Category Close-up: Web3 in CPG

Brad Avery [00:07] Hello, I'm Brad Avery, reporter here at Bevnet, and you're watching the latest episode of Category Close Up, where we're continuing to look at the major trends cutting across all areas of food and beverage with a panel of experts and industry leaders to help us put them into focus. If you were one of the 112.3 million people to watch this year's Super Bowl, then you almost certainly saw an ad for a cryptocurrency or an NFT-based company. NFTs or non-fungible tokens, and the broader world of Bitcoin, Ethereum, the metaverse, and blockchain are all part of the basis for Web 3. A new technology platform that is working to remake the internet and e-commerce around an ethos of decentralization and token-based economics. And it is resonating. Last year, Web 3 companies raised more than $30 billion globally. Though the origins of this movement go back at least a decade, this new technology is now rapidly integrating itself across business sectors, including and especially within CPG. Well, you may currently be seeing plenty of board apes and doodles across your social media feeds and food and beverage major brands like Pepsi, Budweiser, and Frank's Red Hot have tapped this trend for marketing campaigns and announced NFT drops. There's also been an influx of startups seeking to build new companies through integrated business models that marry digital assets with physical goods. Some of these new brands like coffee producers, Board Breakfast Club, or pre-launch hydration drink, leisure project, or tying subscription models and, or rewards benefits to NFT ownership. While other companies are looking into blockchain as a means of introducing more transparency into their supply chains. Others see NFT as a means to self-fund their ventures and still more are drawn to the online communities that Web 3 has generated and are seeking to create their own communities around their brands. But Web 3 is also controversial, both within and outside of its communities. Sustainability concerns and the speculative nature of crypto and NFTs have already warned off some consumers or big brands jumping into the space, risk looking opportunistic to Web 3's longtime advocates. The goal of our discussion here today is to help make sense of this rising technology and learn from how food and beverage brands are already tapping into this movement. So joining us first, we have Kat Cole, the recently appointed president and COO of direct to consumer wellness company Athletic Greens. Kat is a food and beverage veteran who previously spent over 11 years at Focus Brands, where she led restaurant chains like Cinnabon and Jamba Juice. She has also been an early adopter, and advocate of Web 3, and established herself as a thought leader in the NFT and CPG crossover space. So, Kat, thank you for joining us. Thanks for having me. So can you start by telling us a little bit about how you came to get involved in NFTs and web 3? As someone in the CBG and the food and beverage business, what opportunities did you see and what excited you about it?

Speaker 2 [02:49] And I try to have a beginner's mindset of anything that appears to be capturing the attention and potentially the wallets, um, of humans and of consumers, whether that was social media, many, many moons ago, or social audio, more recently, and then certainly crypto-related technologies, NFTs, and roll it all up the broader web 3 space. So, what brought me to it is just being curious and appreciating that things that may start out as hype or Trendy, often have some grain or thread that endures and becomes woven through the fabric of society, uh, consumer products, and eventually brands at large. And so, uh, NFTs and Web 3 were no different. I really started paying attention to cryptocurrencies, a piece, and a, a critical enabling piece of Web 3, several years ago, and, um, really thinking about what that might mean. At the time for retail, um, just transactions, a different currency, a different way to think even about loyalty and using tokennomics, something to digitally commemorate loyalty rewards and things that could enable different types of transactions. So, my thinking in the early days when I was with Focus Brands was quite tactical and linear, and that I thought first and foremost, this might be a, a variable form of, um, transaction capabilities that Then could link to loyalty, just like people earn and burn points. It was very clear that cryptocurrencies had some role to play there. And then over time, as the, um, non-fungible tokens, NFTs became centered in popular culture, I first heard about them on Clubhouse, and I was on Clubhouse because I was an early adopter of social audio, also trying to understand and engage in where the world might be going. And er saw the energy around the intersection of art and creativity, um, and some form of cryptocurrency powered frameworks, er, around these things that have meaning to people, these, these assets. And so, I got curious. I started buying NFTs, and engaging in different NFT communities, and that then led me to realize how similar some of these NFT projects, especially the PFPs and the collectibles, are to franchising. Um, you're building a brand that is in the hands of others. Community is at the center of that brand or business, if you want to call it a Business entity being successful over time. There's a treasury that essentially is populated, fulfilled by people who are participating in the community. So, it's the community economy, it's the ownership economy, very similar ethos to franchising, at least the way that's the lens through which I saw it. And so, to me, it was very clear there's opportunity here for. Consumer brands, to engage communities, uh, and to create a way for people to participate in a brand, and not only participate, help shape it, and then participate and shape the economics, uh, of brands and consumer products. So, between it just being fun, because it's fun and it's art, uh, and it being fun because it's new and messy and early, and I appreciate. That stage, and seeing the practical applications that we are still just at the very beginning of. Um, that's how I got brought to NFTs and Web 3, and I'm still a very active participant in many communities, DOs, uh, and Web 3, Discords, Telegram groups, you know, other collections of humans that are spinning up as a result of Web 3 activity.

Brad Avery [06:35] Right. And, and a lot of it is centered, like you said, in those communities. Uh, if anyone watching doesn't know Discord, for example, uh, it, it's similar to Slack. It's a, it's a chat, uh, group, and Telegram, obviously, uh, is where a lot of, uh, the community gathers. Uh, Kat, I, I'm curious, uh, you mentioned this in your, um, early in your answer where you said, uh, how a lot of the uses for NFTs, uh, I think a lot of people see stuff like Board Ape, like Board Ape Yacht Club, and, you know, sort of see it as, you know, buying. Pictures, but there's obviously functional benefits that you can implement and tie for, for a CPG brand and one of those things you mentioned, sort of, you know, rewards programs that owning an NFT might unlock. Uh, I'm curious though, is, um, are, aren't a lot of these things that are being talked about, like, say, you know, a discount on products or being kind of a part of a, uh, of a brand's community, aren't those things that you can already do now? So, so what are NFTs and, and web 3, doing differently, uh, that wasn't there before?

