definitely think it makes sense to like set up some sort of reputation system to account for like who did what, because as you grow as a group, you can’t really, you know, I guess it’s like sort of like Dunbar’s number, right? Like you don’t know who’s who or anymore. It’s harder to keep track of that. At least mentally. I think for Meta Cartel we never really went past that stage yet. Like we still heavily rely on like individual key community members to like vet for people. And like I guess that’s vouch for new members and new projects, right. Definitely see a lot of other communities that need sort of more formalized reputation systems, but for us, we’re just growing very slowly., And yeah, like what is Meta Cartel today? It’s more like a group of DAOs that are focusing on each have their own goals and who’s in Meta Cartel is more like a curated list of who you trust, right?

No, it makes sense. And all these people that you trust have you met all of them, or these are just all internet characters that have kind of got referrals from other people that you’ve trusted. 

Yeah. I’ve mostly met all of them over the last three, four years. Initially it was like just people who aggregated online. Online, first and offline. It’s like that’s definitely a core pattern. 

When you’re starting these DAOs, how do you think about community building? And I only ask this question because you wrote an awesome article back in June titled, “How to Grow Decentralized Communities.”

There is no recipe for the process of community building for DAOs. It depends entirely what the DAOs are for, right? What the goals of the DAO are. So like you can go from DeFi, like DAOs own like DeFi protocols all the way to like, you know DAOs that basically manage treasuries and funding, right? Or DAOs that purposely, you know are focused on services, privacy, focused on social curation as a social club. Right. And so the person in which you like basically launch it out and tell, it depends on what the DAO is doing, how it’s evolving from. Is it starting from ground zero? Is a starting for an existing product or a set of assets, right? Like, it really depends where you’re coming from. And if for each of these sort of veins, right. And all the types of DAOs, these sort of patterns that emerge with, how do you bootstrap them? How do you launch these certain networks around them? It entirely depends on the goals and sort of the state of each DAO. 

Walk me through those three tiers and share your insight as to what you kind of meant for each of those pieces. 

I guess this would be a much of an abstract. It was like a mental model.. Which I wanted to share, which is, to really create a community of stakeholders that actually really care about the project and participate in governance, participate in the network. You know, like, in all sorts of ways, right? Like effectively it’s all about sort of fostering, like to create a great community, you sort of have to foster a sense of ownership. And so ownership is like what drives governance participation outside of monetary incentives. It drives, you know, like product feedback. It drives hiring. It drives working group contributions.

You know, drives all these areas of a DAO a decentralized organization that you sort of need to like fill, right? And it’s very hard to sort of manually find community members you know, unless you are able to bootstrap this like ownership, right? And how do you get your ownership? You have to build a relationship. And before you even are able to build a relationship, you have to attract and like communicate and, you know, like find potential community members that resonate or are like a fit for the community itself. So it was really just going backwards of like, how do we foster ownership? How do we get to that position to foster ownership? And then, how do we attract the right people? And I think that roughly when we’re thinking about the whole process of like building a community, like getting to the end state what the is like a climate like a group of people, at least how I define community is really a group of people who are collaborating one-on-one in a many to many fashion on a shared set of goals and, with a set of values. You know, to get to that place, it’s like, this is sort of roughly the process you have to go through regardless of what you’re building effectively. And it is a bit abstract in the sense of like, it’s just ownership, but yeah, for each and every network, recently I would even tweak this a bit. One realization recently was that some communities might actually want to maximize community participation. Some communities might actually want to benefit from community participation in the token network itself, right? Like the governance minimization, to some extent. Different communities can leverage a network participation in different ways. For some it’s a use of de-risked platform risk. For some others it’s used to crowd source, right? Cause this means the network means the crowdsourcing of ideas or projects or in the case of say indexes. Like the development of index products. Like they might want to maximize that. So as we sort of better understand what are the different types of token networks, there are sort of these themes that emerge. So it’s not always a black and white of like, we want to build maybe the biggest community. I think it’s really about identifying, who are the stakeholders, that matter for the end success of the network. Or project and then going from that, and then just building out these sort of funnels effectively that bring people to become a community member. 

How do you build in public without giving away too much too early? So let’s give an example. Let’s say you’re building a consumer app or a web app, right? And you want to kind of take the components of DAOs in terms of how communities are involved in their ownership, but you don’t want to give up too much governance rights to these individuals. You want to keep the core product and its team somewhat centralized, but still build in production. Is there a way to mix the two? How would that work? Like how do you form a DAO without giving up all of the governance rights and exposing yourself completely. How do you keep it focused and narrowed and then expand gradually? How does that work?

What is the DAO’s end goal in general. All your decisions revolve around compromises that sort of like, I wouldn’t even start with that question. Yes when you’re putting a product that wants to be Decentralized, early on, you want to have local control over it. Especially when you need to create community participation, build it out, make quick decisions, move fast. Different projects have different levels of centralization, where they give away different levels of ownership away to the community. This is all dependent, on like what your end goals are. If you’re trying to build a hundred billion dollar financial primitive, well, you want nation states to trust you. Yeah. You know you probably want to have a fairly decentralized network, right? But if you’ll really building an application, where you want participation, to some extent. You want to, find upside. You want to decide network ownership that helps you get to the end state that you want to go for. And for some projects is going to be you know they might give away like say 30% of its tokens to community. Soome might give away 50%. And the beautiful thing is that projects are going to compete for the same customers, with their own networks. When you pick the product that gives you less tokens, more ownership. And it depends, whether which product is better? Which product or community do you resonate the most with? Maybe it’s the same all around and you just want the one that actually cares about the users or yourself the most. It really depends. A fluctuating sort of parameter that they want to find, you know, there’s no right answer.

How do you instill a sense of ownership within a community that transcends beyond the purpose of the token? So how do you encourage people not to just speculate, but to contribute?

Most projects launch a token with incentives and then try to use incentives to attract participation. Whereas you’re supposed to actually really, you know, find contributors or community members and then, find a middle ground between the intrinsic and extrinsic for them to participate. So you’re gonna start with participation and then reward that. It’s like most projects, you just get tokens that are just sold and like farmed and dumped and just like, you know, it becomes a fairly transactional environment. So yeah, like when we walk up to projects that one key aspect, really the methodology, at least approach that we take is really, you want to build a community fast, right? Find community participation or network participation. And then once you understand what the network looks like, how you will likely design it, who are the most important stakeholders, it’s really then designing like a distribution system or a token distribution plan that really rewards their most valuable network participants. Rather than going backwards from like incentive design. That doesn’t really work at least from our perspective. 

Another question I have for you is as DAOs approach more of the mainstream world, and you see more of these, again, these creators, internet personalities, Instagram influencers, whatever, building these modern day decentralized fan clubs. Is that something that excites you or worries you? Do you think that’d be good for the space or toxic for the space as you bring more of these like normies speculating on themselves and the communities? How do you feel about that? 

Yeah, whatever fraction we’ll hit, we’ll hit it anyway. I think that web 3.0 is a democratizing power that will empower communities. Participants at the same time are going to fall victim to scams and, you know, others taking advantage of people and it’s a totally new paradigm. So I think it’s inevitable. I don’t think there’s a reasonable way to approach something so powerful, so carefully. Like that’s a very naive sort of standpoint, like the internet hit society a wave,  hackers were roaming the internet fishing people you know, hacking into systems that were unsecure. People falling pray. At the same time, you know, all these internet industries emerged, all these people you know, we got like online shopping, we got all these other services. As much as I like to say, like I’m, I’m definitely excited by the emergence of like actual adoption and actual use cases there. But I think it comes into the good and bad, I guess. Yeah. It is what it is, I guess. 

You guys are one of the earliest NFT investors at 1kx. How do you make sense of what’s happening with JPEG summer? How do you wrap your head around that?

Yeah, it’s a good point. I think that I mean, there’s a lot of musical chairs of course. But I think what is happening is that, at least one case or sort of thesis around NFTs is that, we think art and collectibles were like a great initial beachhead for like, you know what it could be. And they were sort of like the obvious use cases for NFTs. But we’re much more interested in like the financialization of NFTs themselves. Like basically everything in the internet is an NFT. It just, hasn’t been introduced or minted into the web 3.0 economy. And when they do you really need protocols that unlock financial value, like the property rights of NFTs. We’re really excited about things like, NiftyFi where it’s like, you can basically take your NFT as collateral and get a loan from that. Like if you ‘re an Instagram influencer, you can’t actually go to the bank and get a loan for your Instagram posts. Because it’s not a real job, no one cares about it. But you can get your rocks, you know, whatever you want, your penguins, and you can go and get a loan for that. You might get a loan for your videos that might generate revenue, or even your token has video revenue rights or your articles. And so we think that that’s really the future and we actually overlooked a lot of the profile photos. Initially, like what’s going on? We didn’t really get it. But then we realized that we missed the musical chairs and hot potato games, we’re really playing. There was a certain section of the NFT economy, especially around profile photos where like these profile photos or like avatars actually represented the ownership. Like it represented ownership of certain communities collected by density. So I think like punks is definitely one. Bored Ape and other projects, maybe they eventually become established being like this game of, you know, a hot potato, but we sort of then sort of had this really interesting epiphany of like, “Hey, it’s actually about online ownership”. So, you know, I think that’s our explanation of that. Well, actually, we’re quite excited by this revelation. It’s like, it’s actually another take on identity that was completely different. I think a lot of people have tackled and try to solve, understanding what is identity from a very purely technical angle. Like from a standards angle. But you sort of see this as like, this is like identity being understood from a social angle, which makes a lot more sense. 

What are you guys looking at, at 1KX? Are you guys investing in profile pictures? Are you guys more on the equity investment side? What’s your investment strategy? 

Yeah, we generally don’t buy NFTs themselves individually as a fund. You know, we try to look for a general sort of strategy. We try to look for investments that build exposure across a broad area. So we sort of look for index bets. So we haven’t really found that yet, at least for the avatar space, but I definitely agree with you around that thesis, like at least early on in MetaCartel, when we created MetaFactory. There’s a lot of discussion around like UX being the barrier for mass adoption and, you know, technology is like abstracting away crypto, and we thought that was a part of the puzzle, but our thesis for mass adoption was that it’s actually going to happen to crypto natively. It’s sort of like hip hop, right? Hip hop was extremely niche, you know, created by really like black communities from, let’s say, you know, New York, right? Like, in fact, like it really came from a place that was so niche, so unique, had such a unique sort of identity, and that became cool. And others wanted to be part of that . Hip hop did not, you know, try to appeal to anything else it was itself and it said, fuck you to everything else. And I think like our thesis at MetaFactory was, we want to actually expose the coolest parts of web 3.0, like digital ownership, DAOs collecting NFTs ,digital property rights, royalties you know, to the rest of the world. And we sort of started with digital, physical clothing while like we had branded pieces of clothing, but they were sort of attached with rare and collectible NFTs themselves with RFID chip clothing. This thesis is definitely sort of playing out. Well, mass adoption is actually happening for the crypto native side of things. Whereas a lot of people try to solve it like, how do you do the same thing in Web 2.0 but in Web 3.0. 

Adam: What a great analogy. The comparison between the rise of hip hop to the rise of crypto. And I’ll even argue that crypto is going to be bigger than hip hop and it’s own respect and way. Obviously they’re two different components, but yeah, what a good analogy to see the rise of something that was like, so of a fuck you mentality, this is our culture. This is how we feel. And this is how we express ourselves. And if you want to be a part of us, come join us. You know, our way. Crypto is very much that level of mentality and that aggressiveness and that level of anarchy that you don’t really see in any other space as of now. So the projects that you guys are investing in. I know you mentioned the intersection between DeFi and NFTs. Obviously that’s a lot of excitement right now. People are talking about that across crypto Twitter.

What other use cases get you fired up on NFTs beyond DeFi? 

I think, so aside from financialization, like NFT financialization protocols, I think that we sort of see it as like, that’s almost like the melting block, right? All the creativity that spawns off digital assets and how they sort of become valuable, or at least how people can extract value from that. I think like the use cases are less specific to products and technologies, but rather the fact that like, NFTs and the fact that like you can permissionlessly enter this like financial economy without needing to be over 18. I remember what I was like 13 on the internet, like I was trying to like freelance and do motion design, and I couldn’t. I had to like get my parents to like sign up for a PayPal. The use case of like the NFTs I feel like, it’s like, you can create these financial assets, as a 13 year old or 12 year old and get into business, from day one if you wanted to on the side. And I think like this permission-less economy is actually the key use case that will probably lead to really cool things I think. It’s an entire platform itself, this existence of an economy. 

Adam: One thing that I’m personally excited about is all these like future consumer applications that are going to kind of stem from either the social side of NFTs or the marketplace side of NFTs or merely the portfolio management side of NFTs that we have yet to see. Right now, if you think about it, the current state of NFTs is, it’s very much desktop driven, right? There is no real mobile marketplace yet that allows people to buy and sell stuff on the go. It’s something that you have to access through your Metamask wallet. And just the user flow is really messed up. And I know you mentioned it’s not a UX thesis, it’s more of a crypto native thesis, but I’d argue something different. I’d say actually, A lot of people need to understand what a dumbed down version of this looks like. People kind of get overwhelmed still by Metamask. People still kind of get overwhelmed by open sea and all the data and the search and basically finding alpha. Understanding what JPEGs do I buy? How do I buy it, et cetera. So that’s something that I’m personally excited about.

What’s your point of view on the development of crypto-native consumer apps? Anything on your radar on that end?

Yeah, no, I definitely don’t disagree. I think that my point with that thesis was that we really needed to solve for exciting use cases first. And then once you’ve solved that, then the next limiting factor was that user experience. And I think we’re definitely at the point where, I think the future of society is like groups of people collecting NFTs together. It’s groups of people buying and trading NFTs from one another. It’s creating NFTs together as a group. It’s meeting one another in these DAOs. And I think that slowly, maybe we won’t call this sort of activity DAOs or NFT collecting, who knows what the language and how we’ll extract it. But I do think it’ll look somewhat similar to this. And this is how people meet and connect with one another nowadays, right. At least in the future. And I think that, regarding user experience, I think it’s sort of like an amount of time before someone figures out how to take the really interesting bits of the crypto native and bring it to the masses. And maybe it happens from a top down angle. Like there’s a Steve Jobs that’s like the product or maybe it’s a much more decentralized approach, where you just have different ecosystems that emerge and slowly solve for greater adoption. Because it’s not like, boom, you know, you go from zero to a million users overnight with the invention of a better interface. It’s what are you out? We’re growing, our user base for generally Web 3.0 and the NFT economy fairly quickly itself. So I think it’s just like, this expanding bubble, no pun intended, that’s just growing and growing. 

Adam: In my point of view, we’re seeing the rise of all these different innovative protocols, whether they be curation protocols, proof of attendance protocols, marketplace protocols for NFTs. And I think it’d be cool to see all these different puzzle pieces kind of come together in a nice, I don’t know, more mainstream type of way. Because users need curation. Users need to kind of create a diary of where they’ve attended and what they’ve attended, right. Users need a marketplace. And I think there’s a beauty behind working in a decentralized fashion, bringing all these different puzzle pieces and making one beautiful picture.

Just to add to the puzzle analogy. My favorite analogy is web 3.0 and crypto and DeFi and web 3.0 in general is a huge Sudoku puzzle. You’re maybe like filling in blocks a bit blindly and none of it might make too much sense until you, like, maybe you fill in the right box and suddenly you just unlock all of these other like boxes. And the Sedoku puzzle just suddenly became super, super obvious. And I think the lull and bear market that we had in like, especially in DeFi, I think like in 2019/2018, it was sort of the two boxes that we filled that really unlocked everything like lending markets and AMMs, like Compound and Uniswap. And those two financial primitives unlock, like the rest of DeFi. And for NFTs where maybe with bringing NFTs to the mass market, it’s like NBA TopShot proves that people understand collectibles. It’s like taking up these big questions. Like, do people actually understand this? I don’t know what you call this group of people who are like hardcore.

Adam: They’re the most active fans. You know, you have the people that watch on TV and then you have the people that go and attend the games, buy the jerseys, buy the cards, buy the branded cups, you know, and freaking paint their faces and shit. Those are the most active fans. You’re giving the more active fans a sense of community, a sense of ownership and the things that they love and they support already. I want to pivot into one final question. And this is something that I’m starting to ask everyone at least on season two. So I’m a big fan of the development of the internet, specifically how the transition from internet web one then from internet web two and how kind of, I guess, web 2.0 ate web 1.0. Let’s paint this picture. Web 1.0 was very much static, right? It was very much read only. You couldn’t really do much other than kind of browse information in an unorganized fashion. Web 2.0 came around, you had more advanced products like Google, like Facebook, Instagram that created more UX UI layers on top of this scattered virtual world. You had companies like Uber, a lot of mainstream centralized corporations and this whole rise of data control and data aggregation. And what that means. And now we’re seeing the development of what we like to call web 3.0, which is a decentralized version of social networks, decentralized ownership and web 2.0 ate Web 1.0. And the bet is that web 3.0 is going to eat web 2.0.

What’s going to eat web 3.0? 

I have no clue, I thought about this before. We’re probably going to be like, you know, considered the next boom ers by the time that really happens and we’re going to be like most likely blind to, you know, the next wave of what happens, right? I don’t know. It’s a really good question. You know, everyone eventually becomes a dinosaur. It’s part of the cycle. 

I think that’s a good place to end off. Everybody’s becoming a dinosaur, shout out to my dinosaurs. Peter, before I let you go, quickly plug yourself, where can we find you 1kx and everything you’re building?

Twitter is the best. You know, my username, if you search it in, you’ll find me easily. Always available for DMs.

Listen on: Spotify | Apple Podcast | Google Podcast

Background

Mint Season 2 episode 10 welcomes Erikan Obotetukudo, Founding and Managing Partner at Audacity Fund, who’s investing in Black and African-led crypto startups targeting trillion dollar markets ssworldwide. I wanted to bring her on because she’s extremely vocal about how NFTs will change Africa forever – a new perspective that sparked my attention.

In this episode, we talk about:

• Audacity Fund’s investment thesis
• Understanding JPEG Summer
• Erikan’s love for the intersection of DeFi and NFTs
• How NFTs will Revolutionize Africa
• What will eat Web 3?

…and so much more.

Links: How NFTs will Revolutionize Africa –– Forever (pt 1)

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Thank you to Season 2’s NFT sponsors!

1. Coinvise – https://coinvise.co/

2. POAP – https://poap.xyz/

3. Socialstack – https://socialstack.co/

4. Celo – https://celo.org/

5. PrimeDAO – https://www.prime.xyz/

Interested in becoming an NFT sponsor? Get in touch here!

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Erikan, welcome to Mint. How are you doing? 

What’s up? We’re good. We got the sunlight. 

Give me a brief about yourself. Who are you? What were you doing before crypto and where are you now?

So I’m Erikan, I’m from Rancho Cucamonga, California. Shout out to Etiwanda high school. Prior to crypto, I was doing a lot. 

I’m bringing myself back on the screen. Shout out to your high school. Oh my God. No, this is my favorite interview by far. I was in the green room and I was dying of laughter. Like, no one’s ever shouted out there. High school before. 

No, I mean, it’s an important part of the story. I grew up watching the internet, take my high school by school. And I went to a very multicultural high school. And so I saw like YouTube and Twitter and vine really started to like go through young black kids. And I would start to see like all the viral things that they would do. And this was before I think the word viral was a thing before influencer was a thing before being a creator on the internet was a thing. Like I just was a part of culture at my high school, that was so swagged out. So culturally relevant that we made the internet hot. And so, I shout at my school because that really put me on to like powerful market makers and demographics in the tech industry that don’t get their shine, but that actually drive a lot of what becomes popular in consumer technology and in what becomes the norm for creators. So you think about Tik TOK, you think about clubhouse, cash app, Twitter. These are a lot of companies that are obviously technology sensations, but in the United States in particular for their markets they were actually popularized by what young black kids were doing on them, that then everybody else wanted to adopt and internalize. So what was I doing before crypto? I frankly, was on a journey around the world. I eventually did 24 countries in a pretty long stretch of time, observing economic and cultural trends in different parts of the world that I knew one day would be strategically important for today, which is having an investment firm that really needs to be aware of cultural and economic trends to understand how crypto as technology can really disrupt, expand, and capture all the value.

24 different countries. Where did you start and where did you end? 

Yeah, so it wasn’t all in one batch. So I technically started in The Bahamas. So I was assigned to do history research. I was a biology student in college, but I got connected on a whim with a history professor who was like, I need somebody to go to Jamaica. No, I need somebody who’s going to Trinidad. No, I need somebody to go to The Bahamas. Literally on a Friday I was going to Trinidad Sunday morning, I had a ticket to The Bahamas and a hotel booked like it was so on a whim. She was just like, I need somebody to go to the slave archives and research and find letters that plantation owners would send to their wives back in Europe when they would land in The Bahamas. And they would have their cargo, slaves. I want you to capture the love letters that these plantation owners would send to their wives back home and old country or whatever, the UK and all that was called at the time. So my job was to literally sit in an ice cold archival historical building in The Bahamas in Nassau Bahamas and read through slave records. 

And create romanticized stories about the letters?

 I mean, I did that in my imagination when I would go to sleep. What was the communication channel between essentially a white slave master and his wife in a different continent as they’re sort of like voyaging to this part of the world where they’re going to build business and build commerce and builds like economies. So I was a biologist at the time, doing a history funded project, but looking at economics and culture at its most uncomfortable intersection. You know? So it was like, okay, these cargo are slaves from Africa, which is where I’m from proudly. And I’m seeing their names are called Bobo. Jo Joe Fu Fu, do do, Bo bo like these weird things, but I’m African as hell. So I know their name is not Bobo. It’s probably Olu-. I was like, okay, there’s something happening here. And so then the way that the records really showed the economics of creating like cotton fields and all these sorts of other sorts of things in the, in The Bahamas, it let me know and helped me understand the psychology of frankly colonizers and how 400 years ago our value is so low that like it’s, it makes sense that frankly, the value of black people is not in my opinion, fully realized, given that that was the power dynamic for so long. And all of those things influenced me to where I think there are pockets of rich economic potential that people don’t see because they don’t know that deeper history. So it kind of informs my clients. 

Hence the audacity. And we’ll get there in a moment, but I wanna kinda touch upon the 24 countries. Okay. I know you said it was over a period of time, but how long was that entire, that journey? Because that’s no joke. People don’t really travel that much right. For their entire life. So what was that timeframe?

 And then the person has done like 46 walks in the room. It’s like once you pass, like the 10 country mark, I think it’s like, okay. You’re part of a certain club. Now, so that way, I mean officially 2006 was my first time, but 2011 I’ve kind of been nonstop since 2011. I live in Brazil, proper. Like Portuguese-speaking all of that. I was up in that culture heavy 2012, and then lived in Nigeria 2013. Did a repeat, leveled up on my living experience in Nigeria in 2015, lived in Thailand 2018, and you know Latin America, Africa, and Asia. And I was doing different things each time I was living in those places. But at the end of the day, like my experience in Brazil actually ended up being one where my job was men’s health. I was focused on men’s health. Men’s health research, really understanding what are the experiences men have with their own health, their body, their care, and what are the challenges that they have in accessing care. And how does that connect to their job prospects, their mental health, their drug use, alcohol use, et cetera. So I just got in the brains of men in Brazil, in Nigeria and in South Africa. And that helped me really learn people’s challenges with accessing economic opportunities related to cultural expectations, resource limitations, et cetera. So this again helps inform my understanding of, how do you market something like crypto or other products to communities who’ve never been properly spoken to? And in this case, like Portuguese speaking, predominantly black men in Brazil.

If you could sum it up your time traveling, give me one thing you learned that you’re applying right now. 

Totally. Well, I used to work at LinkedIn. I worked there for two years. I also, while I was working at LinkedIn, I would go to Nigeria a lot and I would be very involved in the early tech ecosystem and particularly the FinTech ecosystem. And I remember sending an email to the CEO of LinkedIn at the time and also the senior vice president of sales. So like the head CRO being like, there’s this company out of Nigeria, it’s undeniably going to unlock the African continent for you. It’s payments infrastructure, and enables you to accept any kind of currency tied to USD. We need to move with them ASAP because you’ll literally be able to accept every currency across Africa, and now expand LinkedIn across Africa because people can pay for LinkedIn stuff like subscriptions and other things. And that conversation went nowhere. And so respectfully, I just was like, okay, so I can bring a lot of stats and facts. But certain people just won’t get it. We might have to edit that part out. Certain people won’t get it, and as a result, I got to just go build it. I think that was the biggest thing. I’m like, okay, there’s a demographic of people that are influencing technology and finance and just what we’re all excited about today that literally can’t even place. 

Like certain parts of Africa or certain demographics that I see billions, like walking in the streets. It’s hard to invest in those things. If you’ve never seen it, you’ve never been to those places. So two things came out of that. I knew we ,as a fund, we’d want to invest a lot in media, visual video, like going on ground and getting you the immersion in Brazil, The Bahamas, Lagos, Nigeria. So you can feel it and almost get a connection with it and be excited about it. But also I knew. We’d have to storytell the investments that we’re making and why, so you can really see that beyond what we’re used to in the United States, there are so many other layers of socioeconomic operations where money flows, trillions and billions of dollars flow that most people of a sort of developed economy mindset, don’t know to solve for. And so it just essentially said all these travels, just let me know there’s something most people can’t see and I have to believe and what I see that most people don’t and say, we’re going to make that group, the investment thesis.

How long have you been running Audacity so far? 

In terms of audacity? So went public with an announcement in June, so it’s been a few months since I decided to raise an initial fund. End of March, top of April. So it’s been a speedy process. As it would with crypto, it is naturally very fast moving. 

What’s the current state of the crypto market? 

Wow. So. Whew, that’s its own podcast, for sure. There’s a lot to say. I think the expansion of decentralized finance and open finance to me is always going to be the unsexy interesting thing. But I think what we’re starting to see is, NFTs, one regain in popularity. So that’s cool. That increases the belief that this is here to stay. Visa just acquired their first crypto punk. So all of these things are helpful in the greater narrative. Shout out to Cuy Sheffield, holding it down. So anyway, those moments are important. So I think now with that visa integration on the crypto punk side, it shows that like old money really, blends with cultural money and there’s something interesting happening there. And I think that’s really important. What I would love almost is if I could actually say the state of the market in terms of what people aren’t looking at. And that’s probably the most anyway. I think there’s still a lot to be done and thinking about how, and NFTs can be used or just your crypto assets, whether you have an NFT, maybe you have a piece of an NFT. So my Twitter profile right now is currently a crypto punk. Named Howie and I have a fractional ownership stake in that. So I think it went for like, I don’t know, 232 or something like that, 200 or 300, maybe 400 ETH. I have a piece of that, you know, I don’t own it all, but I still get to get excited about having a piece. And if you were to have your own whole NFT at a varying price point, that same asset can be leveraged for access to loans. It could be leveraged for creating new financial identities on the blockchain that allow you to kind of leap frog the limitations of your real-world environment and credit scores, and like all these other things that could get very systemic and challenging and difficult to navigate, because you participated in an aspect of culture that you really like. You can now leverage that to like level up in your sort of access to financial tools and resources and capital, which is really cool and important. And I think that’s an area that I would like to see more attention drawn to because it’s now culture is now leveraged for economic opportunity, which is like important for a regular Joe, who would one of my investors said today, you know, getting a culture crypto punk is like getting a Jordan, you know, in the sense of like, you know, there’s only one of a hundred, you know, like they go up ,they’re scarce and all those other things. So what does it look like for all the Jordan lovers out there to now add onto their sort of pandemonium access to a crypto punk, but they could leverage that for a loan to pay for their school. 

Can you give me some examples of what’s happening either in the black tech landscape or the African landscape as to, who’s moving mountains in that sector? 

Wow. There’s a lot to say there. So first of all, I just want to give a shout out to everybody who’s ever felt like this moment in the internet, this moment in history, and the moment of life is like the cumulation of all the random things we’ve ever done throughout our lives. Because I personally feel like someone who was a big AOL chat gal, you know, out here with these aliases and stuff, I feel like this is like my moment to come back and build cool things. So you want to shout out to everybody who’s using this moment to create really cool, gnarly things, especially the amazing black people that I’m inspired by every day. So first and foremost, there’s a community called crypto for black economic empowerment, which I happen to be the president of. That is a pretty good collection of a lot of amazing black people in crypto. So I mentioned Cuy as one individual who is head of cryptocurrency at visa, and very much influential in crypto acquiring a crypto punk. So that’s like at the executive level at a franchise institution, that’s trying to figure out a crypto strategy. That’s like one really cool thing in terms of like black crypto tech. And then there are companies that are tackling more of the traditional finance arena. A company called on-ramp led by a gentleman named Tyrone, Tyrone Ross. They’re essentially enabling people to provide sort of Bitcoin and other crypto assets as wealth advisors. So they deal with RIA. So people who are essentially dealing with, you know, clients that want to increase their wealth and are thinking about how should my portfolio now include Bitcoin or other assets. They’re enabling that integration to happen with that type of provider within finance. That’s really cool. 

On the NFT side, there’s a lot of amazing NFT artists from across the world that I think are going to increasingly make it cool and viral to buy an NFT as a person that isn’t typically centered in technology. So Latabo is an amazing NFT artist out of South Africa. She’s such a huge inspiration. Eyeshelles Is actually from Panama. She’s the highest grossing woman for NFT sales, she did $2 million I think in a day, or maybe a few hours. Yeah. Highest grossing. I think that was March, April. No, may. It was the first week of may. So I think highest grossing like one instance, black NFT artist as well, and then also highest grossing digital artist for Panama as a country. So, I mean, just like breaking all the records. That’s pretty cool. And beyond just the sales of NFTs, I think people that are really leading culture are certainly Firms like Andreessen Horowitz, for sure. They launched their $2.2 billion fund, which there’s people there that are really instrumental in driving culture, like Chris Lyons and Megan over at the cultural leadership fund. So those people are really cool. In terms of the Africa side, I’ll give you just some strategic market insights. Right now we’re seeing a bit of a rush to crypto exchange. So who’s going to be that Coinbase? Who’s going to be, I don’t know that people are really thinking about being the next FTX , but like who’s going to be that exchange that really the entire continent mobilizes around. And my thesis is that like, there won’t be one. 

There will be many that sort of meet the different socioeconomic classes and categories of people across Africa. So you have your elites, you have your institutions, you have your banks, you have your central banks, you have those sort of regulatory government entities, and you have like a social elite who, you know, disposable income probably want access to crypto as a part of a traditional portfolio. And then you have like the masses broken up by age ,swagger, ways that they need to be spoken to language, culture, et cetera. So crypto exchanges is one category that’s starting to formalize more and we’ll see who wins. But next is DeFi. There’s a lot more education to still happen around the DeFi side to getting increasingly more entrepreneurs and founders building there. But truthfully, I think leverage in gaming. We’re seeing gaming as an interface, or music and sports, and film as just like Dapp. A decentralized app that is the interface for consuming those very things. Sports, film, any creator related entity and having DeFi on the backend to me is like the secret sauce for building a culturally relevant business that has the potential to multiply its capital reserves and treasuries just by using DeFi tools. Yeah. So I’ll pause there. 

Do creators need to start rethinking how they create NFTs, because there’s going to be new forms of finance that allow people to monetize their art, or should they stick to the craft? What do you think? 

That’s a good question. I like the way you asked it dramatically. So I think creating an NFT inherently is creating money for yourself. So understanding how an NFT works is definitely helpful. Because you’re creating something that even if somebody just buys it for a dollar, if 300 years from now, your stuff goes up and it’s now worth a thousand dollars, that person, or that estate that holds that asset, which is kind of crazy to think. If you own crypto today, you need to think about estate planning because a lot of this stuff is going to be held into perpetuity long after you’re here. So that’s for artists, but that’s also for holders, people who are part owners with you and your assets. All in all. I think artists are naturally already starting to think about money and finance more because they not only see one NFT as a way to capitalize and make money instantly without any intermediaries on the art they would have already created and put up for free on social media. But now it’s a new way of revenue. So you can say. Hm. I think I have the potential to make 10 K on this one, NFT or a thousand dollars or $750,000 on this one NFT. But what does it look like if I did that? What does it look like if I did that weekly, what does that look like if I decide, I want to donate a portion of it to high school because it was my high school that taught me more classes? Like, you know, there’s all these new ways I think artists are now being emboldened to kind of act like banks, frankly. 

And act like financial institutions because they’re getting an influx of cash, or excuse me crypto in a short period of time that would have been hard to access before, and now it can make decisions with their money that they never had a chance to. So that means people are paying down their loans. So they’re naturally interfacing with money in ways that overcome the fear that they originally might’ve had with loans. You’re able to now help your family members. You’re able to think about donating a certain lump sum that you just got over a weekend, because there was a fire auction. You like a community that you care about. You’re thinking about maybe leveraging that asset for more loans. Like there’s all these different things that I think is inherent that people should just be smart and build supportive, helpful tools around to enable artists to just feel more confident and emboldened to do right for themselves and their community around their money.

What’s happening in Africa’s tech landscape, and more specifically, with NFTs?

So with NFTs, you can have one of one. Meaning there’s only one, there could be one of a particular number that you set, or there could be one of, you know, sort of any amount that is purchased within a period of time. And so there could be one of one, there could be one of 100 and then there could be one of 720. Also with each of those NFTs, it could be that one NFT is purchased by multiple people. So multiple people own one NFT, or as I’ve just mentioned earlier, it could be that multiple people own an NFT of a particular collection with a fixed amount. The reason why I say that is because. However it is you participate, whether you own a piece of one, or you own one of a limited few, you now have an ownership stake in the creativity of whoever it is that you love, that you’re supporting. So it’s now your money that you would have spent on a VIP at a concert or the money you would’ve spent on Donda’s new ear listening thing to get the Kanye album. They could attach the NFT to that. And now you would not only have the hardware that Donda and Kanye just released, but you’d have an NFT associated with it that could increase in value as Kanye’s legacy continues to grow. And now, you’re not just a consumer, but you’re an investor that has an asset that appreciates that you would have put your money towards anything. So you would have bought the Donda thing or you would have bought Yeezys or whatever it is. But now that same money, that 200, 300, a thousand dollars you would have put towards is actually an asset that can go to $10,000 in six years. And now you can flip it. You can hold, you can do so many different things, but you never know longterm how that asset will be valuable to you, and in this case, the consumer turns into the investor. And that consumer turns into an owner. And that is an identity change. That is super important for people. And then like economically, it’s like, you’re an asset owner. You not only are a fan of Kanye or a fan of Burna boy, you’re a fan of Adam, but you like kind of a piece of ownership of it, and you can do a few things with that. That means that everybody gets a chance to win generationally because all of it’s into perpetuity.

How do you go by educating others that there’s a value to owning a digital asset? People haven’t wrapped their heads around that yet. 

Yeah. I think it’s the same as like, wouldn’t it be nice to own a piece of Twitter, especially if you avidly tweet every day? Like your data is contributing to Twitter, making money off of that. And so like, wouldn’t it be cool if day one things that could become a Twitter, AKA really successful business, you had an ownership stake in early? And your stake was liquid in the sense that you can do things with it without having to get the approval of that same entity that allows you to have access to that ownership. So I think that we really just have to understand that traditional finance is just being made available to regular people and people have been owning things for forever. Some of the legacy American families don’t own the United States. They just said that they have a business that owns a particular industry, and now they own that industry. Meaning like the largest railroad manufacturing company, they own the largest bank in wall street. They just decide. They just decided that they were going to build something that said they’d either own it partially or wholly. And over time, we’ll allow certain people to come into that ownership by going public, et cetera.

