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By Zach Heerwagen (Twitter/LinkedIn)
Cover Image Source: Rarible Taco Bell Page
Background
100M global users have now adopted crypto currencies and/or blockchain technologies. At the heart of this new ‘blockchain revolution’ is the ability to decentralize internet based business models and eliminate value-capturing middlemen. While the digital revolution created unprecedented wealth in silicon valley and across a select set of entrepreneurs and early stage investors, Web3 enables crowd-sourced funding enabling early users to become owners via tokenization and defined tokenomics that align incentives across audiences. Imagine if early Uber and DoorDash received a small % of earnings in tokens/equity.
Representative graphic from Packy at Not Boring, if you click on one link, read this:
While the technology that will enable mass proliferation of crypto technology as currency and as a replacement for existing Web2 conglomerates is early, we can use the 100M user metrics to make the analogy that it’s ~1998. While web infrastructure built in the early 90’s enabled open sourced software and laid the foundation for the first dot com boom, the launch of the Ethereum Virtual Machine (EVM) in ‘15 provided infrastructure and inspiration for the explosive growth that’s followed. Today’s Google, Facebook, and Apple are yesteryear’s Ask Jeeves, Myspace, and Dell. We may have a crash (or two) on the way, but disruption is inevitable for many digitally enabled businesses due to blockchain’s ability to align audiences at scale.
This was drafted as a 2-pager for executive leadership at DoorDash to encourage a culture capable of adapting to the threats and opportunities presented by blockchain, nft’s, and crypto currencies before being adapted for a broader audience. These themes are most relevant to tech, tech-enabled, and market leading businesses because the threat of decentralization is disintermediation of aggregators by replacing firms that monetize captive audiences with businesses who’s audiences benefit from their growth.
Executive Summary:
Crypto currencies and the blockchain technology enabling a decentralized ‘Web3’ are experiencing hypergrowth and pose a critical risk to the business if not embraced.
Reccomendation: Large companies should define a ‘crypto strategy lead’ role to work with relevant teams and incorporate Web3 concepts into company culture, enabling the business to adapt to the next horizon of digital innovation.
When DoorDash was founded in 2013 the crypto market cap was $1.5B and its primary asset, BTC, lacked utility. In January it was $771B, rocketing to $2.7T today. Values have soared on the basis of speculation but now we’re at an inflexion point for Web3, with utility being recognized by users in the form of DEFI, NFT’s, and Web3 DAPPs. The next set of layer one technologies like SOL and layer 2 ETH scaling like FTM and MATIC will open crypto as currency to the masses. This will continue to accelerate adoption in-line with speculation driven growth seen since Ethereum’s founding by distributing value to early adopters at internet scale.
This document summarizes five opportunities to begin integrating crypto currency and NFT’s to mitigate risk and accelerate growth, takes a deeper look at biz-model specific approaches to using NFT’s, and potential internal staffing approaches to begin making progress on a business specific Web3 strategy.
Opportunities:
There are several opportunities for businesses to create immediate value while determining how to best incorporate blockchain technology and Web3 concepts in culture and business strategy long-term. These are ranked in order of time investment and scale needed to incorporate into an existing business plan and drive impact relative to other strategic initiatives, and will vary depending on business model and stage.
#1. Use of NFT’s and Crypto in Marketing: Industry leaders like Budweiser, Mcdonald’s, and State Farm have already proven that NFT’s can be successfully utilized in marketing to augment messaging and earn media by tapping into a growing cultural movement.
NFT Mechanics: Creators take a % of secondary market sales (2.5-7.5%), and the leading NFT marketplace, Opensea, takes 2.5% of sales.
Businesses creating NFT’s can partner with nonprofits to maximize marketing, or use primary & secondary sales to more than offset costs while creating a ‘next level’ of brand advocacy amongst token holders.
Dashpass NFT Example: A DoorDash specific implementation of the themes above could be to launch a set of 10-100,000 DashPass NFT’s providing holders free DashPass while they hold the token.
A more innovative approach would differentiate levels of membership by offering exclusive Michelin star selection and/or waiving service fees from the standard 5% DashPass users pay.
Absent a value creating NFT that provides real world value, brands are using NFT’s in marketing with remarkable success.
The cheapest Taco Bell NFT on secondary markets is 1.75 ETH or ~$8k. Brands with cult followings can now let fans ‘own’ a piece.
ENS Registration: Budweiser purchased Beer.eth setting them up to launch decentralized applications (DAPPS). Major brands should do the same.
Ie. for DoorDash I recommended purchasing both DoorDash.eth and delivery.eth on the secondary market to preserve optionality.
Why this matters: NFT’s create an immediate opportunity to improve marketing returns and begin experimenting with tokenomics to drive business impact. By provisioning ownership of an asset representing part of your brand you can also develop a next level of super fans.
Recommended next step: Identify an internal expert on NFT’s and/or retain external expertise and discuss potential token sales models or marketing projects with experts in the space. These people are everywhere, and will enable you to evaluate models and research emerging trends, without overspending since the tools needed to mint, sell, and analyze NFT sales are available out of the box via platforms like Opensea and Rarible.