Speaker 2 [07:35] Part of what's different and, yes, there's so much that is similar, and then there's more. So, yes, some brands are using NFTs to unlock value that might look very much like what they could currently unlock from a loyalty program or just being a customer. And there's more. And so, what an NFT does that differentiates from, call it Web 2 or non-NFT or non-Web 3 approaches to value, or in the web 3 world, we say utility. One is it's completely transparent. I mean, the level of transparency and traceability on the blockchain is very different from the Black box of most, like, earn and burn points programs. And so, some people care about that, some don't. Eventually, it matters to most. And so, you can't remove the transparency of the blockchain from the differentiators of web 3 or NFT enabled benefits versus web 2. The second is the idea that there, it's digital, right? And, yes, my rewards program for Delta, or Hyatt or Starbucks is digital, but it's also sort of linked through this app that I have to go through, and my wallet can follow me everywhere, and it's becoming this piece of identity, where my participation in multiple projects over time. is becoming these little breadcrumbs of who I am as a consumer, in the way that old school or current brand purchases or brand behaviors would typically indicate. So, this idea of this digital collection of things that I love, that are easily found and explored and discovered, is one. The other is, Everybody's in the Starbucks program, or everyone's in these membership programs, and there's not something that's unique about it. For the PFP projects, the collectibles, my cool cat is unique. It is one of 1000, but it is a one of one. And over time, that asset, whether it's just because of what it is, the art that people enjoy, The community, the gaming, the other benefits coming, the utility coming from what this group is building, or the province, like, who's owned it. It's kind of cool to, for someone to buy an NFT that someone else you dig has owned. And so there are many layers that are different from a typical loyalty or rewards program from a brand that Really reinforces that community is at the center of so much of this, the ability to participate in things together. As a Delta Sky Club member, one of my favorite loyalty programs, I'm not engaging with other Sky Club members, other than when I'm in the Sky Club, you know, when I'm traveling, and then I just keep my headphones in. These are projects and programs that actually bring people together around a brand. It is the holy grail of building a brand. People have started to move from Building a minimum viable product to developing a minimum viable community. And if there is something like a web 3 approach to community that's more sticky, that encourages people to engage with each other, that has many layers of value and utility beyond the simple and the obvious, right? The discount, the access, whatever, that's sticky. And if it feeds community and gives me value, in addition to, oh, wow, I love the brand, and I just think this piece of Art is cool, uh, or I think this project that you've built is representative of my values, you start to really see the separation between Web 2 benefits that brands might offer and Web 3 enabled approaches to utility, which include community, great transactional benefits, and then other value creation over time of that NFT as a result of both the community and the utility.

Brad Avery [11:24] Great. And so I know that you, uh, you, you only joined Athletic Greens, uh, a few months ago, I believe, but, uh, I know that this was one thing that, uh, you were very excited about, uh, bringing to the company and that the company is, you know, absolutely, uh, looking forward to, to work. With, are, are there things that you've already started doing, you know, web 3-based with athletic greens or things that are, you know, right on the horizon? I know there's kind of a lot of, uh, you know, theoretical, hypothetical things that you can do, but what are some of the first things you're looking to put into, into place?

Speaker 2 [11:56] And we will follow a crawl, walk, run approach. I so admire those who can jump in the deep end and go straight to running, uh, but as a high-growth organization that is literally a rocket ship, we need to focus and prioritize and dipping our toe in the web 3 space. will look first like being a fan. We have already started to purchase NFTs and support creators and communities that are aligned with our mission, whether that's um health and wellness or personal improvement, even a New Zealand creator, our founder is a Kiwi from New Zealand. And start first by being a fan, and participating and engaging in these communities. Next, we've hired a fantastic head of community who will be nurturing our existing community, tapping into others with an eye toward red pilling. Or purple pilling, at least, our approach to those communities. So, eventual releasing of NFTs that have meaning and utility to those communities, and also finding other NFT and Web 3 projects where we as a company can be one of the supporters for the benefits that those dows or those. Those communities provide. So if it's a wellness Dow, and they want to provide foundational nutrition products to the members of the Dow, we're gonna be first in line for that. So there are many ways that we already are seeding our approach, uh, into, into Web 3, and there are some, then there are much bigger ways that eventually will be a part of most consumer businesses, things like supply chain and traceability through blockchain. Um, especially around sourcing. We source 75 of the highest quality ingredients from around the world, and any degree of traceability and transparency is going to be a benefit to a product that's as complex, um, to make, to source, and to make as ours, but we're starting with the consumer side of web 3, NFTs, building, uh, brand partnerships, and starting with the community aspect of Web 3 1st.

Brad Avery [13:56] Yeah, and, and definitely later as we move, move into the panel session, we'll, uh, we'll definitely sort of break down what community means cause I feel like it, it comes up so often with this and it's so vital to understanding it. Uh, you also mentioned Daos, uh, decentralized autonomous organizations, correct? Mhm. Yeah, just, uh, you know, they, there's a lot of lingo, I think that you'll, you'll pick up and, you know, we'll tie back to the community element, but that's, Taos are sort of a, an important, uh, element of this, you know, in terms of, uh, how, how these groups function of, of the decentralization. Um, the, the last thing I wanted to ask about though was, uh, supply chain and blockchain, because you've mentioned that a few times. Transparency is a big part. But, uh, you know, when managing supply chain, uh, do you want to be transparent?

Speaker 2 [14:43] Well, first, there's a part of transparency and supply chain has nothing to do with customer facing optics. It's about running a better business, and I want more, yes, of course, I want more visibility into every piece of supply chain. Every company does. It de-risks the business, it helps you plan more thoughtfully, and so, what that will look like is not every small or high-growth consumer business building their own. blockchain supply chain technology. What this will look like is phenomenal vendors and businesses that are B2B in supply chain, upgrading the way they approach helping to manage logistics and sourcing with blockchain-powered tools. So, it's very, like, it's fun for me as an operator, but it's very back of house. But then, if you so choose, and you want to reveal some of that traceability, like, think of The pizza tracker, uh, on the slice app, right? You order on Slice and you can see your pizza, um, where it's at in the process, and so, very similarly, a company, if they first build a blockchain powered supply chain tool or element of their business, may choose to make pieces of that customer facing. Maybe not all of it, but pieces, and especially if their brand positioning has something to do with sourcing and with sourcing transparency.