You can think about an NFT as a micro-business saying we’re going to make ownership of this thing available to multiple people. And we’re all going to benefit from the long term growth of this revenue or micro business over time. And that is ownership. Like it’s the same concept. It doesn’t change because there are JPEGs or MP3s involved. And I think it’s crazy that people are even confused about why you would want to own a piece of the internet. When you think about how much we’re consumed and addicted to the internet.

Adam: Yeah, fair. I just think, you know, like when you tell someone yeah, but you’re buying an image. Like why would I buy that image? I could just go on Google and like, have that image. So I think with time, people are going to realize, because the way all these networks, these crypto networks are set up, they’re set to validate, they’re set to prove they’re set to be transparent. That’s just their innate nature, right? That’s just how they’re set up. That’s how they’re designed. And once more of the world kind of gets ingrained with crypto by default, with everything, everyday things that they do, they’ll realize the power they’ll realize the potential whether they like it or not. It’s coming guys, whether you like it or not we’re coming.

If it doesn’t make sense to you know, follow that discomfort and, what the hell, because what you don’t see is probably what needs to be created because it’s so early and it’s time for you to get in. Like if you get everything you’re probably too deep in your rabbit hole. You’re too Deep in your rabbit hole, cause you haven’t come up with, well, where’s this and where’s that, oh, it doesn’t exist yet. You got to go build, are you investing in it? Are you sharing that idea? And then the other part that I would tell people is NFTs are a tool. They’re not equal to JPEGs. So, an NFT is a digital certificate of ownership of anything. So if you have land, you can have an NFT that represents your digital ownership of your land and in the smart contract, AKA the code, and like instructions, it can say that you own it, here’s the terms, here’s the size kilometers, et cetera, and being like, so only when this asset changes hands does someone else on your land. So that is just literally a tool that every DMV, every registry, archives. And so it’s at that point in time, that’s great for a library. That’s great for an entity that has to keep records of hospitals, your medical records being an NFT, which is not like flashy NFT. It’s just like, oh God, thank goodness I have ready access on my phone, the last time I got my COVID vaccination, you know? So like it’s a tool. That it is popularized in art, but it’s a digital way to capture information and in most cases ownership. So how would you then want to use something like that in the worlds that you’re operating in? 

Amazing. So the number two is revenue and royalties, which you already kind of touched upon behind number one. Either owning something right in the money that comes from that and the generational wealth you can build. Anything else you would add to the revenue and royalty section?

Generational revenues, like who is mad at a royalty check 50 years after the person that’s inspired the royalties have unfortunately transitioned and a family can benefit from a check every month. Because your dad made a cool NFT four years ago, and we’re still collecting the money. And mind you to be clear the royalties come from secondary sales. So I do think it’s worth acknowledging, again, these things that have always happened in traditional finance, but now regular Joes, like you and I get to recognize that like, there’s that initial opportunity to buy something and buying means you actually have a piece of ownership, but then there’s that second chance then there’s that opportunity of like, dang, I missed it, but what’s the resell. So, and that resells that opportunity for you to jump in and still get active, it might be 3x on the money. It might be 10 X, but at least it’s still an opportunity to ride the wave as the value grows up over time. So it’s like buying Bitcoin today when you could have bought it at 5,000, but you still bought it. And if it goes to 1 million, then you’re still up. And then the other part of that is Reselling and speculating. So that’s a whole nother category that’s going to mushroom because people want access to royalties and access to revenue. So you could say I’m an NFT flipper, and that’s my part-time job and that’s my full-time job. I’m just trying to get 5X on NFTs. That’s new revenue for you. And any time it’s bought or sold, you’re getting a piece, just like the artist is getting it. 

Revenues and royalties checks, self-driving money, liquidity, collateral, and financial freedom. I feel like this also ties into DeFi a little bit. 

Yes, it does. So there’s three ways to think about having a crypto asset at minimum. One is the value of it goes up, or it goes down, two, that asset can be staked, AKA, you can get interest for just lending your crypto asset to the crypto world, and then also, three, is that that asset can go into a decentralized finance vehicle, which really just means you could leverage that asset for loans or for other financial instruments. So the self-driving money piece is like you made one action. You bought something that you loved, you bought art, you bought a NFT sneaker line. You bought whatever it is. And that one activity with maybe a complimentary gesture of a button or two can now make you more money without really doing much more work. You know what I mean? So that’s the element of, like I bought one Bitcoin, it’s now 10 X the value. And I only bought it once, but it still continues to make me money because it grows in value and I staked it. And I’m now adding it to a liquidity pool where I’m getting, you know, 300% APY. Those are three different, amazing things that could happen off of one activity of buying a Bitcoin.

And the last one, which is my personal favorite and the theme of this entire show, right, is a, they create our economy and how youth transforms global perceptions. There’s a lot to unpack here. So take it from any direction.

 Well, I think it’s kind of the same concept of diminishing the JPEG. It’s just like, you don’t take us seriously. It’s just like, what do we have to do? Like we built billion dollar business. People’s pensions are now getting invested into startups. Like we have to really understand how the world of money works and it’s just like, there’s noise. And then there’s how money works. And money goes to what people perceive as valuable. And if there are certain demographics or industries or regions of the world that are perceived more valuable, money will go there. Insert the United States of America. So people perceive the United States of America to be the creme de la creme, the top country in the entire world, economically, culturally, enterprise, Hollywood, all these things, right? Because the US has done a great job of PR and by owning one huge creator economy, AKA Hollywood, and entertainment, we can produce films and movies that broadcast to the world, whatever story you want to. Which is not always true, but it benefits us because we control the narrative because we control LA and the entertainment industry. So if you have regular Joes releasing viral art, viral films, viral fashion lines, viral music that people all over the world have ownership in. They’re going to be broadcasting their love of their thing that they captured from you in every village, hood boardroom, you know, water cooler moment, zoom call, et cetera, you know, a display profile picture on Twitter, all of these different moments or instances to evangelize . Your love of a cultural moment, an NFT artist or creator, whoever. And by being able to get more pandemonium and fandemonium because your fans are actually your investors, they’re your co-owners. You immediately have more people talking about you. And the more people that are talking about one piece of African content and another African creator and another African creator. It means like, whoa, something’s happening about Africa, because I keep hearing about these different types of African creators and all of those things help evolve and expand people’s perception of Africa. Why isn’t evolved perception of Africa important? Well, you talk to most Joes on the street and they think Africa is lions, tigers, bears, hyenas, war famine, HIV, and aids. Save the children from commercials and national geographic. I think that was a very thoughtful and comprehensive spectrum of what most people think about for Africa. Oh, black Panther, which was super important for activating a possible different narrative around Africa, which to me, I think black Panther is more accurate than it is fictional. And so all in all, imagine if Black Panther itself as a film was an NFT and imagine Black Panther made like almost $2 billion three years ago. Imagine every single person that bought a ticket now actually owns a piece of black Panther too. You know what I mean? That not only means you watch the movie, but you own that, you own a piece of that. That is not going to change the way people think about Africa, because they’re seeing the value of their NFT connected to Black Panther, triple as the movie launches, and then continue to go up as Marvel continues to integrate characters from the sequel into more Marvel pictures. All of this is raising the value of something people associate with Africa, which is important for us to challenge those narratives that kind of keep our value hidden to the masses. 

You know, it’s interesting you brought that up and I don’t know if that number is specifically true and you tell me if it’s true that they made $2 billion off that franchise? Is that number correct?

Definitely well over a billion. 

Adam: Okay. Well over a billion, whatever it may be. I would argue that if they applied web three primitives to their marketing and launch strategy, and every single movie ticket would actually be a form of ownership, a small fraction, but a form of ownership, right. Not enough to give everybody control over the movie because the director and the producers still need to bring this thing to life. I would argue that the value would be 10 X maybe only because everybody’s incentives are aligned beyond just a ticket in popcorn. Now it’s like, fuck, like I have ownership, you know, like, I can control collectively with this community what the value of this franchise may be. I got to talk about it more. I got to tell more people about it. I gotta promote it more. I got to do all this or, you know, Just the power dynamics shift. 

It shifts, and imagine like the makeup artists and like fashion designers who were seaming away right before the big scene. Like what does it look like for those people to also benefit from the upside of their craftsmanship and their work? You know what I mean? Not only just the big ticket director, executive producer, et cetera, but everybody along the value chain in the creation chain of such a big body of work like that, being able to have a stake, which is hard to do now just given the way payment structures and business models work in most industries. You kind of pay the most of the person you perceive to have the most influence and value, which isn’t always representative of who actually put in the most work or like representative work. And so you’ll say that maybe a part-time person who did seamstress work on Lupita’s outfit, may not warrant getting as much upside as like the producers. Oh, okay. Maybe, but does she just get paid for those three hours or 10 hours or a hundred hours she was on set, but not benefit from the stock potential of the success of this film? Because she made Lupita’s outfits fire in every scene. So like, I think the impact is there. So it just gives people a chance to say, if I touch this in some way, AKA, if I contributed to this success in some way, I can get a piece of that. So that’s an example. I mean, Hey, I’m working my way up to Marvel and all of them to make sure we can get this done. 

Adam: Yeah, I got you. We gotta brainstorm after this. You know, one thing that actually, as you were, as you were talking and you’re answering my last question kind of popped up into my head. There’s always been an issue of financial literacy. Of people kind of like not understanding what one money is, what credit is. Right. And what ownership is. NFTs are changing that. NFTs, their foundation is understanding the value of ownership. And you’re seeing all these creative individuals that maybe I could be wrong, I could possibly be wrong, but I would argue that focus on the creative side of things, you don’t really focus on the financial side of things they just create to create are now understanding financial primitives that are core to their success and their future representation as an artist. So it’s cool to see this happening live and it’s cool to be a part of it.

Adam: I want to wrap up with a couple of questions here. Okay. And I wanted to talk to you about creators and DAOs and the inequality and disparity of how intellectual property works with black people and Africa. There’s so many things we can talk about. So I’m going to let you pick, we got the topic of creators. We got the topic of DAOs or we have the economic and inequality disparity that comes from the intellectual property of black culture and African culture. Which one do you want to do? Cause I know this is something you’re very vocal about, right? Because I think it’s pretty evident that black culture is a core component to a lot of music, sports and so much more. And we talked about this a little bit, but you argue that they don’t see the value of that intellectual property to its fullest. And crypto can fix that. So talk to me about that. Share with me your point of view on that. 

So you could pick a lot of industries, but one of them we can think about is wall street. Wall Street was literally built off of colonizing bodies, going to West Africa, getting gold and slaves to then come to the United States to build enterprise and build commerce and build financial institutions that we now helm as the American sort of, like we regard them heavily. So that’s like labor and intelligence to build economies off of the strength of your own DNA to then build a nation that is considered the best nation in the world. Like that’s already a huge rip off in terms of like the black community not benefiting from the upside of the success of the US. That’s one example. Another example is jazz music. So jazz music predominantly comes from southern artists, Louis Armstrong and various others who eventually migrated up north and really took over Harlem and the New York scene by storm and got signed by a lot of record labels that never paid them. But the same people were sort of broadcast outside of the United States as like the beacons of American culture, Louis Armstrong was made into an ambassador and literally traveled all over Europe to promote the United States, but was like poorly treated when he came back to the United States and didn’t benefit and economically from expanding the jazz genre all over the world. But what then inspired jazz? Jazz then spawned blues. Blues then started to spawn rock and roll. Rock and roll then spawned hip hop in certain ways. All of those were driven by black characters. And oftentimes it was the business people that interacted with these black creators that benefited financially because they built the business model to benefit them, and not actually the creators of IP, which were the musicians. Every genre, same case. And so sports is a similar example. You see a lot of the trouble with what LeBron advocates for, and you see it in the NFL as well. So these are the real instances in which you’re driving a lot of the momentum, the dabbing like all of these things. You’re driving all this momentum Tik Tokers in 2020, literally from the Savage dance to all of these things, became the blueprint for what was viral during COVID around the world and respectfully, white young people kind of leverage that to create dances as well and became more popular of the creators on Tik Tok which then leads our people to get sponsorship deals, endorsements. I saw one of the top influencers, she’s now an angel investor in startups. So like you are taking dance moves from young black kids and just dancing to them, no big deal, but like that’s creating economic opportunity for you that allows you to now be an investor in an ownership of companies that can change your life and your whole legacy. Whereas that same person who created that dance gets a pat on the back and a few likes or for creating a dance that changes the world. Why is that important from an IP standpoint? It’s to say that if, for example, every Tik Tok video was instead attached to an NFT and instead of you liking it and commenting, you put a dollar towards how much you love it, and it’s automated, it’s simple, connected to a wallet. You don’t even have to think about it. Now, every single initial viral creator online gets a dollar per the equivalent of a like, and now it gets to see immediately the economic gain from that. And because they’re first to market with their respective NFT or creation, that’s connected to a dance or whatever it is that a lot of black creators create that really forms the internet. They’re able to benefit us as a first mover, have tens of thousands, if not millions of people who’ve bought into their love of that same viral moment on the internet, and everyone will be able to be proud that they have ownership of that meme that was created by X person from X place. And that meme can take on a similar sort of pandemonium as a crypto because it’s widely used in group chats and all these other things. So now this is an opportunity for someone who influences internet culture, who’s historically known for being a meme. AKA, a lot of creators, especially a lot of young black people to have an asset attached to that cultural moment, and it be something where you can only use that meme or NFT, if you are a part owner in it, which you had the opportunity to do so at the onset of launching that NFT. So these are different ways that people can capture their IP. 

Adam: You just inspired a train of thought right now where let’s say Tik TOK were to go more web three native, and these audio files that people consistently, you know, create new files, those were NFTs essentially, right? And every time they would get used, there would be a way to measure the virality and the amount of attention that’s captured through that specific trend and the ad revenue that would be captured through Tik TOK would then get equally or not equally, but proportionally redistributed to the person who initially uploaded that MP3 file. And then that got streamed and recreated thousands upon millions of times. And that’s powerful. Right? That’s powerful. Realigning incentives, realigning the distribution of wealth, realigning and rewarding those who create virality, those who bring the attention, a stake and ownership in the platform that they help make a reality.

And another way that it could work is Tik TOK launches a token. I recommend that they use roll tryroll.com. And they can launch a Tik Tok token, $TikTok ,and gift some of the founding like most viral content creators of 2020 proportionate tokens to their viral impact. And now those people have essentially a stock connected to Tik Tok, that is not exactly stock, but kinda.. And now you have an asset for all of the, like things that you did. 

What’s going to eat Web 3.0? 

Listen. I think we’re going to be eating with web three for a long time. It’s just the beginning. But I think what will eat web three is tribes, communities of people. So that goes into DAOs, but like communities of people creating their own economies. Like to me, that’s like you and the homies and a group chat should have your own economic system. Like, I just don’t even understand why, like there isn’t a wallet connected to every group chat that organizes for brunch. Just like, come on. If all of you are gearing up to go to burning man, there should be like a very simple way to economically just figure that out. And I think people walking around as financial institutions is the future. 

That’s a perfect place to end Erica. And where can we find you? Where can we learn more about Audacity Fund.

Audacity.fund, that’s the website. That’s it. @HeyErikan on Twitter, and yeah, I’m pretty active and just find me there.

Listen on: Spotify | Apple Podcast | Google Podcast

Background

Mint Season 2 episode 9 welcomes Andy Artz who’s on a mission to advance humanity by solving the world’s hardest problems by investing capital across early-stage startups at Social Capital.

He’s also a major proponent of the decentralized social media platform BitClout following his own creator coin $ARTZ.

In this episode, we talk about:

• Understanding BitClout
• Weighing the risks of creator coins
• Curation on the blockchain
• Launching $ARTZ coin
• Trading social capital
• What will eat Web 3?

…and so much more.

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Thank you to Season 2’s NFT sponsors!

1. Coinvise – https://coinvise.co/

2. POAP – https://poap.xyz/

3. Socialstack – https://socialstack.co/

4. Celo – https://celo.org/

5. PrimeDAO – https://www.prime.xyz/

Interested in becoming an NFT sponsor? Get in touch here!

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Let’s just jump right into the basics. Tell me a bit about yourself. Who are you, Andy? What were you doing before crypto? And kind of, where are you now? 

These days, I’m a social token influencer by night. By day I am a partner at social capital. I’ve been in the venture capital space for the last eight years. Before that I was a VP of analytics and finance at a gaming startup called O M G Pop. Kind of a precursor to crypto. In a way gaming communities feel very similar and very related to crypto. So it was building social games there. We had a game called draw something which was popular for a minute in March, 2012. Before that, I studied physics. So I was coming from a science background.

So you studied physics. Okay. Very far from investing, very far from gaming. How did you go from the physics route to the gaming route? And now it’s crypto? Like what was that transition like?

The transition was rough. I think all transitions are hard. There’s no such thing as a smooth transition, in my opinion. I was curious about how the world works. So I liked understanding, you know, like at the atomic level, protons, neutrons, quantum was very interesting, like a probabilistic view of the world. But going deeper into science was a different path I wasn’t ready for. So I got into finance. I had loans to pay, worked at IBM. Learned how to use Excel, learn how companies think about buying other companies. Got to see the flow of funds of who cashes out, where the values created at IBM, where this large company with a lot of loyal executives that were buying these smaller startups. And so I fell in love with that process and that’s what led me to join startups. So I reached out to a bunch of folks in my network. OMG pop got connected through a friend of a friend. And yeah, I really love the gaming space. I’ve always been a gamer, grew up playing StarCraft Diablo 2 Warcraft 3. 

So at social capital, what do you guys kind of focus on? I know you guys are a relatively big firm and I feel like you’re agnostic, but what do you, I guess, more specifically, what do you look for as an investor?

Yeah, we’re a generalist firm. We’ve got a couple of billion dollars under management across venture funds SPACs . We do private credit as well, a bunch of different asset classes. I joined with Bitcoin in mind in 2013, so Chamath and I teamed up. We started thinking through where’s crypto going. We put on a big trade back then. Which has worked out well for us. We bought a piece of digital currency group. And so I’ve always been interested in tracking the frontier of how consumer behavior is changing. We did a lot of healthcare, education, and SaaS investing in social capital. That was our mandate. But slowly I’ve been drawn back more to the crypto side from last year, I’ve been focusing full-time on this and really on the consumer angle too. Like, how is crypto gonna enable new ways of communicating new ways of interacting. I think DAOs are interesting. New ways of governance, new ways of you know, culture we’re seeing in the NFT space.

I think you called yourself a social token influencer, right? Which I think respectively on BitClout, you’re obviously one of the top-performing creators out there, if you’re measuring it by your ticket price and also your level of activity. And you’re a very big advocate of these creator coins, right? However, you want to call them. What is it about social tokens that got you so excited to begin with? 

It was new. It was different. It was weird. It was addictive. It felt like there was some new behavior that was being unlocked beyond, you know, I could go set up a Stripe account or a Shopify store, or, you know, I have Venmo and I have a PayPal account and that’s all fine and good. There’s something about the speed, the global reach, the fact that it’s crypto, it’s on a blockchain. BitClout is a layer one. And you know, this is not specific to BitClout but I think the idea of social tokens, I can’t set up a token on rally for example. I’m not a YouTube or a vine or Twitch or whatever streamer that has a huge following. So BitClout was just this very simple way for anyone in the world to go up and have a token. The simplest way in the world to issue a token right now, currently I think that’s, that’s on BitClout.com.

Have you ever thought about what a stable creator coin would look like? Does that even make sense? What do you feel about that? 

Yeah, one of the first experiments had been, a platform, I called it StableClout. People to keep a peg of my coin price at $8,888 so that if it went over, people would sell and buy. So trying to replicate an algo stable coin of sorts with the community there were no real incentives. It was just for fun. But yeah, I think it’s a great point. Like a lot of people don’t want to be exposed to volatility on the day-to-day and that affects their user experience. So I think. You know, keeping it in stable coins and then there’s diamonds on the platform, which are basically a form of tipping, which you tip in your own creator coin, which is volatile. So you know, that piece is a little weird, but I think to your point, not everybody wants to be exposed to volatility in all aspects of what they’re doing. So that’s definitely something that we’ll need to evolve with the ecosystem. 

What’s the current state of the social token market? 

We’re very early. The social token wave is yet to crest. I think you know, there was a little bit, a BitClout mania upon launch. Rally and roll had a headstart, but this is the first consumer facing platform that’s reached a million users and is available to anyone in the world. This is sort of at the Friendster, if you compare it to the social network days. Where, you know, social networks,are not yet anywhere similar to how social tokens, not yet on the tip of everyone’s tongues. But I do think it will have its moment. And I think, you know, right now you mentioned NFTs are the focus. That seems to have captured the community’s imagination and how you have this piece of ownership and then connecting that to DeFi is interesting. And then, you know, what’s happening in gaming right now is interesting. I think people are getting more and more used to the idea that there are assets other than, you know, your standard layer one tokens or layer two tokens that have value that can be transacted in interesting ways. And social tokens takes that up a notch. If you spend any amount of time on BitClout, how many different interdependencies, there are the coin price, volatility, the tipping mechanism, you managing your own coin and your own cap table of coin holders. It’s a very complicated thing. Not only intellectually or financially but also there’s a social element too which I haven’t seen before in crypto. It exist on on other platforms. 

A lot happened between the Friendster phase and the Facebook phase. What do you imagine the Facebook phase of web3 looking like?

Well, the biggest change that happened in the early 2000s was people getting wired up to the internet. So I think the similar phase where, you know, a couple, a couple hundred million users in crypto worldwide, I think people getting wired up to crypto is the biggest change that needs to happen. You, you know, BitClout was unique in that it focused on a different audience than the hardcore crypto community and some of the hardcore crypto community weren’t so impressed with the way some of the growth tactics and how it launched. So it kind of alienated some users early on, and there’s a small, very small subset of the global population that’s using this and experimenting with it. And it’s hard to onboard. It’s hard to go from USD using wire to confirm via your bank account to get a small amount of Bitcoin that, like you said, it’s a volatile asset and then convert it for BitClout and then convert to creator points. It’s like a five, six-step process. It makes no sense for your average user let alone fees too, you know, and in Nigeria as a user you’re to pay $20 a transaction fee to swap USD to Bitcoin. So there’s some barriers there. 

Share with me the process of how you came to the conclusion to invest in Bitclout.

Yeah. I guess in my limited experience, in my career, some of the biggest value creation, examples, some of the biggest start-ups that have ever been created are, are innovating around human communication. Whether it’s WhatsApp, whether it was Facebook originally, whether it’s thinking about telegram, think about Snapchat, think about Twitter, it’s always some form of changing the way we communicate. And so at the core, I think inter human communication is a big problem to solve. And so anyone that sets out to do something different there, I’m already very interested in. In the case of BitClout , there’s a problem that’s very top of mind right now around getting canceled on centralized social networks. Do you really own your account? Do you really own your data? Do you really have a platform to speak? Who controls that? I think that’s a question that the community is struggling with, right now, at large. And so BitClout saw that and had a solution to that problem. So that was very interesting. That was very timely. I don’t know if people would have been as receptive to that idea five years ago or certainly 10 years ago.

How do you see the competitive landscape of decentralized social media platforms like Bitclout evolving over time? 

No, I think a rising tide lifts all boats. I think people are just waking up to the idea that they don’t own their data . I think that’s starting to come into the consumer consciousness more. I think more examples of people trying to build this will only bring more attention and usage to these platforms. I happen to like the BitClout platform. It’s fast, it’s responsive, the developers are very committed. There’s a large treasury to support the project. It’s hard to do. I would really applaud Twitter and congratulate them if they can make it work. It’s also nice for competition to exist because then, you know, different teams can learn from each other what works. You know, copy each other, share technologies in certain ways. So I think it’s better. The more people that are working on this problem, I think the better off humanity will be. So I’m encouraged by it. I think BitClout has a first mover advantage. It’s a very smart team. They’re in pole position right now. If they keep executing the way they do over time, it’s going to be a long journey ahead. It’s speculative, but it’s, it’s also a long-term project.

How do you see curation protocols playing a role over the years and empowering platforms like BitClout or a future web three social networks?

Oh yeah. I think it’s super important. BitClout Is the data layer, the blockchain. And so the node operators are gonna have to figure out how do they engage their users and monetize. Maybe that’s one of the challenges BitClout faces is, has it encouraged a vibrant third-party developer ecosystem of node operators who will then go build consumer-facing applications that will then attract users to come and join and monetize and engage. So I think curation on that piece, the endless infinite scroll is the best part of TikTok. That sense of satisfaction that you get for completing these short videos. The dopamine hit and then the unlimited, you know, never ending scroll. Those are two powerful features. So I’m sure there will be some novel engagement tricks and techniques that will be developed by some of these node operators that we haven’t seen before. That are more crypto native, and maybe that’s, you know, you could imagine your wallet balance tops up as you engage for longer term. Think about like brave and bat, like maybe you’re benefiting from some of the ads that you consume and you’re, you’re constantly earning that way. I think, you know, with axie and the axie infinity play to earn. There could be a similar model here you know, of a scroll to earn .consume to earn, interact, or, and engaged, or, any kind of model that doesn’t really exist in a social network today.

How would that look? Like another example that comes to mind is the collaboration between Celo and Socialstack. And they implement this concept called proof of listen. So every time you would listen to a podcast episode, you basically get rewarded in whatever token. So that’s kind of like what you’re, you’re hinting at? 

Yeah, exactly. What do we call it? Proof of engagement. Proof of activity, to that extent. Yeah. 

I want to jump into your token $ARTZ. You’re publicly trading on the market. People can speculate on you as a person and the content that you push out. Off initial thought, did that scare you? Did that give you any concerns that freak you out at all? How was that process? 

Maybe it should have. You know, not financial advice, I’m not, I’m not a financial advisor. I think, the regulation aside, it was play. It was, it was pure bliss. It was really enjoyable. It was a curiosity. No one knew what to do. I created an account called a Clout Taito account where I would send people a fraction of a BitClout and ask them to keep a slice and pass it on. And the community responded. It was really cool. We talked about the stable coin, stable clout . I started doing some, you know, some lightweight versions of raffles, some bounties. I just started experimenting with everything possible that you could do with having your own token. I have my own sovereign currency now, so… 

You say you have your own sovereign currency, but in reality, I mean, technically it’s a currency, but what can you do beyond just trading? Like where does a utility come into play? How do you think about that?

Yeah, I think early on, it was a lot of speculation. I think by locking value into my coin. So I bought a bunch of my own coin. I exchanged BitClout for ARTZ coin, which then threw the bonding curve, boosted the price of ARTZ coin. So now I have this asset that I can distribute to people in fractionalized ways. I can give you a fraction of ARTZ coin. The first thing I would think about is access. I haven’t done anything with my community, but there’s some creators. Think about Craig who has a private telegram group that coin holders have access to. There was a sub stack sort of equivalent platform where you could write called sub clout where you could write a blog post and have that be pushed out to all of your coin holders. So I think at the very first, the way we, a lot of us thought about it was, it’s sort of like a CRM and your coin holders now are some your VIP users. And maybe you have followers on social media, on Instagram, who will like your content. But this is like the next level of engaged users who are actually willing to put real money in support you. And it could be a dollar, it could be a thousand dollars. You know, that the amount is that way. So that’s more about just gaining access to a creator, from a follower perspective. 

The other piece that you mentioned is financial. And so what does this asset really represent on the financial side? What’s the underlying value? I think where things are heading is tying some form of cash flows back to coin holders. The first iteration of that, the platform launch that launched NFT sales. So I can mint an NFT, I can sell it. And then a portion of the proceeds can go back to my coin holders and I can tweak that ratio. So if I’m a prolific NFT creator, there’s a real incentive for my coin holders to hold my coin, because now they’re going to be receiving some cash flows from those NFT sales.

If a creator would come to you today and they ask you Andy, like I want to get into social tokens, I love the concept of tokenizing myself, keeping my users a part of the journey,but how do I promote this to people without it feeling too sketchy? Without it feeling like a cash grab? Like how do you imagine that line of communication? 

Yeah, I think it reminds me of in the gaming world in the social gaming world, we had a concept in freemium games of a power users. We would call them whales, the users who had spent over a thousand dollars in your game. It’s usually a small fraction of the user base, less than one percent. Those are the users who drive 80% of the revenue. And so I imagine there’s a similar segmentation of a creator ‘s fan base. Who are the fans that are consuming, you know, 5, 10% of fans that are consuming 80% of the music, the content that’s put out, buying the tickets. And so I would not think about this as a product right now that’s suitable for your mass audience, but I would think about it as a product that’s suitable for sort of the upper echelon of your fans. And then the second piece is do you ask them to buy it? Do you ask them to put real money into it? Do you use it as a sort of fundraising platform for yourself for a monetization platform? Or do you think about it as more of an access platform? I, right now today think it’s better suited for access. So I would create a token. I would Boost the value of my own token myself. And then I would airdrop that to my top thousand fans, not asking them to buy anything. So now they have a piece. I’m rewarding them for, you know, in a way you think about like a cash back of sorts. Like it’s a reward for being a part of my community. And then empowering them. 

You know, a lot of creators have this huge community, but they don’t know how to tap into the intellectual capital that exists there and to mobilize that for their own benefit. You know, if there’s a developer in my community and I want to launch a website, or if there’s some clever marketing that I need help with you know, paid acquisition for some campaign I’m running. Or there’s some musician and I need some help you know, scoring one of my, my TikTok videos. All those people exist in my community, and they’re probably a few that are highly engaged. I would love to use my token to at least connect with them, have them on a register of sorts, a CRM. So I can know who they are and then engage with them in a more meaningful way. And transact and send value to them for you know, completing bounties for my community. Things that I need help with things that helping me scale. 

BitClout will let me say, Hey, here’s my top thousand followers. And I would need something on top of that. If the user chooses to remain anonymous or pseudonymous I would need something on top of that to stitch their email to their BitClout account or their phone number, and I could ask them. We invested a company called Moonbounce which is stitching those together so that a creator can say, Hey, you know, go to this site and put your email, your phone number, join your BitClout handles, so I know who you are. Sort of, you know, a lightweight KYC of sorts for creators so they can have their contact details of their top fans. 

Since you launched ARTZ coin, what are some like major things you learned that you didn’t expect you’d find out along the way?

Yeah, I guess, you know, I realized I was really impressed by the Goodwill of the community. I thought going in that it would be like you know, the equivalent of like a stock price that people would rapaciously, buy and sell and looking at it from a profiteering motive. I’ve actually made some really good friends from folks who are coin holders, Douglas being one of them. It’s a pseudonymous account. We met up in person and we both hold each other’s coin. We saw each other’s activity on this and I made some great friends on the platform and it’s sort of transcended the financial aspect. It’s almost in a way, you know, I don’t want to go too far, but it’s almost as if how you think about treating family with finances. it’s not really business in a way. And so there’s that element where you’re aligning individuals you’re holding their coins. 

I’ve seen these really long-term coin mutual coin holder sort of handshake agreements emerge where people want to be invested in each other and support each other. That’s another piece. There’s a psychological component to it. When you own a piece of someone, of their token, it changes how you interact with them. You want them to succeed. I’m much more generous with my time than I would be otherwise in the BitClout community. Partially because I hold these tokens and I think there’s a psychological hack in a way that where my brain says, these are my allies, these people are part of my tribe now, in a way that, you know, someone just hits me up in email and says, Hey, can we chat about this? I might be more reluctant to do so. 

How do you feel about a Black Mirror scenario unfolding where everyone is tokenized and we judge each other by our price. Do you see that idea becoming a reality? If so, how do you feel about that? Is that scary to you? Does it excite you?

Well I think it’s up for grabs. It’s up to us to decide how we want to fashion that. I believe we have agency in shaping this. The interesting thing about crypto is we have an opportunity to refashion the world and the power structures in a way that don’t exist in the analog world. If we do nothing, you know, maybe they just map over one for one. Billionaires today, have plenty of power and status. And so if you’re saying someone with a billion-dollar coin price has power and status and it’s tokenized and maybe a billionaire controls, a publicly-traded company, and now they have their social token. That’s totally, you know, kind of analogous. There’s not a lot of difference. It’s different than the social media influencer that has a bunch of followers and maybe doesn’t generate income. I love the fact that things are a lot more transparent. I like the idea that everything you do is visible and you have to be accountable for your actions now. And those can be discoverable by anybody who has access to the chain and knows how to use a database or knows how to read the block Explorer. I like that a lot. And people can still obfuscate what they’re doing and hide it through other accounts and, you know, send it through tumblers. That’s always possible, but I like being myself on the chain. When I post a picture of my six-month-old baby it’s embedded on the chain and now everyone can see it and hackers and allies and foes and enemies. Everyone has access to that image now. It’s just cool that you’re kind of putting all your cards out there.

What’s going to eat web three? What do you think? Web two ate web 1.0 web 3.0 , the bet is going to be eating web 2.0. What do you think will be eating web three? 

Hmm. Good question. What’s next, next. Well I think the arrow of time is pointing to the rise of the sovereign individual. And I think going from web one to web two to web three has given more and pushed for more power down to the individual to use technology, to interact with their world and their lives. I mean the first thing that pops into mind is the metaverse. I think there’s a lot of talk about that, but it’s the very, very early innings. And so the thing that would eat web three is if web three allows all of us to have an economic presence and the build out of these economic blocks online, where you know, the financialization of everything that we do, the crypto vocation of everything we do online, I think that allows us now a different way of interacting exchange of value, a seamless exchange of value. And what follows from that would be. Yeah, I suppose you would see more and more people setting up I guess building their lives increasingly online, more so than they’re already doing today. Today, we kind of think about the internet as the remote control for our real life. But maybe that flips and you know, we’re spending the majority of our time earning our incomes, our livings through these platforms. You know, if you think about breeding horses that run, maybe that’s just a joke today. Maybe that’s the tip of the iceberg where you know, these DAOs and these communities of people to economically be productive. That’s a hard question.

Web3 question continued…let’s say everything is on-chain. Is that a good thing or a bad thing? And why? 

Well, everything already is on-chain in the sense that, you know, our interactions. Like if you think about the universe is the chain we’re already living on chain. It’s just such a computer that we don’t-. It’s a giant atomic computer, we don’t have the ability to calculate. So this is just dumbing, everything down and saying, okay let’s, you know, embed everything you know, on a chain we can actually read. I think that’s really cool because now it opens up a new possibility to have this third brain of sorts that we don’t have today. That is, you know, you could, on the one hand, you could fearmonger and say, oh, it’s this hyper surveillance police state that we’ll be living in. 

On the other hand, you could say, oh, it’s, you know, all these apps that can augment my daily life that we can create based on the data that we couldn’t have before. So I I’m in that camp. You know, I want to put all my life on-chain. Think about all the biometric data. Tell me what to do. Here’s all the data. I love that idea.

Before I let you go quickly, plug yourself and where we can find you in the various projects you’re involved with.

Yeah. I’m Andy Artz. You can find me on Twitter as ArtzAndy, or on BitClout as ARTZ. Yeah, thanks so much, Adam.

