Letting A Chance For Brands To Monetize Their Intangible Assets
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Recently, Adobe acquired Figma for $20 billions.
While everyone was talking about the deal, I saw a tweet that caught my attention.
Figma's community is obviously a key component of what makes Figma valuable, and beyond the question of whether Figma users should get a share of the deal or not, this tweet highlight a profound question:
Did the community even factor into the price of the acquisition?
Over the years, Figma has created true love around its brand, and a communal space for creation and exchange where people spend hours daily.
But despite Figmates' love for the brand being enormous, it's intangible, letting Figma no way to value one of their most valuable assets on the term sheet.
1. A 50 years paradigm shift
The truth is, today, the most valuable assets are often intangible.
Over the past 50 years, we have moved from a world of physical assets to a world of intellectual (digital) assets.
You can call it perceived value, subjective value, or intangible assets, but you buy Nike shoes as much for the quality of their shoes than for its "swoosh" and wear a Supreme hoodie for the social capital that makes you part of the “cool kid club."
Companies are creating stories and brand experiences for people to come and be the people we told them they could be, spending millions in marketing and ads to make their consumers associate themselves with ideas and values.
In 2022, you buy a product as much for its quality than for the values it represents, and looking at traditional financial metrics is simply no longer enough to analyze businesses.
Today, intangible assets must be valued on term sheets.
The question now is, how do we do it? How do we measure the love, anger, or friendships created by a brand?
One way to look at this problem would be to start measuring related tangible elements. Figma could, for example, measure the number of new templates created by its community daily as a metric for community success or even measure its story’s success by its social engagement.
But these metrics fail to measure the degree of attachment someone has with the brand and the truth is, we have no way to measure those intangible assets efficiently today.
2. Making the intangible tangible.
For brands to measure their intangible assets, they need to tokenize them.
With companies tokenizing their intangible assets, meaning issuing fungibles or non-fungibles tokens for fans to purchase or earn, they would finally get an easy way to measure what’s not tangible, and fans would now own, compose with, and transport these assets - reinventing the brand/consumer relationship entirely.
In this new tokenized world, once intangible communities are now collections of 10K NFTs and social tokens with a clear valuation that fans can sell and buy easily and transparently.
In this new reality, fans are "investors," and everyone is incentivized to add value and cheer for the brand in an under-precedent way — accelerating the pace of collaboration and members' involvement. With their NFTs, fans can now vote and coordinate on projects aiming at making the brand grow.
Adding liquidity in the private market is tokens’ massive unlock.
With everyone having a "share" of the brand in the form of tokens, one could bring its assets across brands.
So if you're talking about current loyalty points being locked into companies' world, imagine a world where you could be an Airbnb superuser and swap your $AIRBNB for some $UBER tokens, now unlocking discounts for your next Uber drive.
Tokenizing intangible assets removes the friction of being locked into individual programs and move the battleground from attention to utilities. Sure, go subscribe to our competitor's newsletter and earn their tokens... but then swap them for ours because we provide much better experiences and discounts for our token holders.
This creates complete new dynamics, ones more valuable for both consumers and brands, making it much easier for two companies to collaborate, leverage better their intangibles such as loyalty or community, and create bigger consumer rewards.
Be a fan of brand X and brand Y to unlock benefits in brand Z.
In this new reality where brands all have tokenized their intangible assets, we could envision a fashion brand launching a new clothing collection and offering discounts to consumers with $30 ZARA and $40 H&M in their wallets.
Web3's power resides in the fact that anyone can own and build on top of others' data, and the first brands taking the leap will have an enormous advantage.
Plus, by leveraging competitors' fungible token, rather than having fans being either "in" or "out", brands will quantify a person's engagement much better than "likes" on social networks, and create targeted experiences to monetize their passive fans and those of others.
3 - Building the infrastructure for this future to emerge.
But while promising, tokens are no utopian idea.
In fact, you can easily imagine ways in which financializing intangibles creates adverse outcomes.
Do we want to send a tradable token back and forth every time we help each other out? Do we want to have thousands of NFTs of company logos and introduce thousands of new stakeholders to the organization?
We'll first need to build the infrastructures that ensure the best experience for all, and take the time to think thoroughly about the many variables involved:
What should be tokenized? What's off-limits?
What should be fungible? What shouldn't be?
How do we measure the success of these tokens?
Each company and community will need to grapple with these questions. Many will fail, while others will pave the way for navigating this new reality well.
That doesn't mean there will be easy answers.
A social community will need to handle its tokens differently than an exclusive brand, which will need to handle its tokens differently than a cc0 project. The goals those communities pursue (and their strategy to get there) will dictate the way they use tokens to measure intangibles.
As an example of the problems we must fix, we'll first have to make sure no one can buy engagement, loyalty, or reputation. For this, we'll need to differentiate the 'Purchased Tokens' from the 'Earned ones' with a history on-chain that surfaces important information about its holders and how they received it.
It'll also be essential that we separate a social token's monetary baggage from the actual use case being built and show individuals that reputation & network are more important than money. Otherwise, brands will only attract the least loyal consumers and the speculators.
While we still have a long way to go, we're likely heading into a world where everything will be tokenized.
This shift is already slowly starting to happen, with communities valued at $704M, not based on a product they’ve created, but on the cult and feeling of membership they've aroused among their members.
There will likely be debate about whether this is a utopian or dystopian future, and I don’t expect every brand to push into that direction, but in my opinion, we might see sooner than expected the next Figma being acquired not by selling shares to investors but by letting them buy tokens.
As someone who went through the ups & downs of content creation and Web3 community building, I can assist you in two ways:
The 5 Pillars of Web3 Community Building: If you need help starting & growing your community, I’ve written a free 40-pages guide with all the best practices I've discovered to launch, grow and monetize your Web3 community. Grab a copy here:
The Modern Web3 Community Builder - A Handbook to Collective Symbol System: If you’ve already created a community and are now looking to unlock the next phase of your journey, I’ve created a written course that’ll show you how to arouse a feeling of belonging and expand your community’s culture.