Brad Avery [16:11] Well, Kath, thank you so much, and we'll, uh, uh, welcome our next speaker, but I, I look forward to having you back in just a few minutes for the panel discussion. Next, we have Nick Sharma, CEO of Sharma Brands, and an investor in DTC expert who has invested in CPG companies such as Sanzo, Honda, and Juonshine. Nick has also been exploring the web 3 space, and late last year launched his own NFT project, Bodega Cats NFT. Nick, thanks for joining us.

Speaker 3 [16:38] Thank you for having me. Uh, as a longtime fan of BevNET, it's, it's almost like an honor to be here.

Brad Avery [16:45] I mean, I, I appreciate you, uh, coming to, to, you know, share your insight here, uh, and, uh, particularly, uh, talking about the investment side, I'm very curious about because, you know, beyond, beyond CPG, you know, we've seen over $30 billion globally in venture capital funding, uh, last year into crypto and, and other web 3, types of companies, but from your stance at the intersection of D2C, CPG, and Web 3, what's the investment environment in the space like right now, uh, in particular for those companies where they have married Web 3 and CPG from the start?

Speaker 3 [17:20] There's a lot. There's, uh, you know, I personally have invested in two companies, uh, that are doing their best to marry the worlds of CPG and this, uh, NFT or crypto world. Um, but there is a lot of investment going in, and it's not just the technology, but it's also into communities. It's into the picks and shovels types of businesses that are helping. Uh, build these technologies, that's going into media companies that kind of surround themselves around the crypto culture, and, um, you know, there's, there's, uh, there's just a lot, like, it's an overwhelming majority of deal flow has crypto or web 3 as a part of its, uh, as a part of the business as a whole.

Brad Avery [18:04] So, so what are investors looking for, uh, you know, and, and what are, what metrics are being used to gauge growth potential right now? It seems so early and a lot of people are having trouble understanding it. So, so what are, what are you looking for before you invest in a, uh, a web 3-based startup?

Speaker 3 [18:22] Well, I think we're really, really early. Um, you know, it almost reminds me back, uh, Cat mentioned social audio. It reminds me back when social audio was it kind of had its moment, right? Everybody wanted to build in social audio or have something to do with it, and um, To be honest, I think that we are very early in terms of even understanding what to look for or uh what types of functions these projects or these companies or these, these uh really brands will have in the future as it relates to their web 3 presence. Um, personally, I look for Function, right? So the, the two companies that I've invested in, one is kind of a picks and shovels business around um enabling companies on Shopify, which is a, uh, an e-commerce platform to be able to sell NFTs, whether it's as, you know, something like a gift with purchase, uh, or with the reverse, you know, being able to understand there's an NFT. In somebody's wallet and unlocking access to certain products or collections. The other, the other one is a little bit more experiential with larger brands. So for example, if a national restaurant chain uh puts out an NFT that they sell, if you're a token holder, you can, for example, get into that restaurant or order specific items off that menu. Um, but You know, I think different investors are looking for different things. I'm more in the commerce and CPG and direct consumer space, so I look for how the functionality ties back to the companies that I look at or work with or talk to on a daily basis.

Brad Avery [20:00] I'm curious a bit about scaling opportunity, especially in CPG. So let's say, let's say you have a company that is doing a subscription model for, for a food or beverage that is tied to ownership of an NFT. Now, early on, a lot of these NFT drops tend to be around 10,000, uh, somewhere in the, the multiple low thousands for how many NFTs there are, but the value accumulates uh, a bit on scarce. right? And so, if you need to scale your brand, and do you have to introduce more NFTs, I mean, how are you, how are companies thinking long term and, and would introducing more NFTs to get more consumers in devalue the, the early adopters, what they hold? How's this working? And, you know, and, and how are people envisioning the business plan in a few years when, when millions of consumers want in?

Speaker 3 [20:51] Uh, all these conversations that we're having are fairly still early, but, um, you know, going off some of the stuff you said, um, a lot of CPG companies, when they think about releasing NFTs, it's usually in two ways. One is, we want to find a community of super fans that The 5000, the 10,000, maybe even just the 1000 fans who will hold these NFTs in exchange for being a token holder, they will unlock access to maybe its new flavors, exclusive products, you know, certain events the brand is tied to, things of that nature. Um, and so that's, that's kind of one model that a lot of companies are using. Uh, one that I'm seeing specifically in beverage, uh, more so alcoholic beverage is really interesting too, which is, you know, if you're a whiskey brand, for example, you are storing your whiskey in these barrels for 40 years, maybe 50, 60 years, and attaching an NFT To buy your bottle upfront allows them to actually generate cash flow immediately while those barrels are sitting and they're not just sitting assets. Uh, so that's another really interesting application. The third one I'm seeing a lot is almost phasing out subscription and, and, or membership and using NFT as your membership card. So, if you become, uh, you could think Think of like Solo House, for example. I, I think the future of Solo House cards is, or membership is you're a token holder. And that gives you access not only to the venues and the events that they hold, but anytime they have a partnership with somebody else. If Athletic Greens does an exclusive experiential event in New York City, and you have to be a SOAS member to get in, you use your SOA token to get in there. Uh, the fourth one that I'm seeing, uh, becoming more of interest is how do we actually phase out things like discounts and gift with purchase, and, and instead phase in NFTs. So, um, you know, the easiest example I can think of to describe this is you go to a concert, right? A lot of times you might, um, get a free t-shirt shirt or you get a free tote bag, uh, or some, you get something for going to a concert, maybe. Um, instead of getting a t-shirt that sits in the closet and collects dust because it's never a comfortable t-shirt, you might get an NFT instead that says, you know, kind of as it creates your digit your wallet becomes your digital persona, uh, attaching to that, you have this NFT that says, yeah, I was at that Post Malone show, and I was on his first tour, and I am an early fan. And, um, so those are kind of the different ways I'm seeing. Uh, these NFTs being applied now, and obviously there's this massive community component to it as well. The, the, the most interesting part to me about the community part. Is that, uh, just like Kat mentioned about like Delta Sky Club, right? You, you might be a member of Sky Club, you might be an MX Platinum cardholder. Uh, there's a very good chance that you will actually relate quite a bit to other cardholders or other Sky Lounge, uh, members, but that is not something that gets facilitated nowadays, and that is something that crypto does allow, right? You can get into, uh, rooms, whether they're chat rooms or physical rooms, by validating yourself with the token.

