The past two years have brought an explosion of NFT artwork, but consumer brands are also starting to innovate at the intersection of blockchain and commerce. The long-term adoption of Web3 technology will likely depend on two major factors: community and utility. Web3-native consumer brands are on the forefront of innovation when it comes to both. In this week's Twitter Space, we speak to two entrepreneurs building Web3-native brands to learn how they implement digital tokens and crypto technology into their business models.
Joy Howard is the founder of Early Majority, an outdoor clothing brand and Web3 membership community that promotes sustainable manufacturing over harmful consumption. Previously, Joy has had a track record of leading the marketing teams of high-growth, innovative brands, including overseeing the digital transformation of Patagonia and Sonos.
Tory Watters is the founder of Snowdrop, an NFT licensing matchmaker that supports NFT holders in monetizing the intellectual property (IP) of their assets and helps brands tap into and partner with engaged NFT communities. By day, Tory is the head of product marketing at Galaxy, a digital asset firm bringing institutions to blockchain.
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We had a belief that we could rally a much broader constituency around what we're doing by using the tools of Web 3 than what's in Web2 today. Our company started with this radical idea that we could create a different kind of apparel brand that grew by expanding supportive community instead of proliferating unnecessary product.
That is a pretty dense phrase, but it gets right at the heart of what I believe will be the total transformation of the entire apparel industry through blockchain technology. I think it's going to happen at just about every touch point of that industry, and so there were a lot of places where we could start.
Because community was so core to how we really wanted to transform the industry, and what we thought would be the unlock to ending some of its more damaging practices, we started by minting a community token. That's the first thing we've done. That's the primary way in which we're using blockchain today — by joining a group of people together who share a similar set of values, who want to support each other in a similar set of activities, really building this venture together and having fun together as we do it.
Shout out to the BF community because I am a You holder and a bracelet holder, and really I think what Jamie and team have done in terms of utility and perks is really interesting. That was definitely a big inspiration for me building Snowdrop, really thinking about what NFT utility means, how can we expand utility for holders and really help them take part in a meaningful way in the upside of these decentralized PFP brands.
In terms of Web 3 tooling, we at Snowdrop validate NFT ownership via tokenproof. So basically we do not require a wallet connection to prove that you have the NFTs that you are trying to license. And we felt that it was more strategic to go with a trusted, well known tool like tokenproof rather than prompt that wallet connection. Especially because, as everyone knows in this room, this space is rife with a lot of scams and we definitely wanted to ensure that no one is connecting to something they think is a Snowdrop licensing opportunity [but really isn't].
We also want to help people keep their valuable NFTs in cold storage. So tokenproof helps validate your ownership without having to keep it in a hot wallet. So if anyone followed what happened to Seth Green, the actor, and the Bored Ape that he was using to create a TV show based on that was fished from a hot wallet. So certainly if you're licensing your NFTs, please keep them safe. That's why we use tokenproof.
We're also exploring in the long-term thinking about licensing agreements on chain. So what does it look like to have these standard contracts in a more Web3-type manner? Right now it's all quite traditional how we operate with lawyers and with contracts, but that's something we also want to keep an eye on and really just have Snowdrop be as close to the Web3 ethos as possible while we also navigate from a legal perspective, doing everything in a compliant and airtight manner.
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I started Snowdrop in January as soon as World of Women announced quite permissive commercial rights for for all holders. Since then — especially in the profile picture (PFP) space — there has been a cooling both in floor prices and I think just general cultural interest. But I'm a believer that NFTs are going to decentralize brand value the same way that crypto decentralized finance. So I think especially the blue-chip NFT projects — the ones that are taking a long-term view themselves — they will continue to survive and thrive.