Listen on: Spotify | Apple Podcast | Google Podcast

Background

Mint Season 2 episode 8 welcomes Maria Shen who’s a partner at Electric Capital. Prior to Electric, Maria was CTO and co-founder of a startup that helped SMBs easily create their supply chains with manufacturers around the world. Prior to that, she worked on search technology at Microsoft, with her features shipped to more than 1 billion devices.

In this episode, we talk about:

• Her NFT collection strategy
• Undercollateralized social lending in NFT communities
• Favorite NFT use cases
• The intersection of DeFi and NFTs
• How creators should be thinking about the metaverse
• The frenzy behind Bored Ape Yacht Club
• Lessons learned working in this space

…and so much more.

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Thank you to Season 2’s NFT sponsors!

1. Coinvise – https://coinvise.co/

2. POAP – https://poap.xyz/

3. Socialstack – https://socialstack.co/

4. Celo – https://celo.org/

5. PrimeDAO – https://www.prime.xyz/

Interested in becoming an NFT sponsor? Get in touch here!

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You’re making a lot of noise on crypto Twitter with your love for bored apes and your love for NFTs. So I’m excited to dive in. Let’s just get right into it. Give me a quick brief about yourself. Who are you? What were you doing before crypto? And like, where are you now? 

Yeah, sure. So right now I am an investment partner-focused VC firm called electric capital. Where I, as you see from my Twitter, I’m super focused on NFTs and we can totally talk about how I got into NFTs in the first place. But prior to electric, I was co-founder and CTO of a supply chain startup. Before that I was getting my masters in computer science. I spent some time at Microsoft on search tech as a PM. Graduated from Harvard, studied political science and computer science. So yeah, I mean, my background mainly is in product and engineering being an entrepreneur and now investing.

How did you go from the supply chain to crypto? Cause that’s like that’s night and day. I know there’s a lot of overlap with blockchain technology and supply chain, but NFTs and supply chain?

I didn’t jump from supply to hang to NFTs, but I did jump from supply chains to crypto. So you know, kind of the backstory here. I started my company back in like 2015, 2016 . So if you take yourself back to that time that was when direct to consumer products really rose to prominence, right? This is your Casper. This is your Warby Parker. This is people realizing all of a sudden, oh, you know, I don’t need to go work for Nike or Lulu lemon. Like I can actually market my products directly to people through Instagram. And be able to actually reach a very wide audience. And so a lot of these small businesses were great at creating products, thinking through who their users were, but not so great at their supply chain at kind of actually creating the products and mass where we’re in many cases, even prototyping the products. And so my company at the time was effectively a supply chain backend for these small businesses. And so I worked with you know, I would say maybe about 300 manufacturers across Asia, South America, Eastern Europe and then thousands of small businesses use this system. And one of the really interesting problems that I kept seeing over and over again, payments. So specifically a lot of my small business customers were in the U S you can Canada. And so in order to pay a manufacturer overseas, like, you know, obviously you have the problems that you can imagine, like foreign exchange is difficult. Wiring is difficult. But actually the really painful problem is a lack of trust. These are small businesses that have never interacted with these manufacturers before, and these manufacturers have never interacted with these small businesses. It’s not like H & M coming in and saying, you know, Hey, give me credit. I’m H & M like, you know, I’m good for it. For these manufacturers I’m not so sure, and then small businesses are also unsure. So the kind of industry standard that was established is 30% upfront or something like that, about 30% upfront and about 75, 70% when you receive the goods. This made zero people happy. Right? So small business was like, what, like I’m paying 30%, who knows what I’m getting. And then the manufacturer is like, okay, I’m getting 30%, but I’m making a hundred percent of the goods. So like, how does that make any sense? And so there’s just like always this tension around payments. And so I thought back to when I was getting my masters in computer science, there was this one guy in my program who was very into Ethereum, like to the point where he was doing sessions for the rest of the class.

Just like on his own about smart contracts. So he’s like, listen to me guys, like smart contracts are the future. And at the time I was really focused on things like big data and machine learning and I was like, oh yeah, you know, smart contracts. Cool. You can put rules on top of money, but like, you know, not what I’m interested in AI is the future. And then, you know, once I kind of saw this problem with my customers in the manufacturers, I kind of thought back to smart contracts and it was like, oh, well, you know, actually if you can write rules on top of value, you just be able to do a really lightweight business escrow. And that would solve problems for both of these parties. It could be a really cheap and programmatic way to introduce escrow into the payment flow. And you would solve a lot of the like foreign transaction friction in terms of just moving money over, across borders. So I was like, cool. Okay, I’m going to integrate with an API. Someone’s got this. And I looked into it and it was like, no, the infrastructure was not ready. Fiat on-ramps and off-ramps were all over the place. KYC and AML, if you’re trying to form some sort of cohesive experience, especially across borders, like that’s just not going to happen. Manufacturers are like, you know, we’re barely using email. And so trying to get them to understand like, custody of the token, like, you know, there’s no chance. Zero chance. So I was like, okay, well this was a cool thought experiment, but like infrastructure isn’t ready. But that is what got me down the crypto rabbit hole. Cause I was like, well, you know, I mean, infrastructure can be built, right. But if the technology is there, then you know that’s real. And so, after I stopped working on my company, that’s really what I focused on was crypto. And I knew I really wanted to get into the industry. And so kind of here I am. 

That’s awesome. You know, I got started in crypto also like your friend, just teaching classes on the weekends or my free time, like I used to write in Facebook groups, I read the Bitcoin white paper. If anybody wants to learn about how peer-to-peer transactions work, I rented this room on the university campus on Saturday at this time. Hit me up. And like, there’s something really like it about me, but there’s something really about something special about your friend. Cause imagine the amount of inspiration that he kind of shared from his passionate expressing and explaining something that he believed in so much and how that kind of trickled down to the rest of the people in that room.

No. I mean, absolutely. I think in retrospect, that’s when everyone should have seen that crypto is going to be big. Right. It’s like when you, when you kind of inspire that kind of fervor and people go out of their way to educate other people yeah. You know, it’s like this kind of religious fervor, right and anything that kind of inspires that is actually. Incredible and worth studying and worth looking into. 

When did you make your transition into VC?

 So once I decided I wanted to get into crypto. I really was not considering VC at all. I was really looking at, you know, Hey, should I join a crypto startups? Should I do something out of proxy? Should I start my own company in the crypto space? And so this was 2018 at this point and I met a Avichal Garg and Curtis Spencer, who are the founders of electric capital. And what I realized about being in crypto VC, that maybe a lot of people don’t realize is that there’s actually a lot of building that you have to do inside. I mean, as a, you know, just a very kind of elementary example. If you’re a traditional VC, you don’t have to worry about custody, right? Your custody is your bank. You just put the money in the bank. Period like that, you know, that’s it. As a crypto VC, it’s as you know, not so simple, right? Like what are you going to do? Hold millions of dollars on a USB stick? Like probably not. And so just things that you really take for granted that third party providers exist for at least in 2018, either didn’t exist or was very under supported. And I mean today, right. Still very under supported. 

So you’re telling me you wouldn’t wear your fund around your neck as you wouldn’t wear 25 million around your neck? Pimp it out like you would with a gold chain?

You know, that actually might be the play is like, instead of like a Rolex, like watch, it should be a diamond studded USB or something. I think that’s awesome. Yeah. I mean, there’s just so much infrastructure to build. Right. And that’s just like internally, but then externally. I mean, the industry is moving in real time. Like things are being discovered in real time. And so any contribution you make in the space is almost just like putting something down in a history book. Right. And that kind of excitement, especially on the VC side, I have this privilege of being able to look across the board at what’s happening in crypto at large. And there’s always so many interesting things happening that honestly, I had trouble really focusing on like, you know, working on one specific idea was going to be very difficult for me. And so kind of this, this marriage between being able to look at a bunch of things and also being able to build so a lot of us at electric actually write a lot of code as well. And so like being able to actually exercise that muscle it was just the, you know, the right combination for me personally.

You know, you talk about as you ship something, it becomes a part of history. Right? Show me another industry that’s like that, that it’s so fresh. So early, there’s a lack of like talent, real, genuine talent. And we’re seeing this happen live. The best example that comes to mind is obviously party bid, right? And, and the, the beautiful social interactions that they created from like a multi-player bidding platform. Right. Another great example is fractional. Right. And really solving, tangible use cases and seeing the sheer market validation that comes with that is inspiring. And a lot of the reason why I entered crypto is even if I could just contribute with a grain of salt, I know that grain of salt would be tasty because in the grand scheme of things, like it’s so early, so fresh and just get in there and just build something. I love your story so far. That’s fascinating.

No, I think you’re absolutely right. I mean, Really any topic and crypto can be an area of study. Right. And I think it will be like, I think they’re like in colleges, in the future, people will be studying crypto-economics as like, as its own field. You know, there’ll be countless Ph.D. theses, written on this topic. And that’s just one of, I don’t know, hundreds if not thousands of different topics, right? The game theory of creating incentive mechanisms even just like the depth of the tech that exists, like really any direction you look in Is something new being created. And I mean, to your point earlier, I really don’t know another industry where this is.

Let’s pivot into the topic of NFTs. Okay. I know you love NFTs and I want to hear why, like, what is it about these, whether there’ll be 721s 1159s future standards to come. Why are you so attached to these cool collectibles? What is it about it for you? 

You know, it’s funny, you should ask that because I’ve never been a collectibles person, but I think that’s actually, what’s really cool about NFTs is: just because you’re in NFTs doesn’t mean you’re a collectibles person. So I mean, I was first exposed to NFTs with like CryptoKitties, right. CryptoKitties came and I was like, oh, this is cool. Played around with it. I bought a few crypto kitties bred, a few crypto kitties and I was like, okay, cool. But how I kind of really really fell in was back in 2018. Crypto voxels was around and I’m a huge kind of Sci-Fi reader as is a lot of people in crypto, I think. And I’m a huge fan of snow crash. And so this idea of the metaverse is just like insanely cool to me. And crypto voxels is a metaverse right, is, is kind of this digital world where your avatar gets dropped inside and you can just walk around and the land itself, these parcels are NFTs and you can own parcels. And if you own a parcel, you can build on top of that and build all sorts of creative buildings. People create all sorts of amazing architecture on top of their own parcels. And so that’s really what I first did was like, I just walked around and I was like, oh, this is cool. Like, this is the metaverse. And what was funny is that crypto voxels were really early in integrating with NFT marketplaces and platforms so people could embed their own NFTs within their crypto voxel architecture, effectively turning the entire crypto voxel metaverse into one gigantic gallery or like one gigantic museum. And so I would literally spend all of this time walking around, looking at art, like clicking through the walls and being like, oh, what’s this and that’s how, you know, that’s kind of how I first kind of fell into it. Through the metaverse angle more than anything.

Were you buying plots of land yourself and like building on top of them? Do you remember how much the first plot of land you bought was for?

I think I spent something like $200 and this was after like, so what happened is I kept watching this land. I’m sure. I was like, I should buy one. And I’m like, that’s nonsense. Why would I buy digital land? It’s worthless. And then I was like, I just like, couldn’t help myself. Which again, I think when you have that kind of feeling like there’s something kind of interesting happening there. And I was just watching the prices go up and I was like, no, I have to $200 is like an insane amount of money to be spending on digital land, but I’m just, I’m just going to go for it. It’s going to be a total loss, whatever I’m willing to take it. And so, yeah, so that was, I think, around the prices and when I first started buying some parcels you know, I think they’re like over a thousand. I actually don’t check the prices that often, but yeah. 

Can we talk about the addiction of spending ETH for a minute? I would rather pay a thousand dollars in gas fees than pay $300 for a flight. Like, I don’t know why what’s up with the psychology behind that, but it’s so much easier spending my ETH than it is spending my US dollars. 

Absolutely. I mean, this is very embarrassing to admit, but like when I go to Chipotle I don’t get the guac cause I’m like, I’m not going to spend, this is a scam. I’m not spending $2. I remember one time, was like during the height of the NFT craze, right? Like I did something and this was when gas fees were atrocious like hundreds of dollars. I did something and the gas fee was like 60 bucks. I’m like, oh my gosh, what a steal! I think it’s very, well-documented like, not officially, but so many people have talked about this feeling where it’s like, you know, like I would never spend 20 bucks on this, like very normal, reasonable thing. But $2,000 on a JPEG, like yeah. Yeah, that’s right. That’s it. So that’s like practically free. 

It’s the behavior that makes it absolutely insane. I mean, and you brought up part of it, right? Like all the behaviors from the outside looking in, it is nuts. Like party bid with like the zombie punk auction, right? Like party of the living dead brought in 400 plus complete internet strangers to lock $3 million into like more than $3 million to bid collectively on a picture. Like it’s the whole thing. Like if you try to tell that story to someone who’s not in crypto, It’s just mind-blowing.

I think there’s something culturally really interesting about NFTs that people didn’t foresee which is originally like, you know, the promise of blockchain and the promise of crypto is like, oh you do everything on the blockchain. You’re basically doing everything in public. And that brings transparency. Right. And transparency brings trust. But I think what people forget is like, we’re all like still very primitive monkeys. Like we actually, when we actually do things in public, like we do it for the status. Like, you know, we’re like doing with a flex and we’re doing it to actually signal publicly, like who we’re aligned with what we’re aligned with, like what our ideology is when we purchase something. And that something is effectively broadcast across the entire internet. Like, you know, back to this point about collectibles and NFTs, not really being collectibles, like if I were to purchase a beanie baby, you know, I would have to, it’s kind of like a push model of like, I have to tell people otherwise, who knows, you know, I just bought it in private. But, NFTs are public by default. Like it’s broadcast by default. Right. And so like, you’re really living like and broadcasting your digital life all the time. And that sort of social interaction is something kind of beyond which we’ve seen before.

What’s the current state of the NFT market?

I mean OpenSea is saying I think it’s made more than a billion dollars in transactions in the last 30 days. 100k registered users, which if you do the math, it’s like the average JPEG is like $10,000, which is insane in USD terms. So I would say there’s a couple different categories of NFT art that’s going on. Right. There’s kind of the profile picture lead where it’s not really about profile pictures. It’s really, you’re buying club memberships, right? You’re spending like thousands of dollars to be part of the club. You know, and that’s why you have people out here being like Hey, I joined bored apes like follow me, right. This is a community. Not to mention, it’s also a distribution channel. Like if you look at the hundreds, which is doing just like street wear. So they’re going to be dropping apparel for I mean just bored ape apparel, right? You don’t have to be in this bored ape yacht club to actually access it, but that’s actually a distribution channel. Like there’s actually, you know, real monetary value in this community. So, I would say the first bucket is a kind of community based NFTs where everyone coalesces around some kind of common identity.

I think there’s also a lot of stuff happening in the kind of generative art space, like art blocks and you know, kind of creating almost like accidental art, but still, I think there’s this kind of like community aspect with generative art, which is interesting. And then there’s kind of like the one-on-ones there’s the art community there. I feel like this broadly is, you know, one is like community-based and one is like artists based or like creator based. And I think that there’s another thing that’s kind of coming along, which is how do NFTs really get plugged into DeFi. Like NFTs at the end of the day, you know, they may be art, they may be collectibles. They may be whatever. They may be pieces of writing on a mirror. But they’re assets, right. They’re financial products. And so there’s kind of this category of things that are looking at NFTs as assets, kind of like fractional which you talked about before. And how can we actually introduce liquidity? How can we introduce better pricing models for rare or kind of tail NFT assets and how can these things be then plugged back into the DeFi ecosystem? I think that’s probably what I would say is like this really interesting unlock that’s going to be happening where, I mean, for the longest time you’ve had kind of two parallel tracks. You’ve had the DeFi community and you’ve had the NFT community and there’s been, there’s definitely been like cross-collaboration. Like I think that’s maybe what made Axie infinity very interesting is I remember. You know, back when Uniswap, did the retroactive draw of their uni tokens. Some Axie players actually ended up getting uni tokens because they inadvertently interacted with Uniswap through playing Axie infinity through, you know, kind of just like earning SLP swapping SLP. Like that’s that super cool right there. There’s that kind of thing that’s going on. I think like, you know, yield Guild for example, is looking at how can we actually loan out the NFT assets that we own and then these NFT assets actually have like a cashflow attached to them through these play, to earn games. And then how do we kind of capture some of that cash flow? So there’s, there’s been kind of stuff. Interactions, but I think the true unlocking kind of this like real marriage between DeFi and NFTs hasn’t really happened yet. And I think fractional and like you know, kind of that category of things is really leading the way. But we really haven’t seen that true unlocking.

Yeah, I want to touch upon the first point that you brought up of Bored Ape yacht club, doing a collab with the hundreds, doing a merch drop specifically for their community. And I know you mentioned for whatever reason I saw online that you have to be a member. BAYC to get t-shirts. 

I’m not sure. So there was like a Bored Ape merch drop that was separate where it’s like, you know literally token gated. Where you have to prove, and then you can purchase. I thought the hundreds was open to everyone, but I actually could be wrong on that. 

Do you see creator passes in the form of NFTs coming into fruition down the line?

 Oh, yeah, absolutely. I mean, it, I think it’s absolutely going to happen. I’m very opinionated on actually how these communities form and I think what you mentioned is almost like a social token, right? Where it’s like highly sort of social token. It could be a ERC 20, or maybe she launches on another chain. But I actually think the reason why NFT communities are so passionate and so special is because it’s not a token. Like I mean, it is a token obviously, but it’s a unique asset with like an image that you can kind of emotionally resonate with, which you can’t do with an ERC 20 token. So I actually feel like the way that creators are going to be able to leverage their communities is through like, Some sort of badges or some sort of NFT based thing. And I think there’s kind of two aspects. There’s like, how do you enrich your community and your fans? And then kind of like, how do you really engage with them? I think on the enriching part, you know, I feel like what’s going to happen is you’re going to have musicians, for example, creating their music, masters as NFTs. Fractionalizing that right? And then people who own fractionalized shards of this music master may be able to generate streaming revenue or, you know, it doesn’t have to be music, right? Maybe it’s the commercial rights to a specific ape or to you know, maybe a Kylie Jenner, cartoon character that might be option for a movie. Right. And what if that were fractionalized and you actually get revenue based on how this IP is used? Yeah, I think that would be super, super interesting. And then I think there’s kind of this community aspect or engagement aspect where right now most NFTs are pretty static. And this is where I think async art has done a really amazing job and not getting a ton of recognition. They definitely get some recognition, but they invented this concept. I mean, correct me if I’m wrong. My understanding is they invented this concept of layering for NFTs, where a certain NFT can have multiple layers. So you can imagine for an album cover, for example. Let’s say Drake is going to create a new album, his album cover has like a background and a foreground. You know, maybe the background is like you know, like this beautiful nature scenery. And then the foreground is like some cartoon characters. What if every single aspect of that was actually an NFT and so like layered together, it creates a cohesive whole. And if you owned the background, you can change it from night to day. You can change it from New York to Tokyo, you can change it, you know, like you have the power to actually lose this album cover in some way. So I feel like this, like there’s still a lot of play and experimentation we can do.

That’s like, that’s the only token standard, right? Stacking collectibles, and basically non fungible tokens on top of one another, whether they be eyeglasses, right. Or whether they be rings or whether they. That are interchangeable, but okay continue.

 I think that can be applied to the community as a whole, as well. Right. Where it’s like, let’s say you’re the oldest followers of a certain celebrity. Like maybe that means you get accessorized in a special way that the NFT that you have actually grows and develops as kind of the community grows. And I think those are all sorts of really interesting things where fans can get recognized for the contribution that they make. And that can happen, you know, that can happen through NFTs and I think there’s no real way for that to happen at scale today for creators and their fan bases.

That’s actually a very practical use case of applying what these cartoon drops are doing to a real life example. Being able to interchange different components of an album cover, issuing those as NFTs and having unique components, unique traits to the album cover. And even if you would take it one step further and do like extended versions of songs, you know, on some ensemble drops versus non. Like which one’s explicit, which one’s not explicit. Now we’re going down a rabbit hole that the possibilities are endless, but here’s the issue. Like creators they’re not thinking like that just yet. You’re seeing founders innovate. And I recall talking to like four projects that are working on the element of tokenizing musicians and tokenizing their albums, basically. And figuring out the whole fractionalization of royalties, bringing that off-chain payment on-chain. But again, creators don’t get this. Creators typically want to focus on the creative they want to focus on drawing and they have their managerial team that kind of handles the rest. So how do we kind of get more managers, and more artists related with what’s happening in the space to be more ballsy, right? To be more risk-taking. What do you think is the right solution for that? And part two is what do you think is stifling that? 

That’s such an interesting question. And I agree. Because right now, like in order to really design well some of these mechanisms that we talked about, it’s almost a piece of performance art in itself, right? It’s kind of a full-time thing to be able to design that. And if your full-time thing is actually photography or your full-time thing is actually music, like. Designing the community interactions, designing the incentive layer, designing the reward, you know, the reward mechanisms. That is a very, very heavy lift. . I wonder if, what will actually happen is some creators will experiment and achieve kind of like the playbook for how this is done. You know, I know Justin Blau, for example, has done a lot for his music NFTs . He tweeted out kind of enigmatically that his NFT holders can kind of get rights to it in some way. So, you know, I think some artists are going to end up pushing the boundary and proving out certain models. And I think those models will become the playbook. And then once the playbook is established everyone else probably will just be able to adopt it right in that here’s five playbooks. And so whoever ends up writing one of these playbooks early, will win asymmetrically, but everyone else who follows that playbook would obviously also benefit. But yeah, I do think it is a big lift and it means veering off the creative path a little bit, or whatever, kind of, you know, art or creation that you’re doing to think in a very specialized and deep way about game theory and incentives which is a big ask.

If porn stars started issuing their own social tokens, how does that intertwine into DeFi. Are they going to start issuing like lending and borrowing pools on Aave, you know, for whatever?

Every single kind of technological advancement we’ve had like video streaming, like, you know, kind of like the internet, like a lot of this is pushed by honestly, the porn industry, like they’ve always been on the cutting edge of technology. Like, ads are delivered through videos.

I’m curious to see what happens with that use case. I want to talk about what are some of your favorite NFT use cases that extend beyond land, like digital land music and art? Like what are some of the more experimentative things that you’ve seen, either creators communities dabble with and make a lot of noise behind?

I think there’s going to be a lot of power in collective storytelling. So I think Aku is a really good example of this, where the Aku character is a ten-year-old boy he dreams of being an astronaut. And there, the idea is that there can be a community DAO behind deciding storylines for what Aku ends up doing. And I think that’s going to be, you know, incredibly interesting for storytelling and for media going forward, there was another idea that was tweeted. Earlier I want to cite him correctly. Maybe we can tag it afterwards or something, cause I want to make sure it’s actually attributed to the right person. He had this idea of what if we had this, you know, manga series where every single character is an NFT and and, and fans can kind of coalesce around these characters and then you can kind of create narratives around them. I think it’s, you know, I actually feel like this sort of community created content is going to change the way that media works in the future. Like it’s going to change the way you know, Netflix and Hulu and Amazon and all of these, these platforms work and the way that we consume. Like think of the fervor around game of Thrones, right? Like if you actually had like, maybe through staking, like game of Thrones, tokens against certain characters in battles , right? Like, you know, there was this battle of the night or, you know, there’s like all these epic battles in game of Thrones. And what if you could stake tokens against who would be the winner or like stake tokens to give them special weapons to use during the show like that would be really interesting.

Imagine you could do that live with the WWE. Like that, that just came to mind. Imagine basically stake tokens, and then men fight. You will determine whether or not the dude hits the other dude or girl with a chair. 

I think actually, like you want to do item drops, right? Where it’s like, if you take enough tokens, like this guy gets a banana. I think this sort of participation is just going to change the way like content is created. 

I love that. That’s a good point of view. I want to dive into something you’re really excited about. You kind of talked about it briefly scattered throughout, but I want to bring it up. So you talked about the intersection of DeFi and NFTs. So I want to pull up the tweet that you wrote. So this is from August 8th , 3:40 PM. I’ll shoot it alike, like as well, boost it a little, give it some love. The next thing in NFTs, plus in DeFi will be under collateralized social lending in NFT communities. Social lending works in emerging markets without robust credit scoring systems but didn’t work in crypto because of the lack of on-chain communities. And then below that, you put dead, which is the dead punk that was through party bid. And then you tag Bored Ape yacht club and then you mention communities like that. Can you talk a little bit about what you’re kind of referring to more in-depth from that tweet? 

Yeah. I have never had anyone pull up a tweet during a conversation. This is actually really cool. So. Let’s think about what credit is, right? Like credit is basically trusted. Credit is saying, I trust you to give me this money back plus something else. Give me my original money back, plus some. And the way that trust is established today, like in, you know, for example, in the United States, is through credit systems and credit scores and you do that through repeated purchasing history and kind of repeated activity, whether you’re renting an apartment or whatever. And all of that gets logged on chain or logged in a database somewhere. And the reason why you can even accumulate this score is that you have one identity, right? Like you can only ever have like one social security number. So you’re tied to that identity and that identity can be tied to a scoring system that effectively, you know, it’s flawed in many ways, but the aim of such a system is to tell people how trustworthy you are in this credit and lending system. And in emerging economies where you may not have such a robust you know, in the United States, our entire industry is dedicated to the credit score, you know, and in other emerging economies, you may not have entire industries dedicated to credit. And so you actually have small-scale communities doing community-based lending and saying that like, Hey, I’m a member of this community. You’re a member of this community. We live in the same village. I know you’re not going to up and move. I’m going to lend you some money cause I know you’re good for it. Because we’re attached in some way. And in crypto lending just has a really hard time taking off because there is no identity. I can make as many wallets as I want. And each wallet can have a different set of actions that I’ve taken on-chain and I can abandon any wallet anytime that I want. And so they can’t tie it down to one identity. That makes credit scoring incredibly difficult. So barring that, I think the flip side is like, okay, so then can you do community-based lending. And there’s been some really early I’m struggling to think of the name, but there was definitely like a really early example of this, I think back in 2018 where it was literally a network where, you know, I would pull someone in and I would say, I’m going to underwrite him. Like, I know he’s good for it. And if he doesn’t pay it back, then I also get slashed. Like there was, there’s like basically some incentive system, but it didn’t really take off for whatever reason. And I think the problem is that, like, I would still have to know that person in real life in some way. And like, I still need to like have some sort of relationship. So is there actually some sort of decentralized trustless way of establishing a community to say to someone, Hey, like you’re good for it without even knowing identity. Like it’s actually a really, really tough problem. And so that’s, you know, that’s why it’s been really hard to have under collateralized lending or credit in crypto. But I think the emergent property of these communities like Bored Apes, as silly as it is. The Bored Ape community is very cohesive. Your identity is determined by the ape that you own in your wallet. And I wonder if there’s some way to say like, Hey, if you’ve held your ape for a year or you haven’t touched this wallet can, you know can actually receive some sort of loan from someone else in the Bored Ape community. Or like if you hold debt tokens for a certain amount of time and you can kind of mix and match conditions, right. You can say, okay, what if you, you own a Bored Ape and you’re a big liquidity provider on, you know, Uniswap or something. And you’re an active governance participant in this DAO then like you are able to receive a loan in some way. So I think there’s something interesting about now that you’ve formed identities actually around cartoon characters that there actually might be a way to do lending within these communities.

Do you think people are starting to realize the potential behind DeFi and NFTs? I know there are a few startups already exploring it, but do you think more of the more inner circle crypto community has started realizing what this could become? Or do you think people have yet to experience that aha moment?

I think we’re somewhere in the middle. I think there’s a really healthy contingent of people who are like, oh yeah, this is big. Like once DeFi and NFTs merge, we’re looking at like the most viral financial product we’ve ever seen in the history of humanity. But I think there are also a lot of people in crypto who have been in crypto for years, who are like the OGs, were actually quite skeptical of NFTs. So I think that that’s obviously contingent. So even within the crypto community, I don’t think people, all people agree that NFTs are interesting or worth their consideration. And then outside of NFTs, obviously there are a lot of skeptics. I think we’re still early, but what will happen is I think there’s enough of a contingent of people who are true believers in this merging of NFTs and DeFi to start pushing the envelope on experiments, like party DAO, right? Again, a great example, party bid, like a great example of that happening, where you merged NFTs with DeFi to create some things super interesting that no one’s ever seen before. And I think as more and more of those experiments come to be, I think people will learn through example.

What’s going to eat web 3?

Yeah. I think this is such an interesting question. I think what web three fundamentally solves is how can we create a functioning incentive layer at scale in a potentially adversarial environment, right? So whether all sorts of adversaries it can weather distrust. Like it doesn’t really matter. This incentive system will hold. I think that’s what web three is all about. And once you have this incentive system, you can do revenue sharing, right. And that’s how you can kind of unbundle YouTube and you can kind of topple Facebook and you can kind of topple all of these kinds of more extractive platforms that really profited off of creators, while the creators didn’t really profit off of it. I think web four might be, you know, everyone’s kind of living in some sort of multi-verse and everyone is living their lives digitally. And I think, I really, I think the reason why this question is a good one is because, it’s really hard to imagine what the problems might look like when that is the case, right? When we live our entire lives digitally, when we transact digitally and the relationships we form are kind of at scale and we can have multiple identities as well, and multiple different kind of personas that we live out really full and enriching lives online. This kind of makes me think that, I think it was like in ancient Greece or something where someone was writing you know, kind of like the ancient Greek version of like scifi, right. Where it’s like, okay, what if some sort of being we’ve never met before, like how can we travel to their land? And we’ll travel to their lands through like ships.

Because that was like the longest mode of transportation that they could have foreseen. Like they obviously couldn’t have foreseen planes. Right. It wouldn’t be like flying. It would just definitely be like, we would travel to other worlds for ships. And I think it’s a little bit hard to see into the future and even anticipate what sort of problems we would have once that happens. I do think though, that pendulum kind of swings back and forth between centralization and decentralization and the trade-off is that centralization is efficient, but decentralization allows for trustless transactions to happen. And we’re effectively trading off efficiency for you know, for the ability to interact with strangers. For 400 strangers, to be able to lock up $3 million. Like we did that probably in kind of an inefficient way, but it made it possible. And so right now the pendulum has kind of swinging into the decentralization camp because a lot of the institutions that we’ve trusted for a really long time, turn out to be extractive or turn out to be like, if you look at like the way government functions today, like, you know, it feels like it’s a little slower. It feels like it’s not meeting certain needs. Or colleges where people feel like, wow, I’m paying all these heavy tuitions, but like, what am I getting out of it? So I think there’s just been this like a little bit of a crumbling of trust in centralization. So now, we’re kind of swinging into decentralization. And I wonder when once we’re completely decentralized, I wonder if people are going to be like, wait, this is very inefficient. Wouldn’t it be more efficient if we centralize things? And so I wonder if we’re going to swing back the other way and just swing back, you know, it’s like that’s why history rhymes, right? Like it’s because we’re living in cycles effectively.

Maria, before I let you go, thank you so much for being on what an awesome conversation quickly plug yourself and where we can find you in the projects you ‘re working on. 

So I invest in crypto projects, especially NFT projects, especially things looking at creators and looking at these new social communities and looking at the intersection of NFTs and DeFi . So I’m very actively investing in that in a firm called electric capital. You can DM me on Twitter. My DMS are open I’m at @MariaShen. Or my email is maria@electriccapital.com.

Listen on: Spotify | Apple Podcast | Google Podcast

Background

Mint Season 2 episode 7 welcomes Jonathan Dunlap, Founder and CEO at MintGate. He and his team are building tools for creators to experiment with token-gated content via NFT access passes and generative secret links for events, videos, music, websites, and blogs, to name a few. 

I’m a big believer in the power of token-gated content and how it will upgrade your communities – so this session is a special listen. 

In this episode, we talk about:

• Why should creators care about token-gated content? 
• Most notable token-gating use cases 
• How you the creator can start integrating token-gated access into your community 
• The biggest challenges stifling token-gated content

…and so much more.

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Thank you to Season 2’s NFT sponsors!

1. Coinvise – https://coinvise.co/

2. POAP – https://poap.xyz/

3. Socialstack – https://socialstack.co/

4. Celo – https://celo.org/

5. PrimeDAO – https://www.prime.xyz/

Interested in becoming an NFT sponsor? Get in touch here!

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Jonathan, welcome to Mint. How are you doing, man?

I’m doing wonderful. Thank you for asking Adam. Thanks for having me on the show. 

Let’s just get started, give me a quick background about yourself. What were you doing before crypto? And kind of like, where are you now?

 Before crypto? I worked in a variety of different industries. I worked in online gaming for a variety of time. I built everything from massively online multiplayer games to mobile games. And then coming out from that, I worked in a variety of different startups being myself familiar with different financial technology. But one of the things that really resonated with me, particularly working at Adobe, I was building tooling that help creators create a community around their content. You know, one of the things I really learned, like working with the Photoshop team and the Dreamweaver team is, a lot of the successful new creators that we were helping at that time were really getting themselves bootstrapped by building a community around their artwork or around the videos that they were creating. So this led up until about two maybe three years now. I went to ETH Denver and was able to witness what was happening within the crypto space for all these DAOs that were starting. And to me, this was the big light bulb that has kind of went off in my head, like DAOs can change the world and how they operate they allow communities to self-organize the resources together and actually build a community around the value production that the community is producing. So this is kind of like the context that brought me in originally. 

You know, you come from an interesting background, clearly having worked with creators and building specific tools for creative creators, right? Creators could be classified as people who play sports, musicians. It’s creators is a very big general term when you’re building tools at MintGate, how do you guys define creators? What does that look like from your point of view? 

That’s a very complicated question because there’s so many different types of creators on MintGate today. We have video creators. We have music creators. We have people doing machine learning models and token gating like very specific tuned machine learning data on the gate. There’s such a wide variety of different tools that we’re seeing with different types of creators. In fact, I’m kind of hard-pressed to tell you what’s the main type of creator on MintGate today, because it is so diverse. This technology to leverage crypto to fuel creating a creator economy around their value production really lends itself to any kind of creator that can get bootstrapped. You know, one thing that we see that I think out of, out of all of these categories, the most popular one that we’re seeing is video content creators. Look, video creators looking at NFTs, seeing how much value is being generated around artists with NFTs and looking to take that same step of how can I take my video content and transform that into a NFT that users can buy and then gain access to my content as well as opening up the door to allow those tokens to be resold. And I’ll talk more about that later. 

I think what’s interesting behind this whole point of view of token gated content is, would you say it’s industry specific? For example, if you were to create token gated music and we’ll talk more about that, like deep dive in the use cases, but one would argue that music is supposed to be enjoyed by the masses. Right? So creating token gated walls around music consumption. Would that be a good use case, for example for MintGate for creators? How do you kind of view that? How do you differentiate what’s supposed to be token gated versus not? 

I think we’re still figuring that out. Honestly, the industry is really young around token gating. A lot of the creators that we’ve talked to, who’ve been in crypto for the last like five years who are just starting to, to leverage token gating are still kind of going through this journey of figuring out what that means to release some content that you just buy the NFT, and this NFT represents like my social signal that I have bought and claimed your artwork versus exclusive content that in order to actually view and enjoy this piece of entertainment, you need to buy it and then that gives you exclusive access to watch or to download, or do see a set of like behind the scenes makings of. Backing up one of the things that we saw that’s kind of interesting is a lot of artists taking their NFTs and recording a behind-the-scenes video of them making the NFT and then releasing that on, on MintGate. So that when you buy that piece of NFT artwork, you alone are then able to watch the behind-the-scenes makings of that NFT or at least the set of NFTs and a collection. Only those users are able to see the behind-the-scenes content. 

