What a B2B SaaS product and a Birkin taught me about NFT Hype
I know why NFTs are cool.
I started writing this post before the bottom fell out of the market, but it makes it even more interesting to discuss the hype around NFTs. Why are they so popular?
(A tldr for one dear reader. Friction increases trust and desirability of things. NFTs have a lot of friction. Brands can harness this idea in their marketing. Boom)
Personally, I’m not fussed by the idea that NFTs have no “real” value because many things I purchase have no real value or minimal value. I’m a marketer. I believe in the hype, both as a concept and as a consumer.
I’ve been pondering this question of NFT popularity and hype since I learned about NFTs, but it wasn’t until Packy McCormick interviewed Alex Danco of Shopify that my thoughts coalesced. (The post on Shopify and Token-Gated Commerce is fantastic, and I highly recommend reading it) It had nothing to do with the hype around NFTs, except that Shopify, in noting that hype, is making great strides to use their platform to make utility happen for NFTs in e-commerce, which is cool. The post sent me to a Colussus podcast, which was even more riveting. This is when I just love the internet.
My botched TLDR of the podcast, or at least the part relevant to NFT hype, in my estimation, was about friction. Again, this is a bastardization of what was said, but basically, Amazon is an entirely frictionless buying experience for the most part. You don’t build any relationship with the seller; there’s no trust created. It’s practical and one type of shopping, but it’s not a “spark joy” kind of shopping.
But some “spark-joy” shopping has friction either intentionally or unintentionally built-in. The best luxury example is wanting to buy a Birkin, which I’ve clearly never done. Still, from what I understand from following BryanBoy, you build a relationship with your SA (sales assistant) (friction needs acronyms and lexicons, fact!), and then you get on a list, and then eventually, they call you and tell you one is available, maybe in the colorway you want maybe not. Then you get an appointment, for which you need your passport, and then you turn over your credit card. Then you Instagram about it. That’s a pretty long process, but it builds affinity for the purchase. Many studies (like here and here) prove that humans like scarce goods. And we have a bias toward complexity, valuing actions or systems that are more complex merely because of their complexity. Heck, you probably even like this blog post more because I added the complexity of academia into it!
In short, duh, we like things that are hard to get.
What was interesting in Alex’s podcast was the introduction of trust into the e-commerce transaction due to this friction or complexity. And that this is critical for building an e-comm business that’s not Amazon. You need to develop a trusting relationship with your consumer so that they come back, so that they identify with the seller and the good, and they ascribe more value to the purchase and the process. And, of course, one way to do that is friction.
And you know what has a lot of friction? Buying an NFT. All the faffing about changing currencies, bidding, Twittering, Discording, Drops, minting, etc.. is friction. It tells your brain this is hard to get and thus worth having. And then you get to Instagram it (well, Twitter PFP, but you get my point). It’s basically a Birkin. (but not a meta-Birkin, that’s a whole different can of worms) Maybe this is a crucial underpinning of Web3, the IYKYK (if you know, you know) aspect. It’s hard, you can lose your money, and it’s anonymous. Now that anything I want in a commercial sense is available from Amazon with one-click-ordering, maybe that artificial friction is incredibly desirable.
Another idea Alex referenced was the magic that eBay lost as it grew. In the beginning, when it was one-to-one, collector to collector, you had that friction and trust that made the marketplace really fun. With maturity, you lost friction, you lost small sellers who were using trust as part of their business model, and then it was just a competitor to Amazon. High trust commerce is not about convenience.
Back to NFTs, trust is also about community and social proof. And when we are talking about a digital good with no intrinsic value in most cases, that social proof and community agreement are hugely important. It’s not a part of the value; it’s the confirmation or corroboration of the value, like the Federal Reserve backing the dollar bill. Your NFT project needs an active Discord for legitimacy.
When I think about brands trying to use this idea of friction and NFTs, I think how can one increase this friction? (within reason. The podcast is clear about that, lousy checkout or shipping experiences are NOT good friction. You want intentional friction that increases the value of the transaction, not annoys the consumer)
Here are some ideas for introducing friction-driven value into any product or experience. (heavily influenced by Mardon, R., & Belk, R. (2018))*
Time aristocracy: When an item is available to those who put in a lot of time to get it. Like buying a bunch of computers and minting bitcoin, or waiting months for a reservation at a hot restaurant. Another way to look at this is “old things” that there can be no more of, which combines time with actual scarcity.
Artificially limited availability: Classic scarcity. Make less than you can.
Location/time-based Availability: Only available at certain places or times. Like a pumpkin spice latte in the fall. Or whatever.
Social-based availability: I loved this NYT article about the pilates instructor who only lets people into her hugely expensive classes if they have 4 Instagram friends in common. Hailey Bieber is a client.
Skill-based availability: The consumer needs to have some unique ability to acquire something. Super bowl rings. In-game purchases and winnings from different levels.
This idea also made me wonder– this article in Vogue Business talks about on-ramps to web3, making it easier for consumers to get into digital fashion. But is that the smart move? Probably for scaling a profitable business but not quite as much fun as spending a few hours moving eth from coinbase to metamask to opensea to get my super sweet PFP.
Also, if you’re scratching your head with any of the terms I’m batting around here, I’ve just released a white paper that conveniently has a glossary.
*Mardon, R., & Belk, R. (2018). Materializing digital collecting: An extended view of digital materiality. Marketing Theory. https://doi.org/10.1177/147059311876772
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