#2. Embrace Crypto in HR: Set a culture prepared to embrace the next gen of web tech.
Crypto as Salary: let employees take part or all of salary in crypto currency, adopt early to attract talent with emerging programs from Coinbase and others.
Creation of a Web3 ERG: formally recognize an employee crypto community. Many exist organically, and will thrive with formal recognition from management while educating a new set of crypto-natives to help the business adapt.
Introduction of Web3 thinkers in board representation and business leadership.
Ie. Stripe recently added Paradigm co-founder Matt Huang to their board.
Why this matters: The biggest impact of decentralization to business leaders is risk created from new business models unlocked by decentralization. Attracting, developing, and retaining Web3 natives as part of the overall talent pool will enable businesses to adapt.
Recommended next step: Work with HR to identify initiatives that can influence acquisition/retention of Web3 advocates, size cost to launch and incremental impact on overall talent acquisition & retention.
#3. Allocate a % of treasury to BTC: Square holds >8k BTC purchased at $27.4k on average over the past 1.5 years for a profit of ~$227M at current value.
Businesses with meaningful cash reserves should consider diversification of treasury into BTC to offset the cost of inflation to the treasury.
Meow.co already provides corporate treasurers compliant access to new tokenized assets and Coinbase is working on similar services.
Why this matters: For businesses with large cash reserves to outpace inflation and improve shareholder value.
Recommended next step: For business with 9-figures or more in cash reserves and run way to cover 3+ years of current run rate it’s worth retaining a bank internally evaluating opportunities to diversify the treasury partly into crypto-currencies.
#4. Corp Dev Evaluation of Competitive Tokenized DAPPs: As an example, the complexity of food delivery’s three sided marketplace, with the merchant at its core, will make it hard to decentralize. However, most gig work and digital business models are ripe for disruption by tying incentives between users & their contribution.
***Why this matters: ***To participate in upside associated with new entrants unlocking new value for users and understand the innovations and tokenomics enabling them with an eye toward incorporating similar concepts internally.
***Recommended next step: ***Kick off a corp dev evaluation of competitors in the space. These can start as a google search with ‘Web3 version of X’, but be wary to revisit on a quarterly basis since the space moves quickly.
See Jesse Walden’s Progressive Decentralization for more info on Web3 funding. This common approach provides opportunities for early investors, but not in later stages. Evaluate use of crypto as payment:
International: many emerging markets already use crypto, normally BTC forks like BTC Cash, at scale:
% transaction volume by country: Nigeria: 32%, Vietnam: 21%, Philippines: 20%, Turkey: 16%, Peru: 16%, Switzerland: 11%, India: 9%
El Salvador adopted BTC as national currency and others like Nigeria and China are developing their own digital currencies.
Domestic: while payments investment will be led by intl, enabling payment, and identity-free account creation could enable growth with crypto fanatics.
Why this matters: Crypto-enthusiasts already opt for platforms enabling payment with demand growing quickly in emerging markets. Headlines still exist for early movers like Tesla making this available to consumers.
Recommended next step: Begin scoping if your business is in emerging markets, or if you’re an e-comm business operating at a market cap of >$100B.
Executive Summary:
Crypto currencies and the blockchain technology enabling a decentralized ‘Web3’ are experiencing hypergrowth and pose a critical risk to the business if not embraced.
Reccomendation: Large companies should define a ‘crypto strategy lead’ role to work with relevant teams and incorporate Web3 concepts into company culture, enabling the business to adapt to the next horizon of digital innovation.
When DoorDash was founded in 2013 the crypto market cap was $1.5B and its primary asset, BTC, lacked utility. In January it was $771B, rocketing to $2.7T today. Values have soared on the basis of speculation but now we’re at an inflexion point for Web3, with utility being recognized by users in the form of DEFI, NFT’s, and Web3 DAPPs. The next set of layer one technologies like SOL and layer 2 ETH scaling like FTM and MATIC will open crypto as currency to the masses. This will continue to accelerate adoption in-line with speculation driven growth seen since Ethereum’s founding by distributing value to early adopters at internet scale.
This document summarizes five opportunities to begin integrating crypto currency and NFT’s to mitigate risk and accelerate growth, takes a deeper look at biz-model specific approaches to using NFT’s, and potential internal staffing approaches to begin making progress on a business specific Web3 strategy.
Opportunities:
There are several opportunities for businesses to create immediate value while determining how to best incorporate blockchain technology and Web3 concepts in culture and business strategy long-term. These are ranked in order of time investment and scale needed to incorporate into an existing business plan and drive impact relative to other strategic initiatives, and will vary depending on business model and stage.
#1. Use of NFT’s and Crypto in Marketing: Industry leaders like Budweiser, Mcdonald’s, and State Farm have already proven that NFT’s can be successfully utilized in marketing to augment messaging and earn media by tapping into a growing cultural movement.