When you guys were building out the initial version of MintGate, how did you kind of discover product-market fit at the time? Were there already initial use cases that you kinda got that you saw and that you got inspired by. That you realized, okay, they weren’t doing something right that you guys could come in and kind of improve, like talk to me more about that process of finding that product-market fit.

 Well, we worked with a lot of users that had expressed that they wanted to take their token, like we worked with Harrison First to actually token gate his entire website, which has a variety of different music and media that he posts related to his music creation. And that’s I mean, work with users like Harrison First to to develop a set of technologies that lends itself to being very simple and straightforward, to take any kind of token on any token type and being able to take any type of online content. And token gate. Again, the way that we have specifically tried to build MintGate is to be universal from the start. You know, a lot of startups that are happening in crypto, they’ll take a very narrow, vertical. Like, you know, we’re just going to do music NFTs or we’re just going to do video NFTs, or we’re just going to do such and such, but we’ve tried kind of position ourselves to be more like the CloudFlare of crypto or the Bitly of crypto. Where we built this universal technology that allows you to functionally take any kind of token on any of the blockchains that we support today, which we support nearly 70 different blockchains and gates, any kind of internet resource. You know, any type of digital bits that can be streamed. We have a general-purpose internet gateway that allows to relay and proxy that data to the end user. So in our earliest stages, but going back, working with users we were seeking out users that simply wanted to bring value to the tokens that they were already minting and working with a handful of them to bring utility to those tokens. Because that’s where we saw the opportunity when we started MintGate 12 months ago was that there was a lot of creators creating their own token, but not being able to do anything with their own token, like you have the token, but like, what can you do with that token? You know? And we want to provide this kind of universal drop-in engine for these creators where they can take however they want to monetize their content effectively. They, have a completely flexible engine to monetize their way and however they want. 

So when you talk with these creators, how do you kind of explain to them the difference as to what they should be using what for? 

So, you know, one is, again, I hate to give this as a general answer, but like this industry is so young, we’re still figuring this stuff out. Where we use social tokens, where we use NFTs is still being experimented on which one is a better medium. What I currently see, and then what we’ve built with MintGate is we support both. So you can token gate videos and music with either, or even token gate a video with both an ERC 20 and an NFT or a set of NFTs. So you can mix and match however you need it. Where you would use one or the other between social tokens and NFTs is a really complicated question. On one hand NFTs lend themselves as being a convenient and elegant solution as an alternative to tickets. So if you buy, you know, an NFT could represent my access pass to a piece of content or a set of content or a tier of content. You know this is kind of similar to Patreon where you buy into a certain model, a certain tier and a creator, and then you just gain access to all that content that’s in that tier. 

Even though social tokens came about earlier than NFTs, they have more flexibility to them in that they can be divided and, and fractionalized. But it is more complexity to work with social tokens. You have to think about, you know, there’s complexity in just the conceptual model of no longer having this idea in the end user’s mind that if I have this NFT, I gain access to this video. With social tokens you now have to have this abstraction between amounts and what that amount grants you access to. And like this seems trivial. The end user that has to go out and acquire these tokens or gain access to the content. There’s this ambiguity of like, all right, well, I w I suddenly clicked on this link and it was thrown to some website to swap tokens to access your content. Wait, how many tokens do I need to access this video? Like I have to go back and check, you know, like, 37 tokens access this video. And NFTs have a much simpler story of like, okay, I just need one of these and then I get access. The second thing about the complexity between the two is the legal complexity, particularly in the United States. There’s much more I guess, legal scrutiny over social tokens, than there is for NFTs as NFTs are more easily defined as being utility tools. While social tokens can be looked at as a security.

It seems like that’s how things are shaping out right now in the ecosystem. I agree with that. That seems like the natural overlay of these concepts. Like starting with NFTs makes things simpler because just NFTs can act as general labels. You know, you were here from the beginning. So here is your NFT that gives you the status of you were here from the beginning. And I think whenever you’re a new community or starting a community, ultimately what people are concerned about is just the simple status of being in a community, you know, like where are you an original member or not? Did you participate in some meaningful way? Did you help this community in a meaningful way? Here’s a badge for that. These are important signals that help bind a community together. And I think as a DAO and these crypto communities and mature, overlaying on top of these labels, a social token, where then you could have these points for good behavior or idealized behavior that are aligned to the DAO or the community can then lend itself to then having your own economy within that community. 

Another thing I want to clarify and get your point of view on is how do you kind of think about token-based content versus token gated content? For example, a more recent current event is this rapper, his name is Tory Lanez. He just released an album as an NFT. He did a million NFTs for a dollar each and whoever bought that NFT could get access to his album. So I like to think about that as token-based content. But then on the other hand, he could also create token gated content from that. How do you kind of think about that in terms of a use case?

Can you give me an example of token-based content? 

Another record that came out the Kings of Leon NFT album, right? That’s token-based content, right. That’s a token attached to an album, a series of songs in a certain order, right. That people can consume and enjoy. But then, people who own the Kings of Leon NFT album, this token-based content can now create token gated content around it. So many different buzzwords. How do you kind of think about it beyond music albums, for example? 

 These are the things that I dream about. I dream in tokens. I mean, I think right now it’s like, like we think there’s so much happening in this space right now, but I mean, where you could really go with all these tools is almost like imagination’s the limit. Like the fact that like Kings of Leon could release an album that’s only a certain number of these NFTs are produced and buying these NFTs allows you to say, well, you know, I own, you know, the cover image of Forbes magazine or the album cover of Kings of Leon. But then you could take those NFTs and add token gated content to the NFT without the permission of the original creator of the NFT. And then this gets into like a, a very strange situation where you could, you know, a creator creates an NFT to represent an element of their community that you’re buying into the social signal, but then the NFT because whoever owns that entity could then add additional token gated content to that NFT, the NMT itself kind of takes on its own life. It can take on its own community. People could use that NFT then to token gate, a forum where only other people with that NFT are able to communicate and have their own social network amongst each other. 

So you can imagine, you know, the top fans of Kings of Leon are able to come together and share content you know, maybe even communicate with members of the band through these private channels. It really leads to what we call it, what we’ve seen in like the web two space where we said these network effects. There’s a whole other level, like this is like network effects on top of network effects, you know. I’m really excited to see what this time next year is going to look like for social networks that are based around tokens, particularly NFTs. I think social tokens will be more towards point systems that become economies for large communities, but I think NFTs are here to stay for the long run. Like I don’t think NFTs are a fad they’re going to fade out and transform to something else. I think NFTs are really pivotal piece of technology that represents a sort of like membership or a concrete asset of some kind that’s held by a community.

What do you think are the biggest challenges right now kind of stifling the token adoption side of it? 

Well, there are many dimensions to this. One is there’s a lot of incentive for solutions that are outside of crypto, mainly because like, you know, Subify can be financially either invested in by different creators or investors that have their own network that they can leverage to bring onboard other creators. It’s challenging starting out in crypto and building a startup in crypto because you’re inherently saying we’re going to build a platform that primarily gives control to the creator, you know, at the end of the day, like. What my aim is with MintGate is to develop us into a form of a protocol where we’re an open standards technology. That’s my objective. This is very difficult to get off of the ground from the get go because you know, companies like Subify are basically the same model as Instagram. It’s the same structure as always existing social networks that , you know, eventually Subify is going to get to a certain level where the relationship is no longer in favor of creators. So a hard challenge is trying to get ahead of that, and building a system that works on crypto and decentralizes the technology as maximally as you can, so that creators ultimately have control over their audience. You know, another challenge outside of the business landscape, there’s just a challenge of, of crypto still being very young for creators. The DeFi landscape is massive, but for creators, you know, coming in creating their own token is still such a new novel concept. I’ve talked to people that have been in DeFi for like, since the beginning of defy that are creators, and it’s still really strange for them to conceptualize what it looks like to generate value through issuing NFTs that gates private content. It’s just a new model that, you know, like NFTs didn’t take off the moment that they were invented. It took someone to show it by example, in the marketplace, that it had a certain level of traction before you could prove to the market that this is a way that creators can sustainably generate value. This is a way that art creators can sustainably generate lots. I mean, now you’ll get how much money people are actually making off of NFTs. And that’s incredible, but you know, you only go back 12, maybe 14 months ago. And there was an unthinkable that like at NFTs could generate the market size as it is today. I think really the challenge is just the lack of initial momentum. That we’re starting out here building up the snowball effect and as it gets a little easier day by day, but it’s just a lot of effort, but you got to put it into it. 

It’s unimaginable. And before crypto kittens, it was unimaginable that ERC -721s were going to be this massive industry boom. Like the people inside the crypto conferences you know, and so what I’m trying to convey is if people in the industry are working with technology that, you know, helped contribute at the ERC -721 couldn’t even imagine how valuable of a technology, it could be to creators, creators only have that much more difficulty conceptualizing the use of the technology to empower their content creation. You see what I’m saying? It’s like telling a creator to use the internet before you know, even the people laying out the internet lines know that the internet is valuable. So a lot of our challenge really is just the process of making connections out to creators, working with them and kind of hand holding them through the process of thinking about how to take the content that they’re creating and building an economy around it. Run some experiments where you release this amount of content free and open, but you need these NFTs to access content that requires this amount of effort and work that you put into that content in order to access it. And it’s finding that balance between the effort it takes to put into the creative medium that is going to require the use of token gating to drive value to that token sale that ultimately the creator gets compensated for their hard labor that goes into some digital medium. 

You speak about this stuff very passionately. Like I see the fire in eyes and you obviously, from what I’m picking up is you have this clear vision of what you want this to become. Can you share with me, paint me that picture? What does that look like from your point of view, the future of token gated content? How do you imagine that kind of unfolding five to 10 years from now?

Well, five years, I have no idea in five years. Good Lord. But I could say maybe in a year or two from now, I can tell you what’s going to happen. I mean, things change quickly. So like I imagine that in the next year or two private access unlockable access to content is going to become as ubiquitous as NFTs are today. We’re going to see video creators saying, you know, if I can bring my audience directly to my own website or my own Twitter feed or Instagram, whatever medium that they’re using, and be able to market and sell my content directly to my audience, that’s the route that a, it makes me feel that I have more of a connection with my end users, and two, it allows users to take part of this big vision. And I haven’t really touched on this yet, I believe that token royalties are going to play a huge factor in rebooting the creator economy. And this is one of the features that we have launched with our platform. Is that any NFT that’s you mint on MintGate, you define your own royalties on that token. That means that anyone that buys that token you get the sale from it, but if that user decides to turn around and resell that token to another marketplace, you as the greeter always receive that royalty that you set on the token. So as a creator, you get to kind of tune your economy. If you turn up the royalties too high users may not be incentivized to turn around and shill your content and resell your content. And as an early creator, you have a high incentive to incentivize your audience to buy your NFTs, to buy your access passes to your content and act as your representative to the greater community to sell those access passes. You are basically crowdsourcing the outreach to your closest fans. That’s the big idea here, I think ultimately. Like why, cause why use tokens for any of this stuff? Like why not just, why not just sell your content on YouTube? Why not just sell your content on Patreon ? Why use tokens? And I think royalties are really the biggest reason to use crypto for monetization. Because it allows you to always be part of the value production of the access passes to your content. And because they are limited in edition , you can always let the market price your token for the value of your content which just, you know, in a way it’s like hyper capitalism. It’s taking the best elements of market dynamics, which is price point discovery, and baking that into as a content creator into how you’re delivering your content to your end users. Not a crazy idea. I think I thought about it, as a content creator, you could give out your access tokens for free to your closest fans. And say, all right, you’re my closest fans. You get access to my premium content because you’re the OGs you’ve been with me since the very beginning. You just get access and I’m going to rely on you to resell my access tokens and to be my ambassadors as a creator to sell my content.

It makes a lot of sense. You’re preaching to the choir here. Like you’re actually preaching to the choir, but the reality is a lot of these creators still don’t understand what Bitcoin and Ethereum is, let alone social tokens and let alone launching their own currencies, let alone, they just see NFTs as art that people are spending a lot of money for online. And many of them lack the rationale as to what this could become for their own creator community. And I think that comes with time. I think that comes with education. I think that comes with experience and tinkering and experimentation. And I think definitely in a few years from now, it’s going to get much better. Like you can obviously argue that with time as, as technology gets better. And the software in these tools that require creator onboarding and user onboarding, they improve. User onboarding for Metamask has drastically improved, I’d argue, since I got started in 2017. Opening up a Coinbase, like all these things they come with progress. So I think definitely down the line for sure, I agree with your vision. And let’s kind of talk about the other side of that. What do you think would prevent that from becoming a reality? 

Well, maybe just to touch on your point on like still how young this industry is. I’m out here in Los Angeles and I was talking to a video creator, a very prominent video creator in Beverly Hills.And they were telling me that they own Ethereum. They own Bitcoin. They bought into Matic they’re very savvy crypto users and they produce video content. And I was talking to them about NFTs . And they told me that they just don’t understand NFTs. Like, what’s the point like to them, what’s the point of NFTs. It seems like there’s a lot of noise. And this piece of feedback was really interesting to me cause here is someone that’s in crypto. They actively trade in crypto. There are content producers, you know, they’re active in the community and yet they don’t even understand what NFTs could be used for as a way for just selling artwork. Like, so we’re very much like this kind of very new bleeding edge side of the market that still has a long way to go to raise awareness over what tokens can do for content creators. So going back to your question-

You painted your vision of what this could become in one year or two years. Right? I guess my question was like, what would prevent that from happening? What barriers would be in place. What would prevent that from happening essentially? 

Well, I think a very topical point is regulation. If new regulation gets put in a place that is too heavy handed on the industry where it would basically hamper the user experience of such platforms, one of the things I’m concerned about is if regulation will come down to require every NFT marketplace to do a KYC application on every single user that wants to buy a $1 NFT that is greatly concerning to me. Now currently, it looks like, and this is changing day by day, at least here in the, in the U S is, it seems like the regulation is leaning towards only requiring KYC up until a certain dollar amount, before that KYC process is required. But again, it’s still too early to see how this shapes out in Washington. So that’s a big factor, right? Regulations are a huge, huge factor. I think, what are regulations there for? Regulations are ultimately to protect users you know, in the best spirit of the law, protecting users from scams, online scams, user scams and any abusive behavior that might take value from an end-user. And I think that’s another thing that could slow down this trend. If we start seeing, you know, other startups happening that are looking to do scammy things with NFTs. Even if regulations are moderate when they’re rolled out, if there’s a lot of bad actors that come into the market and start giving NFTs and crypto a bad name, Because they’re doing user abusive behaviors ,that will also slow down the rate in which users feel comfortable with buying an NFT of their favorite artist.

Before I let you go, give me a quick shout out. Where can we find you? Where can we learn more about MintGate and all the great things you guys are doing?

 Wonderful. Well, Adam, thank you so much for having me on it’s a pleasure connecting with you in your community. You can find me at @jadbox on Twitter. You can also reach our MintGate Twitter handle at @MintGate_IO, or go to mintgate.io for our main website. And right now we are particularly looking for users that are video creators, looking for a new way of monetizing their videos around NFTs. So if this is when it gets interesting to you, please give us a shout-out. We’d love to work with you one-on-one to help you be successful with getting into NFTs.

Listen on: Spotify | Apple Podcast | Google Podcast

Background

Mint Season 2 episode 6 welcomes Reuben Bramanathan, an expert on all things crypto law, product management, fund management, and more. Having worked at Coinbase from 2015 to 2017, Reuben has seen the industry evolve at a rate in which many don’t have purview. Now, he’s helping build IDEO CoLab for collaborative impact where he and his team connect organizations to shape technology’s impact on the world.

In this episode, we talk about:

• His take on JPEG summer
• How NFTs are introducing the mainstream into crypto
• Securities laws regarding fractional NFTs
• What opportunities in the space most excite him and IDEO CoLab
• Fair launches for creator coin
• NFT consumer applications
• What will eat web3?

…and so much more.

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Thank you to Season 2’s NFT sponsors!

1. Coinvise – https://coinvise.co/

2. POAP – https://poap.xyz/

3. Socialstack – https://socialstack.co/

4. Celo – https://celo.org/

5. PrimeDAO – https://www.prime.xyz/

Interested in becoming an NFT sponsor? Get in touch here!

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Give me a quick background on yourself. Who are you? What were you doing before crypto and kind of where are you now? 

I almost can’t remember what I was doing before crypto. It feels like a lifetime I’ve been around since about 2013 was a lawyer by training and working in a big law firm, found out about Bitcoin through some friends, got deeper and deeper into it. Ended up leaving that big law firm to start a small law firm focused on Bitcoin in Australia. It was 2014. And through that just kind of got deeper and deeper. I joined Coinbase in 2015 as one of the first lawyers there. Also did a bunch of product management work at Coinbase and started some new businesses, including the index fund there. And through that I realized you know, law was my profession and the set of skills that I had, but crypto became my passion. 

I ended up leaving Coinbase in 2019 to start working with companies deeper in this space in DeFi and more recently NFTs social tokens and using my regulatory and legal background to help solve some problems at those earlier stages, help founders build, navigate some of those tricky issues. And through that got connected with the team at IDEO. And so now I’m full time investing with IDEO. But also, you know, we, we just spend a lot of time with the companies we work with and yeah, solving some of those hard problems that early stages. 

Yeah. I think one thing I really like about your story is obviously getting started at Coinbase, which I’m curious about. How has that shaped your career in crypto? Getting started at like one of the best firms to work at in this space? 

It was amazing. It was an incredible journey. A lot of ups and downs and, you know, living for that hyper-growth, and seeing those cycles in crypto is definitely, it gives you perspective. Every time that something new or exciting or traumatic happens, I think our tolerance to chaos is much higher because, you know, you kind of live through that. In those early days at Coinbase, the crew, there was incredible, just some phenomenal people to work with and to kind of have been there was just a blessing. And then to have that experience, as I said through the cycles, is really setting up a lot of former Coinbase folks to go out and go on to do even greater things.

Yeah, for sure. Obviously the first person that comes to mind is Antonio from dYdX. You also have a few people that kind of bridge from Coinbase who started their own funds. And it’s cool to kind of see your journey and help so many founders solve really critical problems, whether it be regulatory problems, tokenistic problems, right. What part of the crypto sphere, cause you’ve dabbled, you’ve also consulted, and you’ve also launched you on social token, throughout every experience, what have you found to be like the most rewarding one so far? What have you enjoyed doing the most? 

Yeah, that’s a great question. I think what I enjoy most is just being there alongside the builders the folks figuring out the new stuff and that’s in my career that’s been the one thing that I think I’ve done right, is I’ve always managed to seek out the people finding and building the new stuff. And so for me, it’s kind of being there alongside them, whether it’s a, a tricky regulatory issue. The decision around, you know, the right move for communities some, you know, product-related stuff as well. I think that just, you know, just having been around long enough, I’ve been able to help a bunch of people. And honestly, through that, I learned as well. And I feel like you know, the companies that I’ve advised, I’ve learned as much from them as they have from me. So that’s just such a rewarding thing about building new stuff in uncertain territory together.

Yeah, for sure. I wanna pivot kind of to where we are right now in the marketplace. People are coining it as a JPEG summer. We have the cool cats, the board apes, the punks record level transaction volume across OpenSea and all these NFT marketplaces. And it’s kinda like NFTs are having their moment of fame again. How do you feel about everything that’s happening aroundJPEG summer?

 Don’t forget the penguins. For sure. It does have some parallels with DeFi summer. Just that euphoria where so many new people are coming into the space and coming in for new reasons, you know, for so long people only got into crypto through Bitcoin through that digital gold narrative. And then even after that, you know, we had all the other coins at the peak of the 2017 cycle. And then DeFi summer really peaked because people came into crypto for DeFi. Not just for you know decentralized digital gold assets, but because of the new things that are being built, the new ideas of the borrowing and lending and decentralized exchange protocols yield, farming, all these things. People came in for different reasons. And we’re seeing that again in a different flavor now, which is even more powerful because as it turns out more people care about culture and art and communities and sport and gaming than do about finance. Right? So there’s a new reason that people are getting into crypto and that’s, what’s most exciting to see new people who wouldn’t have really gotten into Bitcoin or Ethereum or any other crypto for crypto sake, they’re getting in for the sake of the content and the communities and the new networks that have been formative of people. So I think, you know, you can kind of hone in on any individual NFT project. You can see the explosion of punks. Obviously you can look at party DAO just recently in the stuff that’s been built there. Rationalize NFTs. All of these are indications that there is demand from normies to come into crypto for different reasons.

One, how sustainable are all these profile pictures? And two, do you think it’s a good intro for new people to come into crypto and to experiment like this type of bubble, this type of chaos, this type of a casino? What do you think about that?

 So answering the second question first, I think. Yes. I think there’s obviously, you know, some, some danger in a lot of like the frothy bubbly price, speculation stuff, but I think that’s always been the way in crypto. What attracts people is something that’s hot, that attracts attention and necessarily that means there’s price speculation, because everything in crypto is inherently financial or fnancializable. So that just means that that speculation is a measure of the attention coming in. And like I was saying, it’s really exciting that people are coming in for a lot of the cultural and art reasons as well. So it’s just another on-ramp into crypto. And I think that one of the things we’ve been talking about for a long, long time is how do we bring crypto to the mainstream? But really the question that we need to be asking is how do we bring the mainstream to crypto and NFTs have proven that this is one pathway. And of course it’s janky to set up Metamask and secure your private key and figure out gas and all that stuff. But people are doing it and people are doing it because they want to be a part of crypto and they want to be a part of space. So that’s not to say that, you know, we can disregard UI or all the, you know, making it easier for people to kind of onboard. But, the reality has always been in crypto that people find a way because they want the product so much. So as to how sustainable that is, that’s a great question. I think like anything in crypto, that’s going to be just more and more peaks and troughs and volatility. You know, there was a great post by Fred Wilson again this week that whether this version of NFTs is the exact version of the future, that’s up for debate, but it’s, it’s beyond debate now that NFTs are going to power web three and the internet of the future. What the internet was always supposed to be. 

One thing that I see increasingly happening is, well, it’s obvious that these NFTs have market value. Obviously, people are trading them right, making money from them, flipping them, whatever, raising the floor, sweeping them, all these different tactics to kind of manipulate the market. But at the end of the day, the big bet here is that every form of media is going to end up becoming an NFT. Right? It’s going to have a level of ownership. Do you agree or disagree with that for starters? 

A hundred percent agreed. Every form of media including every content, every piece of content, every post, every story, every fleet, every library, everything, whether it’s specifically an NFT or not, it’s an on-chain action that’s going to be cataloged, recognized and available to form your social profile in the future. 

So, okay. We both agree on that. I think many people also agree on that concept, but right now, the tools in the onboarding products that are in place for Metamask to all these alternative crypto wallets, they don’t play on that narrative. Right now they’re focused on onboarding users to play and mess around with ERC-20s. Right? The second you open a wallet. Specifically Metamask who focuses on the Chrome extension. You have all your ERC-20s. You don’t really see your NFTs, even though they do store them. So the onboarding process on getting people to consume these NFTs, these media files, whether they be land rights, whether they be future PDFs, whether they be MP3s from an NFT album or an NFT film, that’s not in place right now to actually enjoy and consume. Have you seen companies kind of approach that problem? What do you feel about that? 

Yeah, I think that’s definitely a huge area of opportunity to build products that let users really dive in there. I still think that it’s not the most pressing problem. I think because people are still finding their way into crypto because they want the product as janky as it is. And I kind of look at more things like security. You know, especially at the user end. I think that’s one thing that wallets could really focus on and do better in addition to, you know, improve user experience. But yeah, for sure. We’re going to see new wallet infrastructure. We’re probably going to see an evolution of the wallet to the profile. And we think about that a lot at IDEO. The wallet is a very financial lens to look through the way you interact with cryptocurrency. And like you say, you know, if for many people, the primary action to do with NFTs has to do with content rather than finance, then that experience should look different. But again, it comes down to that, you know, secure private key management. And then how do you translate that into your collection, your profile, your gallery, your display. So there’s going to be a few different ways to approach that, whether it’s a more lightweight wallet that kind of plugs into more fully-featured galleries or metaverses or spaces or something all in one. Yeah, that remains to be seen. 

 Why are you so excited about the security side? What is it about it that gets you going? 

I would say I’m not thrilled by it, it’s just something that needs to happen. Both at the protocol level, the contract level and the user level. I think that’s one thing. I mean, you know, you can train or you can educate people to go through the clicks and the stages to send and bid and all that stuff. But if they haven’t backed up their private keys in a secure way, then that’s the fundamental problem. So I think that, you know, it’s great that the hardware wallet space is evolving. It’s great that user education is evolving. But I would say that’s still the main area of concern rather than just, you know, a nicer user flow. 

When artists are trying to experiment with the NFT route and trying to take it one step further beyond just selling a JPEG or an MP3 file and really allow their fans to kind of go on their journey with them financially, how can they do that today without kind of like crossing the red flags of the SEC?

Yeah, it’s a great question. And I think, you know, music is a great example of an industry with very entrenched or big power structures that don’t always serve the artists. In fact, most of the time they don’t. And you know, again, it’s ripe for disruption where we now have a technology which enables artists and creators to engage directly with their fans, directly with their communities. Whether that’s through music as content, whether it’s through NFTs or other kinds of multimedia that, you know, they want to sell or give away or share with their communities, we’re going to see actual on chain, tokenized, royalties. That’s coming. You know, it’s just a matter of time. It’s going to be as disruptive to the industry as the internet was to the media, or as the press to Hollywood. I think that, you know, this is the true promise of web three, that this technology is here. What that means in the short term is that there’s still a lot of resistance from the traditional legal structures to anything different. So, you know, your example is a great one. What if an artist wants to share their upside with their community? What if they want to take them on the journey? There’s still limited ways in which you can do that. 

One example, which I was really proud of because I worked on with the RAC so I can and what we did for RAC was we actually did an airdrop of his token to all of his past supporters. So went back and looked at people who had supported him through Patreon people who had been to one of your shows, bought much band camp, like all of the other ways that he’d built this community around him, folks that supported him in the past, and he was able to give back to them through the token. So it wasn’t an ICO, it wasn’t a sale, it was just given away. And he kind of aligned himself with his community that way. And then going forward, you know, those tokens can be used for other incentives or you know, collaborations or people in the community participating and supporting him you know, token data that says there’s a bunch of stuff you can, you can do. But I think that the long story short is, when it comes to a creator or an artist, actually giving back to their community, that’s a much more fundamentally less risky way than if they’re extracting value from their community. So, we could do a whole session on securities law and how we test that, but the TLDR is, I think that kind of aligns nicely.

What you’re explaining or describing from what I’m understanding is the utility component behind RACs token, the access component. And is that kind of like more where you’re leaning towards.

 It’s a little bit about utility but it’s also about what the community expects and what they have to give up to participate in it. So if you’re asking them to buy your tokens from you, that starts to look like an ICO. If you’re giving them tokens or you’re letting them earn tokens, or you’re kind of well, you know, creating an economy where everyone shares in that value, that’s much less likely to be a security. And I I’ve written a little bit about this and some of the other things you can do within the community to make it about sharing the value rather than extracting value. 

Very, very fascinating. And you talk about token gated content, and this is something that I’m personally very excited about, that we haven’t seen kind of experimented with to the fullest extent. I think the most prevalent example when listeners think about token gating content, and what that means is, when you buy a bored ape, you have the bathroom that you can unlock and you have this shared canvas that everybody can contribute to a pixel of art to the whiteboard, right? Every two, 15 minutes, whatever the time interval is. What other forms of token gated content, have you seen, that’s quite exciting that you think other creators can kind of implement or start tinkering with in their communities? 

Yeah. There Are plenty of examples of, you know, token gated discords or telegram channels or forums streams, all this stuff is going to be token gated. That’s not to say that, you know, that’s the only model but it is one. You know, especially for creatives with a large audience you know, being on the inside, feeling like you’re part of the, the inner circle, I think can be really valuable for those token holders, but there’s also, again, NFTs being, you know, inherently public by default and that content being public. And the more that that content is shared and referenced, you know, the more valuable it becomes. So that is kind of the other end of the spectrum. So for a creator . It’s important to think really carefully about what you want to gate, what experience you want to create for your inner circle of fans and supporters, and then what you want to make public and the different trade offs between those two models.

Yeah, I think you’re right. All of these collab land bots, these Coinvise bots. These POAP bots, right? All these things contributing, whether you’ve participated at one point in time in a community and what that allows you to access, it’s a very powerful thing that we see more in like web two and a mass level, for example, like subscription, right? If you subscribe to an only fans account, you get access to certain perks, right. And if you upgrade there’s tiers to it, which is a very known model, but now it’s integrating it on the token front, right? One thing I want to talk to you about is this infrastructure bill that came out recently that made headwinds across crypto Twitter. For those who don’t understand it, can you give us a quick brief of what was kinda driving people crazy. And how do you feel about the infrastructure bill and kind of where it stands right now? 

Yeah. First of all, the biggest takeaway is that the folks that are lobbying for fair and reasonable regulation for crypto, they’re super important. Donate to coin center and support blockchain association. These folks are doing great work. And what they were able to do was take this infrastructure bill, which is about like bunch of other stuff in the economy, but there was an amendment part of it which would treat basically everyone in crypto as a broker. What the intention of the bill is to make sure that the people who are actually brokers, Coinbase, other exchanges, centralized custodians, requiring them to report on user transactions, just like every broker in the U S has to do. And no one was disputing that, but the problem was the bill was so widely drafted that it could have included miners , validators, people who had deployed smart contracts or running DEXs, lightning operators, basically anyone who touched a crypto transaction, would make them into a broker. Which would mean that they had a responsibility to report the identity, the cost basis, all this stuff around transactions that they simply don’t have access to and they’re not in a position to do that. So I tweeted it. It’s actually not existential for crypto, right. 

Crypto itself, well, it doesn’t care because the actual app, you know, the functions of the network , doesn’t really get impeded by these folks having to do more compliance, but it’s a huge problem for the crypto industry in the US. It would force a lot of these operations offshore, or it would mean that it’s simply not practical to run a node or a validator from within the U S in a way that people off shore could easily get around. It is trivial. So we’re still in a stage where that might go through and then there’s a few more stages after that in terms of whether the treasury and IRS would actually seek to enforce that against people who write contracts or simply validate, but it’s just really bad policy and it was a shame to say it rushed through so quickly.

I agree with you. I think it obviously stirred a lot of chaos across crypto Twitter, and I called my Senator and I read that script and did that whole process. And, my next question to you is, how does this affect creators in that future vision of what crypto wants the creator economy to become? Like if that went underneath the rug and that passed, right? Thankfully it got the attention of people who care about crypto and believe in it wholeheartedly beyond just the transactional component. But what does this mean for the future of the creator economy? 

Yeah, it’s a great question. I think this specifically even in the broadest interpretation, shouldn’t include creators who are just selling NFTs or who are part of communities or running tokenized communities. But the broader issue of regulation, I think again, it comes back to securities law. Can you launch a token, can you launch, you know, a brand or fan or community token without running a foul of the securities laws? You know, my take in general is that the creators are the folks who have really been historically underpaid for the work, the content they create, the communities that they build and, you know, there is a narrative around crypto enabling and empowering creatives. It’s a way that for the first time, they’re actually able to realize the value of the content, of the work that they produce. And so there’s a stronger argument, you know, for these folks to be able to monetize than there is for, for example, you know, like a 2017 ICO, that’s just trying to, trying to pump its bags. That’s not to say it’s going to be smooth sailing. There’s probably going to be still a lot of gray area around social tokens. But to me, at least there is a stronger narrative for creators and like anything in crypto, the principle of decentralization and community contribution actually aligns pretty well with the securities law. The more decentralized the community is the more different participants you have that are adding value that are creating content, the less likely it is that your token is going to be a security. If you’re just one personal brand or team that’s doing everything, that’s actually more likely to make your token a security, because you are centralized. You’re the one responsible for adding the value and the rest of the token holders are more passive. So the more active, more engaged, and collaborative your community is, the less likely your token to be a security.

How do you feel about everything that’s happening around fractionalization and kind of where they clash and the legal system? 

Yeah, there’s definitely still a gray area. Having said that, I think a fractionalized NFT is in general less likely to be a security than most ERC-20 tokens. And the reason for that is you buying a part of a whole and the whole is the content. It is the NFT, it’s the punk, it’s the API, it’s whatever. And your expectation of profit, and this is the Howey test, but you’re buying into this collectible, or this original, and you might speculate in the value of that original, but that’s much different to speculating on the value of a protocol or of a new asset that has a central team building. I still always thought that the NFT in general, your expectation of profit is due to the rarity or the demand for that asset, for that piece of content rather than, you know, the efforts of any other one person. So it’s not to say that it’s all in the clear. But I think around, again, back to this narrative of art and design and culture and content, this is simply the monetization of stuff that hasn’t been able to monetize on the internet very effectively before. And that’s very different to ICO’s and pump and dumps and rug pulls. 

Why from a real-world example fractional art is a security, but from the digital world example, it’s not?

Well, it comes back to investor protection at its fundamental level. If you fractionalize the Picasso, someone’s got to hold the original, it’s gotta be in a vault somewhere. They’re responsible for that centralized point of custody. And yeah, you want to make sure that that actually exists and it’s not, it’s not a scam. But that’s very different to a fractionalized NFT. You know, anyone can verify instantly that it exists. Obviously, it’s non-custodial, so those same kinds of risks are not present in a fractionalized NFT in the same way that a fractionalized real-world asset is. I mean, there is certainly a possibility that a fractionalized NFT could be a security, if the way it’s marketed is like, you know, marketed like an investment, that’s going to have value-added because there’s going to be, you know, things built on top of it or whatever. But I think if we live in a world where an artist can’t sell an original NFT fractionalized from the start, then that’s a huge problem. Why shouldn’t an artists be able to sell 100 fractionalized NFTs as opposed to one original. The one original is clearly not a security. It’s a piece of art. So if we live in that world, I think we have a problem. I don’t think we’re there yet. I think that’s kind of the worst case outcome, but if you think about it like that, why shouldn’t a creator be able to sell the work in a thousand pieces rather than one piece? It’s the same outcome.

Should creators be approaching their token sales, their NFT sales from a fair launch point of view, or they be approaching it from doing a private raise before publishing it to the community to get involved?

Yeah, it’s a great question. We started fair launch capital last summer at the height of DeFi summer because there was an opportunity and there still is for people to raise funds in different ways. Whether they raise from the community, whether they raise from private backers or whether they don’t raise at all. And there’s still the things that are uniquely enabled by crypto blockchains are kind of self-sustaining in the way that they kind of pull capital, and then that capital gets allocated to projects within that ecosystem. So we definitely have seen that capital, those gains recycled into new projects. As the artist, I think that again, you know, for so long, they haven’t been able to really realize the value of their work. So I don’t think we should have an expectation for artists to kind of give away their work for free. But you know that there’s definitely opportunities if that’s what they want, if they want to give something back to their community, they can give away tokens. They can give away NFTs. 

Some interesting models where, you know, there’s rather than a full, you know, unlimited open edition. there’s one of X, but then there’s, you know, another kind of you know, a replica of that, that’s its own edition that gets given away so that the folks that can’t afford to bid on the original or the one of 10 or the fractionalized, one of a hundred to do that. But other fans can still have a derivative or a print the equivalent of a print of the original that they can own as well. So there’s so many new frameworks and new possibilities that can be explored. I think that’s one of the most exciting things. 

