The slow-to-market chase of NFTs and Clubhouse from the corporate station wagon…The risks of faking innovation.
Over the past few weeks, it seems the world has discovered Clubhouse and NFTs (non-fungible tokens), and as a result, brands are now cannonballing into the crowded pool. NFTs are scarce digital content represented as tokens. Think collector’s items or artwork - where the value comes from its uniqueness and scarcity. Baseball cards and fine art are how I originally wrapped my head around the concept. News broke this week of a Kobe Bryant rookie basketball card going for $1.7m because there are only 2 of them in mint condition. Why is the Mona Lisa worth so much but an exact replica worth so little? Scarcity. The value of the original. These are what an NFT is, except all-digital, with no physical product.
Two years ago, we recommended to one of our corporate clients that NFT represented an enormous white space to create limited edition virtual products. This client makes amazing clothing and apparel – it fit their brand ethos and young consumer target. It was brushed aside as too weird, not enough reach, they “didn’t get it.” To be fair, we were pushing some way-out-there concepts for the time: blockchain, crypto, direct-to-avatar.
The NBA, who consistently impresses with their adoption of innovation, saw an opportunity for a new revenue stream. They realized the next generation is more digitally native and they need to win new fans. So they entered into a licensing deal with Dapper Labs in 2019 that enabled people to buy and trade digital collectibles of NBA highlights. Seems cute, right? Fans have spent over $230m on these highlights – not to mention each time they talk, share, trade, negotiate about one of these digital products they are creating an advertisement for the NBA. Interestingly, the same client who “didn’t get it” is now trying to figure out their NFT strategy. They are chasing cool, from their corporate station wagon.
How do you quantify the missed revenue opportunity for being late to the party? Two years ago, every NFT platform would have piloted with this brand for next to nothing. The brand would have won all sorts of cool with the celebrities, musicians, and athletes that they covet, and in turn would have captured the brand love of these influencers’ legions of fans. The press would have more than compensated any proof-of-concept costs as it would be a great story: “Major Brand Validates Nascent Space.” But they missed that early-adopter window. Unfortunately, they join the slow-to-market, fast-followers chasing this “new” opportunity that is now at a premium. Sort of like everyone who joined Clubhouse the last two weeks.
It is very clear when a brand tries to capitalize on a trend after it has trended. Everyone can spot the imposter in the room.
You can’t fake innovation. Like the crypto tokens themselves, innovation is non-fungible. Either you commit to innovation as an organization or you are destined for slow-to-market, incremental changes. There is tremendous value in taking many small risks, early on. The investment level and risk are small. And as a new technology starts to build velocity, you have already lassoed a wave to drive competitive advantage and first-to-market, in-crowd affinity. Put aside the catch-up money you are spending on Clubhouse and NFT strategies today. Commit those funds to identifying and partnering with new, emerging opportunities. The companies perceived to be the most innovative wildly outperform their competitive set in a non-fungible token you may appreciate – your company’s stock price. Or you can keep chasing the party from your corporate station wagon, just don’t forget to turn the radio to Clubhouse.