Permissionless Brands

Chu and Fancy are part of the core team at Protein Community, these thoughts are their own and don't represent the views of the full Community. We'd like to say thank you to Other Internet and their article on Headless Brands, which was integral to our thinking.

By Forefront and Chu and Fancy - Dec 1, 2021

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Chu and Fancy are part of the core team at Protein Community, these thoughts are their own and don't represent the views of the full Community. We'd like to say thank you to Other Internet and their article on Headless Brands, which was integral to our thinking.


Something is happening to brands...

We're seeing it in the marketing folks lurking in Discord servers, we're seeing it in Gen Z aping into meme coins, we're seeing it in beer companies launching NFTs and buying .eth addresses. Brands are starting to think about Web3, not only in the surface-level ways described above, but also in ways that are far more meaningful, regardless of whether they fully understand it yet or not.

This thinking is already buzzing throughout social communities like Friends with BenefitsBored Ape Yacht ClubCryptoPunks and Nouns DAO, communities that are driving the concept of 'brand' as something more fluid, valuing authenticity over control and consistency. By their very nature, these brands are permissionless.

The concept of being permissionless is the most powerful bootstrapping tool for a brand. It's the potential to redefine the anatomy of a brand itself, the ability for members to create value however and whenever they feel without permission, combining the attention and ownership economy to distribute a brand between an entire community that owns it.

To provide some historical context, modern brand communications began through a one-to-many broadcast medium, an authoritarian-like perception of brand through curated channels like newspapers, TV and adverts----a sort of psyops on the masses.

Then Web 2.0 and the introduction of user-generated content forced brands through the fractured lens of social media. Without this broadcast control, brands leaned into covert exploitation through social listening, pyramid scheme referral programs, and preying on cultural movements in the name of reach.

In this article, we'll dive deep into the issues that plague web 2.0 today, unpack a framework that defines three key principles of Permissionless Brands, and share case studies that are manifesting this potential. Then we'll wrap up with additional takeaways for how Web 2.0 brands can prepare themselves for a Web3 world.


Brands, Control and Culture: How community changed the brand

'Brands' have always had a tricky relationship with controlling their place in culture. In the early days of Web 2.0 (1996), an email campaign to boycott Tommy Hilfiger was sparked by rumors that the designer had made racist remarks on the The Oprah Winfrey Show, saying "If I had known that African-Americans, Hispanics and Asians would buy my clothes, I would not have made them so nice."

The rumor stemmed from the fact that wearers of Tommy Hilfiger couldn't believe how a brand like Tommy Hilfiger, which made clothes for runways and the preppy elite, could accept their clothes being appropriated for streetwear. While these rumors have since been proven false multiple times, including confirmation that the designer was never even on the show, they still resurface on social media today ---- decades after they never happened.

The persistence of this digital urban legend suggests two things: 1) there is a pervasive distrust in how brands control their image, compared to how they operate behind closed doors, and 2) brands rarely, if ever, have the final say in how their brands are integrated in the real world.

"A brand has no objective existence at all: it is simply a collection of perceptions held in the mind of the consumer." -- Susan Fournier, Harvard Business School

The concept of brand is, by design, a manifestation of the community which adopts it into their lifestyle. Without the community there is no brand. This truth has been relentlessly proven for brands like Clarks (utility wear), Adidas (sportswear), and even Brandy Melville (prepwear), which have been reappropriated for mod and punk, streetwear, and more recently, cottagecore subcultures.

Fast forward to the present day, and brands continue to force a broadcast approach through an even more fragmented digital realm, leaning on 360º integrated marketing plans, invasive targeted ads, user segmentation and multicultural marketing. In the 'peak influence' era, where social media was manicured and gentrified, brands felt they were able to control their place in culture by selectively partnering with the influencers who they thought could further their reach.

But the tensions between these relationships were becoming more evident. There's the famous case of Abercrombie & Fitch offering money to Mike "The Situation" from Jersey Shore to stop wearing the brand's clothing, as well as the dilution of the impact when mega influencers like Kim Kardashian work with so many brands their followers aren't quite sure what they even stand for anymore.

And as influencers grew their audiences into communities and some became true content creators, something shifted: those who were previously paid to sell teeth-whitening products were now launching their own merch lines, licensing deals and building toothpaste empires.