What are some of the more pressing issues in crypto that have yet to be seen? 

Yeah, I think like I mentioned at the start, security at all levels. It’s still such a huge one. So we’ve been investing in some great projects in the infrastructure space in terms of security audits, bug bounties insurance. And we’d love to see more in the user experience space as well. So that’s , I guess probably number one. And then again, like there’s always still more efforts to kind of bring mainstream users into crypto. Having said that, I think, you know, the NFT summer is proving that that people are coming in. I think now, it’s almost like we do look still for the pain points. We look for the things that are really painful for builders, entrepreneurs, users, and solving them. But we also just see this like massive blue ocean of new opportunities. And we love talking to founders who have a big vision of how things will look in three and five and 10 years. And so, they’re also working on something that’s a pain point. One example is everything around DAOs . So DAOs run effectively like traditional businesses. They need, you know, HR and payroll and operations and treasury management and accounting that simply doesn’t exist and those tools need to exist right now. So that’s one, that’s clearly a pain point. On the investing side you know, we spun out syndicate protocol, which is really focused on making it easy for people to spin up any kind of collective investment vehicle on chain or off chain. So those are some examples of pain points, but on the other side, you know, looking at things that are happening in the NFT space seeing what happened with party DAO and you know, enabled by the auction house Zuora built. That’s like truly new primitives and new markets that are coming. 

Final question for you. I know you’re a big fan of the development of the internet and the transition from web two to web three. You’re very vocal about that. One thing that I like is to pick apart the development of the internet. So web one was very much read-only, right? Web two made that transition and created social graphs, social networks, and connected friends online. Web three is entrenched by this primitive form of internet money, right? Ownership, decentralization. And they’re each like collectively eating one another. What do you think is going to eat web three? 

Nice. Yeah. Huge question. I honestly hadn’t thought about it. I think we’re still many years away from the full web three vision, although we’re starting on that pathway now. And the thing about web three is that, you know, when people own their own content and data they can choose which platforms to use. They can choose where to share it and how to surface, but they still own it. At the same time they own the platforms that they’re using. So community ownership is we believe, fundamental to web three, the ability for users to own and control and have a say where the direction of those platforms goes in. So I guess after that, you can kind of extrapolate and see basically, you know, new platforms being built by communities rather than by centralized teams. The tooling just being there from day one, the pseudonymous economy being really part of web three and just, you know, enabling anyone anywhere to contribute, to start something, to contribute to something else no matter where they are, what they look like, which regime they live under. I think that’s really where we’re heading and that’s one of the most exciting things about web three. 

Every single thing that you just mentioned is with the intention of bringing everything on chain. Right. Well, what happens when everything is on-chain and what risks does that kind of propose? And I think that kind of ties into what will eat web three? Once all that data is on chain, what comes after that?

Yeah. I mean, maybe there’s just an AI revolution where the bots are so much more effective at interacting with the chains than humans are. And yeah, maybe that’s when we kind of transcend into the, into cloud or the matrix or whichever utopian or dystopian future you want to want to believe in. But yeah, I think that at that point, Society looks much, much, much different. Both in terms of how we will participate in the economy and then how governments and, and traditionally logical operations, like the role that they play will obviously look very different as well. So that’s a deep future episode, but I can see that the, the seeds are already laid.

I think that’s a perfect place to end off Ruben. Thank you so much for being on mint before I let you go quickly, plug yourself where we can find you and everything that you’re working on. 

Thanks so much, Adam. It’s been amazing. I’m on Twitter at @bramanathan, hit me up. My DMs are open any time.

Listen on: Spotify | Apple Podcast | Google Podcast

Background

Mint Season 2 episode 5 welcomes Jess Sloss, instigator at Seed Club, an incubator for the crypto space helping creators and communities launch and grow successful social tokens.

In this episode, we talk about

• Finding and aligning your community with a universal purpose
• The ownership economy
• Frameworks used to derive liquidity for early-stage social token projects
• DAO management roles
• The importance behind on-chain revenue
• The rise of a human stock market

…and so much more.

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Thank you to Season 2’s NFT sponsors!

1. Coinvise – https://coinvise.co/

2. POAP – https://poap.xyz/

3. Socialstack – https://socialstack.co/

4. Celo – https://celo.org/

5. PrimeDAO – https://www.prime.xyz/

Interested in becoming an NFT sponsor? Get in touch here!

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Let’s start with the basics. Who are you, what were you doing before crypto and where are you now?

My name is Jess. I’m the instigator of a project called Seed Club . We are a DAO that builds and invests in communities with tokens. Yeah. I mean, I guess I got into crypto in 2017. I was really fascinated with this idea of being able to own and have a say in the networks that are coordinating our economic lives and fell down the rabbit hole pretty quickly worked on a number of projects over the last few years, but I think really found my footing in this emerging social crypto space. So in just about a year ago, I think we’re going to have our year anniversary coming up soon and what I can figure out exactly when we actually started, but about a year ago the emergence of some early signs of value and opportunity within the social token space became apparent. And I was lucky enough to be joined by a great group of early collaborators to form Seed Club where, you know, today we’re 62 collaborators. These are the member owners of the Seed Club DAO backed and have launched close to 17 projects and currently recruiting for our third cohort, which will kick off at the beginning of September. So trying to put things in the social token space. 

How did you come to the conclusion that you wanted to have a say in the projects that you use which have an economic impact on our lives? 

Okay. I mean, I guess I was really early into social media and got really excited about the opportunity that sort of democratized access to distribution would bring to the table. So this idea of being early blogging, early Twitter, being able to like publish things and have people see it and you know, I’d run a business early on and spend you know, thousands of dollars on advertising before and just realizing how ridiculous and painful it was to pay for attention and really wanting to see an opportunity to have more direct to my audience or to my customer relationship. So I got really into social media. I was excited about it and, but pretty quickly it started to be apparent that, you know, giving a Facebook or a, you know, later Instagram or YouTube, like control or like the, the dominant being the monopoly, essentially over attention and access to you, to your audience was maybe not the best idea you can see what’s Facebook, you know, the, the idea of removing organic reach and instead forcing people to pay for advertising to get that reach was pretty clear example of that sort of S curve of adoption and development within these platforms where they’re, you know, platforms are all about building and giving and, and collaborating and you know, creating value for users to a point where they’ve captured the lion’s share of attention and sort of have this you know, viral growth or exponential growth themselves and then they start to turn that off and instead begin monetizing. So this like, you know, build an audience, then kind of sell them out in order to monetize model was pretty apparent to me and it was very frustrating to sort of think through like all this value and effort that has been put into building up a Facebook page or even you know, and then it was a YouTube subscription sort of subscriber base only to have it be algorithmically limited and really forced towards advertising. So that was like the direct example. 

How have you kind of seen crypto approach this problem? Obviously it’s a big ethos and a big narrative for crypto in general, even more so with, with social tokens and NFTs, what are some examples that come to mind that attempt to kind of go after this problem and eliminate it and bring kind of power back to the users? What is like one of the more recent examples? 

 I mean, I think the jury’s still out on whether we’ll see like, you know, competitors to YouTube or Facebook or whatever, and that same model that we’re we’re, you know, cryptos are the central piece to it. I think Audius is probably the best example of this and other, you know, I think have 5 million monthly users right now and are seeing some really great success. It’s still is a tiny percentage of what something like Spotify would have as far as their monthly users and listeners. So I’m optimistic that something like that will happen that eventually once a consumer application rolls out like a true sense of ownership to its users that that will ultimately result in its growth. More projects like that going that direction. But you know, I think right now that what I love so much about the community token space is how visceral that feels like the idea of being able to ya know .So friends with benefits is a project that I’m sure you’ve talked about a lot here, the ability to sort of buy tokens that represent ownership in this community. You know, there’s a set amount of tokens and I own a percentage of those. And that gives me access to this community. And through my efforts, you know, I host a Thursday afternoon, social token chat there and been involved in supporting the project in other ways I can have an impact on the increased value of this token. And as more demand comes to that token, I get to see you know my value increase. So I think that’s a very tangible example of like having a sort of, I guess, profiting from the increased usage, the example of early Uber drivers or Airbnb years .Again, I think they’re used quite often and saying, well, these folks created a ton of value for these networks, but don’t get to profit in it.How do you actually have a say in these networks? And what does it say look like, and is it truly a say or is it more of like a, you know, a nice to have or like yeah. Is there ever really truth on these things?

Yeah. I want to bring up something because it’s super on par with where the conversation is heading right now. This article came out on Bloomberg. So basically the headline is Facebook, Google, and others should pay us for using our data, here’s one way to do it. This was published three hours ago, and a lot of people kind of argue that these conversations only live on crypto Twitter, right? The sense of ownership, the sense of being a part in having a say in a stake in the products and services. But obviously this is starting to exist beyond crypto Twitter, right? This being the most obvious example. And the writer, Peter coy is basically arguing that maybe there’s a way to get paid 10 cents for every single dog or cat picture you post on Facebook or maybe even $5 a month for your searches on Google. In return of them using your data. Right. And I assume I see you nodding your head to share with me a little bit about that. What do you think?

 So like individual data, even bucket a data it’s not valuable. It’s the network effect is valuable in these communities and these platforms. So it’s the network of Uber, the network of Facebook. And so unless they’re giving equity to people who are creating value on these networks, then no amount of pennies and dimes being paid to from my interaction on the platform is truly reflective of the value that we’re creating. And I think that that’s why crypto is so innovative, like tokens represent ownership and a say, and a governance right. And sort of an indication of being early and all these things are what’s truly valuable. And I think the you know, we need to get to hopefully a world where we can give people tokens that represent something that’s much more equity-like that represents the value that they’ve created and either betting on something early or bringing a lot of value to a network early. And that is in assets, not in income. 

 Yeah, no, I hear you and I think a lot of these like more modern-day web three companies, there’s the element of starting a DAO and going strictly to the token model. But there’s also like this hybrid model of starting that LLC, and then bridging out into a token. And what’s interesting is the employees that get hired for these hybrid model firms. They kind of prefer more of the token route rather than the equity in the LLC itself, because the real value, the real liquidity, the real growth that you see like front on, in hand in front of you is from the token appreciation. So what would you say, how do you kind of determine between bridging that through that hybrid model versus going full throttle down web 3.0?

 I just think it’s exciting that we can go full throttle web 3.0, like that’s the innovation. Is it right for everybody? Definitely not. There’s a lot of reasons why you want to have a you know a corporation that you raised into and the limitation of liability that exists for that. There was a ton of regulatory uncertainty that we’re dealing with still, no matter what model you go with, but definitely some, you know, more with, with some paths than, than others. So I just think it’s a very exciting that this is an option and because of how much less friction exists to bring people together around a multisig with tokens and a snapshot and to, you know, pull capital and go do cool things inevitably more of these things will be started and soon the question will really be like, do I really have to start a coin? I mean, the best founders are already asking me this already. Do I really have to start a corporation? And the answer is maybe. Maybe depending on what you’re trying to build and how you’re trying to structure it. 

Let’s reference this article again really quick. This theory, this element of people want to own the products that they use. It’s an ongoing narrative. Jesse Walden is one of the godfathers of that narrative, right? It’s a known thing. But when I talk to my cousins, who I consider more of the normie crowd, okay. When I talk to friends, when I talk to people that work in traditional companies, right. They use these platforms they’re incredibly addictive and they just consume the content and they don’t really think twice whether or not they should own it. Right? When do you think we’ll start seeing that dynamic in that shift on a more main scale type of level, because right now in crypto Twitter, it’s very much so the belief. Right? But beyond that, beyond that Bloomberg article, I feel like many people don’t think about it as philosophically and as critically the way we do. 

Yeah. I mean, I think a big part of that is that people don’t know there’s another option. Right. And so there’s an education component and I think, you know, as more people do realize that, that the idea of like, do I want to earn ownership to use a thing or not earn ownership to use a thing. I think that becomes like a pretty more obvious decision. But I think there is like an underlying concern here where like ownership in a purely financial sense, you know, traditionally has been very concentrated and it’s not for lack of trying to be more distributed. So the fact that most people don’t care about it and don’t know why to care about it, or maybe they can’t, maybe they, you know there’s sort of like a short-term profit need or earnings need that ways the ability to sort of hold long-term. And I think we saw Eric Arsenault from the Rarible DAO post something about this around like the experience being or people are mining, you know, Rarible tokens for doing things on the rebel platform and the vast majority are dumping it. And so you’re seeing a concentration of those tokens in the hands of more of a professional class. So I think like the reality is we’re going to hopefully just do a little bit better than the way it is right now. I think that’s what we’re seeing in Twitter generally. Like there is a more distributed ownership base for the most of these projects. There is a lot more choice and voice and exit opportunities, so we can, you know, move away into doing new things if we don’t like the way a community or platform is going. And so I think we’ll, you know, it’s unrealistic to think that we’re going to have 100% of the population being stoked on ownership, but I think we have a 10, 20, 30% increase. I think for me, this idea, like the concerning thing around our digital economy that we will live in, especially over the sort of web two era, was just how many winners there were, but just how many losers there were, there was no middle class in the creator economy. There’s no middle class in this sort of digital world. And the sort of like the impact networks have, you know, when our economies become networks that the normal distribution curve just seems to disappear because there’s no physical bounds to it. And so I think crypto now through the introduction of scarcity through NFTs and ERC-20s the ability to sort of earn algorithmically or through other schemes might increase the likelihood that we’ll have some semblance of the middle middle-class in a digital economy. And I think that’s something that we should be working towards. 

I remember seeing an article from Cooper and Kinjal covering this topic and I know a few others have kind of covered and wrote about it and you’re seeing this argument. I feel like you’ll see a lot of this art or these arguments prevailing. More specifically in like the creator economy and all these like random ass Tik Tok creators that are really just gamifying the algorithm, but they get a lot of views , but they don’t know how to really build communities, but they might have a small following subset. If people that engage with them and those are the type of like the micro economies that you’re referencing?

Well, I mean, I think the opportunity for many micro-economies to exist is exciting, I think the fact that those Tik Tok-ers , you know, in a world where Tik Tok was web three they would be earning for the value they’re creating. Right? So their ability to win the game, that is the algorithm is about the algorithm was what Tik Tok should reward. Ultimately they’re rewarding them with views right now. And they’re just unable to turn those views or those followers into revenue or money. Right. And so I think having, you know, the aligning an incentive scheme, such that the more addictive content that you can create, the more Tik TOK tokens you earn and therefore giving somebody an ownership stake in the network is the thing that leads to more of a, you know, a middle-class of creator. So creators need to be earning ownership, not just income off of these platforms for the change to happen. 

No, I hear you. And I know a big part of what you guys do at Seed Club is really focus and prioritize these web three communities also dabbling on the creator side. But I know a lot of that has been shifted towards the web 3.0. Communities and a core component of these web 3.0 communities is the liquidity, right? That kind of drive power people get paid out in tokens. They still need to live their lives in the real world beyond the web 3.0 world cash out. Okay. And as you and I can both agree, it plays a large role in opening up the project to the community. Is there some type of framework you guys used to kind of incentivizing liquidity for native tokens as you grow these communities? Like, what does that look like from your point of view? 

Yeah, so I think like we take a creator or a community-specific approach to any project. And so the first conversation that we have with somebody who’s building a community token is really to, to understand what the goal is and where they think a token can create value within their community. So, you know, we’re not talking about minting tokens right away. We’re not talking about liquidity, we’re not talking about revenues, et cetera. It’s really about trying to align their goals with what we see tokens being able to do. And so for many of the communities that we work with liquidity is not something that we recommend to even dive into early on. And I think it’s part of a much broader plan and it needs to be thought of as part of a strategy to ultimately unlock the most value that these tokens can unlock within a community. The second you have liquidity. Yes you do have the ability for people to cash out into Ethereum or some other token, but for many communities, that’s probably not a good idea. And you can just reference you know, startups, for example, where, you know, for many startups, you’re looking at 6, 7, 8 years before you have a liquidity event. And while that might seem awful in many ways and, and arguably it is in many ways there’s also a big benefit for community members to be aligned over the longer term, because the reality is you’re probably not able to create something of exceptional value in a course of a week or a couple of months. So the thoughtfulness around when some liquidity should be brought to a project, really, it sort of leads to, I think, more positive outcomes. You know, we even sort of put a lot of thought into like the distribution of tokens early on whether they’re NFTs or, or your ERC-20s because so much of I think the challenge in this space is how do you actually get people who truly care and want to create value within these communities to be owners of the communities when speculation is so easy to do. So, you know, I would say we have four or five tokens that we’ve helped launch out into the market. We’ve worked with 16 or 17 projects. Number of them are still running a playbook that’s all about building connection and value and standing the ownership base of their communities prior to releasing tokens to the open market. So I think that’s like the most important part as far as like, you know, incentivizing liquidity. We’re fans of a number of models, but one that seems to be leading is, is sort of whitelisting LP providers. So giving core team members or backers of the project, the opportunity to provide liquidity and to earn tokens. So much of the design of these token models, I think, especially in the ones that we’re talking about, which are community tokens, where, you know, mostly the tokens are supposed to live within the community treasury and are being used to invest in, in growing the project. You know, the idea of how do you actually, like who gets the chance to earn those tokens matters quite a bit. And you want to make sure that they’re aligned long-term, especially if they’re significant earners. So white listing token or liquidity providers seems to be a good way to go about doing that. And also, you know, the, Uniswap V3 provides new opportunities to sort of set tight bounds as far as what token prices could be. So there’s more and more options. And I think other tools are coming out that’ll make this easier. But I think the core point here is just to be very thoughtful about when you provide liquidity. Some, you know, friends with benefits, as an example, that’s brought up all the time to me, where they were saying, well, you know, FWB had a liquidity pool from day one. And my counter to that is like, yes, but nobody knew who the hell they were or why they might want to own one of those tokens today. When a token price is north of $50, anybody in their dog who’s been watching this whatsoever is going to look at that and say, you know what, probably worthwhile for me to punt an ether on this, because it might just pay off. And now all of a sudden you have your ownership base and pricing based, based on people who are just purely speculators rather than, you know, the amazing community members that Trevor and team were able to bring together.

How do you go by developing your community’s why?

I mean, I think it’s something that’s refined and not developed so much that it’s a core thing that we’re looking for when we explore whether it makes sense for us to work with the community or not. That’s a big part of like our application process for the accelerator and for the studio that we run, we’re really drilling down into that quite deeply. And the big piece here is like you know, a strong why I think sustains and allows you to sort of evolving and overcome challenges where any of the mechanisms like liquidity mining or airdrops, or, you know, play to earn games, maybe that are just being snapped onto these communities in the short-term PFP, chasing the profits of flipping NFTs. Like these are all going to get a whole lot of attention in the short term, but once there’s a deeper why it is to the importance of coming together and working towards something it’s going to be very short-lived and Seed Club’s model, essentially, as we take a small ownership stake in all the communities that we help launch, and we’re locked up in line with the founders at the very least. And so we want to be early diamond hand-holders, which means we are partners, which means we are marrying these founders in some way. Our brand is tied up with them and we want to make sure that there is a long term focus here. And so we’re very, very, very thoughtful about drilling down and checking whether this why is something that resonates, that makes sense that checks out that is aligned with the creator’s experience. And is something that actually, we think we’ll have, you know the pole power to maintain over the long term. I think, you know, it’s interesting that you described FWBs why as being clear, because I think I agree with you though, I don’t know how I would articulate it. So maybe that’s a counterpoint to that point, but I do see a number of people out there saying that, you know, the community tokens off, they don’t have a clear why. And it’s very hard to have a clear why, or at least it’s going to evolve over time. I think that’s a huge benefit. I think it’s like the idea of like what these tokens you’re really doing is creating a shelling point for attention and belief and ownership and responsibility and action around an idea. It can be something like a wall street bets community coming together to stick it to the man, or it can be a moms group that are coming together to mutually support each other through, you know, through whatever challenges they might be having. And you know, what we need to do through designing community tokens is best, you know, empower these tokens with that mutual belief and sense of belonging and that story and narrative that’s going to sustain beyond any sort of short term hype or excitement or their markets whatever may become. So I think the best community tokens are going to be ones that have a clear why, at least for now that motivates people to take action. I think one of the most ones that’s kind of blowing me away is what Krause House is doing. I don’t know if we’ve talked to those guys yet. So it’s a DAO that’s coming together to buy an NBA sports team. They have a mission to buy an NBA sports team. And that’s the look that I gave them as well. Like, are you kidding me? And yet people are like, heck yes, let’s do it. They don’t care that it may be completely unreasonable to go do, or there’s no possible way to do it. Just they’re United in this big vision. And that the team does a great jobs for driving short-term action and belonging and working groups and making stuff , et cetera. So I think like, yeah, sussing out the why and, and seeing what, what resonates is going to be interesting. I mean, I guess it’s how we’re going to be making bets on a lot of these things moving forward.

Okay. So from that point, right? What advice can you give creators in like future wave three communities on finding and discovering that why? How could they go through that process and do it successfully?

Yeah, that’s a great question. I mean, I think that the concern I have, even with the premise of the question is that it’s this idea of, of manufacturing something. And I think like, you know Derek Sivers, who’s the founder of CD baby always talks about how he only ever wants to work on companies that are being pulled out of him. He doesn’t want to start a new company unless it’s being pulled out of him. And I think that probably rings even more true in this world that we’re playing in right now where you know, forcing something and trying to manufacture something, is just probably not going to work. You really need to be able to get a number of people who probably even don’t know about you to come together and, and believe in a thing. And the way you do that is by having a, you know, a true bleed, deeply held belief in, in why something needs to exist and the progress you’re trying to make. And so I think there’s like any number of whys to be discovered. And I think that’s a personal journey for individuals to say, okay, well, what is this thing that I really want to put my time and effort and, and reputation on the line for? And I think a lot of the, probably the top streamers and content creators probably do have that wide deeply ingrained. Like there’s a, you know, a Casey Neistat. It was really about the creativity and the you know, discipline and the pushing forward of a craft. And I think, you know, he has been able to build a large audience around that and I would assume a large part of that audience would probably join a DAO that he created and could focus the effort of that crowd on something good that matters to them. And that would be a worthwhile pursuit. But I don’t think like sitting down and saying, okay, well I want to create a token or a DAO. How do I come up with a strong, why that’s going to motivate people is relative to the appropriate way to go about doing it. Very much feel like Seed Club. Like I describe it as like a you know, a horse that was just, you know, all of a sudden I found myself riding and I just feel responsible for, you know, driving it, steering in the right direction. Let’s make sure there’s water. It’s make sure it eats. And sometimes it’s bucking and sometimes it’s running sometimes it’s trotting, but yeah. You know, there, there is any number of times in my career where I felt like I was really just pushing a big Boulder uphill and this feels like I’m just running down downhill next to it. And I think the best whys are like that. There’s this sense of something that exists out in the world that should exist. And that can point to, you know, a number of projects that we’re working on that, that fit that mold like forefront is like, Hey, there’s just nobody talking about the data and, and the markets around and the people around social tokens, we should be talking about that. Jumped from the joint junk community, which is a B2B marketing community saying, Hey, there’s like, no , marketers or a big market here. People, they care about it more than most people. There no place for them to learn. Let’s go create something. You know, Matthew Shane from song camp literally was on our live stream and said, Hey, I had this kind of crazy idea. Should I go do it? And I was like, heck yes, you should go do it. And now they’ve been producing amazing experiences with amazing music entities. And they’re probably leaders in the music NFT space, despite the fact that there’s artists with millions upon millions, upon millions of followers that are coming into it, they don’t have that sort of deep ingrained sense of mission and community. So I think you know, if somebody is like, I want to get into the space, I don’t know, like, what is my, why my recommendation is you should join a community that resonates with you at first. Go get your hands wet there, figure out what’s going on. And then if you’re like truly have, have built sort of an audience or early community and you want to explore, you know, how to shape a token project in a way that makes sense. That’s really why we invented Seed Club. It’s an opportunity for people to like understand the intricacies and the nuances of what needs to go into launching one of these tokens and why running into it and just minting a token right off the bat, or even worrying about all these things, like getting a perfect economic design, et cetera, without really, you know, diving into the problem area deeply is just not worthwhile. And that’s, I mean, I watched so many projects come in from day, week one, and just sort of transformed by week four and five through our accelerator program. 

What are some other key roles in DAOs that are required to make it successful?

Yeah, so I think there’s the core thing is there needs to be a core of an organization that keeps the heartbeat going and momentum building. And so I think, you know, there is sort of this often misguided belief that that is just a community that all of a sudden, a community just manifests and they’re gonna make decisions based on consensus, and everybody’s going to be pulling in the same direction and we’re going to create this amazing thing. The reality is there’s usually one or two or a small handful of people who are taking the responsibility to move things forward. You know, for Seed Club, in the earliest days, that was me. And now we have a team of three along with a number of Collaborators that lead our working groups. I think if you look at someone like friends with benefits, it would have been Trevor and a small group of people and now they have you know, five or six different working groups with, you know, operations and communications and various roles that are in play there. So it was really going to you know, I think that the, in our organization that rolls the instigator, but I think there’s, you know maybe a title is not the most important thing here is just, how do you find an, I guess you just require somebody who’s going to be taking that responsibility and pushing things forward. You know, much like other organizations, you need to have a finance focus, right? How are you budgeting? How are you deciding how to pay and reward people? There needs to be somebody who’s, who’s running operations, right? There’s any number of things to manage within the discord server or you know, transactions to engage or broader conversations to have. I think we can borrow from a lot of the existing organizations and think of like, what are the roles we need to have to keep this economic engine that we’re building growing? But I think what’s exciting is that there’s like all these other roles that can start to pop up. And I think each community really should just be paying attention to where, where there is value to be created or a need, and then figuring out how to match community members to that role as fast as possible. I think it’s a very hard thing to do. I don’t think, you know, I don’t think we do a great job of it yet. We’re really trying to get better at it. But I think that’s a big unlock is sort of identifying opportunities and creating opportunities for individuals to kind of step up. But you know, we see marketing and communications and meme, you know, meme dealers, the Elon Musk’s meme dealer, just, you know, et cetera. We’re seeing, you know, folks who are doing data visualizations, but I think the, the interesting thing is, what we’re seeing work really well is have some core folks that are taking responsibility for moving things forward and then making it easy for a broader crowd to come in and, and support those folks. So look, I think a structure moving forward would look like, you know, five or six working groups with one or two people in those groups that are by their part-time, but more directly compensated in a task with the responsibility of managing those groups and then giving them those folks, a budget to you know, quote unquote hire or recruit, or, you know involve other members of the, of the team or the, of the DAO in that effort. And so I think that’s one way other ways are a lot more chaotic and it’s really just about like fighting for resources and pushing ideas forward. And I think, you know, all of these experiments are worthwhile and it’ll be interesting to see. And I think it’s going to be about, ultimately, we’re going to see matching organizational structure with the type of DAO that is being created as being key. And it might not be super clear yet how to do that, but I think it will be in the coming months. 

Do employment standards change in a DAO setting? For example, you talked about, for example, having six working groups? Two people, working groups, having someone part time leading that, managing it. How do people think about, or either, how have you seen people thinking about how do you guys think about compensation for these individuals? Obviously they’re paid through the native token, depending on their funding. They might even get a certain stipend through USDC or USDT right. Let’s say, they’re just like, they’re just the Genesis, right? Trying to incentivize people to come on board through their, why paying them through tokens what does that payment structure look like?

 Yeah. There’s no one-size-fits-all here whatsoever. So I think like 90% of my time is spent working with folks that are leading DAOs and communities and working alongside them to help figure out what the right fit is for them. And, and I think like the best way, Joey DeBruin, who’s a, you know, a researcher in residence with us at Seed Club coined the phrase, or described the process of were saying we’re in the case studies phase, not the template phase of DAOs and social tokens and communities. I think we can pull insight from many, but we need to make those decisions relevant to everything from our why to our founding members, to the work that we’re trying to do. So like Seed Club, right? We work with many projects and the types of projects we work with are early stage, and they’re not out in the world and distribution is such an important piece to us. So we can’t be super public about all the projects we’re working on, which means we can’t just say here a community come and support us and help us figure this out. This is a challenge, because in many ways there were probably be a lot of value in better-involving folks to it. So we’re really trying to figure out what the right way to do that is. But for us, the idea of having some core members that are responsible for doing working groups here make sense and, you know, we’ll find whatever the appropriate sort of compensation is to you know, be competitive in the market and also you know, give people the type of upside that they want from participating in these communities early on. And, you know, I think the good thing is people who are joining teams right now are really collaborative. Right. I think that you have to approach it in a collaborative way. I know song camp just went through a whole discussion with our team around it and the community around it. How do we use these funds that we’ve, that we’ve raised, like where should they be used? How should we pay people? How should we think about paying people? Should we pay people? And it led to, I think, a better outcome than, you know, Matthew or I, or any sort of members of that team could come up with through engaging that community. And it also brought them closer together and there’s a deeper sense of ownership. So that sort of collective, like, you know, my salary through Seed Club was decided by a working group of people who did research and suggested something and then voted on it. And then the community vote, like our DAO members voted on it and it was enacted. And here we go. And you know, I think that’s just sort of like that, that process is probably key to building you know, consensus and authority and validity in that payment structure.

How do you differentiate social capital from financial capital?

 Yes, I think communities, individuals will say DAOs a community like Seed Club needs to think through how we allocate both our financial capital and our social capital. And so financial capital would be, you know, how do we spend our budget? How do we, how do we spend our tokens? You know, do we back a project? How much should we back a project, etc. The social capital is I think much more nuanced and maybe the most overt way. It’s like, who do we want to align ourselves with? Which projects do we want to partner with? Which projects that we accept into our accelerator what types of projects do we work on? You know, I think increasingly we’re going to see the value of curation in the space grow. And when there’s an opportunity for anybody to launch a token in any community to launch a token and we truly believe there will be millions of community tokens out there, being able to determine which community tokens are of high value is going to be a big challenge. And so, you know, we think that by being thoughtful about how we align ourselves with projects today, we’ll be able to position ourselves to be that trusted voice in the space. And that our curatorial sort of partnership and backing of projects in the future will create value for those projects. And that partnership will be valuable for projects themselves. So that’s sort of like the investment of social capital. How do you actually build that social capital? I think is how we show up on a daily basis. Yes. It’s the culture of the DAO . Yes. It’s who we brought in first. You know, most of my first eight months of working on this project was really talking. I mean, I talked to people every single day, all day long, and a big part of it is trying to make sure we find great people to come and join us at Seed Club. And, and I’m just ecstatic by the 62 member-owners that we have today that are all not only outstanding operators or builders or artists out in the world, but they’re all great human beings. I sort of had this mental model of like if any of our team members were locked in an elevator accident, would they have fun or at least enjoy each other’s company? And I think across the board, the answer is yes. And so can I scale that? I don’t know if we can scale that, but I think it’s definitely the intention. So how do you like, to me, that’s more like the, how do we build an engine of, of increasingly growing social capital? But I think the people who do it the best, or are friends with benefits like that is purely social capital. It’s about the sense of belonging. It’s about the sense of, of like, you know, where do we, what do we build? What sort of parties do we throw? There’s all this intangible stuff that just keeps unlocking new levels of value. And you know, I think the sense of ownership and the creativity and like the irreverence and, you know, the, the way that somebody handles issues on discord or that the community responds to how you go and do fundraising, all these sort of things built into this growing a pie of social capital. And it’s unclear to me how sustained, or how much of a moat exists there or like, is it fragile or not? But I think it’s the important thing is to, I think, start thinking through how that, that there isn’t just financial capital that we’re allocating, but there’s also social, social capital.

How can communities push towards achieving on-chain revenue?

Yeah, I think NFTs are the core innovation here for social DAOs like FWB and like the bill and this actually expanding quite a bit. Right? So like PFPs, as an example, like communities like Bored Ape Yacht Club selling out a number of NFTs. And then building a really strong secondary market that can really sustain a lot of development and building within that community. That’s a great example of on chain revenue. You know, we sold off a series of entities that represented sponsorship over our creator crypto summit at the beginning of this year, that’s on chain revenue. The FWB example is on chain revenue. I think like what the tools that mirror are building with additions or on chain revenue for media DAOs you know, the ability to sort of want to sponsor and back and collect these things and show your signal. You’re supportive to a creator is on chain revenue, but I think we’re still really early days as far as on chain revenue goes. And I think the directions I’m interested or that we’re really trying to push is looking at like, what does subscription look like in these community tokens or like social DAOs , you know, owning seventy-five FWB tokens is great, but the likelihood is that I didn’t buy those from the DAO . I probably bought them from another person who was selling them on the market. So there wasn’t revenue that’s going to the DAO directly. It’s not always the case, but that’s often the case. And so some sort of mechanism where there’s a mixture of subscription revenue to unlock some extra benefits that also leads to a portion being paid out in tokens, I think is an interesting model that we haven’t really seen takeoff yet, but we’re eager to push that forward. And I think there’s, you know any number of interesting models that are going to come from the integration of communities and DeFi . Like I truly believe that the next a hundred million users into crypto are more likely to come from Kanye than they are to come from compound. Like what would communities and creators do well, right. They built the trust and authority of an audience. And so that means that they have the ability to communicate, to capture it. They have the right to somebody’s attention for some amount of time, whether it’s in an inbox or on a video. And the biggest challenge I think we have in crypto is that it isn’t obvious why this matters to start with, right. It isn’t obvious why a DAO is better than a corporation, or why borrowing on AAVE is better than borrowing from your bank or why staking something in a liquidity pool is actually valuable. And so we need to have people who have earned the right to that extra beat or two that gets the necessary information across to somebody to get them to go, oh, that’s kinda cool. And to be fair with the crypto world, most of the content that’s out there is really schemey and pump and dumpy, right? Like it’s like, here’s a token why you should buy ADA today and it’s going to be up a thousand percent and you know, what I think we’re not seeing it’s like, so, I mean, the example I’d love to give us what Packy McCormack is doing. Like the work that Packy does at not boring is phenomenal, right? He has a newsletter, 30,000, 40,000, 50, a hundred thousand people. I don’t even know thousands of people read and they read every single week because he’s built up that trust and the good that he’s done for the Ethereum community, the Axie infinity community NFTs is monumental. And so, okay. As more and more of these people come in, there will be more and more you know, web three interested folks in those worlds. And I think they will have the ability to introduce new consumers to DeFi . I think they will earn, you know great referral fees and, and marketing budgets and sponsorships for all those sort of things. I think those opportunities exists for DAOs and communities as well, and maybe are even better suited there. 

 I think you brought up a great example that at some point I’m a believer that Kanye is going to have the Kanye DAO, right? He’s going to host his own creator DAO, and there’s going to be exclusive gap X, Yeezy drops, you know, specifically for token holders and people are going to be, airdropped probably Kanye songs, unreleased songs, you know, or samples, or there’s going to be this whole element of web three, fun and developing and all these individual communities. And these are gonna be all the normies that come from the Instagrams, the Snapchats, the Tik Toks, cause that’s their main form of distribution to onboard them. So it’d be interesting to see how kind of that plays out down the line. 

