Jeff Kauffman: DAOs Will Own Big Brands

Jeff Kauffman loved to skydive. He was obsessed. He wanted to link with different skydiving junkies truthful helium turned to the powerfulness of the internet. He utilized a blistery caller website to make a hub for this community: MySpace.

This was backmost successful 2005. Facebook was inactive lone connected assemblage campuses. At the clip the radical was astir comically small; the MySpace leafage was conscionable “Skydive Dallas,” intended lone for section skydivers. “It’s the astir niche happening you could perchance do,” says Kauffman with a laugh.

But that’s however agelong helium has been creating online communities. Eventually helium launched a skydiving radical connected Facebook, helium expanded beyond Dallas and soon helium scaled it to the world’s largest specified group. Then helium built communities with brands. Over the adjacent 15 years, Kauffman focused connected Web 1 and past Web 2 marque building, wherever his clients ranged from GameStop to Dr. Pepper to Chick-fil-A. He enjoyed it. He loved it.

And past the crippled changed.

“Unfortunately, the mode Facebook and Twitter evolved, they didn’t truly nurture online communities the mode we had hoped for,” says Kauffman. The caller rules of the road: Communities were out, paid advertizing was in. You could nary longer genuinely prosecute with your customer; you conscionable paid to service an ad. In aboriginal 2020 helium took a hard look astatine himself and thought, “I can’t tally different carousel advertisement connected Instagram.” He didn’t cognize what was next, but helium knew helium was done with the Web 2 grind.

Almost connected a lark, Kauffman went to the website of Andreessen Horowitz (the powerhouse task superior firm), and helium followed the links to each concern the steadfast has ever made. For weeks helium studied these investments. He ruled retired verticals similar biotech and abstraction (he wasn’t precisely an expert) but helium focused connected media, civilization and entertainment. “I was conscionable like, ‘What’s the future? What’s coming?’,” helium said. In the people of this research, helium stumbled upon a word helium had ne'er heard before: “social token.”

Hmmmm. That seemed interesting. Thanks to his societal media background, Kauffman’s a whiz astatine scraping Twitter and utilizing “listening tools” to amended recognize a topic. So helium went to work. “Within 3 days I understood the full scenery of who's talking astir societal tokens,” says Kauffman. “I started building connection clouds astir who's associated with who, who's utilizing the word the most, who's followed the most.”

Kauffman began publishing daily insights connected societal tokens and the autochthonal Web 3 space. People began to work and get it. He started tagging influential radical successful the abstraction including Jess Sloss, the laminitis of Seed Club (a societal token accelerator). He whipped up probe reports and analyses of these caller companies.

He had a consciousness that Web 3 would beryllium the aboriginal of brands, and helium wanted to larn by doing. So helium created JUMP, arsenic successful “Jump into Web 3,” a Discord-based web of branding advertisement execs – from mainstream companies – who are funny astir Web 3. Jump is fundamentally a bootcamp for Web 3 branding.

Kauffman keeps the subordinate information private, but says that “at slightest 200 of the apical Fortune 500 companies” person marque managers who person joined Jump. “Take immoderate large marque that you tin deliberation of, and they person aggregate radical wrong the [Jump] community.” (And Jump is present connected the radar of Morning Brew, the concern publication, which noted that Jump has “two beauteous wide usage cases: arsenic a level for networking and arsenic a harmless abstraction to inquire questions.”)

So where, exactly, are we each jumping? Kauffman’s not wholly sure. But helium shares predictions connected however Web 3 volition alteration branding (including rewards programs “on steroids”), is bullish connected a resurgence of assemblage gathering and boldly predicts that wrong the adjacent 5 years 1 of these communities volition “purchase a Fortune 1000 brand.”

This interrogation has been condensed and lightly edited for clarity.

You’ve called the aboriginal days of Web 2 a “golden era,” wherever brands were truly capable to physique communities. What bash you mean by that exactly?

For a soap brand, for example, you could really physique an online assemblage and get merchandise feedback successful existent time. One of the brands I worked connected was “Boudreaux's Butt Paste.”