NFT Mechanics: Creators take a % of secondary market sales (2.5-7.5%), and the leading NFT marketplace, Opensea, takes 2.5% of sales.
Businesses creating NFT’s can partner with nonprofits to maximize marketing, or use primary & secondary sales to more than offset costs while creating a ‘next level’ of brand advocacy amongst token holders.
Dashpass NFT Example: A DoorDash specific implementation of the themes above could be to launch a set of 10-100,000 DashPass NFT’s providing holders free DashPass while they hold the token.
A more innovative approach would differentiate levels of membership by offering exclusive Michelin star selection and/or waiving service fees from the standard 5% DashPass users pay.
Absent a value creating NFT that provides real world value, brands are using NFT’s in marketing with remarkable success.
The cheapest Taco Bell NFT on secondary markets is 1.75 ETH or ~$8k. Brands with cult followings can now let fans ‘own’ a piece.
ENS Registration: Budweiser purchased Beer.eth setting them up to launch decentralized applications (DAPPS). Major brands should do the same.
Ie. for DoorDash I recommended purchasing both DoorDash.eth and delivery.eth on the secondary market to preserve optionality.
Why this matters: NFT’s create an immediate opportunity to improve marketing returns and begin experimenting with tokenomics to drive business impact. By provisioning ownership of an asset representing part of your brand you can also develop a next level of super fans.
Recommended next step: Identify an internal expert on NFT’s and/or retain external expertise and discuss potential token sales models or marketing projects with experts in the space. These people are everywhere, and will enable you to evaluate models and research emerging trends, without overspending since the tools needed to mint, sell, and analyze NFT sales are available out of the box via platforms like Opensea and Rarible.
#2. Embrace Crypto in HR: Set a culture prepared to embrace the next gen of web tech.
Crypto as Salary: let employees take part or all of salary in crypto currency, adopt early to attract talent with emerging programs from Coinbase and others.
Creation of a Web3 ERG: formally recognize an employee crypto community. Many exist organically, and will thrive with formal recognition from management while educating a new set of crypto-natives to help the business adapt.
Introduction of Web3 thinkers in board representation and business leadership.
Ie. Stripe recently added Paradigm co-founder Matt Huang to their board.
Why this matters: The biggest impact of decentralization to business leaders is risk created from new business models unlocked by decentralization. Attracting, developing, and retaining Web3 natives as part of the overall talent pool will enable businesses to adapt.
Recommended next step: Work with HR to identify initiatives that can influence acquisition/retention of Web3 advocates, size cost to launch and incremental impact on overall talent acquisition & retention.
#3. Allocate a % of treasury to BTC: Square holds >8k BTC purchased at $27.4k on average over the past 1.5 years for a profit of ~$227M at current value.
Businesses with meaningful cash reserves should consider diversification of treasury into BTC to offset the cost of inflation to the treasury.
Meow.co already provides corporate treasurers compliant access to new tokenized assets and Coinbase is working on similar services.
Why this matters: For businesses with large cash reserves to outpace inflation and improve shareholder value.
Recommended next step: For business with 9-figures or more in cash reserves and run way to cover 3+ years of current run rate it’s worth retaining a bank internally evaluating opportunities to diversify the treasury partly into crypto-currencies.
#4. Corp Dev Evaluation of Competitive Tokenized DAPPs: As an example, the complexity of food delivery’s three sided marketplace, with the merchant at its core, will make it hard to decentralize. However, most gig work and digital business models are ripe for disruption by tying incentives between users & their contribution.
***Why this matters: ***To participate in upside associated with new entrants unlocking new value for users and understand the innovations and tokenomics enabling them with an eye toward incorporating similar concepts internally.
***Recommended next step: ***Kick off a corp dev evaluation of competitors in the space. These can start as a google search with ‘Web3 version of X’, but be wary to revisit on a quarterly basis since the space moves quickly.
See Jesse Walden’s Progressive Decentralization for more info on Web3 funding. This common approach provides opportunities for early investors, but not in later stages. Evaluate use of crypto as payment:
International: many emerging markets already use crypto, normally BTC forks like BTC Cash, at scale:
% transaction volume by country: Nigeria: 32%, Vietnam: 21%, Philippines: 20%, Turkey: 16%, Peru: 16%, Switzerland: 11%, India: 9%
El Salvador adopted BTC as national currency and others like Nigeria and China are developing their own digital currencies.
Domestic: while payments investment will be led by intl, enabling payment, and identity-free account creation could enable growth with crypto fanatics.
Why this matters: Crypto-enthusiasts already opt for platforms enabling payment with demand growing quickly in emerging markets. Headlines still exist for early movers like Tesla making this available to consumers.
Recommended next step: Begin scoping if your business is in emerging markets, or if you’re an e-comm business operating at a market cap of >$100B.