By structuring a relationship between influencers and brands based on fees, brands adopted an approach of buying their way into communities. Ultimately turning the influencer into a contractor and establishing a dichotomy where the brand and influencer exist in separate realms with conflicting interests.

And herein lies the issue: brands thinking they can buy their way into others communities, rather than truly integrating and empowering a brand with its own community.

A Web3 Revolution

Web3 technologies have the potential to truly shift ownership through concepts like decentralization and transparency, challenging the broken relationship of control between brands and consumers. However, like all technologies, the morality of this tech is defined by how we engage with it.

So for web3-native brands, like Bitcoin, Ethereum and other nascent blockchains without any central CEO or marketing director, they used mimesis to create communities of brand maximalists, which could be easily remixed and 'shilled' into existence. Today however, while we're still seeing memes shilled into existence, we're also seeing something new emerge.

Welcome to Permissionless Brands

Let's take a look at key features of those that are pioneering and defining this new landscape.

  1. Adaptability

  2. Humility

  3. Decentralized Ownership


1) Adaptability = dynamic bootstrapping

For new brands forming in the Web3 space, being permissionless means the ability to bootstrap and adapt the brand at the speed the brand evolves. It's the ability to level up as you go, a network effect that challenges the conventional model of external agencies, consultants or 'in-house' talent and emphasizes purpose, not perfection.

Through 'in-DAO' branding, we see realtime permissionless brand innovation. Members might create alternative logo designs, curate a DJ set, put forward a proposal for a growth strategy, and invite friends without anyone explicitly asking them to. Here, each iteration mutates the brand to reflect the personal tone of the member.

We're seeing this in the hive mind of PHLOTE, where people are solving UX and logo design problems. It's cropping up in the Discord stages everyday, where over 100 people in the community are collaboratively working together using tools like Miro, Figma, Googlesheets. And we're putting it into practice at Protein Community with a series of workshops, progressively defining Good Growth through continuous collective refinement.

2) Humility = the community is always right

For too long, Web 2.0 brands have been 'telling' consumers what to buy and when to buy it, leveraging social listening and targeted ads in order to gain a competitive product-market fit.

However, web3 brands can leverage distributed decision making and collective steering in the form of open discussion around the brand, to lead to instant community market fit.

The idea of bringing power back to the community is the shift from "user-created content" to "user-owned content." It's the reason we've seen DAOs explode this year, whether that's voting collectively on the direction of the brand strategy, proposing strategic partnerships, or even debating the value of something going to a market.

The ultimate trend in DAO governance, however, is that more and more power is going to be placed in the hands of the community. Because when it comes to community market fit, the community will always be right.

3) Decentralized Ownership = tokens for everyone

Social Tokens are a type of this digital asset that are backed by the reputation of a community, individual or brand. We like to think of them as a tool for cooperation and coordination, where value is created through an individual's or community's interactions and reputation.

One form of social tokens are stonks (meme stocks). Something all too often forgotten is that publicly traded companies are owned by decentralized shareholders, with actual legal and social responsibilities to them. That said, most corporate accountability is almost nonexistent in 2021 as financial giants, legislation, and powerful boardrooms have spent decades conspiring to decouple the shareholder from their shareholder rights.

But stocks are just one method of achieving decentralized ownership that's been co-opted. What can social tokens provide when they're developed for the very communities that have been building the brands themselves, as in the case of Clarks and Adidas? How can we bring power and ownership to these subcultures and communities that have already brought the brand to new heights after claiming ownership over the brand themselves?

The reimagination of social tokens, digital currencies, and ledger-based social exchange are ushering in a revival of cooperative economics, wherein Web3 brands can, from day 1, integrate and distribute ownership to the early adopters and brand ambassadors shaping the brand.


Now that we've explored three key characteristics of Permissionless Brands, let's look at some case studies:

Bored Ape Yacht Club

Bored Ape Yacht Club is a series of 10,000 unique NFTs, where each Bored Ape is "programmatically generated from over 170 possible traits, including expression, headwear, clothing" all associated with different rarities.

While at initial launch, Bored Apes sold for 0.08 ETH, six months later they were selling at a floor price of 39 ETH. At the time of writing that's roughly $180,000.

How? The answer is adaptability, ownership and community.

For owners of Bored Apes, they don't just change the profile pictures because they want to signal their status to the brand; they also do it because it's in their interests to promote it. Why? Because the NFT contract states the Bored Ape owner has full commercial rights for the apes that they own, and holders therefore own a small part of the entire Bored Ape ecosystem.

