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Episode 3 of PatSnap's Frontier3 podcast

JUMP Into Web3, Featuring Jeff Kauffman Jr.

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About the Frontier3 Podcast

Welcome to Frontier3 by PatSnap!

This series is dedicated to unpacking the innovation ecosystem of Web3. Featuring our Co-Founder, Ray Chohan, and various industry experts, Frontier3 explores how Web3 will fundamentally change how we live, work, and play.

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In This Episode of Frontier3

Jeff lends his perspective on how existing brands should adapt to the Web3 future and how Web3 native brands will thrive. He also talks about the adoption of Web3 ‘keys’ such as NFTs and the part they may play in the near future. Ray and Jeff talk about examples of how Web3 is truly applicable to the consumer and why it matters to get involved now. They explore what the future may look like including the creation of ‘IRL cities’ grown from ‘URL communities’.

Episode Highlights

  • Some fast-moving new concepts like UGC (user-generated capital), social tokens, and how NFTs are the new UGC (user-generated content)
  • Why it’s crucial for businesses to get involved in Web3 now
  • How Social tokens and NFTs can be seen as a passport or key to new communities or destinations on the web
  • How Web3 unlocks universal basic equity
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The Experts

  • Episode Guest:

    Jeff Kauffman Jr.

    Founder at Parachute & JUMP into Web3, NFTs and Social Tokens

    Jeff Kauffman Jr.

    Jeff is the Founder at Parachute, a consultancy firm building web3 solutions for brands and agencies with focus on web3, NFTs, & social tokens. He writes for Medium and is the founder of JUMP, a Discord community described as the first “tokenized community for marketing and advertising professionals”.

    Connect with Jeff Kauffman Jr. on LinkedIn

  • Host:

    Ray Chohan

    Founder West & VP New Ventures, PatSnap

    Ray is Founder West & VP New Ventures and the founding member of PatSnap in Europe. He started the London operation from his living room in 2012, growing the team to 70+ by 2015. Prior to PatSnap, Ray was BD Director at Datamonitor where he was an award-winning revenue generator across various verticals and product lines over an 8-year period. This journey gave Ray the unique insight and inspiration to start the PatSnap ‘go to market’ in London. Ray now leads corporate development where he focuses his time on creating new partnerships and go-to-market strategies.

Episode Transcript

Ray Chohan: Jeff, welcome. Really excited to have you on board today. I think we were kind of speaking earlier before we started today’s conversation on how myself and the team loved your piece with Real Vision. That’s how we came across you and some of your kind of key insights from that conversation. So we’d like to just continue and build on that really, and just kind of go down the rabbit hole of Web3 at a macro-level, dig into social tokens. Obviously, NFTs have been absolutely butchered in terms of mainstream media, but I still think there’re so many folks who don’t really understand that world. And most importantly, how that links to brands and kind of the B2B and consumer worlds.

But Jeff, just kick off with that, I could understand that you kicked off your career at Myspace. Boy, did that bring back some memories when you mentioned that. So would love to kick off just with your backstory and how you started your career and then how you slowly kind of evolved into the world of Web3, Jeff.

Jeff Kauffman Jr.: Yeah, absolutely. And thanks for having me. I’m always excited to talk Web3 and brands in the future and innovation. And it’s always fun to start with the Retro experiences of internet marketing and branding with something like Myspace. So Myspace is kind of where I got my start. I didn’t work at Myspace, so just want to make sure that’s out there, but the first community I ever built and my first step into marketing a brand was on Myspace. So couple things happened. I was in college studying marketing, thinking about the future, I also started skydiving and was having a ton of fun here in Dallas at a local drop zone called Skydive Dallas.

And it just sort of dawned on me one day that I felt like it would be cool to start a Myspace page for Skydive Dallas, and to start building a community for the people that were at the drop zone and give us a way to connect with each other while we weren’t at the drop zone because we were just skydiving on Saturdays and Sundays, but Monday through Friday there’s all this time and all this space to connect with each other, share videos, share photos and do all of that. And Myspace was kind of the best place to do that in 2005. So that’s where I got my start and then kind of that led into the next 15 years of digital marketing and advertising and building brands and online communities.

Ray: And then I can understand you spent some time in the traditional B2B agency world. So I’m guessing that would’ve been between what? 2008 to probably 2018-ish. Is that where you spent a big part of your career?

Jeff: Yeah, yeah. You almost nailed it. There’s the 2009 to 2021. So earlier this year I was still at the big enterprise agency world. So sort of getting in the space early within the Web2 movement. So Web2 being social and mobile. Social kind of leading it first and then mobile kind of hitting really hard in 2007 with the iPhone and app and App Store and all of that. And the work that I did on Myspace, and then later Facebook, I ended up building the largest community for skydivers back in 2007 globally.

And so that kind of set me up well to enter the large enterprise agency world to work with big brands, the first big social campaign that I ever worked on was with Fruit of the Loom. So really just put together the strategy to bring Fruit of the Loom into Facebook and Twitter and social back in 2010. And so what I was doing in college between 2005 and 2009 kind of set me up to enter the big agency world and have a lot of practice and a lot of knowledge and enter the business world with sort of a lot of, I guess, experience at a time when no one really had experience doing social marketing.

I mean, I remember looking for my first job and I was trying to find just the title of social media marketing or social media manager. And this is back in 2008. And it didn’t exist. It’s so funny to think about, but I literally couldn’t find a job dedicated to what I was doing and what I was having a lot of fun with. So I just entered the agency that I started at just on the media team. So a super low level trafficking campaign manager type role. And then as buzz within the agency and within these large brands started to catch up around social, which was really 2010 to 2012 when larger brands finally started being interested to lean in and ask questions, I was kind of right place, right time, had already spent five years thinking a lot about it.