Relevance of Initiatives By Business Model:
While the initiatives above are roughly prioritized, some may be more or less important depending on business model or company size. Today’s creator economy enables producers to benefit only from retail sales and revenue from brand advertising while tokenized systems enable all contributors to share profit. At a high level businesses should consider the risk presented by Web3 competitors vs. the upside presented by embracing web3 concepts in marketing and treasury management to determine where to focus first.
The two most important recommendations for most businesses are working with HR to build a culture that can adapt to Web3, and executing marketing campaigns or augmenting existing business models with NTfs to experiment with blockchain tech. Note, adapt does not mean pivot. For most businesses incorporation of NFT’s should be an exercise in bulletproofing the existing business model by augmenting existing teams and work streams via the ability to offer distributed ownership of an asset or concept.
Marketing approaches by business model:
While the HR policies needed are fairly uniform, I want to add a few additional use cases for NFT’s based on business models using real world examples.
Example Business & Campaigns
Retail Biz #1 = Chipotle
Create 10-100 ‘golden burrito’ NFT’s providing up to 1 free burrito/day/token with unlimited customization. Auction 10 with proceeds benefiting Chipotle foundation, 10 to re-tweets, and the remainder to random Chipotle customers Willy Wonka style for 1-2 months against a social drum beat. Model projected resale rate and value/sale to determine secondary market sales needed to cover ongoing cost incorporating the value of marketing exposure.
Retail Biz #2 = Hot Topic
Hot Topic is synonymous with the artwork on their clothing, and could create NFT’s of all current artwork owned + launch a campaign to incentivize creation of new artwork from artists interested in launching NFT’s with real world scale via apparel. Other apparel brands can achieve similar impact with key photography, logo art, etc.
This also opens up collaboration opportunities with NFT brands already accumulating a following at scale like Bored Ape Yacht Club.
E-comm Biz #1 = Amazon
Monetize prime video content: create 1/1 and 1/x NFT’s celebrating characters and moments, including unreleased content and bloopers from Prime original TV shows like Bosch, Fleabag, and The Boys.
Future state: Enable creators with content on prime, or sellers who create their own goods to leverage Amazon’s NFT platform to launch similar campaigns.
E-com Biz #2 = Shutterfly
Idea 1: Enable consumers creating custom materials such as books, invitations, and signage as a 1/1 NFT, saving the template for creation of future physical copies building an online/offline experience that brings in new generation of customers.
Services Biz #1 = Local Salon
My cousin, Abbey, recently opened a high end salon in Beverly Hills overcoming two meaningful challenges of 1) covering fixed start up cost 2) scaling initial clientele quickly.
By creating a ‘Salon membership’ NFT, salon owners can tap into their existing clients by providing an ongoing 10-20% discount and corresponding NFT to cover initial start-up cost, and incentivizing customers to transition quickly to maximize their benefit.
Services Biz #2 = Wag
Rover has stolen market share from Wag since their funding round from Softbank, but the fanaticism of dog owners creates an interesting opportunity to build community by creating the right incentives around token/content creation & sharing, and could fuel a turn.
Proposed Tokenomics:
Each Wag report card can be turned into an NFT for only $1. Report cards are stored on the Solana chain and take only ~$.01/transaction to mint/share.
Each NFT mint send $.50/$1 to the NFT treasury tying value to the asset.
10% of Wag EBITDA beyond breakeven is also sent to the treasury as a quarterly dividend paid to token holders.
Report card NFT’s can be sold on the secondary market with 2.5% of sales shared with the treasury.
In this approach owners create fun and lasting NFT’s and share these tokens as memes while participating in possible upside associated with Wag making it to profitability.
Subscription Biz #2 = NFL Sunday Ticket (#1 was Dashpass)
NFL Sunday ticket to partner with the NFL and create a series of 1/x team and year-specific NFT’s. Each subscriber is able to select 1 NFT per season with the serial number shown based on what number they are to select their team that year providing ‘bragging rights’ to those that choose a champion, or select their favorite team early in the year.
NFL Sunday ticket to collect 5% of secondary sales as funding source while providing incremental value to subscribers.
Legal and Policy Disclaimer: While many of the other investment opportunities above leverage technology partners who exist to mitigate legal, financial, and policy risk, the NFT space is likely best approached with a combination of existing tooling via creator platforms and external counsel from legal experts in the NFT and blockchain space. Many firms have already developed expertise in the SEC’s interpretation of different NFT models and are available via referral and/or google search.
Investment Approach:
Recommended to start with a ‘mid level’ investment and evaluate the 2-3 highest impact opportunities as a ‘20% project’ with executive oversight from the head of corporate strategy.