Brad Avery [23:58] So one other thing that uh a lot of startups are doing right now, it, it seems that some are turning to NFTs as a means of, of raising money early, um, and perhaps you, you release NFTs and then you can use the funds to, to self-fund your company. Uh, what do you make of that model just from an investment standpoint, and, and what are we seeing there, that you've experienced? Yeah,

Speaker 3 [24:19] I, you, you know, personally, I haven't seen a ton. Um, there, there's one or two companies that have come across my radar where Uh, they are essentially going to release tokens. And as you, um, as you buy a token, you are now both an investor, but also get access to these products, exclusive products. Uh, and then you also share in the profits that come back from these products as well. Um, so I've seen that be kind of a model where, you know, you can put out 10,000 tokens, you fund a business, uh, you know, there's this famous group of YouTubers called the Nelk Boys. They launched this product called the MetaCard. Uh, 10,000 MetaCards went out. I think they made something like $23 million. And now that is a business that will now open, you know, they'll start selling their own products that the token holders will share profits in. They're gonna go open venues like gyms and lounges, and, and same thing happens there, right? The profits come back and token holders will benefit. Um, the other interesting thing too, I think, is, you know, when I think about investing as a group into companies, uh, similar to SPVs, I think that will also become Uh, you know, through, it can be done through NFTs. So for example, uh, with our bodega Cats project, you know, we only have 30 token holders, um, but we are very close to acquiring a company where the bodega Cats will actually own equity in this company, and, uh, and they will share in all the upside as the company grows as well.

Brad Avery [25:53] Great. Well, Nick, thank you so much. Uh, I think that's, uh, good for now, but we'll see you again in just a few after we speak with our next guest for the panel. Thank you.

Speaker 3 [26:02] Absolutely. Thank you for having me.

Brad Avery [26:04] Finally, to give us a startup perspective is Cal Free, co-founder of functional beverage brand Taika. Taika recently partnered with Web 3 Community Friends with Benefits to produce new products and is continuing to seek out new ways to integrate its canned coffee business with Web 3. Cal, thanks for being here. Thanks for having me. So I wanted to start just by asking about that partnership with Friends with Benefits. First of all, interesting name. What is it? And uh how did that come about? What, what is the project all about?

Speaker 4 [26:33] Yeah, so kind of quick intro to Friends with Benefits. So Friends with Benefits is a community story by a couple of friends of mine actually. Um, Maybe about a year ago or so, uh, is when they started launching. And the idea is that To become a member of the community, you have to hold their token, and then Everyone's incentivized to help the community grow and has financial upside if the, you know, value of the community grows. And I think it's a really interesting approach to crypto, and I've been sort of the sidelines of crypto since 2015. And the moment that was kind of my red pill moment when I really got it was when my friend Alex, who's the mayor of, uh, as he calls it, uh, FWB explained to me how it works, and I was like, OK, this makes sense. And I think the really interesting about crypto is like how we can align incentives across a large number of people. And then how this collaboration came about is that we at Tika are a little bit different to many beverage companies. So many beverage companies are really focused on sales and marketing and they outsource their product development. Whereas we're product people at heart. I did minorgra in food science and had been working in coffee for 15 years, and my co-founder was the first mobile product manager at Facebook. And we have this thesis that if we invest in product development and hire a full-time food scientists, we can develop really great products really fast and then do these collaborations where we partner with cool communities. And so this is our first venture, doing something like this, where the idea is to, you know, partner with the community and Get their feedback like we chatted with them and we're like, hey, what would be cool to make? Like what, what is the product? What is the drink that you want to exist in the world? And they came up with this idea of making a we call a club mate that web 3. So Club mate is a like a yerba mate soda that's being in like Berlin rape scene and kind of a hacker scene, but it has a lot of sugar, it doesn't actually taste that. Much mate. And so we thought of making a kind of a tycoide version of that, that's sugar-free, highly functional, so it has uh caffeine paired with Ltheanine and lion's man, and just kind of a really fun packaging. Idea is that we're kind of involving their community, so FWB community. So we had a designer, Eric Hug, who's part of the community to design the can for us, wanted to make it something kind of really fun and different. And um just this morning we had our first We'll call an alpha tasting with the community. So we sent samples to about 100 members in the community. We did a Zoom tasting with them today. We sent them two versions. People get to, get to give feedback on those versions, and then we'll iterate based on that. And the next step is we're launching an NFT to drop this um sometime this spring.

Brad Avery [29:13] Fantastic. It's funny, I didn't know you were doing that right before this. I mean, I gotta ask, how was the community reception for it?

Speaker 4 [29:19] Oh, it was amazing. Like, as far as we know, this is the first time anyone's doing something like this, or like a brand partner with a Dow and actually co-creating a beverage where the community has input. And so the, the response was great. So we're doing 4 of these, we have the first one this morning, we have 3 more next week, and it just, you know, a lot of fun and I think from there kind of follows this idea that we're in web 3 this idea that users should own the platforms. I also believe, you know, from that point that for CPG products like the users of the community should have input in the product and, and also potential upside for it. So we'll be selling this and then, you know, FWB gets the shared of revenue that we generate from this.

Brad Avery [30:02] So Taika is a young company. I, I believe you were founded in 2019, and I'm curious about approaching this as a startup. Now, some of these companies are talking about or, or started from the beginning to be web 3 integrated, but uh you are still getting involved early, and I'm curious, what other ways are you looking at, at tying Taika to this space? And, and what do you think other startups should consider before they jump in?