And quickly built out the agency’s social advertising practice, ran it as its own P&L and standalone business within the larger agency for about 10 years. And so kind of just worked through the entire growth of Web2, social, mobile. And then it kind of tapered off, the innovation slowed down quite a bit, everything between really 2017 and 2021 within Web2, mobile, social just was very incremental. There didn’t seem to be any sort of exponential big innovation coming out of the space. And I started to look really hard for what was next. Had always been following crypto and blockchain and Web3, but not being a developer, not being a finance background, didn’t really understand where my skillset fit in, but obviously was just super fascinated with how these big ideas, like Bitcoin and Ethereum exploded overnight. And anything that explodes night, I’m just like, “What is this? And what is happening?”

But somehow came across NFTs and social tokens in early 2020. And immediately when I saw them, I saw the benefits, I understood the cultural impact that was about to happen. And it just sort of lit this fire that I don’t know that I had had since the early days of Web2. And I just went, put my head down and spent all of 2020 trying to learn as much as I could, meet as many people as I could to just kind of figure out how was I going to enter this space and not miss this moment?

Ray: Yeah, it’s interesting. So before we dive into Web3 and this potential huge unlock Web3 is promising, just for our audience, because I think a lot of people now, well, not a lot of people. I think people are getting it Web1, Web2, Web3, where I think Chris Dixon from AZ16 did a few great tweets where he is like, “Web1 read only, Web2 read, write.” And then obviously Web3 is read, write, and hopefully fingers crossed if it goes our way, own. And has that kind of macro 30,000 for overview, but from your specific context and the world of brand and marketing and working with kind of the early generations of communities, what does it potentially unlock in that specific context?

Jeff: Yeah. There’s so many things that get unlocked and this is what makes it so hard for everybody to wrap our heads around, even myself included. But when we look at just macro things of what happens when new technology comes along and what are some of the big signals, new technology unlocks value in areas that we couldn’t get to before. And so if there’s not value being unlocked, then it’s probably not the type of innovation that we’re looking for. So what’s an example of that? And to use some marketing lingo, there’s a term called UGC. Are you familiar with that term?

Ray: No, I should be.

Jeff: No, no, no. It’s okay. But it makes a lot of sense. So UGC for probably 2005 to 2020 was user-generated content. And it was this concept of, “Wow, as a brand, our customers are creating content and creating ideas and sharing information about our brand. And this is something new that we can lock into. We’ve never had this sort of two-way dialogue and conversation.” And that was just fascinating and actually kind of scary for a lot of brands to lean into this idea of user-generated content and allowing your customers to sort of shape some of the conversation and the identity online, but the brands that did it well, really unlocked the power of Web2 in a big way. But there's a new version of UGC that's now here and it's shifts the terms and that phrase a little bit. So user-generated capital.

So user-generated capital are social tokens and NFTs allow us to unlock user generated capital. So that’s the new UGC. And that’s quite amazing because the value that communities have typically created has usually been captured by an institution, whether that’s pre-internet, and it’s definitely visible during the age of the internet with Facebook and Google, and mostly Facebook, meaning that billions of people have used this platform and have created a ton of value for being there and using it, but they did it at the expense of the individuals being the product. You are the product when you’re on Facebook. And Facebook captures all of that value.

And really, most of that’s because the technology wasn’t there for the people using the platforms to capture that value. And so that’s sort of a huge unlock and it kind of plays into what Chris Dixon is talking about with that ownership side of what Web3 looks like. And really, Web3, the best way to think about Web3 is, we now have property rights on the internet and we have digital ownership. And that is such a big unlock. That just gets me super excited.

Ray: Yeah. And this space is interesting because… I think I’m probably drinking the same Kool-Aid as you, but we’re really ultra bullish even on the NFT space and social token space going into 2022 because we know there’s going to be a correction generally at the macro-level in markets. But there’s one force which I think is carrying NFTs a lot faster and in a less frictionless manner than others. So if you look at most big brands, especially on their earnings calls, in particular, Nike who are crushing it on the DTC side, right? The common narrative for most earnings calls for the big brands is, “Oh, this is our revenue now on the direct-to-consumer side.”

And reflecting on this, NFTs is just an accelerant of that. So there’s already probably political capital within large brands who normally move slow and only scared with change and freak out, like you mentioned around kind of the Web2 hero of people, the voice of the customer and user-generated content. But are you seeing that? When you’re speaking to brands through obviously your community JUMP, your agency work, are you seeing that as well where it’s going to be a lot more of a smoother adoption going into next year, Jeff?

Jeff: Well, the adoption, I mean, what’s so funny about the last couple of years or so interesting about the last couple of years is last year in 2020, I had put together this trends presentation around this entire space and I hit up the smartest people I knew. These are agency partners, principles, creatives. Pretty much any sort of discipline across the agency and the brand side. And no one had heard of any of these terms, absolutely none.

Ray: What month was that last year? Because it’s so month by month at the moment, right?

Jeff: So that was October 2020.

Ray: Shit. Wow.

Jeff: Everything is moving faster than I could have even expected. So a couple things, I presented this to 20 or so people, everybody was like, “This is so cool. It’s so fresh. It starts to break down, sort of break through the barriers of Facebook and Google and Apple and all these handcuffs that’s been put on the brands and the agency, people that are stewarding those brands.” It just starts to break all that down and it gives us a completely new fresh sort of canvas to paint on to build these businesses and to build these brands and to do what we want to do with brands, which is connect deeply and serve the needs of the customers.

And big intermediaries have always kind of gotten in the way of that and forced brands to sort of play in a certain way. And that’s caused a lot of negative impact, it’s caused bad marketing, it’s caused bad advertising and all of that. But just last year, there’s virtually no awareness of this conversation that we’re having. And then you fast forward to August of 2021, and you have Visa buying a CryptoPunk, you have Arizona Iced Tea buying a Bored Ape, you have Budweiser buying beer.eth. All in the same month. And so some of the timelines that I like to work off of in terms of how fast this is moving, and then to dig into your question about where are we headed?