Light -- Continue to monitor trends, do not invest time yet. (not recommended, early stage or sub-scale business only)
Medium -- ‘Crypto Strategy Lead’ to take on a new ‘20% role’ charting crypto and Web3 strategy with executive sponsorship, and work contribution from partner teams based on opportunities prioritized in planning. (recommended for all businesses)
High -- Hire full time ‘ Crypto Strategy Lead’ reporting into our head of corporate strategy or equivalent and leading these workstreams in coordination with partner organization. (recommended for large businesses in a market leadership position)
By Zach Heerwagen (Twitter/LinkedIn)
Cover Image Source: Rarible Taco Bell Page
Background
100M global users have now adopted crypto currencies and/or blockchain technologies. At the heart of this new ‘blockchain revolution’ is the ability to decentralize internet based business models and eliminate value-capturing middlemen. While the digital revolution created unprecedented wealth in silicon valley and across a select set of entrepreneurs and early stage investors, Web3 enables crowd-sourced funding enabling early users to become owners via tokenization and defined tokenomics that align incentives across audiences. Imagine if early Uber and DoorDash received a small % of earnings in tokens/equity.
Representative graphic from Packy at Not Boring, if you click on one link, read this:
While the technology that will enable mass proliferation of crypto technology as currency and as a replacement for existing Web2 conglomerates is early, we can use the 100M user metrics to make the analogy that it’s ~1998. While web infrastructure built in the early 90’s enabled open sourced software and laid the foundation for the first dot com boom, the launch of the Ethereum Virtual Machine (EVM) in ‘15 provided infrastructure and inspiration for the explosive growth that’s followed. Today’s Google, Facebook, and Apple are yesteryear’s Ask Jeeves, Myspace, and Dell. We may have a crash (or two) on the way, but disruption is inevitable for many digitally enabled businesses due to blockchain’s ability to align audiences at scale.
This was drafted as a 2-pager for executive leadership at DoorDash to encourage a culture capable of adapting to the threats and opportunities presented by blockchain, nft’s, and crypto currencies before being adapted for a broader audience. These themes are most relevant to tech, tech-enabled, and market leading businesses because the threat of decentralization is disintermediation of aggregators by replacing firms that monetize captive audiences with businesses who’s audiences benefit from their growth.
Executive Summary:
Crypto currencies and the blockchain technology enabling a decentralized ‘Web3’ are experiencing hypergrowth and pose a critical risk to the business if not embraced.
Reccomendation: Large companies should define a ‘crypto strategy lead’ role to work with relevant teams and incorporate Web3 concepts into company culture, enabling the business to adapt to the next horizon of digital innovation.
When DoorDash was founded in 2013 the crypto market cap was $1.5B and its primary asset, BTC, lacked utility. In January it was $771B, rocketing to $2.7T today. Values have soared on the basis of speculation but now we’re at an inflexion point for Web3, with utility being recognized by users in the form of DEFI, NFT’s, and Web3 DAPPs. The next set of layer one technologies like SOL and layer 2 ETH scaling like FTM and MATIC will open crypto as currency to the masses. This will continue to accelerate adoption in-line with speculation driven growth seen since Ethereum’s founding by distributing value to early adopters at internet scale.
This document summarizes five opportunities to begin integrating crypto currency and NFT’s to mitigate risk and accelerate growth, takes a deeper look at biz-model specific approaches to using NFT’s, and potential internal staffing approaches to begin making progress on a business specific Web3 strategy.
Opportunities:
There are several opportunities for businesses to create immediate value while determining how to best incorporate blockchain technology and Web3 concepts in culture and business strategy long-term. These are ranked in order of time investment and scale needed to incorporate into an existing business plan and drive impact relative to other strategic initiatives, and will vary depending on business model and stage.
#1. Use of NFT’s and Crypto in Marketing: Industry leaders like Budweiser, Mcdonald’s, and State Farm have already proven that NFT’s can be successfully utilized in marketing to augment messaging and earn media by tapping into a growing cultural movement.
NFT Mechanics: Creators take a % of secondary market sales (2.5-7.5%), and the leading NFT marketplace, Opensea, takes 2.5% of sales.
Businesses creating NFT’s can partner with nonprofits to maximize marketing, or use primary & secondary sales to more than offset costs while creating a ‘next level’ of brand advocacy amongst token holders.
Dashpass NFT Example: A DoorDash specific implementation of the themes above could be to launch a set of 10-100,000 DashPass NFT’s providing holders free DashPass while they hold the token.
A more innovative approach would differentiate levels of membership by offering exclusive Michelin star selection and/or waiving service fees from the standard 5% DashPass users pay.
Absent a value creating NFT that provides real world value, brands are using NFT’s in marketing with remarkable success.
The cheapest Taco Bell NFT on secondary markets is 1.75 ETH or ~$8k. Brands with cult followings can now let fans ‘own’ a piece.
ENS Registration: Budweiser purchased Beer.eth setting them up to launch decentralized applications (DAPPS). Major brands should do the same.
Ie. for DoorDash I recommended purchasing both DoorDash.eth and delivery.eth on the secondary market to preserve optionality.
Why this matters: NFT’s create an immediate opportunity to improve marketing returns and begin experimenting with tokenomics to drive business impact. By provisioning ownership of an asset representing part of your brand you can also develop a next level of super fans.
Recommended next step: Identify an internal expert on NFT’s and/or retain external expertise and discuss potential token sales models or marketing projects with experts in the space. These people are everywhere, and will enable you to evaluate models and research emerging trends, without overspending since the tools needed to mint, sell, and analyze NFT sales are available out of the box via platforms like Opensea and Rarible.