Yeah. Whether or not Kanye comes out and does create a DAO. We’ll definitely see hundreds of thousands of others do it. We’re seeing that it happened already, you know, RAC was an early example of it. And I think there’s a lot to be done there still. But a lot of these folks who are stepping into the NFT space, I think it’ll be the natural progression will be for community tokens. I think there’s a number of artists that are in the rally ecosystem. That as soon as you know, there’s more and more tools that roll out there, I think you’ll see them take advantage of that. But yeah. So this idea of like, I always I think I use Taylor swift as an example. I don’t know why. If I was like, I think a Taylor swift token and community token like a Taylor swift coin is like, not a great idea, but I think like a Taylor Swifty coin is a great idea and the difference being that you tokenized the fan community rather than tokenizing the artist. And I can almost like imagine there being competing Swifty communities that are bidding up on every single Taylor Swift NFT that gets dropped or the new album that gets dropped for or whatever. And so they’re kind of having these like Essentially like the BTS army, right. But swifty army that’s out there you know, supporting the artists, but could probably be directed in any number of different ways. And, you know, we’re doing this in, I think like the switch from like web two creator to web three is still a very challenging one because the vast majority of people don’t know why or what web three is or what a Metamask is, and it’s going to exist like that for a little while. But I do believe these big creators coming in are going to create that urgency or interest to actually learn. But right now, you know, we’re really focused on the web three communities and NFT communities are a perfect example of this. You know, one of the projects I was involved in, in launching is squiggle DAO , which is you know, a generative NFT art on chain art collection of 10,000 rainbow squiggles. We did not create them. They were created by the founder of a platform called art blocks, but we use them as a way of sort of getting people into a community, giving them some ownership in the community, focusing our efforts on kind of building a large invaluable collection of the community or have tokens that are community-owned and we’ve done that well, but I think what we really want to shift our attention to is how do we go be just like the best advocates for the fun and irreverence that a crummy squiggle represents out in the world. And so could we be throwing parties at the art blocks party that’s happening in Texas, this October, if you’re an ECC next year, you should probably walking into a squiggle DAO party. And there’s probably squiggle streamers that are coming up and just the fun, ridiculous pieces of all of this and I think the reason that’s valuable is that it introduces more and more people to this sort of unique art collection and really doubles down and increases, sort of more of an emotional connection there to a broader audience. So we’re going to see this just like a tiny slice of what’s happening in this weird obscure world of on-chain, generative art. Yes. Imagine what happens when you have communities of folks that are thousands, millions of people that are brought together because of the love of music and care about some of the same things that that creator cares about. It’s gonna be pretty cool to see. 

 One of the most exciting things that fire me up is, okay, you build these online communities, they’re vast and distributed, but the second you may start meeting them in person at all of these centralized events and see people face to face, there’s nothing more exhilarating knowing that I’m a part of this community, you’re a part of this community. We have shared value in this community and look at what we did together, right? There’s something very special and something very beautiful and elegant about seeing that come to life. Not only digitally, but physically too, through these events. I love that.

 I feel like it has even more impact these days, given how distanced we all have been over the last couple of years. Yeah, an early supporter of FWB token holder to FWB. I’m stuck in a line with 400 people outside of the Miami club, trying to get into the FWB party. I RSVPd, nobody reached out to me like what’s going on. And yeah, I look over and there’s Trevor, who’s the founder of FWB still stuck in line with me as well. Right. Like just couldn’t get in. But the conversation in the crowd wasn’t like, oh man, I can’t get in. It’s like, oh my God, this is next level. This is I’m like, this just puts FWB on a whole other level. So there’s this sense I think of like belonging digitally. That definitely changes when you meet in real life. And I think that what I watched there was sort of this unlock of saying, okay, there’s actually a lot more value than just being a part of a discord server. And I think that’s what we’re going to start to see across the community and social token space in the next little while, is this understanding that we’re starting with these basic primitives, but truly it is the sense of belonging that’s over here, that’s over and above it, all that matters. And that can, you know, we talked to started off talking about the disproportionate power that platforms have on the online world. I think what we’re seeing with what tokens are going to do is say, well, actually, yeah, That the point to show your support for me as a creator, isn’t subscribing to my YouTube channel. It’s not subscribing to my email or following me on Twitter or on Instagram, it’s owning my token. And then wherever I go and bring that token, wherever whatever platform, whether it’s discord or something else, whether it’s a party in Paris or something else like that token becomes like the shelling point for our belief and our affinity around that community rather than something that’s owned by a platform. I think at the end of the day, that’s the truly disruptive piece. 

There’s two more things I want to talk about is M club, which had a successful crowd sale on mirror. Congratulations for doing that. What an awesome thing to see, come to life. And so many like-minded people, 47 ETH that’s no joke. I think last time I checked, that’s like 140 K that’s going towards, which I want you to tell me more about, I know it’s a media DAO that lives strictly for mere creators. Tell me more about what you plan to do with that 47 ETH. What’s your vision? 

So, I mean, the vision behind M club was to create a space for people who are interested in being a part of a zero to one moment in a DAO to have that opportunity. So we were really thinking through how do we best put our efforts towards creating, learning, and educational experiences within the Seed Club discord and the idea of doing like a course or just more of a media series didn’t quite click for us. Like there’s sort of like something different about getting your hands dirty and building these things that I think are essential to be able to actually learn from. So I think that’s like the underlying goal. And as we talked about before, we needed to be pretty clear about our why, and we’ve been big supporters of the mirror ecosystem from day one Seed Club of the first right raise. And we’ve been very active in bringing great people onto that platform and you know, song camp is another example of a project that crowdfunded and launched on that platform that we helped work with. And so, you know, it was pretty obvious to me that there’s a lot of opportunity in that ecosystem. And I also love this idea of not asking for permission to be able to create things that are going to benefit another group. Like I talked about out earlier, we didn’t have permission to launch squiggle DAO. We just did it. Talk to M Club is really about creating a grants-giving DAO or a DAO that’s focused on backing creators that are launching and doing cool things on mirror, or it’s not associated or aligned with the mirror company and organization sort of completely organic and ad hoc. And so we just sort of said, Hey, look, we’re looking to raise 20 ETH to put a pool together and give folks you know, a share of a vote let’s say, in this, in this DAO to create a way for people to, to help co-create something. And the focus we have is on backing great projects on mirror. That’s kind of it. And what we’ve seen over the last three weeks is a group of people come together align around a few core working groups create a season one game plan that was just passed. So season one is going to run for the next 60 days and really starts to formalize a lot of the answers to the questions that I think you’re getting at, which is like. You know, beyond just supporting creators on mirror, like, what does that look like? How do you back them? How do you decide to back them? What’s our role in the mirror ecosystem beyond just allocating financial capital you know, what does a media data look like? How can we be active in leading what that looks like? And so we have 185 members or token holders in the DAO . There’s about 35 who are super active every Wednesday at 10:00 AM. We have a town hall call where working groups are reporting back on what they’re working on, and these are just brilliant human beings doing cool things that blow me away every single day. Today we had Dennis from, from mirror sharing sort of the vision for Mirror . And I think that gave a lot of our community insight into like what’s coming. And I think it’s really exciting to see some of like what I think some people will call a pivot in the near future, but I think for those of us that have been watching, it will just seem like this further empowerment of creators and communities from a great platform. But yeah, I actually asked Dennis I’m like, what was it like for just like having just like a random group of people come up and say, Hey, we’re going to build a community based on your communities. It’s like, welcome to crypto.

I’m a proud supporter of MClub . I have one of the NFTs I voted to pass season one. However, you would define me as a contributor. I’m one of them. So I’m excited to see that come to life and what season one entails over the next 60 days. So more power to the core team that’s making that happen and bringing that alive. Another thing I want to talk to you about, in plug, you talked about this early on cohort number three for Seed Club. Super exciting stuff. So cool to see. So give me a quick brief, what are these cohorts? How can someone understand these cohorts? 

So cohorts are how we organize our accelerator program. Essentially we create a thought. As you can probably tell I’m a big believer in the power of community. And I think small focus communities that have a purpose over a short period of time are some of the most valuable ways to collaborate, especially on the internet. So what we do is we recruit a few times a year to bring the smartest, most creative, interesting people that are exploring how to use tokens within their communities, or as creators themselves together to run through a six-week program that exposes them to the latest, greatest thinking of some of the smartest people that are in and around the social token and NFT space. And so, you know, the first season one was really a great learning experience for us. We worked with folks like RAC and Connie digital and Alex Masmej and Carlos from ForeFront and some of the folks that get Daniel to like figure out what they wanted to do and how they were doing it. And it was truly a good learning experience for us. And you know, for participating in these cohorts Seed Club earns a number of tokens from the creators that we helped launch. So we earned some of those wonderful tokens and they’re in our treasury. Our second cohort was really the first one where we really said, okay, let’s help people go from zero to one and we had 12 projects that we launched with. It looks like we’ll probably have 10 projects that will ultimately have tokens out in the world. You know, global coin research forefront. You talked to Jeff from John previously. The protein community is working on one right now. And, and, you know, there are numerous other tokens that are sort of in the works there. And that was really about really helping to, I think in many ways to simplify the project, but mostly I think it comes down to having sort of like the sense of being on a path or on the front lines together. Right. So we jump in alongside our builders and our creators to really help figure out the the nuanced details of each of their community projects. And you know, I think we had folks like Jesse Walden and Jacob from Zuora and James from collab land and Rubin, who’s just a wonderful legal wizard or you know, thinker in the space and a whole host of others Cooper Turley, you know really just the people who are thinking and building on the edges and exposing them to our projects and that’s so the project, sort of getting an understanding of how they should design their economy. How should they go to market, et cetera. You know, after that, the cohort is just sort of the starting phase. We run a continuity program. So all of our projects become, you know, as I said before, we’re long-term partners. So we support projects, you know, over the longterm number of projects that don’t have tokens out yet. I still speak with on a regular basis and we’re helping to sort of push things forward there. So it’s really just a joining, whatever cohorts is becoming a participant and a member in Seed Club, our job is to help them launch a great token. And if they’re able to do that, then they also earn a stake in Seed Club as well. And then hopefully are incentivized to continue to benefit and support other projects that come after them.

 So it’s very much so like a mutual marriage. Like I support you. We get token allocations and then in turn supporting Seed Club. And you get tokens, NFTs, whatever that may be. Are they tokens? Are they NFTs? How do you provide that level of allocation?

Yeah. So it’s still a model that we’re working through and hasn’t completely figured out how to do that well, but it’s definitely the founding intention we have. You know, I think like the imperfect example is like, how often we get described as like a Y Combinator, but for community tokens. The big difference is that you know, projects that that come through our accelerator do get ownership in an accelerator, what level that is and how we define that, I think is still something that we’re working on. But it just is such an obvious thing to us that, that the people who are leading the charge, who are learning, who are at the edges, who are you know, the experts in their field should be incentivized and rewarded for helping to support the next wave. And so if we have just sort of this flywheel of aligned and incentivized, amazing human beings in a space where the reality is human capital is a big limiting factor in our space today. It’s not financial capital, it’s talent, and the ability to take responsibility and move things forward. Folks who are able to join us and prove that out. We definitely want them to be meaningful holders of the club token. 

When you started cohort one, I feel like there are a lot of things you learned throughout that process, especially also transitioning to two. And now applying those learnings, those lessons into three. Can you walk me through, is there anything, well, one, what, what are some things you learned going through one and two that you’re applying to three whether it be in the mentoring, the individuals that you bring on, et cetera, et cetera. And, what are the top 3 things you wish you would’ve known prior to starting Seed Club?

So I think like the big lesson in all this is, it just takes time. It takes time. And if you really want to get it right, you need to lean into that time and be okay with that. So I would, I think before we went into cohort two, I thought we would have all of our projects launched tokens by the end of the six weeks. Why not right? And the reality is like, that’s just a very unreasonable expectation and would lead to a worse outcome for our projects. And so we know we need to be a lot more patient and ultimately need to be improving and how we continue to support projects long-term. Like right now we’re able to do it because it’s small and we have a set number of folks that are there, but as we continue to scale up, we need to think through how we, as an organization, scale up our ability to support projects. And so I think that it just takes time and takes effort. And the limiting factor is people who kind of know what they’re doing and can jump in and really be helpful as boots on the ground. So I’d say that’s one. Two, I think, like I see communities today you know, more like startups, like I think we were taking the decision we will make on, on which projects come in to Seed Club , I think will increasingly look like similar decisions that are being made around startups. And I say that mostly to mean like, we want to back exceptional founders, exceptional creators, sessionable individuals and folks who have proven that they’re able to sort of overcome adversity and just continue to work on something despite, you know, maybe the initial game plan, not quite working out. So I think we were, you know, maybe not focused on that sort of second cohort, but we did a really great job at that. And I look at some of the ways that our participants are just sort of rolling with the punches and making decisions and bouncing back and overcoming some of the challenges that exist in such a nascent space and it’s super inspiring. And so I think we’ll use that to inform our decision-making process quite a bit, moving forward. And also I think like that we still are very much in the beginning of the idea stage here. You know, it was very easy for us to want to double down and say, we just want to do tokenized communities that look like friends with benefits, but for X and we’re really resisting that urge because I think there’s still many more ideas and directions that can be done. Every week, month, seemingly day, new primitives are developed. And we want to really just try to work with as many different, interesting projects as possible right now, instead of really doubling down on any one. And so I think that’s like a lesson that we’re going to continuously learn and keep top of mind. At some point it will make sense for us to be a little bit more focused, but I think there’s still so much more innovation to happen here that it’ll be interesting to see ultimately how this next cohort shapes up. One unique thing we’re doing this cohort is our token holders will be given the opportunity to make decisions on who gets accepted. So if you think about the club token will represent sort of sharing governance. So how do we run our organization? But we’ll also represent a direct share in like, who do we accept into our organization? So a curation tool. And so we have some exciting plans for lesser like TCRS type structure that will roll out. And so it’s, you know, it won’t be up to me. It won’t be up to any individual within our community to make that decision. It’ll be up to our token holders to make those decisions and you know, I think that’s gonna be a fun experiment to run. 

Do you think we’re approaching like a black mirror type of scenario where people will start determining your level of influence and your worth based on how much you’re publicly traded at? 

I think that happens today based on your follower, count on Instagram. I mean, as much as it does with the market cap, like I’m not super bullish on the idea of individuals having market prices on, their fame or celebrity, I think it’s going to happen. I think there’s, you know, billion dollar opportunities for the stock market of individuals or sports stars, et cetera. But the reality is for most creators and especially the ones that we work with, the idea of having a price on their creativity is just like the worst part of all of this is really something that they have to sort of deal with to be able to get the other benefits of it. And I think that the other limiting factor in the, in the personal token space right now is that the benefits don’t really come to creators. There’s not a good way of like bootstrapping your creativity selling by issuing a personal token. You know, I think platforms like Rally create a more of like a an economic design can lead to that, but BitClout doesn’t do that. Like you sort of have to like sell your BitClout and dump on your fans and it’s really just not a good way of funding, new creativity. So I think just to say there that like, it’s, I don’t think it’s going to see in its current state, I don’t think it’s going to see the level of success that many people do. I do think there’s a lot of exciting projects that are being built in that vein that are going to lean more into the social capital or the backing people up early, or we’ll probably use NFTs rather than, than ERC-20s to sort of represent that. And I’m pretty excited about that, but yeah, I think, you know, people will opt in to having market prices on them and, and it’s going, look, I think weird for the next little while and save some sort of broader context or platform that really thoughtfully integrates on it .And I just don’t think it’s going to be a point of interest in the, in the near future. 

People shouldn’t think that I know what I’m talking about. I’ll throw one other thing out there cause I know we’re over time, but I think it’s like, there’s a lot of subtlety to all this sort of stuff. And, and really like what you’re asking somebody to do is really commit to something and committing to a personal token over the long run I mean, ultimately you’re going to want to retire or you’re going to die. And so there’s like a period of time where this is going to be relevant and somebody is going to get screwed. But somewhere along the line, a community or a DAO is something that you’re trying to build forever. It’s trying to exist forever. Even like a personality. So like somebody who might tokenize like the zombie that was just party bid for, that’s a thing that can live forever. Right. And so I think those types of tokens make a ton of sense and I’ll back them and we’ll align behind them. But you know, the Adam token would have a very short duration of value in my mind. And I might still buy it if there was utility and I would buy it to back you because I like you and I’m stoked on what you’re doing for our space, but it’s just, there’s like a lot of things that kind of have issues there. And I think one other maybe controversial point, and I don’t actually know how I feel about this, but I’ll throw it out there. But this whole NFT world where people are like music NFTs , right? People are buying music NFTs to support artists. But there’s this big push to have royalties be embedded in these NFTs . And I think one possible outcome of all of a sudden that’s shifting the idea from I’m buying an NFT to collect or to back , to support an artist who one were on buying an NFT to get access to royalty streams from an artist is that there’s a chance that these NFTs are going to be worth a heck of a lot less, or it’s going to distort the collector base to the point where it’s actually not that interesting to own these NFTs anymore. If I’m collecting them because I have intrinsic value and maybe there’s a benefit of there being some sort of financial value. That’s a very different thing than if I’m making a financial decision on whether I should own the rights to XYZ piece of music. And the reality is most pieces of music don’t earn any money and so when we start to represent the actual dollar value, that’s accruing to these assets the vast majority of them aren’t going to be worth anything. And so for many creators, I think it might be better off for us to be able to actually use NFTs, to represent the social capital, the creative capital, the sense of belonging, the membership in the community than it is to represent a revenue stream. I might be very wrong, but I don’t know.

Well, I just wonder, and I’m really just thinking aloud here, whether if, if we just start to put the focus on the you know current value of future cash flows, versus the value of being able to support somebody early on and being a member of the community that we’re going to devalue. It will be seen as they’re being less valued in the royalties than what might might’ve existed if you’re just making a bet from your intrinsic motivations. I think that the reality is it’s probably both. And the reality is it’s probably about what story do you tell? And if you go to like a crowdfunding website they’re using to back somebody is like, It looks more like a stock market and just showing like the revenues that are coming from it, it’s going to lead to a certain type of user or if it looks more like a crowdfund Patreon style thing with the music front and center probably looks different. So it’s by no means, am I saying this is the outcome, but I think a lot of people just think, okay, well, if we actually financialized these assets more, it’s going to create more value. And I wonder if that’s true. Like, I think there’s instances where it might not be true.

One of the most recent instances that comes to mind is Torey Lanez, the rapper. So yesterday he sold a million NFTs for a dollar. Each NFT represented his album. Okay. Now you can’t stream the music in the album yet. But the takeaway is that the way he promoted was from the point of view of like, you guys are gonna make money from this, right? Like you guys can flip that shit on the secondary market and I’m giving you guys bags. Like I’m looking out for my community. You guys are going to buy this for a dollar and that’s probably the lowest it’s going to go other than other than zero, but you guys are gonna be flipping this on the secondary, like all their, like everyone’s going with these profile pictures, et cetera, et cetera. Now, there is no real like, okay, you buy this NFT album and the intention of buying an album is to consume and enjoy the music from that album. And I went on that sale and I went to go like purchase. I was like, wait, does it make sense to buy a thousand copies of this album to flip and on a secondary market, maybe from an investment point of view, I’m not particularly interested in that. Like, I want to support the artist for his creative experimentation, with the medium of crypto in the medium of MP3 files. Right. And it just led me to buy like $1 worth. Right. But by the time I wanted to buy it, I couldn’t buy anymore because it sold out in a minute. The point being is like, now he issued a million NFTs. He sold a million albums. He went platinum in one minute, technically by the music industry terms. Right. But it was strictly from the point of view of go flip, this shit go make money. Right. Rather than from the point of view of like, I may do an airdrop down the line, like Uniswap did for its early supporters of its platform. Which is another interesting model, which he may even tinker with in the future. But yeah, just, just something to bring up.

Yeah. I mean, I think like the examples, like this are why, so my take on that is great. Cool. Like that’s a great experiment to run and he’s been able to hack to be a way to get it platinum, like, hell yeah. Like this is we’re early streamers were doing, I think. Right? So I think those experiments are worth it and worthwhile and all the power to them. I think like the big question is like, what’s next? And what expectations are you setting up? And I, you know, I think like the reality is the people who purchase those things are most likely purchasing them not because they want to be a part of a community. They wanna be part of like more of a speculative thing or the novelty of it. You know, by all means I think like, it’ll be really interesting to see what the secondary market of that looks like. And if there is long-term value there. And I think that the question is like, what happens, you know, next time? Right. So I think it’s at that, this is going to work out and there’s going to be a strong secondary market and when he comes out and does his next album, boom is going to be a big thing. But the likelihood of that happening in my opinion is pretty low. Like, I think you’re going to see a whole bunch of copycats copy of that model and kind of burn it out really quickly before he even gets a chance to come do it again and so his move really would be just like Jake, Paul’s moved back in the NFT craze is like, okay, you just done this big NFT drop. What do you want to do next with it? And I think, you know, look at what Gary V’s done with V friends. Like the friends is a top 10 selling secondary marketplace every single day, every single week. There’s, you know, there’s utility backed into it. It’s supported by a team they’re trying to do new, cool things. It was early. Yes. But there’s, there’s you know, a number of collectors that are big, you know, who’ve done really well from it because of the value that’s created there. And and I think like, Yeah, we both need to, I guess, balance off this how do we go do new, cool, interesting things, which I think you could argue that Tory Lanez did with like what where’s like the longevity that comes out of this. How can we like pivot this into something that’s going to last longer? I think that’s the hard part. 

I know we put a lot of emphasis on the why and the purpose of doing something right. But even what’s like more so important is like, what is next? What is that long-term plan of continuously creating excitement, continuously creating utility from whatever it is that you’re selling, right. Continuously providing reasons to keep your community engaged in a discord server, whether it be through multiple events per week, like you’re doing an FWB or forefront, right? These are things that creators need to start thinking about as they build their web three communities, right. That engagement what’s the long-term plan. And like how can I create utility from whatever it is that I’m doing. Right. Is there anything else you’d add to that list? 

I just think that there’s a lot of again, it’s about setting expectations, I think in large part. And so I think we’ll see successful projects that aren’t actively building out discord communities but have created other unique experiences across the internet. So I think like, yeah, no matter what, you’re in this world where momentum wins and so how do you maintain momentum? But I think there’s gonna be a lot of creative ways to do that. And it’s not all going to be about just trying to drive attention on discord or secondary market sales or what have you. But I think we’re in a world where creativity gets rewarded. Right? And so the idea that we can just go copy what somebody else has done and go run a game plan and that book and have it work is probably it hasn’t worked in most of the social media world and web 2.0 and it’s definitely most likely to work in web three beyond maybe the first early copycats. I think just generally we’re we should be building for the long-term we’re part of this brand new epoch, this huge, you know, inflection point in, in web three it’s brand new. It’s new enough that we all have an opportunity to sort of be a part of this rising ship. And I think those folks that take long-term you make long-term bets on assets. You make longterm bets on people you make long-term bets on, on ideas and on ways of being, I think those pay off. And so I would just encourage anybody who’s thinking about launching a token to just be thoughtful of that and you know, I think one of the things that I’m really happy to be in a position to do is to have a large amount of inbound interest for folks who are thinking about launching tokens. And I think what most people will say is that, you know, I do my best to, to take those calls and to help direct people into the right direction, because I think those little you know, the slight adjustments in how we’re focusing in, on what we’re focusing on, what we should be building, I think can have a really big compounding impact. And, you know, I’ve been blessed with this opportunity to have a bit of a voice in this space and I’m just going to continue to hopefully use it for good.

I love it, man. I think that’s a perfect place to end off Jess. You’re a pool of information and knowledge. Thank you so much for spending some time with me being on mint and, and sharing your knowledge with everyone. I hope to have you again before I let you go quickly, plug yourself. Where can we find you? Where can we find Seed Club? All the above.

@SeedClubHQ on Twitter or see seedclub.xyz. I am that tall guy on Twitter. You’ll be able to find me on the internet. Just follow Adam. He’ll retweet me every once in a while and it will be good.

Listen on: Spotify | Apple Podcast | Google Podcast

Background

Mint Season 2 episode 4 welcomes CEO and Co-founder of Socialstack Andrew Berkowitz. He’s building a protocol to power mission-driven social token economies on the blockchain that are backed by gratitude and abundance.

In this episode, we talk about

• What determines the success of social token communities
• Debunking social token myths
• How to derive initial liquidity
• Andrew shares predictions for where the space will be in 5 to 10 years
• Socialstack’s vision

…and so much more

I hope you enjoy our conversation.

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Thank you to Season 2’s NFT sponsors!

1. Coinvise – https://coinvise.co/

2. POAP – https://poap.xyz/

3. Socialstack – https://socialstack.co/

4. Celo – https://celo.org/

5. PrimeDAO – https://www.prime.xyz/

Interested in becoming an NFT sponsor? Get in touch here!

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You’re building something really cool at Socialstack. So why don’t we just get right into it? Give me a quick brief about yourself and specifically tell me. What were you doing before crypto and kind of what you’re doing now?

Yeah. So my previous company was actually a podcast media company. So I graduated from Virginia tech in 2015 and kind of in the years after school, I spent that going down the entrepreneur startup routes and kind of my main thing was I started a podcast called the global startup movement and it was really something that evolved from me, just interviewing a different entrepreneur in a different city every week. To me, acting more as an independent media company and really focusing on finding the biggest issues in emerging market tech and innovation industries, finding the people closest to those issues and just bringing them on the podcast. 

And so that kind of grew into a whole portfolio of brands. Our two flagship podcasts for that company were African tech Roundup, which focused on Africa’s digital transformation journey and the global startup movement. Which was kind of broader emerging market tech and innovation focused. And really the core of that journey for me, it was just living the early stage of the creator economy because we had these two pretty traction podcasts. We had a really high quality niche audience for both of them. I found it very difficult to extract meaningful commercial value from the podcast. And so I lived kind of all the challenges of being a creator in the early days of the creator economy starting to take shape. And so a lot of that experience kind of plays into now my ideas and vision for what Socialstack is starting to become. 

And, you know, I think that as a creator, COVID accelerated a lot and kind of, you know, made it so that we now have viable business models that, you know, creators can even expand what they’re doing beyond just a lifestyle business, into something more scalable. And now that we have these new tools, these new web three tools NFTs and social token there’s kind of additional layer now that or additional toolkit that co creators have to work with to really get their audience in more skin in the game with what they’re building make their audience feel like owners as well and get them more engaged. So the, you know, vision for Socialstack was really on the back end of me spending five years building that podcast company. 

I know you guys are really big on the mission-driven side of social tokens, and we’ll get into that in just a sec because you touched upon that for a minute. But, I want to learn more about how you got into crypto. Like, what’s that story? Everybody has a unique kind of way in. What’s yours? 

Yeah. I mean, mine was pretty simple just back in college, you know, 2014, my junior year at Virginia tech just came across Bitcoin. That was when it was around like $600 just from some friends actually talking about it. So steam it by Dan Larimer, he built steam it, I believe in the Blacksburg corporate innovation center. And so there was kind of like, there’s this interesting blockchain community that’s in Blacksburg, Virginia that most people wouldn’t really be aware of. They don’t know it. That was my initial foray into Bitcoin. And so it was just very much so, just like the kind of college kids in a dorm room talking about it. And so I didn’t have that much money when I tell people, oh, I, you know, I got into Bitcoin back in like 2013, 2014, like, you know, I was a college kid. I didn’t have that much money to come in with, to the space with, but it really caught my fascination. Yeah. Been thinking deeply about the space for many years now. And even with the podcast company, a lot of the content that we covered was, you know, crypto blockchain focused, especially within an Africa context.

A lot of people tend to confuse the difference between NFTs and social tokens. Some even call social tokens, NFTs, right? Some people categorize social tokens as fungible and non fungible. How do you kind of think about the two and their differences and their similarities?

Well, I mean, I think they’re both in the same category in my mind, but they’re both different tools for how our creator or a community leader can actually you know, leverage the blockchain technology to start to provide some tangible ways to start to facilitate this process of earning and redeeming back and forth between themselves and their community. So I think finally blockchain has the tangible interfaces and tools where it’s now useful for the creator economy. And we’re seeing the initial use case of art kind of playing out over the past year with that. But you know, it’s, it’s at its core. It’s as simple as you just said, NFTs are non fungible tokens and social tokens are fungible tokens. And each in my mind will enable different components of the creator stack that’s forming in web. You know, I think NFTs are able to facilitate things that are unique items from content that the creator is producing to one-off event tickets or private like, you know, one off concerts conferences that you know, platforms like popup are currently able to facilitate. And then the social tokens really, the way we view it at Socialstack is it’s a way for an issuer, a creator, a community leader, a brand. To connect deeper with their community. And that really is a way it’s a whole new dynamic of community where the most active community members are going to achieve ownership in the community over time, simply by engaging and earning.

What are some of the more interesting, I guess, utility incentives you’ve seen kind of be driven through social tokens to date, anything specific come to mind?

I mean, there are a few early use cases on the Socialstack platform that have emerged that are really compelling and kind of speak to our kind of vision of where social token should go, which is you know, this is not a technology where we’re building something for humans to be traded like a stock market. That’s like that shouldn’t be, that’s not the vision. That’s not the future that I want to create for my kids. 

That’s very much like a BitClout vision, Right?

Yeah. And you know, not to knock on what someone else is doing in this space. It’s like, I think we need multiple visions playing out in the space and then people can choose, you know, whichever culture community vision of the future that they want align themselves with. But really the tangible use cases that have emerged on the platform. I think there are three key ones. The first is an ecolodge, actually an indigenous owned ecolodge that’s based in equity. That’s basically using the social token as a way to reward people for coming to the Amazon and like doing experiences at the retreat center. They’re currently building out the next phase, which is building learning modules where people can learn more about the tribe, about the indigenous tribe, their culture, their practices, their traditions, and you can start to earn some of the social token in that way. Now on the flip side, you can redeem it for heavily discounted experiences at the ecolodge. And so it’s a really compelling use case for how a region can unlock ecotourism assets to create a socially driven means of exchange that might be even more stable than some of the Fiat currencies that are in some of these emerging economies. And, you know, a lot of them are pretty heavily reliant on the US dollar to kind of operate. And so it’s a really competitive use case and like there’s really exciting ways that, or really exciting directions that can go in. 

That’s probably one of the most exciting use cases that I’ve heard personally. That’s the first time I’m hearing about it because there’s actual practicality behind it, right. It’s not mere speculation and it’s not just being rewarded for committing an action. Like you’re actually building an entire economy from this token, which is super interesting. But my question to you is. Where does this liquidity come from? How do they kind of think about that? Do they pump and create their own like uniswap pools for this liquidity, for their new social token ? Like how do they think about that? 

Well, so that token is actually on Celo . Ubeswap is a fork of Uniswap that’s cellos, EVM compatible. You know, altered it. And so all Celo based tokens are traded actually on Uniswap or excuse me, Ubeswap. So liquidity is an interesting conversation in the space right now. I mean, both for social tokens and for NFTs, but specifically social tokens. It’s such an early stage of the asset class that most social tokens don’t have liquidity. And really the only liquidity comes from, us you know, the issuer setting up their own liquidity pool on Uniswap then adding liquidity to it and so that’s like, you know, V1 just reflective of how early of a nature of you know, of a rat in the space. You know, other players are looking at bonding curves and like, that’s something we’re actually exploring internally at Socialstack, as well. As, you know, when you put a token on a bonding curve, it’s a price discovery mechanism where the price and supply goes up, as people buy the coin and the price and supply go down along the curve as people sell the coin and so bonding curves are a really interesting way for a social token to kind of launch itself into the world with tangible liquidity. But I think right now people should be thinking about this space as, you know, ownership in the community network. And so the successful social tokens will eventually become DAOs. I think Alex Masmej said on Twitter, like social tokens and DAOs are one in the same and that’s true. Like any social token that gains traction will eventually come and become a full fully fledged DAO. And so liquidity will happen naturally in the long run. In the short term, people should be thinking about these things as either a reward point system on steroids or as kind of the ability to earn ownership in a DAO and you should be thinking long-term of holding these social tokens. And I think, you know, even the ones that do have traction right now, like friends with benefits. They’re not people who aren’t thinking about speculation right now. They’re thinking about long-term holding the social tokens, something, you know, being a part of something bigger.

Right? How do you advise creators that want to go more towards the bonding curve route versus the linear route? How do you think about that at Socialstacks? 

Hmm. I mean, that’s a great question. I think that right now I would really focus more on like the fixed supply. Like, you don’t need liquidity right now. Like what you need is the initial, like people buying into the community because you, at the end of the day, like what is going to need to happen in order for your social token to be successful is you need brand ambassadors. You need to activate community identify and then activate community leaders that like really step up and take on an ownership role and start to become active in the DAO that is early in starting form. And so if you’re thinking of social tokens as like a new way that you’re gonna make money, like you’re not, you’re not thinking about it correctly right now because of the reality of where social tokens are. I think what bonding curves introduce it’s a shortcut to liquidity and it’s a shortcut to, to like that mindset, but I’m not the biggest fan right now of immediately putting a social token on a bonding curve. I think that it’s something that will come over time with the maturity of the space and the maturity and the tooling in the space, but right now you should be thinking about your social token as a way to incentivize the behavior that you want to see in your community and the most engaged members of your most engaged fans, the most engaged participants of the community that you already have, and that you’re continuing to grow. You know, they’re really, they’re going to rise to the top by earning the most token and then over time. You’re gonna, that’s going become apparent and the ones that really believe in your core mission as a community, like those are the ones, if you’re doing the fixed token supply routes, like those are the ones that are really going to be sticking around in the long run versus, you know, the kind of the emotion of speculation, which isn’t really, it’s not what we’re going for here.

Would you agree or disagree that every token that’s publicly listed on these markets is in one way or another, a social token to an extent? 

I saw Jess Sloss tweeted that. I think that’s a little much, cause like, to me, the core, like innovation here with the social token component is like we finally have a cryptocurrency, a token mechanism where the value is derived solely by the underlying community, by the underlying social capital that the community brings to the table versus the traditional, like, you know crypto model, which is the values derived from the, from the technical component, from the network and the network activity, the transaction the technical component of the token. Obviously speculation will always be there. But I don’t necessarily agree with that. I think a social based currency is the trajectory of the social token space. And so I think that there has to be some sort of distinction away from like the technology component. The technology component is like the toolkit that you use to facilitate things like transfer, poking around, but like the value of Bitcoin or ether, like it’s derived from the technology and the network. Not necessarily like the social, you know, completely driven by the social value. 

But then on the other side, you could argue that Ethereum’s community is like what drives a lot of the value and a lot of the participation and innovation. From the diehard Maxis that kind of rally and push the price and et cetera, et cetera. Right. So it does have that social element to it. Right. And I think maybe that’s where he was coming from, that every single token has this social aspect, right. That has this, I guess, this, this point of engagement where you need the community to drive that engagement and with Ethereum you do have your incentives while you probably don’t get I guess, rewarded for necessarily joining a discord. Right. And you get an X amount of tokens for doing so, like you do in all these other social token communities, right? But it has that social token component, but just a interesting statement.

I partly agree with that. Like, like the value and the reason when people tell me, like, this is an Ethereum killer, that’s an Ethereum killer because of like technology. It’s like that’s nonsense. Like the moat, a big part of the moat of Ethereum is the culture. It’s the community that forms around it. And so of course, like that is present in things, but like it’s only one core component. Whereas when I say social tokens, like they’re like the technology, isn’t what drives the value of any given social token. It’s the underlying social capital and you know, the value of the community there. And, you know, the market opportunities that the issuer is opening up for the token. And so I get what you and Jess are saying there, but it’s more like a social token maxi versus like, yeah like every cryptocurrency has some sort of social component. 