We've rethought some of our model based on floor prices going down. There's the question of licensing — why would a brand license and an NFT if they can easily buy it themselves? Our view has always been that licensing is both an authentic way to engage with NFT communities and then also NFT holders have reached an influence themselves. Since the PFP market has kind of cooled we've basically wrapped influencer agreements into our licensing agreements. So you're not just as the brand getting to use the likeness of the Bored Ape or World of Women, but you're also getting confirmed amplification opportunities from the holder so that they can be incentivized as well to promote the the products further.
Consumer packaged goods (CPG) products tend to be the most popular. I think the reason for this is that it's a really commoditized space and also the barrier to entry to launching a direct-to-consumer CPG product is low. Certainly there's lots of other headwinds like customer acquisition costs being higher than ever, but I think people are really looking for ways to differentiate brands in the tea, coffee, hot sauce, personal care space. We're seeing a lot of licensing partnerships there. For example Happy Dad Seltzer dropped a banana-flavored seltzer featuring a Bored Ape. A favorite superfood soda brand of mine called Perfy has a limited edition Dr. Perfy which features a Doodle.
In the cosmetic space, there's the brand Glamour Dolls, which is trying to reinvent, invigorate itself, launching a Board Ape branded line of makeup products.
Cannabis is actually another area of interest for both licensors and licensees. Certainly there are a lot of marketing restrictions for cannabis companies, so they're looking for novel ways to tap into new audiences. There is an obstacle in terms of marketing restrictions against branding cannabis products with cartoon-like characters given the appeal to children. So I would say that's not an area that Snowdrop deals with personally, but that's another thing we see.
Finally, movement in the fashion space both with mass retailers like Aeropostale and Old Navy and luxury brands like Tiffany. So I think the most successful products are probably going to be in that CPG space. Success is defined by reach and asking, 'Are these products culturally relevant and does NFT licensing help brands continue to be relevant and reach new audiences?'
People have to have a reason to want to to participate. You can educate all you want, but if the desire isn't there or there's some other kind of barrier, then it kind of falls on deaf ears.
A couple of the ways that we're grappling with this question: First, we really didn't want to grow the brand by using Web 2 platforms. I think they've been so extractive and I think a lot of people are involved in Web2 have experienced a kind of depletion from the kind of addictive and extractive ways in which social media work. So we really wanted in the beginning to grow via a network of other communities.
But I think that the chasm that's opened up more widely in the last month between people who are not part of Web3 and people who are is something that we all need to take really seriously. I think it is a really serious problem because it has to do with status and esteem. There's almost kind of these sketchy vape store vibes associated with the crypto space. There are scams and people losing their money. It just reinforces that perception that the whole space is kind of sketchy. And it makes people not really want to be associated with it.
So I think it's just important to remember that even as we're supporting each other in our projects and building things that we feel like really have transformative capability, a lot of the world is looking at it very differently. So that's why I feel so strongly about the need to do something that's truly useful with the technology.
That gets me to the sustainability play: Constructive and meaningful solutions to problems that people really care about like climate change and the overproduction and overconsumption of apparel.
To give you two examples of new use cases for [blockchain] technology: First is verifiable provenance. You see people using a lot in the space of gemstones. People don't want their wedding ring to be a blood diamond. They're using the blockchain to verify the provenance of the product. And that's certainly extremely relevant for apparel where people are increasingly concerned about the farms and the factories that the garments come from. Second is this whole idea of authenticated re-commerce that can also be done on the blockchain. It's what a lot of people call 'circularity' — pairing the garment with a digital twin to make that frictionless and more decentralized and easier for people to access.
Joy, I was cracking up on mute as to your vape store vibes on the crypto space, because that just really does encapsulate, I think, the side of the market that isn't representative of where it is or where it can go. Certainly every industry has bad actors, has a sketchy element or an underbelly. I think that's true of any new technology. It was true of the Internet when it was first going mainstream. So I just like to stay focused on people who are truly building useful tools and technologies.
For more insights, listen to the full conversation with Joy and Tory here
This is not financial advice. If you don't want to spend money investing in crypto or Web3 — you don’t have to. The intent of this article is to help others educate themselves and learn.