I would say NFTs hit mainstream awareness in February of 2021 when SNL did their skit. WTF is an NFT. And what’s fascinating about that is it only took seven months for a publicly traded company to then buy an NFT. Seven months, versus if we compare NFTs to Bitcoin, I would say Bitcoin generally hit mainstream awareness in 2013, there was a lot of coverage on CNBC and Fox and sort of this new Internet Money. Obviously, it hadn’t hit mainstream adoption, and those are two very different things, mainstream awareness versus mainstream adoption. But then if you look at how long did it take a publicly traded company to buy Bitcoin?

It took from roughly 2013 mainstream awareness TV coverage to 2020 when MicroStrategy bought Bitcoin, then Square bought Bitcoin, then Tesla bought Bitcoin. So you compare that to the NFT space and it just shows you how fast culture moves versus how fast the financial side of businesses can move. And that’s mostly to do with regulation on the financial side. So one of the mental models that I use is that the CMO is going to push harder into Web3 than the CFO. And that’s because of the cultural side. And there’s not as much regulation on the cultural side as there is on the financial side.

And so as we’re looking at this year leading into 2022, we have entire new services and as an industry, entirely new departments and businesses being spun up and all of the large advertising agencies, all the large holding groups, like Omnicom, Publicis. They’re all spinning up teams and new businesses and services to bring these new offerings to these large brands. And then most of the large brands are having some sort of conversation and they’re at least talking about it and they’re at least aware of it. And then many have actually started to allocate budget to it, to Web3 and NFTs. And so what’s just fascinating about that is one year ago, not on anybody’s radar. One year later, millions, if not tens of millions of budgets are being towards figuring out Web3 and NFT strategies from these brands and agencies.

Ray: So what you’re seeing is locked and loaded, allocated headcount in terms of new talent, budget, the whole nine yards. Many business units being formed at the big agencies and on the brand side hiring account to manage this. And you are seeing that and job posts and just conversations you’re having with current customers and hopefully future customers.

Jeff: Exactly. And it reminds me, to tie it back to where we kind of kicked off. It reminds me of when I first started to see job postings for social media manager back in 2009, right?

Ray: Yeah.

Jeff: So over the summer, one of the nice things about kind of being baked into this kind of community and the Web3 scene early on is I just kind of get to have a pulse on when these really new moments happen that might seem small, but are really big when you think about it. But over the summer, someone shared on LinkedIn and it popped up right on my feed. And it was a screenshot of a Canadian hockey team posting a job for NFT manager. And it’s the first kind of the Web3 community, and at least on the marketing side, it was like, it was so cool. Because as far as everybody was concerned, it was the first time a job had been posting. And it just reminded me so much of when those social media jobs were getting posted for the first time.

Ray: Yeah. I love this analogy because you see it in even classic B2B enterprise software when you see new job titles being posted. And actually, sometimes the job description is a mirror image of a particular software capability. You see that all the time, software categories follow job creation or job creation follow software categories. So it’s fascinating to see that scale now. And going into Q1 of next year, I think what a lot of folks don’t understand is, what does it really look like, the value add of a social token to a brand like a Nike or an Adidas or an Under Armor or a Devinci? What are some of the low hanging fruit where we can hopefully be talking this time next year, Jeff, and we either have participated in many ourselves or have a brother or a cousin or a friend who now owns a token in a particular brand and has a new level of customer experience. How do you think that will shake out going into say H1 of next year?

Jeff: Yeah. I mean, the way Web3 has kind of, at least on the brand side, has gone over the past two years is it feels like it goes kind of slow and then all of a sudden some fireworks go off and there’s something huge and unexpected. And everything has happened faster and in more interesting ways than I predicted they would in 2020 when I was thinking about what would happen in 2021. So I guess I’ll just premise or I’ll start off with saying anything I’m going to say is going to be wrong because I’m so amazed at the creativity and the innovation and the ideas.

And really this is what this comes down to is it’s a free market that’s happening at internet scale. And in that sense, it’s just so unpredictable and wild and creative. But if we can paint some sort of pictures for what is the value that this space has to brands and then customers, one thing is I like to do is I like to separate the financial side from just the community side, because a lot of this can quickly go down sort of just the financial conversations and ownership and that ownership can create value and it can quickly just kind of be this financial conversation, but there’s a different element to this that is more important that is actually the financial and the value creation. And it’s how communities are forming and how Web3 and NFTs give communities a new way to form.

So a couple of examples, and we’re just in the very early primitive stages of what this looks like. But if holding a social token and an NFT, one of the primary use cases that we’ve seen right now is that you can go into a Discord community. And if your audience isn’t familiar with Discord, think Reddit, but private. Think some sort of mash up between Slack, Reddit and Facebook groups for private communities. So if you you’re passionate about golf, you can create a Discord community and you can kind of customize the channels and access that people have. And you can just create this nice little private space that’s dynamic where a bunch of people who are passionate about golf can interact with each other.

And so one of the things that social tokens and NFTs do is that you can hold these NFTs and social tokens in your wallet, a wallet like MetaMask. And then you can go to this Discord community and you can connect your wallet, and the bot will read your wallet and say, “Oh, you hold the right amount of tokens to enter this community.” Or, “You hold the right NFT and now you can have access to this community.” And then as soon as you sell those NFTs or those social tokens, the bot will scan your wallet and kick you out of the community. And so for the first time you have this passport and this key to go into interesting places on the internet.