I want to talk more about Socialstack for a minute. We kind of touched upon the whole mission driven piece that’s core to Socialstack and the direction you and your team want to go toward. 

Yeah. So you, you cut out there a little bit, but I think I got the gist of that. So you know, really there’s in my mind there’s a couple of different versions of how social tokens are emerging and how people think about it. One is kind of what we talked about that BitClout model of you know, this is about trading people like a stock market and speculating on people in that way. I don’t feel aligned with that feature at all. That’s not the future I want to help. And the other, you know, the other end of that spectrum and the direction that Socialstack is heading in is social tokens are, you know, this is a way for a community to connect deeper within itself. You know, this is a way to really create something that’s founded upon gratitude and abundance, not on scarcity and fear, which is, I think a lot of what drives the blockchain space and like that scarcity component, like right. There is value in scarcity and I get that and we also need other systems and other tools where we can build economies where gratitude, abundance love is like the core of how these economies function. And that’s where I think social social tokens need to sit in the kind of stack of like different types of cryptocurrencies. And so Socialstack right now is focused on two components. There’s the roadmap of our product. And then there’s the roadmap of what we say, consciousness or culture. And so as we build the toolkit, the wallet, the community engagement app that we have as we build out the tools to actually run these social token economies and give that to people, we also need the kind of consciousness shift as a culture, as a society towards this concept of, you know, these mediums of exchange are about connecting deeper with each other about like a creator, rewarding their fans with that emotion of gratitude. And the fans reward, like giving back to the creator with, with that same emotion. And so we’re, we’re, we’re constantly asking ourselves, like how can we build tools? Whether it’s tools for gifting tools, for rewarding, specific kind of engagement, that’s a positive impact on the planet and the community like that’s how we’re thinking about things. So the current iteration of Socialstack we have kind of three core technology components that are the first part of our product roadmap and that’s the social token launch pad where we can issue tokens on either the open Ethereum or on other blockchains. We have our Socialstack wallet, which is a non-custodial wallet with email accounts and password recovery. And so there’s a little we don’t have to go in to this on the podcast obviously, but there’s a technical innovation we’ve put forward of how we create a noncustodial wallet with email accounts and essentially that wallet now is multi chain. So we’ve listed Ethereum based social tokens and Celo based social tokens. And we’ve built a Ethereum to Celo bridge workflow, which allows us to conduct all internal transactions from one Socialstack wallet to another, on the Celo blockchain. And so that makes the wallet very carbon friendly allows us to provide instant transactions and the most important is, there’s no gas fees because all of it runs on the Celo blockchain and there’s very minimal gas fees that we’re able as Socialstack to abstract from the user and so we’ve solved a couple of key challenges around social tokens ones right now with the wallet, which is a simple email based accounts to send and receive and then no gas fees. And then the final component in the toolkit is our Socialstack community app which basically facilitates that earning and redemption where an issuer can basically create community tasks for their community to reward them with tokens when they do complete it and then there’s a storefront where they can put NFTs or products for sale that can only be bought with the issuer’s social token. And so we’ve basically built out this toolkit right now that is reflective of where social tokens are right now and we’re slowly going to put out our roadmap and our vision for where this goes as social tokens, as an asset class, gain more liquidity and get more mature. 

It’s super cool and one thing that I love that you even sell or you’re doing you’re so creator centric, right? You’re so creator focused. Like you said, you’re innovating on the wallet side from an email based web client type of wallet. Right. You’re innovating also on a few other features, but one thing that came to mind that I’ve learned from your team, that you guys basically collabed on this way to prove a listenership for audio and reward creators based on that. Can you talk a little bit more about that? 

ATR U is actually the first Celo-based social token that we launched on Socialstack . And so it’s the social token of the African tech Roundup podcast, which is currently the leading tech podcast in Africa covering the tech industry and so that was the podcast that I built with my partner at my previous company. But now he runs that full time. He’s based in Johannesburg, South Africa as a Zimbabwean broadcaster broadcasting about business and tech in Africa for many years now. And so they’ve implemented something that they’re calling proof of play on the Celo blockchain. And so what they’re doing is they’re allowing listeners to earn their social token every time that they listened to an episode. And right now it’s, it’s a very, it’s it’s, you know, it’s MVP form. So I bet. So right now it’s, it’s being run through essentially a Google form. And they are doing payouts at the end of every month to listeners that prove through the Google form there’s a password in the middle of every episode. And so you have to listen to the episode, they put it at a different point every single time. And then you register that password in the Google form to show that you actually listened to that episode, and then you can earn some tokens. And so it’s a really valuable way for the podcast to do a couple of things. One is Any listener that signs up, you know, they have to register their Celo address. They have to register their email, their name, and a lot of questions that kind of help them identify more about this listener. And now they can see which episodes the listeners tuning into which episodes are actually mining, you know, the token through this Google form method and it’s a really powerful way to get the to have the most engaged listeners kind of rise to the top. Then the people that have the most tokens are going to be the ones that listened to the most episodes. And then on the flip side, they’re setting up all sorts of unique ways for the listeners to actually redeem the social token. So they’re reserving ad space that can only be bought with their social token. They’re reserving podcasts, consulting time from the host that, you know, can only be redeemed with a social token and they’re creating and establishing a network of African tech conferences where you’re going to need to hold a minimum balance of ATR U in any Celo based wallet and show that that you hold it there and you can receive discounts to a whole network of different African tech conferences. And so it’s a really compelling use case. You know how a podcast or cause it can again like use this technology to really deepen their relationship with their fans and allow the most engaged fans to kind of rise to the top. Because as a fan of your favorite podcaster like you want to be seen, like you, you want them to know that you’re really deeply connected with them and a part of their community. And they listened to every, every week or month or however long you, you put the, you put the episode out. And so it’s a really compelling use case.

You know what that reminds me of there’s this producer and a songwriter. His name is Harrison first. He has a social token, first. He was also on season one of mint and he did something similar with his songs where he basically rewards people who engage with his music and play with his music library, blah, blah, blah, long story short. Right. He basically tweeted. He’s like for those who can tell me how many times I mentioned this word in this song which proves that basically they listened to the song, right get an X amount of first tokens or get rewarded with a certain amount of things. Right. Which is, it’s a very similar use case, but how do you streamline that? How do you make that process less manual, I guess. And more, I guess, automatic, have you guys thought about that? Cause it’s such a powerful solution.

Yeah. I mean that, and that’s like one of the, I guess, core questions right now in the entire space, because there’s a lot of like, there’s a lot of developers. There are some people that have launched a social token and are kind of like, you know, operating and testing it out and feeling out. There’s definitely a connection, like a disconnect between the two of those, which is like developer, like actual, useful tools getting built and like what social token issuers need and like you know, we were a part of the last seed club cohort, and like, you know, even within seed club, there’s like still this dynamic of the tool kit that exists right now is so early that a lot of what we want to like enable, like it has to be like the manual process. And so for us, like, you know, with the podcast, we are thinking of like, what’s the most simple tool that we can build that would enable the broadest range of like, like use cases and uses. We’re actually thinking a little bit more on the reverse of the earning side, which is creating a way for a token permission to RSS feed, basically where, you know, this, this concept of like holding minimum balances of token in your wallet in order to unlock, you know, access tiers. That’s a really compelling use case for a podcast, or if they’re able to create different RSS feeds that you need different levels of token unlock access to which means you publishing Mint. Like you need to, you know, maybe hold a hundred Mint tokens to unlock the ad free RSS feed. And maybe there’s another RSS fee that you need a thousand Mint tokens and that will unlock, you know, an additional episode per week or month or whatever you want to enable there. So right now, I think again, there’s social tokens, 2021, and there are social tokens, 2025. Right. What do we need to build now where we can actually meet the market where it’s at versus like building for the future. And so, like, that’s solely what we’re thinking about right now. Like that’s simple use case of token permission in that RSS. 

We’ll get to the question where, what is a 2025 and 2030 kind of look like for you and Socialstack. Do you think mission-driven communities can reach let’s say like a, a billion dollar valuation? Do you think that’s a real world scenario for a social token community? That’s mission driven, right? That’s very social driven in a sense. Can they reach a billion dollar valuation?

Yes. Not for a little while I think. I don’t think any, I don’t think any social token community, even like the, the number one should reach a billion dollars right now. There’s not enough value in the space right now. It’s like to, to justify something like that, maybe in the next bull run in 2024 2025 , we’ll get there. But when, when we say mission-driven, you know, what, what we think about in this space is like, Social token communities it’s a way to align co-creative efforts and align people around a specific mission that the community wants to achieve together. And I think that that’s where we need to go with this space. And so an example of that is a surfboard company. I can’t name the company name yet because they haven’t announced it, but they’re basically going to be using their social token solely as a way to incentivize people to participate in ocean beach, cleanup days, plant mangroves. And do a lot of behavior around recycling and environmental cleanup. And then on the flip side, you know, the community can redeem those tokens for heavily discounted surfboards. Right. And so when we say mission-driven, it’s a question of what are you, what behavior are you incentivizing with your token? And like that will over time, start to align the community’s behavior towards accomplishing meaningful missions. And so I wouldn’t like, and so mission driven isn’t necessarily like a you’re not putting barriers around what the community can become. It’s just. Kind of psychologically framing, social tokens in a way where it’s like this is a really meaningful technology where people can come around and connect with each other and have economic incentives towards accomplishing meaningful things that we all know need to get done but currently aren’t getting done. So it’s like a little bit, if you, if you’re familiar with Charles Eisenstein, synchronet economics concept, like we’re as a team, we’re definitely inspired by that. And like, we want money to be just like a new framing of money where it’s something more meaningful than just, you know, a piece of paper that someone that somebody else says has value.

I have a hard time, you know, part of me sees like all these like micro-economies there’s this article that Cooper Turley and Kinjal from blockchain capital wrote on how crypto is birthing all these micro-economies, right. And how it’s going to be partly driven through these social token networks and whatnot and I have a hard time imagining what a billion dollar network may look like, what, what that’s going to be driven by, right. Who are going to be the key participants, how decentralized it’s going to be, et cetera, et cetera, et cetera. So by asking that question, I’m really just looking to see, like, how do you envision that? How does Socialstack envision that right. Is this a situation? Where is this going to be like a product-driven type of social token, right? Where it reaches a billion dollar valuation, because it has a lot of revenue and it has a team and it’s set up in a way where it’s able to drive profits, et cetera. You know what I mean? Like, yeah. How do you kind of see that? Do you see these social tokens being more social communities? Do you see them being more product driven communities do you see them more service driven communities driven by social tokens powered and framed through social tokens? Like how do you kind of think about that?

So, I mean, that’s a great question. So first answer is, it seems that NFTs are going to be the drivers of social token economies and the like, however that’s facilitated. I think, you know, I think it’s going to be facilitated in a way where. You have some sort of connective tissue, some sort of theme or some sort of mission that aligns all the participants co-creative efforts around. And so like an example that I’ve been thinking about for a while no, one’s really doing like, imagine if there was a solar punk social token and it was a central aggregator for artists to contribute solar punk-themed music art movies, media and there was a whole structure of auctioning, like a whole system for auctioning a system for corporates to interface with the DAO and get services from it. So I think, you know, where we’re going into a world and I’m more bullish on community-based and community-driven, social tokens than other forms of social tokens. But I think we’re going into a world where DAOs will be aggregators of talent. And people will contract with the DAO. The Dow will provide people on the contracting side with work. So they’ll, you know, be companies startups, other DAOs, that contract with a specific DAO that has like proved their core competency of a specific task theme. Ability to complete a search, a certain mission. So I think the compelling billion-dollar DAOs come in the form of broad community-based DAOs that have proven their ability to create differentiated products and services in some sort of area where there’s a lot of demand. And then there’s a bunch of revenue coming in by other outside parties contracting with that DAO =. That sort of, you know, social-driven DAO is where I see things going on the community token side. And then there’s gonna be all sorts of like smaller instances, smaller versions of that that are maybe like brand tokens, where it starts off just as like a reward point system on steroids but then eventually it turns into something where the brands that are honest about their value will attract people that want to participate in that. And so I, I mean, to be honest, you know, I don’t think anyone who tells you that they have any idea where the space is going is being honest, just because we’re still at such an early stage that like, you know, the direction that this space goes in is whatever we as like the active builders in it, Where it goes in, you know? And so I would love to hear your ideas on it. Cause I don’t know. 

You know, like some of the top social token projects that come to mind are, like you said, friends with benefits. Another good one that comes to mind is $ALLIE. Even though it’s not in the billion-dollar range, nowhere near, I’m just thinking about an individual creator going public and launching a token on behalf of their brand for their audience and building interesting utility frameworks that incentivize buying and selling of that token. Allie comes to mind because she realizes that, okay I do something really well and that’s game. I play games, I livestream it and my fans love it. Let’s try to take it one step further and let’s try to do gaming tournaments. And the only way to access those gaming tournaments is with $ALLIE coin. You win, you spend and you earn an $ALLIE coin, right. And you start off small, but then you scale. And then you’re seeing her kind of develop her social token now into more of a modern day fan club through her DAO. So I don’t know if they’re going to be necessarily like individually driven right through these individual creatives. Like imagine if Justin Bieber had his own social token and he was doing really cool, unique concert utility or fan club merch utility or whatever it may be that he’s doing to incentivize. The buying and selling, like I see a huge network effect between that or if Kylie Jenner were to launch her own social token and assuming we’re five, 10 years from now and her fans understand crypto and they’ve onboarded and they have wallets, whatever. I could see her breaching hundreds of millions of dollars in valuation for her token, if she constructed her network and her flow and her funnel correctly, you know, I could definitely see that.

That’s like the core piece of it because there are celebrities that have gone into, you know, quote-unquote, have gotten into the social token space, you know, like Lil Yachty comes to mind. And like, that is a, it’s a textbook example of like, What not to do. That’s very inappropriate, the way he’s gone about it. And it’s like the antithesis of what we’re looking to do in the space. Like this isn’t about this, isn’t a new way for you to make more money off your fans. This is a way for you to connect deeper with your fans in a meaningful way and when I see celebrities just straight up selling their social token and then not really following up, like it’s very inappropriate and it I think points to a larger trend that’s happening, that I actually realized with the podcast company, which is the death of the celebrity and the death of like the ability for celebrity to just like, have that like aura about them, where they can just do things and get away with it. Whereas in this new world, like where now in a world where the community convener has completely replaced the celebrity and anyone that doesn’t properly fulfill that role they’re not gonna, nothing that to do is going to be sustainable. Yeah. 

When you think about funnel or funnels, the way I explain this to creators, they have to completely reimagine what marketing communication kind of looks like on their end through Instagram, take talk Twitter. Everything that they do now needs to be centered around their token to an extent. They have to for the events that they have to the music they release, they have to completely reimagine this funnel. Would you agree or disagree? Like how, how do they kind of go by marketing and incentivizing people to buy into this without doing literally Lil Yachty’s case case? How do you think creators should be thinking about their funnel?

Well, I think it’s a question of what behavior is the highest value behavior that they want their community members to take. Like, do they want them to subscribe to their email newsletter? Like, do they want them to retweet something? Do they want them to join their private membership community where they meet every month on zoom? Like, like what are the highest value actions that your community members can take? And then you want to incentivize that behavior with token reward. So at this like most core and basic, like that’s really the answer. Like that’s how you incorporate tokens in your funnel. And then beyond that, how can you get creative? So one of we’re talking to a creator right now, a big YouTuber that does a lot of challenges. Like they, their audience, you know, it’s one of those things where it’s like comment below on what you want us to do in the next video and their, their fans basically comment. Like I want you to eat 20 hotdogs in two minutes, like some, some crazy challenge. And then each video they do challenges. And so for them, we’re talking about, okay, let’s flip that on its head. You give challenges to your fans, whether it’s, you know, clean up your neighborhood, your neighbor heard park cook a bunch of meals for the homeless, you know, do, do something good. And then you can earn token rewards by recording it, putting it on Twitter with a hashtag. And then submit that, you know you can submit on the the Socialstack community app. We have a feature where you can set tasks and then upload proof that you completed the task. It’s like, that’s a really compelling way for a market, like a viral marketing campaign, leveraging your fans to have them complete meaningful tasks, give them token rewards for completing it. And then they’re all tweeting it out and going viral themselves. Right. And so like, that’s a really compelling way to leverage tokens in your marketing strategy. On Socialstack community, we also have the ability to create influencer links where you can tie token rewards to that link. And so now, instead of like creating a doing an influencer campaign where you get 10 influencers and pay them thousand dollars or like, you know, paying them whatever. Now you can give them a link or they can earn your social token for each time that they drive. And so it’s, it’s really like the possibilities are endless. You’re only really limited by the tools that you have at your disposal right now. And your imagination.

Do you think that’s going to actually be done? Are they open to that or are they scared to mess with crypto? 

No, not at all. I mean we have had conversations where creators are scared to mess with crypto. I think this past year of NFTs has removed that barrier for most creators.

I wanna ask you what was the most important thing you’ve kind of been taught throughout this process of starting Socialstack?

Well, I would say the most important thing is just like getting a full scope and awareness of how early we are. It’s pretty crazy. Just like the conversations I have with like some creators, the deep dive I’ve done into the space when it comes to like what open source tools even exist right now to like, enable this stuff. Like it continues to like, bewilder me of just how early we are . Which is both good and bad, right? Like the nature of crypto is like the earlier you get into the space, the more you’ll reap the rewards. And so it’s a, you know, it’s a double-edged sword, but like that’s a continued just like, whoa, like we’re so early, I would say that’s the core thing. And then the other thing is just like you know, with my podcast company, I was kind of a sole creator. I had a team, but a team of freelancers that I would, you know, just kind of on demand use. And so me and my capacity as a leader, like I’m learning a lot, just how to kind of lead a team, set examples for my behavior. Always be very impeccable with my word and, you know, just really think deeply about some of the ideals in the crypto space of decentralization, personal sovereignty. And how do you strike a balance between. You know, a leadership team of a project really you know, guiding it in the way that, you know is going to be beneficial for the culture, the brand, the community, versus just, you know, it’s a DAO . Go ahead, community, whatever you want, you know, so there’s a balance to be struck there. And it’s definitely an ongoing learning process for the team. 

Who would you say are like the three most influential people that have kind of inspired you throughout this process? Do any come to mind? 

Hmm. I would say Jess Sloss from seed club, for sure. Like he is somebody who is like, absolutely impeccable with his word. I’ve never really seen anything from him where there’s like been a disparity between his word and his action, like. And that’s very important too. Like there’s very important in the crypto space, and you don’t see that that much, to be honest, like there’s a lot of people in the crypto space that they didn’t earn their money through truth and wisdom over time, they just participated in the Ethereum crowd sale and that shows in the way that they manage the money, the way that they act. And so whenever I see someone that is very impeccable with their word and the space and always follows up on what they say they’re gonna do. Like, I respect that so much and I only see that from Jess. So that’s definitely the first one. Let’s see. I mean, I’ve really like what the entire friends with benefits team has done. Like, I think they’ve set in, in my opinion, they’re the only successful social token that is, in existence. And we can go into that if you want, but I think what Cooper, like, it’s so funny that there’s, there’s that meme of like those, like the Scooby-Doo mean meme of like, like pulling off the mask of like and when you research any successful doubts, For some reason and Cooper’s behind it. Like you always get to the point where it’s like, oh, Cooper of course, Cooper launched this. So I think he’s someone who’s had a really deep vision for where the space is going to go. And I really appreciate everything that he’s done for the space, just by setting an example. And then let’s see, I would say probably Alex Masmej is another one who’s like clearly a super young entrepreneur, but what he’s done was Showtime is really, really impressive. And obviously he is one of the pioneers in the concept of launching a personal token. But I’ve been impressed just watching him from afar of like how he’s really navigated and stepped up into a leadership capacity with Showtime.

Can you talk more about the friends with benefits point that you brought up?

Yeah, I mean look, I don’t feel, I don’t know. I don’t know any whale. Like I felt, I feel like it started off where the draw was that you’re earning dividends or like you’re there like earning and sharing in like the vault of whale. But they’ve kind of shied away from that because that’s a huge, like, secure, like, obviously it’s a security risk if you do that. So I feel like there’s kind of like the stale phase of that community where it’s not really clear. And so I don’t really consider that a successful social token. I don’t feel like there’s a genuine community that’s formed around it other than token go up. So that’s my opinion there. And I think friends with benefits have just like really set the standard in every single way. Like the party that they did in Miami at Miami Bitcoin week, I was there and I was like, whoa, like, this is, this is real. This is going to take social token and obviously friends with benefits to the next level, like, and it did, and they did a similar one in Paris, which I would love to hear your opinion of, because I wasn’t able to make it.

What do you feel like is a common myth about social tokens that you’re trying to debunk? If any? 

I mean, I think the main one is just that it’s not like a real, there’s nothing real there. And like, like the people that say that, like, like. They don’t have vision. They don’t, they don’t see where it’s going. Like if you’re looking at the social token space right now and like judging it for like the snapshot in its current existence, like sure, that’s fair, but you have to have a vision for where this can go and, and is going and I was a part of that, you know, it’s very important that people with integrity really step up and take leadership positions within the sphere. Because there’s you know, there’s no saying where it’s going to go. Like, maybe it’s quite possible that by 2030, we’re all just traded like a stock market, you know, like that’s quite, it’s quite possible. That’s the vision of social tokens that actually wins out. I’m building and I know many other people in the space are building so that that’s not the reality that we’re building. So…

How do you prevent that?

By building other things by building others. Like this is the one thing I realized in my twenties, like there’s enough there. There’s absolutely nothing for you to fight against out there. Everything is in the air . Every enemy that you perceive out in, like, it’s, it’s something that you have often here. And so there’s nothing to fight against out there. If you feel like there’s something wrong or perverted out there in the world, then you need to take on the responsibility as much as you have the capacity to do, to build better solutions, new solutions that make that obsolete. And if you build something that’s true, honest and a better solution, then people will adopt it. 

What do you think the future of social tokens kind of look like five to 10 years from now? I know you touched upon it briefly, but talk to me more, build that, build that painting for me for a minute.

Well, I think we hit a similar hype cycle to what we’re seeing right now in NFTs. Where you have this kind of mass adoption within a specific subset of the creator economy. So like NFTs right now it’s like artists are like really like getting the full value and brunt of like what NFTs are and can be. And I think over time, we’re going to start to see that bleed over into other areas of the creator economy. But there’s definitely going to be like a, you know, early majority, late majority. Yeah. That, that type of adoption cycle and social tokens are gonna be the same. I think we’re, we’re, you know, we’re NFTs we’re in 2018. We’re close to that point of the adoption cycle of social tokens, if not like, you know, there or a little bit beyond it. But I really think that five to 10 years, social tokens kind of become this, this world of new experimental models of social backed currencies, that in my opinion, should be mediums of exchange and really creates a world where communities, brands, creators with influence are able to incentivize positive behavior and positive action that helped to create a regenerative world that we all want to see. But now we have the economic incentives and. Community-like, community-driven structures to create that. And I think it was Charlie Munger that said, you know, show me the incentive and I’ll show you the outcome. And so we finally have the tools to come from scratch, create the incentives, create the systems and structures that will result in the outcomes that we want to see, which is regenerative planet uplifting communities and emerging economies and advancing and co-creating together meaningful causes. And I think that that’s where the space is going to go because there are people building towards that and we’re going to win. 

Shout yourself out, where can we find you? Where can we find Socialstack? Give us the whole shebang!

Yeah. So you can find Socialstack at socialstack.co that’s our website. We’re all on every social media, Twitter @TrySocialStack. And then my handle is below @thewitzcarlton it’s like the Ritz call it Carlton, but with a w instead of an R. And that’s definitely the best way to connect with me. And yeah, like super open. We love to hear feedback, like social stack to the extent that we, like, we want this to be a co-creative vehicle. We have kind of a vision for where the product needs to go. And we also have a desire and a vision for where the culture and the community needs to go. And we want to kind of co-create that with the initial creators on the platform and with the initial community that actually engages. So join our discord, the links on our Twitter handle. And we’d love to see you guys there. 

Listen on: Spotify | Apple Podcast | Google Podcast

Background

Mint Season 2 episode 3 welcomes Jeff Kauffman Jr., who’s building Parachute, a social token-driven consultancy firm focused on web3 solutions for brands and agencies. Jeff has made it his responsibility to provide entry-level social token exposure to many mainstream marketing and advertising executives via the community’s currency, $JUMP. 

In this episode, we talk about the vision behind Parachute and $JUMP, how social tokens will change advertising forever, why he’s building an advertising and marketing network native to Web3, the early days of the internet and mobile adoption, launching creator coins, and so much more.

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Thank you to Season 2’s NFT sponsors!

1. Coinvise – https://coinvise.co/

2. POAP – https://poap.xyz/

3. Socialstack – https://socialstack.co/

4. Celo – https://celo.org/

5. PrimeDAO – https://www.prime.xyz/

Interested in becoming an NFT sponsor? Get in touch here!

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Adam Levy: Jeff, welcome to the podcast. Thanks for being on.

Jeff Kauffman, Jr.: Good to be here. Thanks for having me.

Adam Levy: You got it. All right, man. Let’s get right into it down and dirty.  Give me a quick brief about yourself, how you got into the crypto space.  What were you doing before and kind of like,  where are you? Yeah, man.

Jeff Kauffman, Jr.: I’ll so I’ll give you the quick 15 year journey to crypto. So my background is marketing advertising then in the sort of the enterprise agency world for almost 15 years, got my start just actually marketing on MySpace, believe it or not. So I really sort of grew up through the web two movement and saw that from sort of start to what I, I wouldn’t say finish, but to where it is today. And so that was super fun, loved sort of the birth of a new industry, a new models for brands and creators. But ultimately web two started to feel a little stale and a little over a year ago, I came across the concept of social tokens and personal tokens and that those keywords kind of triggered for me that crypto and blockchain and Web  were starting to enter a phase that was more relevant to someone like myself, someone who’s not in finance, someone who’s you know, not a coder or a developer by any means, but someone who builds online communities builds brands and builds experiences. So sort of that combination of writing and industry and you know, see riding the ups and downs of all of that to then wanting to be at the start of sort of the next wave of what internet communities could look like.And yeah, here we are today. And yes, it’s getting off to a good start.

Adam Levy: I love it. And you brought up a cool keyword, web two feeling stale. What about web two is feeling stale to you?

Jeff Kauffman, Jr.: So it’s funny because a lot of the sentiment around web was the exact same sentiment that web two had circa 2000 to 2008, which is we’re removing the middleman. The intermediaries are going away. And at the time the intermediaries weren’t Amazon, Google Facebook, the intermediate intermediaries were the large print publications, large TV networks and things of that nature. And so you know, that sentiment was super important for me because as someone who enjoys building brands the number one thing you want to do is connect a brand to a consumer, deliver a great product and a great experience and grow that relationship and web to promised them. Which is the same promises web three is making right now. So I hope we don’t make the same mistakes. But then over the years, what happened? Google, Facebook, Amazon, apple, they all became these huge intermediaries. So we just got centralization and intermediaries all over again. And immediately you start to feel as though you have handcuffs on, so 2010 to 2017 was sort of the heyday. I felt like there was a lot you could do in web two. And then the last three years, the clamps have just started to come down and it just felt like we were in handcuffs and it felt stale.

Adam Levy: So you brought up a point web to aim, to do what web three is doing right now, but people just built quote-unquote data monopolies and these huge islands that were gated and people became the product and very much so what we’re experiencing right now, obviously, what do you think is happening in web three that’s taking change into their own hands, right? Like what are users kind of like experimenting with from a point of view to make sure that web two doesn’t happen over again? What are you seeing?

Jeff Kauffman, Jr.: It seems like social tokens, brand tokens community tokens. They go by a lot of terms, but I like social tokens as sort of the catchall and NFTs again, a little bit adjacent to the world of, of social tokens, but you can still build communities around both. It’s really the ability for the end user to control their access to a community, not decentralized platforms. So right now, if there’s a big community in a Facebook group or an a Reddit group how do you mobilize a million people? If they don’t like how they’re being treated on one platform, how do you mobilize them and migrate them to another platform? There’s really no way to do that. And so that creates data lock-in network effects, lock in, and the innovation sort of stops. And so tokens putting tokens in the hands of the end user and then allowing themselves to organize around the token and not necessarily the UI or the platform or the database for law , at it’s simple, or it’s at its most granular level organizing around the token allows just freedom and mobility across the internet. So as, as we start to see experiences, websites and apps built for tokenized communities. We essentially get this world of online tribes that can just move across the internet together. And that freedom is essentially you know, what, what I think is the polar opposite and counter position to, to web two, which is no ownership and very little freedom.

Adam Levy: Right, and I guess we can both argue that we’re part of that internet tribe that is working in a very much so decentralized manner, me through mint you through jump, which we’ll get to in a minute, but everybody kind of has their own entry into crypto into web three. Right. What was yours? Did you first buy Bitcoin and realize, all right, what is this internet funny money? Was it through a blockchain use case? How did you get your start in this space?

Jeff Kauffman, Jr.: Yeah, it’s funny. My first awareness of Bitcoin was back in 2012, 2013, and being sort of a brand guy, if you will. And not someone who understands deep, deep, deep technology type stuff. The brand of Bitcoin was a bit off putting to me. It just felt really scammy. It didn’t feel right. Just kind of seeing it on the surface. But the general idea of it was like, man, there’s something here and Bitcoin will kind of be the first experiment and then we’ll kind of see what comes after that. So, Definitely put a bookmark in it and kept track of it. And then as we approached 2016 as Coinbase sort of started to gain a lot of momentum and you started to see this really nice brand kind of developed within the space that, you know, brands can often give a lot of legitimacy and credibility started to pique my interest again. So definitely leading up to the 2017 sort of craze and bubble is when I actually started to make some of my first purchases, obviously like super speculative started the devouring every video I could of Vitalik talking about the vision of  Ethereum, along with every other sort of conference or video that had been sort of put out there and, you know, got super interested in it. And then obviously the, the ICO boom, and the crash, and there’s a lot of sort of cloudy fuzziness around kind of what was happening. And I wasn’t deep into this space. So at the time I didn’t see really the, like the builders and the real like use cases that were starting to form. So I didn’t pay much attention to it. I was also highly consumed with building a business within the agency that I was working at and sort of scaling a web two solution. So I really just poured all my focus into scaling a social media business. And then in 2020, You know, it just kind of came to a head and it was just like, man, this is this again, that the web two is feeling stale. I’ve scaled this business, but I don’t really see, it doesn’t seem a lot of fun to keep scaling. And then again, kind of come across the term social token and personal token, and then just the, you know, the idea started.

Adam Levy: Sure. No, it makes a lot of sense. And, you know, Jeff, you bring such a unique point of view to this entire discussion, mainly because one you saw not only the rise, but the existence of my space. And then you also saw that transition to Facebook and pre IPO. Facebook is very different than post IPO Facebook. And I think newcomers who like gen Zs, right, that are coming into the space, they don’t realize these problems, right. They’re just end users. There’s just a product at this point. Right. And now we’re seeing the rise of these new primitive as these new ideas, these new forms , of one community engagement, community building and community ownership and what it means to be a part owner and something that you use, right. Something that you contribute your time, electricity, resources, whatever. Right. So when you’re seeing the development of my space, right, you’re being an internet community guy, right. An early, early user, you’re seeing the growth of Facebook pre IPO and how it kind of delivered a lot of its organic traffic before when IPO and the second one IPO that kind of like disappeared. Right? Where are we right now in terms of where web three is to where, what to was when you entered? What what’s the energy like right now?

Jeff Kauffman, Jr.: Yeah, I really, I feel like web three, social is 2000 to 2003. So like almost pre my space. Like if you go back before my space, Friendster was really. The, the thing that sort of led up to, to my space. And so I think we’re pre my space. I don’t even think we’ve seen. And it’s tough to say like like I don’t think the next wave of social platforms, I just, it, it, that’s too linear. It’s linear thinking. It’s like to think that there’s going to be another MySpace. I mean, another Facebook that kind of dominates. Like, that’s why I’m not, we can get into big cloud, but I’m not big on just a big cloud feels too linear. It doesn’t feel like this exponential just  change. And, and what we’re seeing. So I don’t even think we’re yeah, we’re, we’re like pre to really 2002 to around 2002.

Adam Levy: Yeah. I could echo that. And just, just because you brought up  bitclout for a minute. Right. And obviously, and it’s a point of discussion that I wanted to have with you more intimately, but we’ll bring it up. Obviously a  bitclout is like that social experiment that hit the market, had all the backing of like the top investors that got a lot of attention, a lot of early capital initially. There’s a lot of hype, right? Tokenizing the top 15,000 influencers on a social media platform. And then adding a twist of decentralization. It’s going to get awareness obviously. And like you said, we’re at a stage right now where.   I like that because you’re the first person to kind of tell me we’re in that early 2000, 2003 phase which basically means my space got started in 2003 big cloud is like that early iteration of what it could become, but chances are, or I don’t know, chances are, they might pivot right.

And become something else who knows you can’t really predict. But when it comes to like these creators, right. And now let’s get into the story of jump, starting a social token, just so people understand the difference between the social token that you started versus the ones that  are on Bitclout. Why not launch jump on bitclout?

Jeff Kauffman, Jr.: Yeah, absolutely. The main thing that I see with Bitclout , to me, it just felt, so it just felt led to like, just, yes, it had this kind of underlying blockchain component. They tokenized the top 15, I think, thousand sort of influencers on Twitter. But everything about it felt so web two, to me and to me, the social graph is completely built around the individual and not platform. And, you know, unless there’s like a layer of  Bitclout that, that, like, I’m not sort of seeing, it still feels like they’re trying to build the social graph around the blockchain itself. And it’s like this, oh, we went from a platform to a blockchain and I dont think that’s where it’s going. I think the social graph is around the user. And right now a theory seems to be the, the best place for an individual person to start to collect tokens and build their own social graph. Right. And, and in that sense, you know, still has all of the high level sort of beliefs and philosophies that ,  Bitclout is going for. But instead of trying to build around us a very specific blockchain use case you know, Ethereum is really allowing people to kind of create their own social graph. And to me, that, that seems like a a bigger sea change that we’re building social graphs around people, not blockchains and certainly not platform.

Adam Levy: Yeah. And I guess from that point of view, we’re building social graphs around people, but blockchains are the underlying infrastructure that are making it possible. Right. And just because we’re already on this topic, right. I, I think it’s fair point to now even introduce, jump. Right. And I’d love to kind of hear the story because we’ve been kind of seeding at it and teasing it throughout this conversation. So really quick, tell me, tell me about Jump, the social token you launched and parachute how those two kind of work in conjunction.

Jeff Kauffman, Jr.: So, to set the stage, I’ve got to go back to 2005 again, go for it though. How did the advertising, how did I get into community building? I was in college at the time. Wanted to go to the forefront of where I felt like consumer attention and consumer media were going so very similar to the way, a lot of sort of people who are graduating college and just entering web three right now, just kind of doing the same thing in 2005. I was very big into skydiving at the time. was making a lot of jumps at a local drop zone and just decided that I would start a MySpace page for skydive, Dallas. Didn’t ask permission, just got into it. Launched the page, started marketing skydive Dallas on myspace.