Speaker 4 [30:29] So Taika is all about fueling creativity. If you think of Red Bull, Red Bull is synonymous with extreme sports. We want Taika to be synonymous with creativity. And the web 3 space is where some of the most creative people are kind of flowing, uh, being pulled, uh, right now. And that's where a lot of this really interesting work and art is happening right now. And we want to be there in sort of a native way to power that. And I think we're actually at a really interesting point where we've been Going on for a couple of years, we have a super solid operations, we have full food science team, we have operations team. So we can, we started talking about this collaboration in October, and now a few months later, we actually have product in cans and we're looking to launch in a few months. So we can deal with these things really, really fast right now when we have the underlying business that sort of supports all the infrastructure that we have. And so we're looking to do a lot more of these collaborations with really cool communities, um, in a way that makes sense for everyone. And I think something to remember for startups or anyone who wants to be in this space, I think it's really important to approach it kind of as as Kev was saying from the point of curiosity and actually being part of it. I mean, Theory into web 3 for the past 6 months I would say, um, both Kat and I are part of and actually Nick part of this community called Clop CPG that's like a phenomenal community where I get most of my, you know, NFT updates and kind of what's happening in crypto and so just being part of it, understanding what makes sense, that's something that I feel with with someone of like bigger companies looking to do something in NFT work space, it kind of feels a little shallow and it feels more like marketing and I think that especially in web 3 the kind of core community there is pretty good at picking up what feels authentic and what doesn't, and I'm, I'm a big believer in doing kind of things the native way and actually partnering with the people and not approaching it for the kind of web 2 mindset of like what I'd call value extraction of like how do we make as much money here as possible, but rather thinking about like what is something that we can offer to people in this community that is really unique, like. None of these people who are in the zoom facing today have ever been able to participate in creation of a CPG product. And I think that's really cool that we can offer that for, for a lot of people.

Brad Avery [32:41] Do you see web 3 and, you know, NFTs and in similar uh tech as, as like a marketing uh tool as well? I mean, are, will it open doors to bring in new consumers?

Speaker 4 [32:54] So I think it's a kind of a two-folded question. I think right now the web 3 community, I think the core users is very small, so it's growing rapidly, and there certainly are a lot of people in that community that could become tiger customers, and that's where we'd like to move toward. On the other hand, I'm a huge believer, so kind of getting into web 3 is, is a bit of a barrier. Um, a lot of it is very early stages, as Nick mentioned. And it can be kind of overwhelming in the beginning, and I'm pretty tech savvy, but it probably took me a month of trying to figure out what is going on and how do I set up a wallet properly and not lose money and so on. And so I believe that CPG brands are actually in a unique position to on-ramp or on board a lot more. People into the web feed, because they are brands that many people interact with on a daily basis, and I think there are natural applications in um referrals and loyalty for CPG companies. I actually believe that. The model that all of these CPG companies or B2C companies were built in the web 2 world of like heavily relying on paid acquisition, that's not going to work anymore. Those acquisition cost numbers have gone up significantly in the past year. What if instead of spending money on Facebook, you invested in the money in your community and rather than trying to acquire random customers, you know, through these other platforms, you invest in your community and incentivize your existing customers to refer their friends to be part of, you know, your brand. I think that's a really interesting direction and there again, I think it's really important to not just think of it as a marketing channel, but think of it more deeply as a You know, value sharing mechanism.

Brad Avery [34:38] So the other thing I'm curious though is, does being involved in this community affect your branding? Does your brand have to uh match itself with, with the ethos of this community? And, and how do you approach that, um, particularly when you're talking about using the brand as a way to, to help bring more people into the community?

Speaker 4 [35:00] Yeah, so that's a great question. Right now we have our kind of main, main products are canned coffees, that we're selling in a bunch of stores, and that has nothing to do with web 3 right now. At the same time, we have this other side where we have this like crazy kind of asky, uh, nerdy style can design that we're going to be dropping as an NFT. And so I think both of those can coexist, um, if the brand kind of makes sense.

Brad Avery [35:28] Yeah, it does remind me though, oh, it, it does remind me though of something like say early Soylent when uh that, that brand was getting started and, and borrowed sort of the, the web 2.0 lingo of, you know, their different versions would be, you know, Soylent 2.0, Soylent 3.0, um, and building the commun, the, the branding and the marketing around that type of web community. It just seems, uh, a bit of a, a, a next evolution, the way that web 3 is an evolution on, on web 2.0.

Speaker 4 [35:57] Yeah, for sure, and um I think for I'm actually an investor in the same company that Nick was talking about about selling NFTs easily on on Shopify and that's something that we're exploring and that I think can be an easy way to kind of Bridge the Let's say more traditional side of our business and allow and make it easy for people who maybe have heard of web 3 and NFTs but haven't ever, you know, got to set up a wallet and make it easy for them to, you know, either purchase NFTs or maybe we'll, you know, Maybe they'll get one once they've been a subscriber for long enough, for example, and do that in what's called like web 2 native way. So you can use your Google login to log into a platform and you don't even realize that you've created a wall and you have an NFT and you don't actually need to acquire any cryptocurrency until you want to sell or transfer that NFT to someone.

Brad Avery [36:50] Well, Kyle, awesome. Thank you so much. And, and I think uh what we're gonna do now is actually bring Kat and Nick back uh to join you and uh I have some questions I, I wanna throw to all of you and then please feel free to, to, you all know each other, so please feel free to just uh go off of each other, and I, I wanna hear more about, uh, community in particular. So, uh, please welcome back Kat and Nick. So, one of the words that kept coming up again and again in these discussions was community. And I really wanna break that down and examine what community means in this context. So, it, it, obviously, these are online communities, uh, for the most part, uh, you know, using live chat platforms like Discord. In Telegram. But from my understanding, a lot of them are relatively small. So how do you see a web 3-based community playing a role for large and mid-size CPG brands? And what happens when that community is no longer in the hundreds or thousands, but in the tens or hundreds of thousands of consumers or perhaps millions?