And so what that starts to actually look like, what we’re seeing is that these NFTs and these social tokens are actually a new social graph. It’s a new data layer for how people are connected to each other. And the fact that you can go into a Discord and in the future and app, or we call these dApps, decentralized apps and you can connect to your wallet and then the dApp can read your wallet, see what tokens and NFTs you hold, and then connect you to the other people that hold those NFTs and social tokens. And so communities now have this way to self organize on the internet in a way that we couldn’t before. Because when we look at, let’s say Facebook or Google or Twitter, if you’ve built up a community or you are a part of a community, you’re not portable.

So let’s use Facebook groups for an example, it would be almost impossible for a group of 1000 people or more, and certainly when we start to get into the tens of thousands of people, and there’s lots of groups, Facebook groups with tens of thousands, if not hundreds of thousands of people, it’s virtually impossible for them to self organize themselves, again, outside of that Facebook group. And Facebook owns that now, and they own you as a group and they can monetize it through ads. But if everybody in that group holds the same NFT or the certain amount, or the same social token, that group can then easily reorganize itself and reappear in another environment where they can connect.

So it takes the power completely out of actually the interface of how we connect with each other online and it puts that control totally in the hands of the community itself. So if the community has self-organized itself into Discord, which that’s where most of these Web3 communities live right now, if Discord doesn’t evolve in a way that allows these communities to thrive and there’s another app that comes along that’s built better and creates a better experience for these communities, all they have to do is say, “Hey, we’re all going over here and we’re going to re-log in and connect our wallets.” And then boom, like magic, we’re all acted.

So the big opportunity here is for brands and agencies to start to build community and start to serve their communities. And you don’t have to do that with NFTs and social tokens. You don’t need those tools to start to build community, but you do need to have those on your roadmap because they’re going to be very critical into how communities are going to interact and engage online. But the big unlock here is that brands, and it’s funny because the last 10 years, really the last 15 years there was sort of this calling to create community and all of that. And it was really a promise that never came to fruition. And that’s mainly because of how the big platforms work.

Facebook would kill organic reach and then a brand couldn’t send out a message to the community they had bought, they had to buy advertising, but really we’ve kind of, we’re back at that stage where brands, when they think about marketing and they think about building their brand, really, they have to focus on community. And then as investors or as entrepreneurs, our target or our north star is what do we invest in or what do we build that empowers communities online. And preferably, what do we build or invest in that empowers Web3 communities.

Ray: That’s interesting. It looks like the whole capital allocation model of a CMO will flip slightly because you might have a future CMO now trying to analyze and track all of these potential communities that their brand should sponsor invest in, and then hopefully grow revenue from within that community. So are you already seeing CMOs view Web3 and the next form factor of community through that lens?

Jeff: I would say Web3 CMOs are definitely there. I don’t know that Fortune 1000 CMOs are there yet. There might be a couple. Seeing what Budweiser is doing with beer.eth and the path that they’re going down, Budweiser might get the sort of check that box. But it’s going to be few and far between at that sort of enterprise big brand level. But when you talk about Web3 brands, so one really great example is Bored Ape Yacht Club. You familiar with them?

Ray: Yeah. I mean, they’ve accelerated to another dimension now. Haven’t they? Where you’ve got, I think Adidas who are now part of their community. So they’re turning into their own mini juggernaut now, aren’t they?

Jeff: Yeah, exactly. And it’s a brand. That is a Web3 brand through and through built on Web3 fundamentals and community ownership and building community and being community first from day one. And when you look at something that not many people understand about the Bored Ape community is that, I think they have some crazy number of, they’ve raised 300 million into their organization and community treasury through the primary sales of their NFTs. And then most of these NFTs have a royalty baked end so that the owner of the NFT continues to generate income off of secondary market sales, those royalties span from 2% to 10%.

And so you can see that the sale of these NFTs continue to pay dividends over time. But I don’t believe the Bored Ape community has taken on any investment. And so you see, basically, especially if you were to survey a younger demographic, let’s say under 30, a brand that has pretty much appeared overnight has massive awareness among the demographic and a war chest, a treasury of 300 million with no investors. You have to pay attention to something like that.

Ray: Yep. From the brand perspective, that makes sense and what Bored Ape Yacht Club are doing and the obviously CryptoPunks and even Friends with Benefits, I can see them ramping up now. And I know you’ve got big investors just knocking on the door of that community saying, “Listen, here’s our capital. Here’s how we can help your community.” So we are seeing early signals of that. But from the customer standpoint, what are some of the big unlocks there? Because I know there’s things like additional benefits, gated access to X, Y and Z, which sounds cool, but still quite early doors in the kind of value add.

Ray: What are some of the big juicy elements you think, which will enable kind of more of a mass adoption into folks wanting tokens or NFTs linked to a particular brand? Is there something new on the horizon, which is catching your imagination, Jeff?

Jeff: Well, a lot of what Web3 is enabling are things that brands have wanted to do for a long time, but the technology isn’t necessarily there. And so one of the mental models that I use for brands and how they invest their marketing dollars, and this goes back to your question about what’s the benefit for the end customer or now member or owner of that brand? So one mental model is for the last, oh, if we go back several hundreds of years ago, you would have owners of a brand, whatever that brand may be, but the employees of that brand didn’t have any ownership. And certainly the customers didn’t have any ownership of that brand.

And then you fast forward, and really Silicon Valley pioneered this next phase where the brands figured out companies, entrepreneurs figured out that if you gave your employees ownership, that that would create a much more healthy dynamic and you could capture that creativity of those employees in new ways because they actually have ownership over the thing. But the customer was still not included in that ownership of the brand. And so now, as we move into Web3, Web3 blurs all of those lines once again.