[Important enactment to reader: Get your caput retired of the gutter. This is simply a diaper rash cream,for babies.]

So for first-time parents, you person nary thought what you're doing. You're trying to fig it out. You're utilizing this merchandise and the parenting communities were conscionable thriving. For a merchandise similar Boudreaux's Butt Paste, we could bring the assemblage unneurotic and make this space.

And then, successful existent time, we could person parents saying, "What's happening here?" And we could commencement to assistance them. Even if it wasn’t selling the product, we could supply immoderate benignant of support. We had a real-time speech of trying to lick problems. It creates a amended bond. And everybody gets served amended erstwhile the assemblage is astatine the center. Customers get a amended product, and the brands get loyal customers.

Everyone knows that the mean user has soured connected Facebook. But you accidental that brands have, too. What’s the reason?

The advertisement dollars conscionable got much and much expensive, to the constituent wherever the ROI got stripped retired of it. It became a contention to the bottom. And, implicit time, [Facebook] imposed handcuffs around, "All right, if you privation to prosecute and speech to your customers oregon your imaginable customers online, you person to wage for it. And oh, by the way, if you're successful, each of those learnings are going to beryllium shared with everybody else. And that’s going to proceed to thrust costs up." It conscionable became incredibly limiting.

What led to the instauration of Jump?

In 2020, erstwhile I was going done my find process, I created a trends deck. And I presented these concepts [in one-on-one Zoom meetings] earlier anybody successful agencies was talking astir [non-fungible tokens] oregon societal tokens oregon [decentralized autonomous organizations]. You tin spell look astatine Google hunt trends from backmost then; it’s tiny. I was presenting these concepts. And everybody wrong the bureau and marque web said the nonstop aforesaid thing. They're like, “Holy crap, that's cool. It solves truthful galore problems. I don't recognize thing that you conscionable said. I ne'er heard of it, but it's cool. And I don't cognize wherever to get started."

I heard those things implicit and over. And I realized, "Oh, the champion spot to get started is to physique a assemblage for selling and advertizing professionals." Because you tin contiguous decks each time long. But until you acquisition it, and you're successful it, it's truthful hard to cognize however to physique and however to create. You person to acquisition it first.

Right, learning by doing.

The champion mode I felt I could thatch the full manufacture was to make thing similar this. That’s however I could standard these ideas and determination the manufacture forward. What I conscionable wanted to accidental was, "Let's make this assemblage to assistance you leap into Web 3."

Then they tin instrumentality those learnings wrong of each their agencies and brands, and commencement to execute. So, that's the crushed Jump exists.

What are immoderate ways that branding volition alteration arsenic a effect of Web 3?

The low-hanging effect is that brands tin make communities successful Web 3, utilizing NFTs and societal tokens. And past they tin make experiences astir that community.

If you person a radical of radical that clasp the aforesaid token, what tin they do? They tin determination anywhere, some physically [in existent life] and online URL. So what a truly savvy marque tin bash is say, “Okay, cool, here's my community, here's my lawsuit base." The champion strategy is really not to merchantability NFTs. It's to springiness them distant for free. Give them away, and enactment them successful the hands of your champion customers.

Now you’ve fundamentally created a handshake and a relationship. And you say, "I don't request you to person a username and password. I don't request to store immoderate of that stuff. I don't request to person immoderate benignant of ID cheque astatine a concert.” This is already happening. Your NFTs tin spell successful your Apple wallet. You tin conscionable amusement up IRL, but besides URL, and you tin conscionable participate immoderate acquisition that the marque has created.

How astir loyalty rewards programs?

Loyalty programs are decidedly massive. In the aged world, portion they did make loyalty it was benignant of this loyalty wherever you felt like, “Man, each my points are stuck there. And I privation to usage them, but it's due to the fact that I'm locked in.”

Right, due to the fact that there’s thing other you tin bash with them.