Speaker 2 [37:48] 11 thought is, any brand's community, if they have real community, something far beyond audience, is a collection of many communities. There are special interest groups within a brand's fan base. And so, if I'm thinking about big brands, which I, my past is running, my advice would be not to boil the ocean, like, to find a community that's already highly engaged and maybe even super niche. And specialized that might already get together in person or have some way that they connect, and that's an opportunity to bring a web 3 approach to that community. On the other side, if a company doesn't have real community, they have audience and they're looking to build community, true community, where people are engaging with the brand and with each other and literally creating their own utility as a result of that engagement and those relationships. Then start with a web rethinking in mind, just as Cal was saying, as Nick shared, this idea of people sharing in the creation of a thing, and then sharing in the upside of that thing as it grows, is a bit of the secret sauce and the differentiator. So, maybe it's a special R&D group, and a feedback group, and maybe their names end up on the box or the can, or there might be real ownership. An upside somehow, that's separate of typical rewards or loyalty program, you can start really, really small. And the fact is, in most huge loyalty programs, you actually have a tiny fraction of those members that are actually hyper loyal, super, super engaged consumers that you could first kind of fuel as a community, but would love to hear these guys' thoughts.

Speaker 3 [39:38] Yeah, I couldn't agree more. I definitely agree with the fact that one large community is a culmination of a ton of smaller communities, and Um, you know, from a technological standpoint, I'm sure that in 2 years from now, Discord and Telegram will not be how these communities live and interact, but, you know, even just looking at what Discord does today, like, it's, it's, uh, you have this big community that you have to verify to get into, but then there's different groups, right? So if you're in a, in And athletic greens Discord, then you might have a group around kayakers, you might have a group around people who wake up and meditate, a group around people who go to SoulCycle classes. And, um, and so, but the one thing that they all share in common is their athletic greens routine or their product. And, um, and that's essentially what ties all these different communities back together.

Speaker 4 [40:35] Yeah, I would 100% agree with that. I think these communities can get pretty overwhelming right now. I'm, I'm in some discourse and it's, it's like impossible to keep up with what's going on, and I'm kind of a believer in Dunbar Dunbar's number, which is that a single person can have roughly 150 relationships and beyond a certain point it just kind of impossible to keep going. So it's taking more of like a cell or sub-community based approach makes a lot of sense. And then on the other side of that, or I think curation is becoming more and more important, where I think the, you know, NFTs are scarce digital goods, but I think the scarcest thing in web 3 is time and attention, and nobody has time, anybody at least with a full-time job, uh, to keep up with what's going on. And I've come to rely much more on, on curation and just kind of being fine, not catching up with everything that's going on, and just, you know, trusting certain people, um, in certain communities to get me the stuff that I'm most interested in.

Speaker 2 [41:38] And even in the community that Nick, Cal and I are all a part of Club CPG or CPG NFT. You know, it's, it's a few 100 folks, but immediately to their point, there's a splintering off of subgroups, one's for deal flow, for people who are investors, another for fitness, and for athletic activities to inspire and motivate each other, another for following news and getting alpha on big, big established franchises that are coming out with NFTs, and so, yeah, of course, you go back to the main section to plug in, but you literally, Cannot keep up with 100 people's worth of engagement and commentary on a regular basis, even if you did it a good part of the day, and so, it's not a failure of the community to break into these parts, it's a sign of strength of the community, and, um, and so that, it's, it's like, so many brands need to take a course in community before they even try to dive into web 3, otherwise they're just putting, like, Web 3 lipstick on the brand pig, you know, they're not, they're not really coming forward and creating engagement in the way that they could.

Speaker 3 [42:52] The other thing I'll say too on top of that is, um, you know, community, especially I would say over the last two years, has become a, a real big buzzword. And, um, everybody is looking for a software, an app, a consultant, an agency, a firm to come in and help build this community, right? Transforming what Kat mentioned as an audience, but to something that is more community-focused. And, um, and, and it's not, it's not something that really works that way. It's something that has to be kind of built from the ground up, built by hand, you know, one community member at a time, and it really relies on a consistent high quality curation, content, and engagement within a group, which will then, as it gets stronger, like Kat mentioned, will break out into its own subgroups as well.

Brad Avery [43:43] I am curious based on the responses a bit as well about um opening this up to, to the mass consumer level uh at an accessible, uh, in an accessible way. Uh, you know, a lot of these, uh, some of these communities right now are, are based on NFT ownership, but those can be in the, the thousands. of dollars and so when we're talking about opening this world up to uh the, the mainstream public, uh, the, what are the ways that CPG uh is going to be allowing, you know, just the average person in at a, at an affordable rate if, if it's, you know, pay to play in a way.

Speaker 4 [44:23] Yeah, I mean, I think just to kind of add to the previous point too is that I think no community is better than a bad bad community and I think for many it's better to just wait until you can find or have the resources to start building community the right way than try to have something. I mean, so many of these discourse that either are, you know, crickets, nobody's chatting, or it's all about, you know, when moon, like when is the floor price for this NFT which is the lowest price you can buy it right now, going to go up. And so then I think the, the question is like, what is that community actually offering to the members? Um, and what's the reason to engage and be part of that. And that's really the reason why Club CPG for example, is pretty special because I learned something every time I log in there and people are kind of It's a curated group of people who are curating high quality information. And I think that's something, you know, a brands or or anybody who wants to build a community needs to think of it first. It's like, again, Not thinking from kind of value capture point of view, like how do I extract value from this community or how do I generate more revenue or value by having a community, but rather what can you offer to the community that will then the goal is not to create more revenue or value whatever, that's a way of measuring how successful that community is.

Brad Avery [45:50] You know, I'm, I'm curious as well cause you mentioned sort of um earlier, uh, a lot of big companies getting involved in here. And, you know, you'll, you'll see Pepsi or Anheuser-Busch, you know, doing NFT drops and, and I'm not uh calling up anyone specifically, but I do know that sometimes there is the risk that some of these larger companies getting involved. Uh, don't always connect with the community that is established, and I'm curious about, um, what, what big companies should be aware of before they just release an NFT, uh, series or, uh, try to get deeper involved in the space and, and what role they can play, uh, in helping spread this as well.