And so the owners and the employees, or the lines between owner, employee and customer get completely blurred. And if your strategy doesn’t blur the lines between owner, employee and customer, then you’re really not tapping into what the value of Web3 brings. And so what this means for customers similar to what it meant for employees of brands and startups and companies, when employees finally started getting ownership of the thing that they were creating value for, it created a whole new go-to-market strategy. And so now customers finally can have ownership over the things that they love and partial ownership.

And that’s big because before, if you were a fan of a brand, and especially if you were somewhat influential, let’s say you’re just a tastemaker sort of within your own mini social network. I’m not talking about an influencer with a big online following. I’m just talking about, let’s say the family who’s just very influential in their community and at their school. And when they come across something that’s great for their kids then they’re able to share that within their community and neighborhood that they live in, it kind of virally spreads from there and so on and so forth. But those customers didn’t have any ownership and they weren’t able to capture any of that upside. So being able to tap into community and build on community, but then give actual ownership to your customers is a huge unlock. And it unlocks value that we haven’t had access to before.

Ray: And you’re seeing the early phases of this. So I know that there’s some communities who are kind of co-developing product together. So I know Friends with Benefits, I think they developed a particular product, which was used to kind of get access or gated access to a certain part of the event in New York where there’s NFT week event there. Which I felt, “Okay, that’s interesting, gated access to physical events, video content, maybe early access to the new Jordans, for example, or new Under Armor equipment.” So there’s that privilege to it.

But beyond that, obviously, this is unlimited composability on what you could build with social tokens and NFT. And all of these ones are interesting, but maybe I’m showing my age here. I was like, “Hmm, this seems like in a creative nice to have. I haven’t seen like this killer mic drop moment where, wow, I really want the NFT because you’ll be able to get access to X, Y and Z, or this is how it could manifest.” Or am I just seeing it a different lens?

Jeff: Yeah. I mean, I think everybody’s going to kind of experience their own moment where they’re just so head over heels around the opportunity to acquire an NFT or these to social tokens and the benefits that that then unlocks for you. That’s going to be different for everyone. But I do believe that every single person, if you just kind of look at humans, we’ve all organized ourselves around community and community has been at the center of our survival as a species. And so when these NFTs and these social tokens start to unlock access into the communities that make you happy and allow you to meet other like-minded people and make deeper social connections, then that value becomes very apparent in that moment once you’re experiencing that moment of access into a community.

And so where this starts to get really big and really interesting is how these communities can form online, come together, create value and then reform together in the real world, the IRL. So the turn URL to IRL. And so yes, the whole, “Oh, you have these tokens and now you have access to this party and this event. Cool.” That’s interesting, but it’s not this mind-blowing thing as you’ve kind of alluded to. But what if that changes where that IRL access is literally an entire city? Meaning, being a part of this community online and creating this value online creates enough value and enough opportunity to literally build an entire city. And the only way to access that city and all the benefits of that city is to have these NFTs and these social tokens? Then that starts to change.

Now, there’s kind of some scary things to consider with that, but I actually do believe that one of the things we’re going to see probably in 10 years is entire cities be built from scratch based off of these communities that have first come together online throughs social tokens and NFTs.

Ray: Holy shit. Now that would be unique. So you might have a community who have a certain belief around education, sustainability, mobiles, tax treatment, for example, right?

Jeff: Yes.

Ray: Just views on that literally. So you kind of have virtual sovereign states form online which can transform into a physical form factor?

Jeff: Exactly. And that physical form factor doesn’t have to be in a central spot the way that we think of cities now. When you look at city lines and county lines and state lines or country lines, it’s not networked. It’s a some form of a circle or a square or something like that. When you think of these cities or these ways to form IRL, in real life, it’s more networked. So a really good example of this is CabinDAO. CabinDAO is a new Web3 community. They went through the seed clubs incubator cohort, which is the same incubator and cohort that I took the JUMP community through. But CabinDAO is basically buying cabins. They’ve started in the hill country of Austin, but they want to be the IRL, the real life sort of home base for creators and people in the creator economy.

And they think about what they’re doing with CabinDAO is creating a networked city. And when you think of a city, you think of these cities as, part of a city’s responsibility is to bring an economic sort of, and business opportunities to the city. So put in place policies and create partnerships to create economic and job growth opportunity for the citizens of that city. And so when you think of CabinDAO as this new brand startup/network city that’s coming to life, and the access to that is through the form of social tokens and NFTs, you can start to imagine this sort of 10 years down the line, CabinDAO having a network of houses and cabins and apartments and potentially large plots of lands with larger communities. But even down to just having a New York apartment. It can be kind of on any scale.

So then you, essentially, you live in that network city and through that network city, when we think about remote work and the digital economy and being able to create most of that value online, and especially when we’re looking at the creator economy, you start to see this group of people that are all working in the cloud and doing all of their work remote as freelancers and as creators. But then they’re plugged in to this networked city that actually has IRL places to live.

Ray: You got my mind spinning here now, Jeff, because if you think about what you just described there, we kind of already do that already. So I’ll give an example. My sister lives in a certain part of the suburb in the UK, and I know she moved there for the community, the certain brand associated with that community, right?

Jeff: Yep.

Ray: Quality of the schools, the road layout, the type of people who live there, yada, yada, yada. The same plays out all over the US and all over North America in certain areas. Like in LA I think Brentwood is one of the hot, cool places to live, blah, blah, blah. And people are buying into a certain culture within that community. But if you think about it, in the traditional world, yes, you do have ownership, but you just have ownership of probably your house and that’s it. You don’t have an overall stake in the entire community and what it stands for.

What you are saying is, you’ll have these communities form in a digital form factor initially, like you mentioned this cabin community, which I’m guessing we might have certain infrastructure, which is fitting for creators, because they want a certain layer of a cabin and certain infrastructure and plumbing as a service. No different from WeWork, if you think about it. They believed in a certain infrastructure and plumbing for the modern day of work. But they still take it to a next level where you’d have these cabins, they’ve got certain layouts, certain look, which creators all fall in love with, they’re sustainable, mobility’s easy, the roads are really clean, blah, blah, blah, blah, blah. The perfect environment for creators.