#2. Embrace Crypto in HR: Set a culture prepared to embrace the next gen of web tech.
Crypto as Salary: let employees take part or all of salary in crypto currency, adopt early to attract talent with emerging programs from Coinbase and others.
Creation of a Web3 ERG: formally recognize an employee crypto community. Many exist organically, and will thrive with formal recognition from management while educating a new set of crypto-natives to help the business adapt.
Introduction of Web3 thinkers in board representation and business leadership.
Ie. Stripe recently added Paradigm co-founder Matt Huang to their board.
Why this matters: The biggest impact of decentralization to business leaders is risk created from new business models unlocked by decentralization. Attracting, developing, and retaining Web3 natives as part of the overall talent pool will enable businesses to adapt.
Recommended next step: Work with HR to identify initiatives that can influence acquisition/retention of Web3 advocates, size cost to launch and incremental impact on overall talent acquisition & retention.
#3. Allocate a % of treasury to BTC: Square holds >8k BTC purchased at $27.4k on average over the past 1.5 years for a profit of ~$227M at current value.
Businesses with meaningful cash reserves should consider diversification of treasury into BTC to offset the cost of inflation to the treasury.
Meow.co already provides corporate treasurers compliant access to new tokenized assets and Coinbase is working on similar services.
Why this matters: For businesses with large cash reserves to outpace inflation and improve shareholder value.
Recommended next step: For business with 9-figures or more in cash reserves and run way to cover 3+ years of current run rate it’s worth retaining a bank internally evaluating opportunities to diversify the treasury partly into crypto-currencies.
#4. Corp Dev Evaluation of Competitive Tokenized DAPPs: As an example, the complexity of food delivery’s three sided marketplace, with the merchant at its core, will make it hard to decentralize. However, most gig work and digital business models are ripe for disruption by tying incentives between users & their contribution.
***Why this matters: ***To participate in upside associated with new entrants unlocking new value for users and understand the innovations and tokenomics enabling them with an eye toward incorporating similar concepts internally.
***Recommended next step: ***Kick off a corp dev evaluation of competitors in the space. These can start as a google search with ‘Web3 version of X’, but be wary to revisit on a quarterly basis since the space moves quickly.
See Jesse Walden’s Progressive Decentralization for more info on Web3 funding. This common approach provides opportunities for early investors, but not in later stages. Evaluate use of crypto as payment:
International: many emerging markets already use crypto, normally BTC forks like BTC Cash, at scale:
% transaction volume by country: Nigeria: 32%, Vietnam: 21%, Philippines: 20%, Turkey: 16%, Peru: 16%, Switzerland: 11%, India: 9%
El Salvador adopted BTC as national currency and others like Nigeria and China are developing their own digital currencies.
Domestic: while payments investment will be led by intl, enabling payment, and identity-free account creation could enable growth with crypto fanatics.
Why this matters: Crypto-enthusiasts already opt for platforms enabling payment with demand growing quickly in emerging markets. Headlines still exist for early movers like Tesla making this available to consumers.
Recommended next step: Begin scoping if your business is in emerging markets, or if you’re an e-comm business operating at a market cap of >$100B.
Executive Summary:
Crypto currencies and the blockchain technology enabling a decentralized ‘Web3’ are experiencing hypergrowth and pose a critical risk to the business if not embraced.
Reccomendation: Large companies should define a ‘crypto strategy lead’ role to work with relevant teams and incorporate Web3 concepts into company culture, enabling the business to adapt to the next horizon of digital innovation.
When DoorDash was founded in 2013 the crypto market cap was $1.5B and its primary asset, BTC, lacked utility. In January it was $771B, rocketing to $2.7T today. Values have soared on the basis of speculation but now we’re at an inflexion point for Web3, with utility being recognized by users in the form of DEFI, NFT’s, and Web3 DAPPs. The next set of layer one technologies like SOL and layer 2 ETH scaling like FTM and MATIC will open crypto as currency to the masses. This will continue to accelerate adoption in-line with speculation driven growth seen since Ethereum’s founding by distributing value to early adopters at internet scale.
This document summarizes five opportunities to begin integrating crypto currency and NFT’s to mitigate risk and accelerate growth, takes a deeper look at biz-model specific approaches to using NFT’s, and potential internal staffing approaches to begin making progress on a business specific Web3 strategy.
Opportunities:
There are several opportunities for businesses to create immediate value while determining how to best incorporate blockchain technology and Web3 concepts in culture and business strategy long-term. These are ranked in order of time investment and scale needed to incorporate into an existing business plan and drive impact relative to other strategic initiatives, and will vary depending on business model and stage.
#1. Use of NFT’s and Crypto in Marketing: Industry leaders like Budweiser, Mcdonald’s, and State Farm have already proven that NFT’s can be successfully utilized in marketing to augment messaging and earn media by tapping into a growing cultural movement.
