Welcome to the Sociology of Business. If you are not subscribed, join the community by subscribing below and share it with everyone you think may find it useful. You can find my book, The Business of Aspiration, on Amazon, and you can find me on Instagram and Twitter. For those new here, my previous analysis was titled “Drip is the New Drop,” and it is about why drip is replacing drop as the operating principle of our culture and economy, and what that means for brands.
Supreme’s brand power is seemingly so strong that everything it touches turns into gold. Supreme instantly creates collectibles, launches cult objects, justifies high prices and propels products into the domain of intangibles.
So does a metaverse-native brand.
Just as Supreme hones its cultural and social flex through limited-editions and collaborations, community-building, iconic logo and brand aesthetic, and generative art, the metaverse-native brands like Bored Ape Yacht Club or CryptoPunks develop their intangible flex through blockchain, digital assets, and PFPs.
The mechanism that a crypto-native brand generates its flex is through five innovations in value:
Symbolic value that Bored Ape Yacht Club or CryptoPunks create transforms non-culture (NFTs) into culture. NFTs are incomparable by default, and people buy Bored Apes to add flex to their digital profiles. Rarity of a Bored Ape is by design: there are 170 traits, like crowns, tweed, hats, eye patches, earrings, necklaces, psychedelic body, that are programmatically generated in unique combinations on the Ethereum blockchain and formatted as headshots. The outcome is that less that 1% of Bored Apes have gold fur or a tweed suit. Scarcity and rarity make a Bored Ape not a product, but a collectible. As other collectibles, BAYC NFTs dub as investments. When Bored Ape collectors invest in a BAYT NFT, they are really investing in its enduring cultural relevance. The investment is both social and financial: Bored Ape #8585 sold for $2.7 million on OpenSea, and Bored Ape #8817 sold on Sotheby’s Metaverse digital art platform for $3.4 million. When one Bored Ape reaches a high price, the perceived value and price of the entire 10,000-piece collection appreciates, a dynamic known in auctions. Bored Apes rarity is random by design, and turns the experience of buying a Bored Ape into an event. The rarer and the harder to get a collectible is, the higher is its symbolic value, and the higher its continued cultural relevance.
Identity and differentiation. Bored Ape Yacht Club or CryptoPunks do not belong to any market segment. Instead, they are increasingly becoming ingrained in culture. Unlike other forms of commerce, the primary value of BAYC and CryptoPunks NFTs is intangible - it is social and cultural capital that each of Bored Apes, Mutant Apes, Kennel Club and CryptoPunks NFTs carries. Having a Bored Ape or CryptoPunk PFP is a status symbol, not unlike having a rare pair of sneakers or the latest bag. It reflects our taste and aesthetic and identity. It also socially and culturally and economically links us with everyone else who has a BAYC NFT. Ownership of a Bored Ape is a membership to a society, an investor group, and an access to benefits, like use of an online graffiti boards and all future BAYC NFT collectibles. Every time there is a new mutant serum drop, there’s a social distance created between those who are thrilled by the news and those who do not know what this means. BAYC members also create a link between us and all other cultural pioneers. This link gives them community and a shared identity, built on the exchange of social and cultural capital.
Aspirational power. SuperRare is a curated platform of NFT art and creators. Recently, SuperRare introduced the RARE curation token that is earned through contributions to the SuperRare community and allows its holders to identify and curate incoming talent. This move effectively decentralizes curatorial decisions and makes them community-driven. Brand growth that is community owned-and-operated is new. Bored Ape Yacht Club is similarly decentralized (a “decentralized Disney”) and its owner-collectors hold the commercial rights on their NFTs, meaning that they can modify, apply and resell them. To keep their assets relevant in the digital world, BAYC and SuperRare are building community, gaming mechanisms and new IP. There are only so many skateboards that a person can own, but not if they are made in BAYC aesthetics. Riffing off the BAYC look is the vehicle for thrill, newness, status, identity, aesthetics. They flex collectors’ zeitgeist muscles and turn aspirational benefits of owning a collectible into a new source of cultural currency and status signaling.
Constant brand renewal. Demand for Bored Apes depends on the perception of their cultural relevance. Without the perception that BAYC has cultural value, its NFTs have no value. Generative nature of BAYC art bets on its cultural value. No two Bored Apes are the same. Mutant serum adds element of randomness and surprise. Consequent airdrops and Kennels keep the mix alive. New brand associations and attributes keeps a brand image fresh and a brand visible among consumers and cultural commentators alike. Brands that don’t evolve are boring brands and boring brands are dead brands. Unexpected variations - paired up with collectors’ own creative riffs - constantly reintroduce BAYC in the culture and in the market by reconnecting it with different parts of community, technology and creative expression. BAYC creators and community reframe the brand for consumers in a new context. The challenge here is to preserve exclusivity beyond the randomized Bored Apes feature combinations.
Elitism for all. Recently, 3lau became the first musician to sell an album as an NFT. "Collectible music” is a version of a music stock market, and 3lau’s belief is that being a fractional owner incentivizes fans to stream and spread the word about music more. SuperRare’s RARE token and BAYC membership all similarly bet on scalable culture, where cultural creations organically expand through the activity of the community members, creating a cultural narrative. This cultural link - like the one that BAYC aesthetic has with 1980s hardcore, punk rock, and nineties hip hop - allows BAYC to sell a lot of items without diluting their symbolic value. Generative nature of Bored Apes re-contextualizes the brand’s original references: a Bored Ape conveys BAYC aesthetics, and puts it on steroids through its own rarity. Everyone has their own version of the brand.
Together, these five value innovations turn crypto-native brands into the emerging model of our cultural, social and economic exchange. In crypto commerce, ownership and distribution of digital assets demonstrates one’s status, distinction and cultural savvy. It is the new operating system of taste, aesthetics, status, identity and thrill, and it powers brand growth through trading in the new intangible and symbolic value it creates. Crypto commerce isn’t brand gloss. Auctions, collectibles, investments and trades, and resale marketplaces built around digital assets are the core transformation of how brands grow. In the nascent crypto economy, this transformation is a matter of a company’s long-term renewal and cultural relevance.
The part that seems new is the decentralized, tokenized governance - like the RARE token that you mention. There's a lot of signals that this is happening for NFT-related projects, but little info on how it really works. Are these brands really willing to decentralize governance? and if yes, what capital / value / business logic is driving them? Because the myth of decentralizing power is beautiful, but it's hard to imagine everyone suddenly buying into it, just because it's expressed through crypto tokens.
Fantastic as usual Ana. Brand new to your blog. Your perspective is amzing and as your linked in picture shows far looking..I just connected with you over there....you should go into futurism:-) Thanks for the great work. Looking forward to following your work.