So in essence, you then have the ultimate advocates of that way of living because each person who’s part of CabinDAO, for example, they’ve got equity and the whole mothership itself, the cabin they own. So then the advocacy, the duty of care to build that community and what it stands for. You are all in then because you’ve got hard core equity in the long-term mission of that way of living. And then obviously, then you’re inviting brands to go into it and then the value goes up. So you’re creating a whole new asset class. It’s like the 13th or 14th sector of the SMP

Jeff: It’s wild and it’s just going to move so fast because when we look at Web2, so Web1 had to be built off the back of traditional media and communications. Then Web2 had the benefit of Web1 and search and email discovery. And now Web3 has the benefit at the lightning speed of communication and organizing around Web2 with mobile and social. And so Web3 is building itself even faster than Web2 did and Web2 versus Web1. And so things are just going to get really weird and really strange and really awesome, especially when we start to think about online communities forming around shared values and shared beliefs through NFTs and social tokens and Discord communities. But then one day million person networks kind of coming together and starting to put their stamp on the world in real life.

Ray: Yeah. Example, Jeff. I mean, I couldn’t agree with you more. The example you shared with CabinDAO, I know that sounds a bit farfetched, but if you think about Airbnb pitching back in 2008. You had all those investors say, “Wait, that’s crazy. Sleep would potentially, somebody is going to attack me or something like that, or who’s got a criminal record.” People thought Airbnb was nuts. People even thought Uber outside of the black cab business, which was more the premium man, the general one was, “Hmm, don’t feel comfortable with that. What do you mean my phone? Who’s the cab driver? How are they verified? Or it just seems a bit weird to me?” Both of those concept, more Airbnb was like, “No way. I’m not doing that.”

When I described that to my wife back in 2014, she freaked out. So if you actually think about CabinDAO, and these other, I call them non-skeuomorphic ideas. So skeuomorphic, again, butchered from Chris Dixon and who I love. He goes, “A lot of stuff right now is basically Web2 ideas in a Web3 form factor.” He goes, “What’s really going to explode are the native Web3 concepts like CabinDAO,” which are just completely different, but just end up being exponentially the ones which kind of unlock brand new values. So I’ve rambled on there quite a bit, but the mind boggles right on how far we can go with this.

Jeff: It does. And to kind of think about a couple of behaviors that I think we’ll see that just seem so counterintuitive to previous generations, probably mostly millennials and above is this concept of ownership of your home. And I think that we’re going to move to a world with these sort of network cities and brands, and we really don’t have the words to describe them. And this is what really gets me excited about Web3 is not as much bringing legacy brands into Web3, but creating the new brands that are truly native to Web3.

But something that I think we’ll see is that, it will actually not be that interesting to own the house itself. Ownership of your home is not actually what you want. What you want is ownership of the network that then owns the home or the property. And by ownership of a certain level within that network, that then gives you access to a certain type of home and place to live and all of that. And then when you want to exit that city, that brand, that community, you just sell your social tokens and, or NFTs and you move to a new community, and you move your life to a new community.

And what this also creates then is it creates massive competition to retain that community. And so if the primary leaders and stewards of that community that are providing all these benefits from everything to jobs, to housing, to food, if they’re not being good stewards of that, then people will quickly exit and go become members of other communities and the liquidity behind moving and exiting cities is actually going to be quite high.

Ray: Yeah. If you link this right, this is no different from obviously you had Marc Andreessen statement right back in 2011, “Software’s eating the world.” What you just described there is software eating. I mean, because you look at Web3, it’s another, just sometimes some people say, I think Kevin O’Leary said this. He goes, “When I’m trying to explain to boring pension funds and classic institutional investors, I go, forget blockchain, forget Web3, it’s software and we just simplify it for you.” I quite like the way of just simplifying that for certain folks.

If you look at CabinDAO, I know we’ve talked about CabinDAO quite a lot, but really what you’re doing there is, like you said, it’s not really about the house, your cabin, that’s the hardware. What you’re really buying into is the software no different from when we buy an iPhone or I wear a Whoop device, the device is, I call the sensor.

Jeff: Yes. You’re connecting some dots there. Yes. I haven’t even made that analogy, but what you’re saying there actually is spot on.

Ray: Yeah, it’s the software, right? It’s the upgrade. So if we live, say us to our neighbors in a certain community and both of our partners believe in a certain type of education for our kids, we’re both into intermit fasting. So we like certain types of Whole Foods stores near us because we just like that type of lifestyle. And then we like this certain type of physical training. We as Jeff and Ray are brought into that way of living, hence why we have that NFT and why we live in that community. So then we expect all the services to come into that community to match our desires.

But if you think about it right now, you can live in a lot of areas and think, “Holy shit, why is that place opened? It doesn’t really match the desires of the community.” That happens a lot. It’s happened in my area. Me and my wife were driving the other day and we saw a shop opened up and we’re like, “We’re not going to eat there. That’s not really fitting of the area we live in and what we are really into.”

Jeff: Right. So now if we wrap that back to sort of legacy brands, legacy brands their challenge over the next 10 to 20 years, and you actually said this earlier, is to figure out how these online communities are forming, where they’re building, where they’re moving to, what their values are, what their needs are, listen to them and then become partners with them and helping them sort of achieve their desired life state, and then building the products and service that they need.

And there’s another term in here that’s has kind of been a mental model for me is the concept of SaaS. And we’ve typically thought of that as software as a service, but a new version of that is software as, or staking as a service. So flipping that around instead of software as a service it’s ‘staking as a service’, have you heard that?