Adam Levy: That’s epic.

Jeff Kauffman, Jr.: In about a month, the manager came up to me at the drop zone and I only had about nine skydives at the time. So I was by no means sort of an expert, certainly was probably not qualified to be representing them on the internet, but he came up to me and he said, “Hey, we have these little comment cards. And at the bottom, it’s a sort of ask about your experience and how you liked your skydive. But at the bottom it says, how’d you hear about us?” And it was like, check a box, radio, TV, outdoor, whatever. But there was a little note that you could write. And a lot of people started writing MySpace on there and we were getting a lot of business from MySpace and I found out you’re the one, running it? We should compensate you. And so that was sort of my first client. It was a barter deal traded skydives for essentially social media marketing that allowed me to make 1800 jumps over the course of 11 years, which was just a blast. And so when I started to sort of move into the next phase of my career and I started to sort of think about really what I wanted to do. I wanted to jump into web three that’s, as simple as it was, and I needed to, and I needed a parachute to do that. So parachute and jump were sort of born.

Adam Levy:I love how it’s that simple. It’s like, that’s the inspiration. You’re jumping into web three. Okay, interesting.

Jeff Kauffman, Jr.: Exactly. And so when I think about it, and I kind of am like everybody needs a parachute to jump in, that’s kind of where we are at this stage. It’s hard to do by yourself. You need a little help. I’ve certainly had help through my relationships at sea club. I’m gearing up junk to help others in a similar fashion, but unique to a certain industry. So when I really started kind of preparing myself to actually jump in full time and leave the safety net of a big corporation. One of the things that I did is I just put together sort of a trends and research presentation, and I presented to just a bunch of smart advertising and marketing people. So think like senior digital strategists founders of agencies Founders and CEOs of billion dollar companies. And really the idea was, Hey, this is what I’m seeing. I’m seeing this crazy. And this was before NFTs blew up. This was before anyone was really talking much about web three from a brand perspective. And so sort of middle of last year, 2020. And the response I got from everybody, super senior people, incredibly smart agency people was, man, this is fascinating. It’s definitely the future. I see why we need it. I see the problems with web two. I see the problems that this solves. I have no idea where to start. This is so foreign to me. It’s like, it’s like seeing the internet again for the first time. And so as I started to formulate, okay. That’s the sort of the feedback I did a little market research if you will, light market research, just kind of talking to people. That’s the feedback that’s most needed right now in my industry, which is fortune 1000 brand marketing enterprise agency services. And the question, the answer was super plain obvious. It was, we need a community for the industry to come together, to start to learn, to start to set best practice, best practices, and ultimately build the products and services that this industry that web three would, would sort of need. So, that’s where kind of jumped started to make a lot of sense and being able to work with a bunch of agencies and brands and help them jump into web three.

Adam Levy: You know what this reminds me of when, like I’m a big fan of, of the history of the internet and the stages of the internet from web one to web two and now web three. And quick side tangent, I’m curious at, what’s going to make web three irrelevant and what’s going to eat web three. Right. But, we’ll get into that even later. But, what you’re talking about right now, because we’re so early in the stages of adopting more retail level type of web three tech, it reminds me a lot of like these early internet advertising bureaus, for example, right. Like the IAB, right. The internet advertising bureau when mobile came out, right. The, the, the mobile bureaus that kind of helped an aim to educate agencies and advertisers. And is that, what is that what the vision is?

Jeff Kauffman, Jr.: Yeah, it absolutely is because when you look at the IAB in the nineties you know, if you wanted to learn about the internet, where are you going to write a print article about it? You’re going to talk on the phone? No, you’re going to build a website. You’re going to start a blog. You’re gonna start an email. You’re going to use the native tools of the space. And in doing that, just to build your community, using the native tools by default, you learn the builders learn, the community members learn. And so when it came to like, what does an industry association look like for this age? It was, well, we, we need to vote. Like if we don’t launch a token and we don’t interact with the token, we’re essentially making a huge mistake in terms of how we’re actually actively learning, not just reading articles and you know, tweeting, tweeting ideas, like let’s actually actively learn. So that’s where, you know, the really formalizing a community around a token became important. With that said, introducing a token is a different dynamic than an industry association that is really classified as a nonprofit, right? When you really look at like structure and architecture. And so it’s not really fair, it might even be a bit misleading to call, jump an industry association because of what that might mean, but it is completely fair to call it an industry community. And then I think it levels up the ideas and the ethos of what association wants to do, but I think it actually turbocharges it.

Adam Levy: So with all these bureaus and associations, obviously they would monetize them, quote unquote, through probably membership fees, et cetera, et cetera, education materials. I’m assuming I don’t know too much, I’m thinking out loud here right? But really this is a network effect type of thing. This is a community thing. And to get the resources, to understand, to really get a better hold of what web three is, you’re giving people that first step to buy their first token, if they haven’t already bought in Bitcoin or Ethereum, et cetera, et cetera. And with that, they get access into a community of like-minded people who are also after the same problems, solutions, challenges, et cetera and going through that tunnel together. That’s essentially what it is.

Jeff Kauffman, Jr.: Yeah, absolutely. And the one thing that I’ll add to that is that to me, a token, having a token isn’t an either or, and like a business model, I still think you can have sponsorships around a tokenized community and we can get into what that means, especially when we’re talking big fortune 1000 brands and how they might interact with tokenized communities. I still think you can have online course material that sold USD or some sort of stable coin. You can still have advertising and sponsorships, and I think there’s a right way to do that within a tokenized community. And so , it’s really, we’re talking about the ying and the yang, the Batman and the Robin, the peas, and the carrots, two things that go together like really well, which is community equity in the form of a token and community cash flows in the term of all kinds of products and services that you can imagine.

Adam Levy: Right. So , my next point of discussion is that everybody can launch a token. And these people that are joining your community will soon realize how easy it is and how quick it is and how cost effective it is to just launch an ERC 20 or whatever the token standard is. But the hardest part behind launching a token is building that network effect, creating utility, creating value. How do you think about that? Is there a framework that you use in kind of deriving this value and creating perks, quote, unquote, or talk to me more through that?

Jeff Kauffman, Jr.: So really, you know , you’ve got to figure out a way to create value around the token, like the value for holding the token for using the token. And in that sense, a lot of the fundamentals of building businesses and building brands actually come into play. Granted, you have to translate that knowledge into the new tactical forms of like, what can you do at a very tactical level that’s new and different, but the fundamentals are the, like the high level strategy doesn’t necessarily change. And the example that I’ll give for that, because I think it’s by far, the best example is Bezos, what he claims is Amazon’s strategy. And it hasn’t changed in 25 years. I think Amazon was founded in 94, which is the goal is to deliver products faster and cheaper. That’s it? That’s the strategy. It doesn’t change. That’s the business strategy. That’s the brand strategy, everything ladders up to faster and cheaper. And in that sense, you can introduce all kinds of tactics and components and ways. To execute against that strategy. And so launching a token is not a strategy that is not new, like you haven’t like unlocked some sort of new strategy. You have unlocked a new tactic and that tactic is super powerful and not a lot of people are using it right now. But the strategies are essentially the high level mission is essentially the same. So if you looked at jump’s mission statement versus the  IAB mission statement in 1994, they probably look very similar, which is create a space for education and learning, create a space for people to meet and network create creative best practices for building brands using web three and helped start and, and sort of fuel the next generation of marTech, which, you know,  the whole new adtech and MarTech stack has to be built for, for sort of web three. And so, that high level strategy is not probably that too  different from many associations leading up, but how we do it. And the tactics that we use are very, very different. So I would just encourage everyone who’s considering launching a token to actually spend a lot of time thinking about just the good old fashioned business plan.

Adam Levy: Yeah. So that’s a really good way to submit faster products in the most cost-effective manner. Right. Amazon strategy, share with me more about what, what jumps strategy is, right. And what that like longterm roadmap kind of looks like.

Jeff Kauffman, Jr.: Yeah, absolutely. So, you know, Creating a space to learn creating an ability to network with individuals and then create a best practices and, and sort of build web threes, adtech and MarTech stack. Right? Look at what a token does to that and how it kind of supercharges that, no industry association has ever been aligned with a token. Really it’s a, you pay a membership fee, you’re a part of a community. And really the value you get is somehow extracting that value back towards the company that you’re involved with. So if your goal is to kind of rise through the ranks and be president of the industry association, you actually still care more about your company than you do the association, you would care about the association to the extent that it helps you in your own company. And what a token does is it aligns your company’s success as well as the industry association success, because you essentially have stake in the social capital now, tokens, you know, depending on how you design a social token and the purpose you give it, you know, you can get in the crosshairs of the sec and it can become a currency. But ideally all social tokens that you launched there, they are utility tokens. And you have to build that utility into it. Now, supply and demand takes effect over any good that can be traded and price discovery can happen into sneakers or some sort of collectible and those aren’t necessarily securities. So the same thing can happen with a social token. And so when you think about sort of the future of what this industry community can look like, we can start to imagine a world where in every top agency, enterprise agency. So let’s take just the top 200 several people holding a jump token, and then you look at every marketing team within you know, fortune 1000 brand, someone in there holding a jump token. And then you look at web three adtech and MarTech, you know, people that are deep in the web three space. Imagine them holding a jump token. And now you have these mega resources in the form of capital from fortune 1000. You have incredibly creative minds at all these agencies starving for new ways to do creative things. And then you’ve got all these innovators in the web three space and they happen to all be aligned with a token. So there’s a much stronger dynamic in terms of win-win across the board, because your stake is not just your own personal desire to benefit your own company. You actually want to see the community grow and your tokens actually give you stake in that social capital.

Adam Levy: So there’s two point of views here. How do you prevent this from being an investor’s paradise, right? Where they pump and dump and speculate on the behalf of fortune one hundreds, tens agencies, whatever they may be there, the capital that they put in there, how do you prevent investors from speculating on that? And two how do you communicate that to people? Right. We get it right. We get it. We’ve seen the reality of what it could become, where it is right now, but agencies who are more, I guess, cautionary around crypto, how do you explain this stuff to them in a, in a more, I guess, meaningful way that resonates with their level of understanding of crypto, beyond it being for criminals, beyond it being a stock market for random shit coins.

Jeff Kauffman, Jr.: So the first question, how do you prevent investors from speculating on it? That question first is a premise that that speculation is bad. I think it can cause some people who are new to the space and potentially holding jump to seeing those wild price swings and a tokenized asset could be definitely alarming or concerning. But, I don’t view speculation as bad. I think speculation serves a purpose. And and then also, I don’t think you can even prevent it like once a tokens liquid, like you can’t prevent speculation, so it’s just going to happen. And so really the idea is to not get distracted by your ultimate goal and your ultimate mission, and then the people that are really aligned with that goal and that mission they’re going to do exactly what, what you as a community leader are doing, which is you’re ignoring the price swings that are heavily driven by speculation. And you’re going to focus more on the mission and the purpose. To start, jump is not tradable. And I don’t even know when the jump token will be tradable when, whenever it makes sense. Right now, you have to earn it. And that’s sort of the first step towards you know, putting the token in the, in the right hands of people that want to use it for the purpose and the utility that it is, you have to earn it. And right now to date, we’ve got about 150 beta members. We’ve got 80 agencies represented from across the globe. We’ve got members from Shopify, Netflix, Tik Tok, Prudential, Amazon. And so these people have essentially earned the token by being the first to request access and and, that’s sort of the way I went about building the community as I wasn’t super public about it. You know, I posted on my own social channels and sent out emails to, you know, really close colleagues that I respect and who want to innovate. But as far as like mega PR releases or some like super fancy website, that explains what jump is. I stayed away from all of that. And it was really just, Hey, this is web three. We’re going to learn about it. It’s jump, request an invite. And so those people that were essentially very curious minds and heard just enough of the story and made the effort to request an invite without knowing  much. And then I had  some zoom calls to sort of onboard people. Essentially their first reward for being curious, people in this field is to receive jump tokens. That’s their first reward. And then moving forward, we’re about to enter season one. And we’ll have two teams. We’ll have an events team and a research team, and essentially to enter the community you’ll have to contribute to the researcher, the events team, and by contributing to the community, you earn tokens, which then give you more access to the community. And at some point, whenever those tokens are tradable it’ll make sense. Obviously, when you start putting tokens into the wild. Anyone can set up a liquidity pool and start trading the token. You know, that’s just the nature of the game. But it’s just like, once you start selling t-shirts, anyone can create a secondary market for your t-shirts. So it’s not like it’s that it’s that different. It just happens at a much quicker pace and probably a much bigger scale, especially coming up throughout the years.

Adam Levy: Yeah. I love how controlled and how focused it is on trying to achieve like not a validation, but kind of getting the initial energy built up within that community before scaling it and getting it much larger. Right. Cause obviously. There is a problem that needs to be solved here, right? And the social token solve that through community coordination, right. And validating equity, right. And validating proof of participation, et cetera, et cetera. Right. And the beauty behind what I like that you’re doing is you’re keeping it controlled, but also you’re aware that there could be quote unquote, a bad actor within that, that wants to take his experimentation to just another notch and create a unit swap pool or a sushi swap cool and create an ETH pair or whatever it may be, whatever the token pair may be. Right. And just put it out there wild and allow more members that you necessarily wouldn’t have won to join, to get into the community. And I think when creators are kind of thinking about how do they build their social token community, whether you’re a Lil NAS X, and you’re you have a fan base of millions, or you’re an individual like yourself that wants to create more awareness for a topic. I think there’s two models, either releasing it out in the wild, right. And letting people ape in quote unquote and buy it, or having a core individual sort of meant this on their own, in their own wallet. Not really create a multisig quote, unquote, that’s managed by multiple people, but you as individuals, Jeff Kauffman Jr. You determine who comes in and who doesn’t. And I think there’s something unique about that with creating that intimacy behind a community. And just to add on to that, you know, I think one of the biggest misconceptions people have is they’re aiming for masses, right? They’re aiming for millions of people in the community, but what you’re proving it’s use case dependent.

Jeff Kauffman, Jr.: Yep. Yep. Absolutely. And I definitely don’t think it’s wrong to just sort of release a token and let people  ape in and kind of do all that jazz. I think that’s more sort of natural for where the blockchain and crypto community has been up to this point. But I do think that like every industry there’s evolutions and there are different use cases and you know, jump is certainly very you know, it’s very centralized in, in a sense right now. Now the goal is to get it to a very decentralized place, but that does not happen overnight. And I think a lot of people forget how long certain projects took to actually get to true decentralization and aligning with that ethos. Now at the same time, I think we all need to sort of sit back and understand that there are plenty of reasons to have a very centralized and creative sort of actor in a sense. And so, like some examples that I’ll give is that a musician. While they , or a band might have a token and a decentralized community, the community is not necessarily dictating what that musician is thinking about and creating about and that exact song and that like that algorithm that’s in that musician or that creator’s head and how they wake up and how they feel and how they get to that next hit song or that next hit album. Now there’s certainly like that interaction with the community, but that actual song that’s being created is not necessarily created by the community. It’s certainly created in some sense in tandem. But yeah, I think there’s a lot of room for a very centralized sort of actor who partners with their community but isn’t necessarily giving out just full control and ownership and just being like, okay, and now you create every single song and album ever released under my name and that sort of like that’s  Bitcoin .

And, you know, that’s, that’s the, just the full Satoshi goes into the back and there’s now , all these actors that keep that platform up, you know, there are ways to bring the metaverse characters to life and this community-driven like avatar, that’s controlled by the community. And like, and that’s kind of, that’s, that’ll be a fun space to play in, but for the time being, while we still have people that want to be extremely creative allow them to be creative. But these tokens allow them to partner with their fan base in any way.

Adam Levy: What I love aboutthe jump story is, and I touched upon this earlier is the, you can be centralized and still utilize decentralized technologies. You don’t have to go from zero to 100 instantly, right? There’s a process to it. Right? And for future creators who are looking to experiment on this, whether again, your little NAS X or Jeff Kauffman Jr. There are stages to, to releasing and becoming more quote unquote decentralized. Right? And you’re seeing a lot of these fair launch models kind of go into the ecosystem. The biggest one comes to mind is Andre Conje . I feel like I’m butchering his last name, but from yearn finance. Right. And he’s very big on this ethos of fair launch, no premine, no VCs, none of that stuff. Here’s a project. Here’s a problem I’m trying to solve you guys do what you will with it. Right.  All still developed, but. It’s two different models. And I think it’s a misconception that people have with like, okay man, how do I go decentralized? Right . Initially, like, I don’t even know the first thing about decentralization. I grew up in a society where all I’ve known is centralization. I have to rework my framework and the way I’ve kind of approached it, like people don’t realize that there is no CEO, necessarily. There is no CMO. There are no executives that kind of manage. There might be not nonprofits that help fuel and fund these ecosystems. But the majority of the traction, the network effects happen many times beyond someone’s control.

Jeff Kauffman, Jr.: Yeah. And you kind of touched on, we grew up with centralization, whether even though we’ve got a whole new generation of bright minds that are coming into this space, they still grew up with centralized school, centralized government, centralized healthcare, centralization, centralized family. Right. And there’s not necessarily a bad. That’s not all bad, but that is a behavior that is so hard to sort of unlearn, but we do need to get there. I’m a huge fan of de-centralization. and we need as much of it as, as we can, but you can do it in a very progressive manner. And so one of the things that I challenge people to do in launching a sort of a tokenized social tokens and community tokens is to think first about what is one single behavior that you can decentralize. One single thing and get really good at decentralizing, that single behavior. And then, you know, you’ll start to lay the foundation and the sort of the culture to sort of spread that. And then maybe one day you can become fully decentralized. You can actually become a DAO. Cause right now, most DAOS are, they’re DOs. They’re a digital organization. It’s not decentralized and it’s not autonomous, but that’s okay. It doesn’t have to start there. And so if, as long as you’re up front with your community, even if you’re calling yourself a DAO, no big deal. Just say, Hey, we’re not fully decentralized yet. It might take us a year or two. I think two years is quick. It might take us some time, especially when we’re talking about culture and human capital, because that is much different than just software.

Adam Levy:  Yeah. I think like that quote right there, one behavior at a time, right. And starting small one baby step at a time, one stair at a time. Right. And building from there. When people enter the space, it can get very overwhelming, very fast. Right. And that whole point of view is like, okay. And I want to pick your brain on this a little bit more designing one behavior at a time. How do you approach that? What does that look like? So let’s talk about it from jumps point of view for a minute. Okay. You’re trying to build a network of like-minded ad agencies ad tech, marketing tech, et cetera, et cetera, people to educate them on the future of web three and what it can become. That’s the vision, that’s the mission. That’s the goal? What does that first behavior look like in your ecosystem? How does that look like from your point of view?

Jeff Kauffman, Jr.: So the goal is to decentralize research and events. So kind of going back to the two teams that were there. And so the way we’ll do it, we’ll do it in classic agency style, which is, there’s always a briefing and you start with a briefing and then you move into a brainstorm. And then those ideas that kind of the community rallies around will then formulate into the working groups and the projects within research and events. And so in that sense, the ideation of what projects fall within research and events was very decentralized. It was the community kind of came up with it. Now, you know, I had to kick off the process, which was very centralized, sort of planning and structure. You know, then I have to do the work within discord to set that up. So that’s very centralized. And so there’s centralized components of, of bringing that together. But that first, like that would be a huge success for our community just to brainstorm on what the working groups would, would be, and then come to consensus on those working groups and then to start working in those groups. And then if we sort of map that out several months and maybe a year or two, the I, the ideal scenario would that an event idea would happen or would come to someone, they would start organizing the community around that idea. And then that event would happen. Done and that’s the vision that’s decentralized and that came to life without any centralized actor within the jump community. So how do, how do I empower that? And then in turn, create others in the community to sort of empower that. And so one of the things that we’ll have within jump, as soon as the community reaches a little bit larger, still as we’ll have a, what we’re calling city nodes. So ways for agencies and people that are in the same cities to connect. So if jump can sort of put out the resources in the form of tokens to hold the local event, and then that of that bounty and that event just happens and it’s grabbed, and it just goes with very little oversight. Or no oversight from, you know, the centralized team and the, the Genesis team, if you will then we’ll start to see like that actual behavior kind of come into life, hopefully pretty soon.

Adam Levy: And the reality of what you’re saying on paper, it sounds fantastic. But the reality of these organizations is that as you build towards decentralization, you’re really banking on the fact that you’re going to have a lot of self-motivated and self disciplined individuals, more leaders, less followers, right. To an extent, right. And in a world where society has only so many leaders and more followers, right? How do you avoid the bureaucracy that will come and streamline efficiency? I think it’s a problem that a lot of DAOs true DAOs, haven’t figured out just yet. One example comes to mind and I’ll let you answer it for this one example is friends with benefits. They introduced season three and they basically have leads managing events, projects, this and that. Right. And with those, you have core individuals that get, I guess, I don’t know what the pay is, whatever it may be, but they basically get compensated from the Dow and become essentially like decentralized employees, contractors, from what I understand. Right. And they, they are like the leaders that coordinate and manage specific departments. How do you kind of view that when one, all these people, they already have full-time jobs, right. And they’re working at Amazon, it’s already consuming a lot of their time. They’re working on these ad agencies, et cetera, et cetera. How do you build a system that motivates and incentivizes leadership versus being a follower.

Jeff Kauffman, Jr.: Yeah man, that is a billion dollar question. See whatever unlocks that is going to start really do it. Cause what we’re talking about. Talking about coordinating human capital, natural capital. And that’s, what’s so fascinating about this space. And so in the absence of being able to perfectly program everything into software, then you have to start relying on  the human brains form of software. And you have to sort of have these centralized actors. And so that’s where, you know,  you need even stronger leadership. And I think that when we start to talk about the bureaucracy of organizations, I actually, I feel like that’s when leadership is breaking down and you’re having weak leadership. And so you’ve actually got to somehow cultivate even stronger forms of human leadership when you’re really relying on a decentralized team to self-motivate self act and do it without a lot of oversight. So really, you know, the future is the stronger the leader. I think the more likely they’re going to gravitate towards this sort of environment, because really strong leaders, they don’t want to micromanage they want to empower people and these systems give them a lot better opportunity to do that. And so I think we’re going to naturally see our strongest leaders and businesses and society start to gravitate towards this sort of model. And when you have strong leaders, I think that’s what gets us through the bureaucracy component until we can start to code the coordination of human capital into software.

Adam Levy: Yeah, I it’s, it’s a great point. Let’s pivot for a minute and talk about the future of digital marketing, the future of advertising from the first point of view of decency, centralized social networks. Okay. Now the platforms right now, their business model is ad revenue, right? Probably other miscellaneous like fields, whatever, but majority ad revenue. I, as a Facebook marketer, I can go and set up a campaign, target a specific audience based off the interest, demographic, whatever people become the product, but on platforms like Bitclout, it’s no longer that scenario. Right? How should digital advertising agencies. And I guess also brands and it’s probably two different answers. How should they be viewing decentralized social networks when it comes to engaging with their core communities and their customer base?

Jeff Kauffman, Jr.: Yep. I love this topic because I think the natural place for a lot of people who are not deep in the world of advertising and marketing and actually care about doing it in a really in a way that’s has a lot of quality and adds value to the person that’s being spoken to and the brand itself. You know, I like to use a couple of old school examples, but I also like to start with a quote from Peter Thiel’s book zero to one, which was you have product and you have marketing and unless your product is at least 10 X better than the user switching costs, well people wont try your new product. And you’re like, well, why not? It’s a, it’s five X better, but the end user, whether it’s a business customer or, you know,  B2C sort of play, the switching costs are too high, especially when demographics start to get older and you’re having families and you’re buying houses and you’re working, your parents, you know, are getting older and whatnot. When you start to hit, you know, the later twenties and your thirties and your forties switching costs become really, really difficult. And so I love sort of how Peter Thiel sets that up. And he’s like, well, if your product’s not at least 10 X better than you’re going to have to win with marketing and you’re going to have to build a brand. And so what is marketing? And that’s where a lot of people just kind of go to, oh, marketing. If they’re not in this sort of field, they go straight towards, oh, it’s okay. And that’s just one tiny, tiny, tiny, tiny little sliver of marketing and what marketing is. But it’s really important for us to think about, like, as we move into web three, there will not be a less need for marketing and advertising, there will be a greater need. And the reason is there will be more decentralization and a greater importance on building your brand, whether it’s a community brand or a protocol brand or whatever the mission is, there will be a big need to build that brand and do it in the right way. So I see marketing’s evolution is actually coming into a bit of a golden age and, and I think a better place than where we’ve been. And what I hope is that when we look at marketing budgets and where marketing budgets go. You know, we’re talking about, you know, the analogy is the fortune $1,000 marketing budgets and ad budgets are almost, you know, it’s certainly not at the level of the institutional sort of hedge funds that are now considering buying Bitcoin and Ethereum, right. But it’s the institutional equivalent of branding and communities and, and all of that. And so unlocking those budgets in a new way and bringing those budgets into web three is going to just fuel the growth of the ecosystem. And what I hope is that we, that what I hope gets removed out of the advertising and marketing ecosystem is rent seeking marketing dollars where it doesn’t add value to the experience or the end user or necessarily the brand. And essentially that’s what Facebook certainly has become. You’re renting your audience and your ad presence. Doesn’t add value to the experience. And that second part is so important. And I’ll go back and I’ll use a skydiving example real quick. One of my favorite magazines when I was jumping was parachutist. And in that magazine, there were a lot of ads and I love every single ad. Why? Because it was the builders and the creators and the event organizers and all the people that made up the community were essentially advertising in that magazine. And in that sense, those products and those services and those events. Added to the community and those ad dollars fueled the magazine, which supported the community. And so I actually think there’s a huge opportunity for ecosystems and brands to actually advertise within their communities. And it’s actually a value add even more so than the magazine example that I gave, because I was just a membership of the United States parachute association. Well, what if that was tokenized? And so instead of buying an annual membership, I actually bought tokens. And those tokens traded a value based off of the value of the community and the desire of people to be part of that community. And so that’s where I think that there’s actually sort of this opportunity for advertising to, again, start to become a value add and the problem with the print industry and the television industry.

And a lot of those advertising sorts of channels is that we’re talking about atoms and paper is actually really expensive and it’s hard to scale. And so it’s hard to create real strong business models around really tight and small communities that can support themselves. And so I think that we can start to reimagine the world of advertising because essentially the cost of the media has come down hopefully the creators that are creating that are, are being compensated fairly unlike they are now. And then those ads actually add value. Unlike Facebook, it doesn’t add value to my experience, but when I’m looking at my skydiving magazine, every ad added value to my experience.

Adam Levy: I love that example. That’s such a clear example, but what about from the point of view of let’s talk about influencer marketing for a second , and let’s, let’s kind of transition into the five, 10 year point of view where you’re going to have hundreds of thousands, if not millions of creators, tokenizing themselves and their communities and giving their fans and audiences a ride for their quote unquote money and experience, right. And brands like Nike, like Patagonia, Adidas, the food network, et cetera, et cetera. Right. How are they going to be thinking about influencer marketing? And I have a hunch from buying into their networks where I’m buying their social tokens, but I’d love to hear your point of view on that. What you kind of see formulating down the line.

Jeff Kauffman, Jr.: Well, first to start with fortune 1000 brands, the idea of them launching a token anytime soon is especially an ERC 20, like social token, sort of like that, that is a, that is actually a long way off. I think it’s the legal component of a publicly traded company launching a token like that, the learning curve, but also just the regulatory, uncertainty and risk is going to take a long time. That doesn’t mean that the industry isn’t going to move forward. What I feel like we’re going to see is we’re going to see just the explosion of tokenized communities forming in a bit of this mass Exodus of attention from web two social networks. And so wherever that attention goes, then brands sort of need to go there too. And so what I hope that happens, what I believe will happen and what I hope the Jump community sets the best practices and standards for. Is that, when I work with a brand we want to develop, we want to essentially build that brand. And so what is a brand is a brand, a logo. Nope. Is it a product? Nope. We like to define a brand as a promise, and it’s the promise that you’re going to live up to X, Y, and Z as best you can every single day. And that’s where you have to like really work hard to outline your brand values and then how that translates into goals. And so if you’re Patagonia, which is a great example, they’ve been doing this for a long time. You know, they’re famous for saying we don’t spend dollars on advertising. We spend a lot on marketing, which is marketing is not just placing a single ad, but what you can start to see sort of formulate is brands that really understand their values and their goals and their promise that they want to live up to every day. Hopefully those brands are making the world better through whatever product or service they’re providing. Hopefully we will be able to, as an industry, match them with tokenized communities and influencers that just share the same values and goals. And so when you start to think of like, what are the goals and what are the values of this community and what brand can actually come in and play a sponsorship role to help them achieve that. So imagine sort of, you know, what would Jordan be without Nike, where would jump man as a brand be without Nike and that sort of combination? How is that going to play out? When we start to see the upstarts of these brands start to align with these creators and or communities, and essentially the brand comes in and rather than spending Facebook generates $25 billion a year on ads, 80% of which comes from 100 advertisers. So 100 advertisers are footing the bill for the entire ecosystem. Most people don’t know that. What if those brands start to redirect their dollars to communities that align with their goals and values and start to support those communities? That’s where I hope we see things going. And the reason we couldn’t unlock that before, is this just really hard for a community to capture the value and unlock their own social capital. Tokens give them a way to do that now.

Adam Levy: Wow. That introduces a whole new rabbit hole to fall down like brands re-imagining companies reimagining how they’re investing every single penny. Rather than spending it on these paid ads, which all these drop shipping models, right. That kind of came into existence and all these new friggin brand to end consumer companies that drop ship products from China, from local us, whatever may be right. You’re telling me right now that they’re going to have to reimagine and actually plug and play into these individual ecosystems, which one on one makes me think it’s a very daunting task. How do you find and source all these individual communities that align with what you’re looking to promote and get out there? And two, and I guess this is more of like a question that we can talk more about later, but I think it ties into it. It’s like when these tokens fluctuate in value, how does a brand really determine what they associate themselves with or not? Does a token price determine that as well?

Jeff Kauffman, Jr.: Oh man, that’s a big question. I think if we’re being, if we’re really focused on our goals and our mission, then we’re not concerned with the price, whether we’re or a community we’re looking at. Like, it kinda goes back. If you look at early early 2000s videos of Bezos talking about Amazon and he’s just like, I don’t care what the stock price is like. Did we deliver more products? Did we, did we improve our shipping speed? Did we bring price down? Did we give people more selection? And are those the metrics that we’re focusing on and holding ourselves accountable to? And I think if you’re doing that, then the token price just kind of becomes a thing that, you know, it’s obviously going to grab some attention, but ultimately, you know, if that’s the focus, I think any community is going to fail.

Adam Levy: So just to touch up on that one point, the first point. So how do brands find these communities now? Obviously they, right now, they live in discord. A lot of them do. Okay. But how many discord servers can you jump into this court also limits you with how many discord servers you could join. Right. So how do you, how do you do that, right? How do you find these communities?

Jeff Kauffman, Jr.: Absolutely. So we’re super early stage. One of the event teams that I hope will gain traction within the jump community is what we’re hoping to host the first ever web three adtech and MarTech hackathon to start to build the tools that will help brands do this. So, okay. We’ve got. Let’s fast forward two years from now, we’ve got a thousand tokenized communities that have members of 50,000 people, or more soon as we got 50,000 people, that’s a decent size audience to sort of like communicate and work with. And certainly if we’re talking about tokenized communities in the millions. Those are really important communities to get into. And if there’s a lot of them, it becomes tough. Okay. So how do you do that? You start to look at some form of user interface that will allow you to sort of survey the landscape look at what this community is about. And there’s all sorts of data points that you can sort of pull. So if we use just a web two example, very common to leverage social listening tools put in a couple of keywords and then you start to build this cloud of emojis. In other words, and other similar accounts that sort of LinkedIn, you kind of start to understand what that social graph looks like. And you can start to understand if that’s the influencer that you want to engage. And so what I anticipate happening is as the tokenized communities form and scale, we’re going to start to need to have these tools that are so essentially a form of next generation of social listening and community management. And so yeah, those, those are the tools that we’ve got to start building, and that’s part of what we hope jump’s role will be. And when you imagine that world of brands and agencies and entrepreneurs aligned around a token, you start to see that we’ve as a community, we’ve actually created the supply and the demand. And we’re aligned with the token around the creation of those tools.

Adam Levy: I love it. It’s super powerful. When do you think all this is going to come to fruition? Like right now, obviously Facebook Tik, TOK, Instagram, Snapchat, Twitter, et cetera, et cetera. These are things that we use and we rely on.  When do we start kind of like how many years what’s that roadmap you think predict, throw a number out there. What do you think is going to be that point where we feel comfortable with web three tools and strategies the way we do with web two tools and strategies.

Jeff Kauffman, Jr.: So, one thing I feel like we’re going to live in is web two’s not going to just disappear overnight. I think web two strategies are going to support web three strategy long time. So we’re not throwing sort of the baby out of the scene, but so, but what about the scale of web three? And then maybe when does the flip happen right? With like mobile took over desktop. When does web three marketing and community building takeover sort of web two. And so I think on the, on the conservative end, and I don’t think a lot of people who are building in the space want to hear this, but 10 years. On the conservative end. On the aggressive end, I think we start to see incredible use cases that set the stage within the next two to three years, we’re going to see a big brand partner with a huge community that has global reach, and they’re going to do something together that every brand and tokenized community is going to be chasing after and starting to build around. And so I’m really excited about what that first use case is going to be. I hope it comes from the jump community. I hope we find the brand that wants to align with the community and do something super special. Like clean up the ocean. I don’t know. Well, you know, we’ll, we’ll see what happens. So yeah, that’s, that’s sort of the timeline on it. One of the things that you have to realize about some of these transitions and one of the reasons why I wanted to build jump is I want to speed that up. I don’t want it to take 10 years and jump as a way to speed that up. And so what do I mean by that? So when you look at these marketing budgets and a lot of these decision-making you have mostly people in their thirties and forties and sort of the mid-level to senior director type positions in VP positions , and then you have like CMOs and things of that nature. So kind of starting in your fifties and sixties. And so we’re talking about educating and reaching retraining, a generation of people and how they operate. And seeing that change in web two, seeing dollars transition from TV to Facebook and seeing the mental leaps that the old CMOs and the senior marketing directors were having to leap through in order to say, Hey, I’m going to shift just 10% of my TV budget into social. And then now, you know, they’re going to start to have to make those decisions of how do I shift 5% or 10% of my budget into these web three strategies, especially when on the surface to most people, it still feels like a scam. And so how do we do that? Build a community around it. Hopefully people learn by doing, hopefully the jump experience spreads super fast to these brands and agencies. And at the same time, web three communities are rising up and we can start to create those sort of case studies as soon as possible.

Adam Levy: I love it, Jeff. You’re a wealth of knowledge. Thank you for sharing this with us. Thank you for being on. Really quick before I let you go. Where can we find you and learn more about jump and parachute? Give us, give us the rundown.

Jeff Kauffman, Jr.: Yeah, absolutely. So you can find me on Twitter at @jeffkauffmanjr. You can find, jump on Twitter at @jumperstweeting , and then you can sign up for jump and participate in jump at www.joinjump.community.

Adam Levy: Amazing. Thank you so much.

Jeff Kauffman, Jr.: Absolutely glad to be here.