NFT Mechanics: Creators take a % of secondary market sales (2.5-7.5%), and the leading NFT marketplace, Opensea, takes 2.5% of sales.
Businesses creating NFT’s can partner with nonprofits to maximize marketing, or use primary & secondary sales to more than offset costs while creating a ‘next level’ of brand advocacy amongst token holders.
Dashpass NFT Example: A DoorDash specific implementation of the themes above could be to launch a set of 10-100,000 DashPass NFT’s providing holders free DashPass while they hold the token.
A more innovative approach would differentiate levels of membership by offering exclusive Michelin star selection and/or waiving service fees from the standard 5% DashPass users pay.
Absent a value creating NFT that provides real world value, brands are using NFT’s in marketing with remarkable success.
The cheapest Taco Bell NFT on secondary markets is 1.75 ETH or ~$8k. Brands with cult followings can now let fans ‘own’ a piece.
ENS Registration: Budweiser purchased Beer.eth setting them up to launch decentralized applications (DAPPS). Major brands should do the same.
Ie. for DoorDash I recommended purchasing both DoorDash.eth and delivery.eth on the secondary market to preserve optionality.
Why this matters: NFT’s create an immediate opportunity to improve marketing returns and begin experimenting with tokenomics to drive business impact. By provisioning ownership of an asset representing part of your brand you can also develop a next level of super fans.
Recommended next step: Identify an internal expert on NFT’s and/or retain external expertise and discuss potential token sales models or marketing projects with experts in the space. These people are everywhere, and will enable you to evaluate models and research emerging trends, without overspending since the tools needed to mint, sell, and analyze NFT sales are available out of the box via platforms like Opensea and Rarible.
#2. Embrace Crypto in HR: Set a culture prepared to embrace the next gen of web tech.
Crypto as Salary: let employees take part or all of salary in crypto currency, adopt early to attract talent with emerging programs from Coinbase and others.
Creation of a Web3 ERG: formally recognize an employee crypto community. Many exist organically, and will thrive with formal recognition from management while educating a new set of crypto-natives to help the business adapt.
Introduction of Web3 thinkers in board representation and business leadership.
Ie. Stripe recently added Paradigm co-founder Matt Huang to their board.
Why this matters: The biggest impact of decentralization to business leaders is risk created from new business models unlocked by decentralization. Attracting, developing, and retaining Web3 natives as part of the overall talent pool will enable businesses to adapt.
Recommended next step: Work with HR to identify initiatives that can influence acquisition/retention of Web3 advocates, size cost to launch and incremental impact on overall talent acquisition & retention.
#3. Allocate a % of treasury to BTC: Square holds >8k BTC purchased at $27.4k on average over the past 1.5 years for a profit of ~$227M at current value.
Businesses with meaningful cash reserves should consider diversification of treasury into BTC to offset the cost of inflation to the treasury.
Meow.co already provides corporate treasurers compliant access to new tokenized assets and Coinbase is working on similar services.
Why this matters: For businesses with large cash reserves to outpace inflation and improve shareholder value.
Recommended next step: For business with 9-figures or more in cash reserves and run way to cover 3+ years of current run rate it’s worth retaining a bank internally evaluating opportunities to diversify the treasury partly into crypto-currencies.
#4. Corp Dev Evaluation of Competitive Tokenized DAPPs: As an example, the complexity of food delivery’s three sided marketplace, with the merchant at its core, will make it hard to decentralize. However, most gig work and digital business models are ripe for disruption by tying incentives between users & their contribution.
***Why this matters: ***To participate in upside associated with new entrants unlocking new value for users and understand the innovations and tokenomics enabling them with an eye toward incorporating similar concepts internally.
***Recommended next step: ***Kick off a corp dev evaluation of competitors in the space. These can start as a google search with ‘Web3 version of X’, but be wary to revisit on a quarterly basis since the space moves quickly.
See Jesse Walden’s Progressive Decentralization for more info on Web3 funding. This common approach provides opportunities for early investors, but not in later stages. Evaluate use of crypto as payment:
International: many emerging markets already use crypto, normally BTC forks like BTC Cash, at scale:
% transaction volume by country: Nigeria: 32%, Vietnam: 21%, Philippines: 20%, Turkey: 16%, Peru: 16%, Switzerland: 11%, India: 9%
El Salvador adopted BTC as national currency and others like Nigeria and China are developing their own digital currencies.
Domestic: while payments investment will be led by intl, enabling payment, and identity-free account creation could enable growth with crypto fanatics.
Why this matters: Crypto-enthusiasts already opt for platforms enabling payment with demand growing quickly in emerging markets. Headlines still exist for early movers like Tesla making this available to consumers.
Recommended next step: Begin scoping if your business is in emerging markets, or if you’re an e-comm business operating at a market cap of >$100B.