Ray: I know there’s people staking their assets now with various protocols, but staking as a service linked to software as a service, no, but please go ahead. Please explain.

Jeff: So staking as a service, meaning you acquire a certain type and a certain amount of NFTs or social tokens and you stake them to acquire services. So right now staking is just to generate yield when we’re talking about Web3. So I stake a certain amount of assets and then I earn something, some other token. It’s very financial in nature. But think about staking as a service to unlock video content or staking as a service to unlock the housing that you have access to, or staking as a service for the fitness membership that you might have.

Ray: So what you’re saying is the things that you’re passionate about that you owe, say for example, I’m a big fan of WHOOP, and WHOOP, I think should have a Web3 DNA because they’ve got a great community within the WHOOP band. So I participate in that WHOOP community of, say in the new world, I’ve got X tokens. I stake my WHOOP tokens and I stake them for more additional in the services or some form of value add, is that why I would stake my WHOOP tokens?

Jeff: Exactly, exactly. And so the business models that we have evolved over centuries in the last 100 years, first, it was sort of trade. Then you had transactions, meaning, I had this and you buy it for X and then the internet and software subscriptions, well, we had magazine subscriptions and whatnot before, but really the internet scaled up this idea of a subscription model. And then now we have this staking model. So subscriptions aren’t going anywhere and one time transactions aren’t necessarily going anywhere. And just trading one good for another good isn’t necessarily going anywhere. So we’re still going to have those, but layered on top of all of that is staking.

And so I believe that the highest benefits that you will get from a brand. And so if you’re building a brand, this is what you’re thinking about. The largest benefits that you’re rewarding your customers with are going to come through staking. So if you want the most premium X, Y and Z, or the highest level of service from X, Y and Z brand or city, or whatever, you’re going to acquire enough of those tokens or NFTs and you’re stake them and then you’re going to unlock that. And then there’ll be tears down from that. Meaning if you can’t acquire enough of that brand’s token to stake, then you can subscribe, but you’re not a not going to get the full sort of experience. You’re going to get a sort of a scaled back version of that experience.

Yeah, that subscription then becomes still part of that cash flow that all businesses need. And then there’s going to be sort of one-off transactions. So if we think of, let’s use Amazon, for example, if Amazon’s successful-

Ray: Right. Jeff, just pausing there one second, sorry, before you dive in for the Amazon example. So that staking example, so if you look at right now, in SaaS or any subscription, people are obsessed with retention, client retention, gross retention, net retention. What you’re saying with staking as a service, it’s this higher definition version of customer loyalty.

Jeff: Exactly.

Ray: You’ve got X number of root tokens. Your day is really good. I’m like, “Yep, love WHOOP Jeff. Stake your WHOOP tokens, but you lock in it is 18 months, but you will get these value added services.” So then in the future, if you’ve got more people investing in the WHOOP brand, you can say, “Guys, their community love them. They have nearly 70% staked and locked in for 24 months.”

Jeff: Yep.

Ray: Higher definition retention and perception of the value of that community.

Jeff: Yeah. Exactly. And what’s so massive in terms of benefits to those customers that are staking, and this goes back to the lines of being blurred between customer, owner and employee. When you start to tap into that really passionate group of people that are willing to acquire enough of whatever it is to then stake and unlock those services, they are now owners because they can sell that stake at any time. And they certainly turn into employees and sales people because they love to talk about all of the services and things that they have access to. And so this is where you start to blur the line between customer, owner and employee.

Ray: I mean, it’s endless, isn’t it on the composability on what’s possible with just a form factor of NFTs? I mean, NFTs right now, you got to view them like in Web 1.0, they’re just a web page at the moment. What that could involve too is limitless. Who would’ve thought back in, I’m old enough to know this, and I’m guessing you might be, but back in ’96, just using, say Yahoo or, I don’t know, Alta Vista. Who would’ve thought Airbnb is possible, or something as dynamic as Amazon’s even possible. It’s probably a 100x or a 100,000x in the world of NFTs and just the whole infrastructure that Web3 enables

Jeff: It is. And when I think about something like Uber and Amazon and Airbnb, if they can get around the regulatory issues and be comfortable with it, which I think they will, and certain governments across the world will allow this to happen, you start to imagine that one day you can stake a certain amount of Airbnb, social tokens and, or NFT tokens, and essentially unlock a certain amount. Well, unlock 365 days a year of being able to stay in Airbnb locations at a certain tier if you’re willing to stake enough. And that’s how you quickly become an owner over this housing network. And then if you can’t afford that number of NFTs or social tokens to stake, then you subscribe. And if you don’t want to subscribe, if you just want to do one off purchases and stay for a weekend here and there, you can do that as well.

Ray: Oh god, man, you’ve got my plate spinning in my mind today, Jeff, at least with some of the examples that you shared there. Then this backs into, I say, I’m going to go more on the financial side, but it’s interesting, people say, “Oh, the market’s inflated.” And then of course, with all the M2 money supplier and the money printing, we all know that. It’s painful right now in terms of the inflation and just the whole, the monetary system and fiscal policy, it’s a mess. But if you look at kind of the upside within Web3, and you see some of the valuations of some of these protocols and some of these fundamental technologies, when you look at it through this lens, it backs into those valuations because the unlock of the GDP is going to be unprecedented.

You’ve got GDP now in the virtual world and you’ve got classic assets being kind of unbundled into brand new business models. And evaluations of those business models are exponential compared to the original business model. So really, a trillion is going to be like a billion dollars, if that makes sense, in five, six years where a billion dollar evaluation now sometimes it’s table stakes, but a trillion is like, “Oh, that’s a bit crazy, slow down over here, but that’s pretty nuts.” It’s not going to be nuts in four or five years, maybe.