Right. Whereas present [with Web 3], arsenic agelong arsenic the marque is gathering successful the unfastened environment, the loyalty programs are connected steroids. Why? Because present you are an proprietor successful the loyalty program. You ain your spot successful it due to the fact that you ain the tokens.

What’s an illustration of a accepted marque doing astute things with Web 3?

Take Time magazine. Now Time is capable to link the readers to the creators – the writers and photographers – that they love. They tin bash that by selling NFTs. In concern with those creators, Time tin divided the royalties. Then the radical who clasp those NFTs tin entree a assemblage of others who are passionate astir the creators, oregon the photos, oregon the people journalism.

What does that bash for Time exactly?

So now, without being advertisement supported, Time has this mode to say, “Hey, readers, you emotion these creators. We’re going to physique the infrastructure of bringing you each together. We person a concern exemplary and a gross watercourse due to the fact that of the superior NFT merchantability and the royalties. We tin stock that with the creators themselves. Oh, and present you, arsenic a reader, really ain what you purchase. So you tin commercialized it. And if you hap to beryllium connected to thing early, earlier different people, earlier that request comes in, you person ownership and upside successful this network. And oh, if you adhd much to the acquisition arsenic a scholar oregon arsenic a subscriber, and that acquisition increases successful value, if you want, you tin merchantability retired of that web and exit, and really recognize a profit."

Now let’s spell adjacent bigger. Give america a bold, “out there” prediction astir what’s going to hap with Web 3 and branding successful the future.

So, the implicit craziest happening that's going to hap wrong 5 years is simply a assemblage is going to signifier without a marque involved, and this assemblage is going to acquisition a Fortune 1000 brand.

Okay, that’s bold! Please elaborate.

It’s going to beryllium hard for the large brands to truly execute successful a mode that’s autochthonal to Web 3. When thing gets large and is old, it doesn't determination arsenic fast. There are tons of moving parts.

Whereas Web 3 is unlocking caller superior and caller resources that haven’t been unlocked before. Web 3 does not request Coca-Cola's advertisement dollars. And due to the fact that online communities tin signifier truthful quickly, and they tin enactment themselves done this economical motor of royalties and superior income of NFTs, they really tin make a batch of capital. Yuga Labs is simply a truly bully example.

I was conscionable astir to accidental that. The Bored Apes guys are already large capable to bargain immoderate fig of companies.

Exactly. And 1 of these communities is going to unlock specified tremendous worth that these brands are fundamentally going to say, "You cognize what? This assemblage and this DAO conscionable offered america a batch of wealth to bargain our company. If our fiduciary work is to bash close by our shareholders, and there's really a ineligible entity to merchantability this into, I deliberation we request to merchantability it.”

What’s a factual illustration of a marque wherever this mightiness marque sense?

I deliberation we could spot an intoxicant marque get purchased by a community. Like a whiskey assemblage conscionable comes successful and says, "You cognize what? We're going to activate this whiskey marque everywhere. We person the resources, and we're really going to bargain an intoxicant brand."

When we spoke a fewer months ago, you floated the thought of an eco-focused Web 3 assemblage deciding to spouse with Patagonia, fixed the brand’s biology ethos. Could you spot an eco-DAO buying Patagonia?

Actually, Patagonia is simply a truly absorbing example. The laminitis owned 100% of it. And past his program is to fundamentally say, "Now it's an employee-owned company, determination [are] nary extracurricular shareholders." And that's great. It truly keeps the civilization intact, and everybody's determination for the ngo and the values. But that adjacent level is existent assemblage and lawsuit ownership, not conscionable worker ownership.

If we conscionable scan the past of time, we went from a king who owned everything, past to this invention of a state that granted ownership and said, "You cognize what? You tin ain your land, and we're really going to support it.”

Then it evolved to families. And past to corporations. So you went from kings to families to corporations. And with corporations, astatine archetypal conscionable the leaders of the institution owned it, not the employees. Then with the Silicon Valley era, the employees could ain portion of it.

Now we’re entering an epoch wherever the existent end-customer precise overmuch owns a stake.

That’s wild. Love it. Thanks for the clip and person amusive astatine Consensus.