Relevance of Initiatives By Business Model:
While the initiatives above are roughly prioritized, some may be more or less important depending on business model or company size. Today’s creator economy enables producers to benefit only from retail sales and revenue from brand advertising while tokenized systems enable all contributors to share profit. At a high level businesses should consider the risk presented by Web3 competitors vs. the upside presented by embracing web3 concepts in marketing and treasury management to determine where to focus first.
The two most important recommendations for most businesses are working with HR to build a culture that can adapt to Web3, and executing marketing campaigns or augmenting existing business models with NTfs to experiment with blockchain tech. Note, adapt does not mean pivot. For most businesses incorporation of NFT’s should be an exercise in bulletproofing the existing business model by augmenting existing teams and work streams via the ability to offer distributed ownership of an asset or concept.
Marketing approaches by business model:
While the HR policies needed are fairly uniform, I want to add a few additional use cases for NFT’s based on business models using real world examples.
Example Business & Campaigns
Retail Biz #1 = Chipotle
Create 10-100 ‘golden burrito’ NFT’s providing up to 1 free burrito/day/token with unlimited customization. Auction 10 with proceeds benefiting Chipotle foundation, 10 to re-tweets, and the remainder to random Chipotle customers Willy Wonka style for 1-2 months against a social drum beat. Model projected resale rate and value/sale to determine secondary market sales needed to cover ongoing cost incorporating the value of marketing exposure.
Retail Biz #2 = Hot Topic
Hot Topic is synonymous with the artwork on their clothing, and could create NFT’s of all current artwork owned + launch a campaign to incentivize creation of new artwork from artists interested in launching NFT’s with real world scale via apparel. Other apparel brands can achieve similar impact with key photography, logo art, etc.
This also opens up collaboration opportunities with NFT brands already accumulating a following at scale like Bored Ape Yacht Club.
E-comm Biz #1 = Amazon
Monetize prime video content: create 1/1 and 1/x NFT’s celebrating characters and moments, including unreleased content and bloopers from Prime original TV shows like Bosch, Fleabag, and The Boys.
Future state: Enable creators with content on prime, or sellers who create their own goods to leverage Amazon’s NFT platform to launch similar campaigns.
E-com Biz #2 = Shutterfly
Idea 1: Enable consumers creating custom materials such as books, invitations, and signage as a 1/1 NFT, saving the template for creation of future physical copies building an online/offline experience that brings in new generation of customers.
Services Biz #1 = Local Salon
My cousin, Abbey, recently opened a high end salon in Beverly Hills overcoming two meaningful challenges of 1) covering fixed start up cost 2) scaling initial clientele quickly.
By creating a ‘Salon membership’ NFT, salon owners can tap into their existing clients by providing an ongoing 10-20% discount and corresponding NFT to cover initial start-up cost, and incentivizing customers to transition quickly to maximize their benefit.
Services Biz #2 = Wag
Rover has stolen market share from Wag since their funding round from Softbank, but the fanaticism of dog owners creates an interesting opportunity to build community by creating the right incentives around token/content creation & sharing, and could fuel a turn.
Proposed Tokenomics:
Each Wag report card can be turned into an NFT for only $1. Report cards are stored on the Solana chain and take only ~$.01/transaction to mint/share.
Each NFT mint send $.50/$1 to the NFT treasury tying value to the asset.
10% of Wag EBITDA beyond breakeven is also sent to the treasury as a quarterly dividend paid to token holders.
Report card NFT’s can be sold on the secondary market with 2.5% of sales shared with the treasury.
In this approach owners create fun and lasting NFT’s and share these tokens as memes while participating in possible upside associated with Wag making it to profitability.
Subscription Biz #2 = NFL Sunday Ticket (#1 was Dashpass)
NFL Sunday ticket to partner with the NFL and create a series of 1/x team and year-specific NFT’s. Each subscriber is able to select 1 NFT per season with the serial number shown based on what number they are to select their team that year providing ‘bragging rights’ to those that choose a champion, or select their favorite team early in the year.
NFL Sunday ticket to collect 5% of secondary sales as funding source while providing incremental value to subscribers.
Legal and Policy Disclaimer: While many of the other investment opportunities above leverage technology partners who exist to mitigate legal, financial, and policy risk, the NFT space is likely best approached with a combination of existing tooling via creator platforms and external counsel from legal experts in the NFT and blockchain space. Many firms have already developed expertise in the SEC’s interpretation of different NFT models and are available via referral and/or google search.
Investment Approach:
Recommended to start with a ‘mid level’ investment and evaluate the 2-3 highest impact opportunities as a ‘20% project’ with executive oversight from the head of corporate strategy.
Light -- Continue to monitor trends, do not invest time yet. (not recommended, early stage or sub-scale business only)
Medium -- ‘Crypto Strategy Lead’ to take on a new ‘20% role’ charting crypto and Web3 strategy with executive sponsorship, and work contribution from partner teams based on opportunities prioritized in planning. (recommended for all businesses)
High -- Hire full time ‘ Crypto Strategy Lead’ reporting into our head of corporate strategy or equivalent and leading these workstreams in coordination with partner organization. (recommended for large businesses in a market leadership position)
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