Jeff: No, I don’t think it will be. And that’s one of the things that has me so excited. And one of the reasons I was willing to sort of just walk away from the very nice P&L that I built at the agency that I was at before to just figure out this space and build a community and be a part of it because I firmly believe that the GDP of the virtual world will just make the GDP of our physical world look like just pennies. I mean, there’s just so much value to be unlocked. And it’s really going to change. I mean, if we just go back 40 years ago and we compare 40 years to now, it’s just wild. But as we go out into the future, I do believe that we will be staking our assets for access to virtually everything.

I believe that a lot of people who are able to acquire enough of these assets to then stake, you won’t pay for food, you won’t pay for your cars, you won’t pay for your transportation, you won’t pay for your plane tickets in terms of one-off transactions or even subscriptions. You actually have the opportunity to stake the right NFTs and social tokens and assets and then you just unlock all of that. And then the more that you contribute to the community and to the network, the more that you can eventually own to stake more and unlock more. And it’s just going to be wild.

Ray: It’s like a whole new level of flywheel. I think Yat Siu founder of Animoca Brands who I think is really interesting organization and a great founder. He described it as obviously, you have universal basic income. [crosstalk 01:03:39] can be really Web3 unlocks universal basic equity.

Jeff: Yes. Yes. Exactly. And I think, I hope that we get into a more positive sum sort of type of environment, meaning, because you have the upper opportunity to own equity in the network and in the community and in the housing and transportation and all of that, that anytime that we’ve seen individuals go from renters to owners, or just that concept alone, you see a much higher level of care. And so I hope that this dynamic is going to cause people and humans to be much more mindful of the communities that they’re a part of and the products and services, and literally everything that we build as a species that will be more mindful of it because we have ownership of it. And because our work, we can acquire ownership of it through the work and the contributions.

And so hopefully that just incentivizes millions, if not billions of people to contribute more and in more creative ways, because they will be rewarded with ownership. And right now, you really only have a very, very small population of the world that can be rewarded with ownership through the contributions that they make. And that’s through stock and these certain publicly traded companies.

Ray: You know what? And also, it’s the right thing to do because it’s an opportunity for the recent generation who do feel a bit left out. You had the Boomer with access to obviously equities out and all time low had access to real estate, kind of a compelling price point and fair play. That was their timing. You add then millennials who still had upside in real estate and equities as well. But then this latest generation, it’s really hard for them to have ownership in anything. Because we live in this slated world of M2 money supply ripping globally. So they kind of left out. And I feel this new technological primitive, it gives them their shot as well.

So not only is it ownership, but as we see throughout history, ownership leads to a higher quality of life, more duty of care, which is lovely to see. And fundamentally, hopefully I know this sounds a bit cheesy, but a more fulfilled and happier world. I’m not saying ownership is the ultimate source to happiness, but you end up creating a better platform of people being more equal, having more skin in the game and feeling more fulfillment and thus leading to less social unrest and less bifurcation because we now currently live in a world where there’s huge bifurcation and kind of wealth inequality. It’s crazy right now. So this is kind of a, hopefully a bright future for this new generation.

Jeff: I hope so. I’m certainly betting on that and hope to see that and hope to be part of those that build that into this technology. So it’s pretty exciting.

Ray: Brilliant. Well, Jeff, I mean, we could go on for hours now, but before we kind of sign off, a little bit about JUMP, if you’d love to tell the audience about JUMP, because we love what you’re building there as well. So a little kind of some snapshot about JUMP, because I’d love for all of our customers and brands to hear what you’re building.

Jeff: Yeah, absolutely. So when I think about Web3 and all of this technology and this conversation that we’ve had today, there’s so many filters and angles of attack that you can put on it and ways to think about it. And JUMP is really the filter and the lens and for the people who are thinking about this new space from a brand perspective and from a marketing perspective and building the next generation of brands and, or evolving legacy brands to adapt to this new paradigm. And so JUMP is filled with marketing pros from existing brands and agencies, as well as a ton of marketers that are at Web3 brands. And a lot of founders that are building Web3 brands.

And so that’s what JUMP is, JUMP into Web3. And it’s been going great. We’ve got a thriving community of about 700 marketers. Right now the community is basically a request invite stage, really building the foundational elements of our governance structure, how we will manage our treasury, roles and responsibilities within the community. And then one day here in the not too distant future, look at the actual official launch of NFTs and social tokens into the broader market to sort of start to experiment with all of the ideas that we talked about today. So anybody that’s interested in joining JUMP can go to and fill out our request invite and application form. And then we send out new invites about once a week.

Ray: And one final point, any must reads regarding Web3 you recommend for our audience? Any kind of broader books or macro pieces or specific books that have inspired you on your Web3 journey?

Jeff: Yeah. I think an oldie but a goodie that starts to take on a new shape in Web3 is Reinventing Organizations which is a management style book that was written before Web3 has really taken off, but like so many things that we’ve theories and frameworks that we’ve wanted to deploy, but we haven’t had the technology to do them successfully, this book kind of fits into that.

So a lot of great ideas and a lot of great thinking, but I think when you read a book like Reinventing Organizations and you think about how your current companies are structured, the current relationship between customers and employees and owners, it gets really hard to maybe implement some of these strategies, but then when you go back and you read a book like this, and then you apply the technology and what Web3 unlocks, and you start to look at it through that lens, then a book like Reinventing Organizations kind of takes on a whole new light.

Ray: Awesome. Well, Jeff, thank you so much. It was a pleasure having a conversation. Hopefully, we can do the same again this time next year and see how far the community has come.

Jeff: Absolutely. That would be great. And thank you for having me and good luck on your own Web3 journey. It’s going to be wild.

Ray: Cheers. Thank you, Jeff.

Jeff: Awesome.