Speaker 2 [46:34] I mean one piece of advice is just Like anything, try to be a student first and appreciate. You know, appreciate what it is, what the communities are. The next is, most big companies, for many good reasons are risk averse, and so they avoid jumping in when things are early, because when things are early, they are a hot mess, and there is plenty of hot mess. In any, um, thing that is early in its curve, and certainly that is true for crypto and web 3 and NFTs, but there's also a ton of magic if you do it authentically. And so, whether it's the community aspect and to Cal's point of having the human bandwidth to nurture a community, like, you can't buy it, you can't outsource it, and so, if you're not able to do that, Maybe you just want to find a way to digitally commemorate an event. Like, there's, there's a way to be so basic and be so cool with being basic, because you can do it well. And if you're already giving a t-shirt to Nik's point, and you're already giving a bag, or you're already sending someone a QR code for their RSVP. layering on a piece of digital art isn't a massive stretch. It could just be, we partner with an artists, and we want to say thank you for coming to our event. If you have a wallet, drop your wallet right here. Here is a token of our appreciation and memento for this event. Boom, nothing. You don't have to talk to them ever again. Uh, but then you could make that mean something in the future, later when you're ready. And so, there are many ways to digitally commemorate something you already do that don't force you to need to be fully red pilled, you know, web 3 experts as an organization. At the same time, if you are getting into tokenomics or community management, then that requires skills, and it requires humans who deeply respect the space enough to not pooh-poo when there are problems, and, you know, throw the baby out with the bathwater, but rather like, OK. This is a bummer. This is a mess. We have the muscle to handle it with integrity and with grace, and we're going to learn, and we're going to keep going. And so, the ability to have a beginner's mind, and a lot of love and respect for what's good about it, as well as the talent to nurture and create and build whatever aspect of Web 3 you're trying to build, these are really critical pieces. For any company, certainly for a large established one that typically has high hurdle rates of performance and KPIs and indicators of success that quite honestly, most web 3 initiatives are not going to even begin to hit like anything new and early in the curve. So you've got to have a good entrepreneurial mindset in the organization as well.

Speaker 3 [49:29] I think Kat nailed it. It's the, it's, it's really like my initial thought was you gotta, you've just gotta listen, right? You've gotta go be a part of it, you've gotta participate, you've gotta learn. I think um. The best thing, you know, if you're a, a chief innovation or you work in the innovation teams of these large companies, I think the best thing is to, to go participate in other communities and, and start understanding what you like and what you don't like, and what aspects could, could pretty easily be integrated into the Existing business. Uh, but honestly, it's just talking to different leaders in the crypto world, the NFT space, talking, even just listening to something like this, right? Getting educated before, uh, before deciding to do something that, um, is, is truly meaningful in the space.

Speaker 2 [50:19] I love Nik's point around just knowing your capabilities, like what Kal did. Kal's model, he's got more ownership of his value chain, he's got the ability to move quickly, and so, for what he did with Taika, the ability to partner with an existing community that he was already friends and partners with, right, a very authentic connection. And do something that his company is already built to do, is not something other companies could necessarily do easily, nor is it the right first start. So I love your point, Nik, around thinking about your existing capabilities and then matching that in a way that helps you step into web 3 authentically.

Speaker 4 [50:59] Fully agree with with Kat's and and Nik's points. Um, I think Looking at some of these bigger partnerships, I think what Nike and Adidas did are, are more interesting where Nike has acquired Refract, which is um a big sort of web 3 company I guess or brand and Adidas partnered with, you know, for example, Board IPF Club, and so I think rather than trying to do it on their own, it might be a good idea for a bigger companies partner with in an authentic way with communities like Friends With Benefits to Co-create something with their audience and really like listen to the audience and think about what they can offer to that community that would be unique to that community that they wouldn't have access to otherwise and let them also kind of lead that and that helps you get buy-in from the community and excitement to then, you know, create that and if you have excitement of a community like that, that's like, you know, a trusted um kind of trendsetter in the web through space, then that'll spread much further as well.

Brad Avery [52:01] Real fast, because uh if anyone watching this is, is really using this to learn about the space, could I get a definition for red pill?

Speaker 2 [52:11] So, it's a, a nod and a wink to the Matrix, you know, the blue pill, the red pill, which one am I going to choose? Often, blue pill is used to describe web 2. Red pilling, you've taken the red pill is for web 3. I like to talk about purple pilling, which is the journey between the two that you don't have to. Be full blown issuing a token in a Dow, like, uh, you know, everything is.e. Um, there is a way to take pieces of this, I think is, which is a little bit of a theme of our discussion here that are relevant for you. So, blue pilling web web 2, like, running things the way they've been run before crypto and Uh, NFTs and dows and all these other things, red pilling, like, fully immersed in web 3, eating, sleeping, breathing, crypto, NFTs, etc. um, and then I'll even throw purple pill in there to just be on the journey.

Brad Avery [53:05] So one of the big, not

Speaker 2 [53:07] an actual pill

Speaker 4 [53:09] there. So this is the beta label for the Friends With Benefits, and we have a, we have a red pill there. That's so cool little kind of wink to

Speaker 2 [53:18] oh my gosh, that's so cool.

Brad Avery [53:21] Love it. So, so one of the big questions, uh, that has come up around, uh, in the mainstream, I think around, uh, crypto and NFTs and web 3 is environmental sustainability. So, we know that sustainability right now is one of the most important qualities for a CPG brand to have, and consumers are increasingly making purchasing decisions based on how eco-conscious or sustainable a product is. However, a lot of these technologies particularly NFTs and crypto, uh, have some big environmental impacts due to the energy required to mint tokens or mine for Bitcoin, and that issue is really painted perception for, I think, a sizable share of consumers. So, uh, one, how can CPG brands square this conflict? And two, I mean, is Web 3 capable of reducing its carbon footprint and what's being done right now to, to help make it more sustainable?

Speaker 2 [54:14] And certainly, there are alternative blockchains being built that are less energy intensive. There are also advancements happening in the energy resources required for, say, Ethereum or other types of blockchains, uh, and how energy-intensive the mining process is. So, one, it's, it's on a journey, right? It's like starting super energy intensive. Some of the story gets twisted out there, but certainly, it's taking a lot of energy, and so, there's now entrepreneurs and businesses and startups coming out of the ground. To reduce, uh, that energy load on mining for these core most popular blockchains. At the same time, there are alternative blockchains, uh, coming out or that are already there that just need more sophistication and more time for more things to be built on them more easily. You look at Polygon, you look at others, um, that are more affordable, some of which have a different kind of energy profile to mining them, and I would expect. That to continue, uh, to be the journey that we're on because the consumer cares. There's certainly a lot of advocacy and activism coming from actually a very young consumer base and a gamer consumer base, who are really calling this out, uh, rightfully so, and so it's like everything, it's like on a journey, it can be better, it will be better, and we all need to push to continue to make it better.

Speaker 4 [55:31] Yeah, I fully agree on that. And on top of that, there are also some companies that can help offset carbon offset these projects. So I'm a member of this project called Deadfellows, and they partnered with a company called Ariel to carbon offset the carbon footprint, and Ariel has offsetted that for Ellen De Junior's um NFT as well. So I think that's important for chains like Ethereum, which is sort of the marquee chain for the biggest name projects right now, where the energy requirements are significant right now.

Brad Avery [56:00] What can brands do if, uh, you know, if some consumers think that, oh, you're doing NFTs, that's terrible for the environment, uh, uh, you know, but you're a brand that's, you know, very eco-conscious. What can brands do to help, uh, you know, bridge that divide that exists right now in the minds of a lot of consumers?

Speaker 2 [56:20] And certainly, if you are a, a planet-forward brand, not just an everyday brand that is caring about the planet and on a journey to do better, but you're actually trying to do good, and you get into NFTs, if you put it through your brand filter, you have a responsibility to do many things. Um, one, what Kal said, which is, if we're engaging in something that is not as planet-friendly as all of our other decisions, how do we, one, push for and make choices of platforms that are Most energy efficient, and then 2, offset those. Now, typically, a Planet Forward brand is not going to want to be in the business of do bad, then do good, to balance out, right? They're going to want to make the smartest choices to begin with. And so, you might push toward a less, um, Premium or less developed chain that has a lower energy footprint, but you're actually shining a light on that in a way that helps that chain become more popular, and so you're a part of this, of this journey and this process. Um, the other for brands that might not be as, like, fully plant forward, but they really, really care, and they're already have these commitments in their impact report, and they're carbon neutral as a brand. Then I would say the same responsibilities exist, really, which is continue to find a way to partner with the most energy efficient chains, invest in, partner with or support those that can, uh, help reduce the energy, uh, resource load of the chain that your NFT, uh, is built on. And continue to do the things you do for your regular business. So, whether that's carbon offsets, or other alternative investments that help balance out the impact. But I, I really like the idea of brands leaning into things and causing the premium chains and those that are the preferred platforms to just be better, faster, uh, in addition to offsets and things like that.

Speaker 4 [58:19] Yeah, I think what I would add there is that at the same time, if you're thinking of doing something. For, for most of these brands, you know, NFTs or any They have their core product and then they have sort of ancillary things. And so at the same time NFTs are digital goods, the, the footprint of sort of the actual item doesn't require to use any natural resources other than the creation and transfer, transferring it. And so, If instead of making a t-shirt or making NFT, you know, I don't know the numbers, but there's a non-zero chance that it actually may end up being more energy efficient to actually produce a digital good and share that with people because it doesn't require transportation, um, you know, you can control labor practices and all of that in a, in a much more better way than you can with these sort of murky, you know, real world supply chains.

Speaker 2 [59:09] And what Cal just brought up is exactly what I meant by the story gets twisted, is that we, there is a fuller story to tell around this, which you never want to tell in a, in a way that seems like you're minimizing or diminishing the work that has to be done on the energy load, but what Cal just brought up is, in fact, the broader story, um, that, that helps. With the, well, wait, why would this brand launch an NFT if I'm hearing it's so energy dependent? And, well, they sent you a, a satchel, a bag, a, a Yeti mug, you know, last year, and if you do the math, it might be equal or better. That gets to be more content than a headline has room for, but it's an important discussion in this space.

Speaker 3 [59:55] Yeah, that was one thing I was gonna jump on as well, like, I used to work at Hintwater, and, you know, we would get criticized for recycled plastic, whereas, you know, the alternative was you use glass, um, and what people don't necessarily think about in that instance. Distance is all the transportation and the energy going into remelting the glass and reforming it back. And, um, basically all to say, you know, there is always a fuller picture and most consumers really are headline. I mean, we all are headline readers, right? It's just a quick and dirty way. Um, but it's, there's an art to the storytelling to ensure that you can fully convey that story. Uh, a great example of a, of a sustainable brand that does this well is Bite Toothpaste on their sustainability page on their site. They walk you through everything around their packaging and why it's actually much better for the planet. Um, so, yeah, exactly what Kat and uh and Cal said, you know, it's, it's really around the storytelling, not just the headline of the energy required to maybe mint or transfer NFTs on the Ethereum chain.

Speaker 4 [1:01:05] And I think 11 just quick point there still, um, it's like instead of if we're talking about making non-consumable products now or, or, you know, items, if I get sent something, there's a chance, good chance that it'll end up, you know, in my cupboard or somewhere where I don't actually see it all the time. Whereas with NFTs, you know, I have a few different wallets, but I look at them, um, you know. Every day or so. And so if I have a branded thing, I'll end up seeing it and remind me of that, you know, much more frequently than for some physical goods.

Brad Avery [1:01:39] Well, Kat, Nick, Cal, thank you so much for being here today. This has been great. It's moving so fast. I feel like we could have the same discussion in 2 months and have a completely different discussion. I hope to have you back soon. Thank you.