This recently released Bored Ape roadmap 2.0 shows the reach and fluidity of the Bored Ape Yacht Club brand vision, exploring trademarks for streetwear and mobile applications, and bridging their brand across different aspects of culture.

At the same time, because Permissionless Brands like BAYC grow through the community who hold Bored Apes, the brand itself is open for cultural observations from outsiders at a very personal level.

In cases like this, we're seeing a perception of the brand that was unlikely intended by BAYC, but is a consequence of the status symbol and late capitalism, which it has created through its ownership. Either way, the BAYC community now has an opportunity to respond (or not) to this feedback and to rework its community structure (or not).

This is an example where a permissionless brand can exist, giving ownership and commercial rights to its members, but without full control of what others see when they look at those who represent the brand.

Friends with Benefits

Friends with Benefits (FWB) is a social DAO at the intersection of crypto x culture, a space for people to come together, hangout, and collaborate. While currently living primarily in a Discord server, FWB is constantly exploring ways to expand, whether that's creating City DAOs, IRL events, partnerships or launching products with instant Community-Market fit.

When FWB launched a year ago, the price of entry in the form of 75 $FWB was roughly $20. Almost ten months later (September 2021), that entry price was almost $14,000.

While this model for entry is being questioned by the community for its scalability and ethics, using a social token for access has created a powerful sense of 'exclusivity' unparalleled to most brands in culture. For those who are on the threshold of the 75 $FWB needed for entry, the social capital vs financial capital is a constant test of brand loyalty.

This intimacy between the individual and community makes FWB a pioneer in the model of Permissionless Brands. Its adaptability to build in the open leads to vision workshops with hundreds of participants and hackathons, where members launch projects in days.

It's also through these kind of contributions that members are paid in a mix of $FWB tokens and USDC (a stablecoin whose value is mapped to the dollar), giving members more decentralised ownership and 'skin in the game' every time they create value for the brand itself.

Another example of FWB's approach is the evolution of its membership through its City DAOs and scholarship programs: new onramps that create a more accessible entry point for new members. The motivation to stay truthful to FWBs original perspective, being a diverse space at the intersection of crypto and culture shows the adaptability to innovate and the humility to listen.

While these examples show the potential of brands in the Web3 space, the incentive for permissionless brands can become a dangerous formula for brand confusion, disinformation and bad growth. Let's explore how...

The Story of Loot, $AGLD, and Bloot

Loot is an NFT project made up of 8,000 text files, each containing a random set of 'in-game items' for a game that doesn't exist yet.

When the project launched, Loot was able to be claimed by just 'paying gas' (small amounts of Eth needed for a transaction to be recorded on the Ethereum blockchain).

Within days, millions of dollars worth of Loot was being bought and sold. While on the surface, this price is pure confusion, but for those who understood...Loot was the holy grail for Permissionless Brands; a minimal foundation that allows others to build entire ecosystems on.

Almost immediately, the community members had released visuals, extensions and microgames to make the text files more tangible, expanding the Loot ecosystem. The most significant was a digital currency $AGLD, airdropped to all Loot holders.

While the originator of the Loot project (Dom) and the creator of $AGLD were not connected on the project, $AGLD (a digital cryptocurrency) at one point reached $5, giving roughly $50,000 USD to every Loot holder. This value creation for a brand and community, in a matter of days, showcases the extreme potential of Permissionless Brands in Web3. For $AGLD, it was the community -- the Loot holders -- who adopted it and made it real.

Then, in the flurry of expansion, variations on Loot started appearing: Loot for CryptoPunks, Treasure for Loot, and the infamous Bloot (not for weaks). Bloot quickly took hold as an alternative to Loot, with 'armour' like 'silver nipple rings of gains' 'shitty shoes' and 'ball gags'.

While initially Bloot rode the brand hype of Loot, quickly inside the Bloot brand, the tone turned to toxicity and rivalry. While the Bloot value has since plummeted and the project pretty much died, the lesson is real; a brand is only as authentic and valuable as the community that drives it. In the nature of a Permissionless Brands, cultural hijacking can be very real.


Mapping Web3 onto Web2

For established brands, entering the state of permissionless is a harder journey. But don't worry --- if you're reading this, you're still way ahead of the curve.

At best, the inevitable shift towards a Web3 world is an opportunity to scale your brand and build lasting relationships with your communities. At the worst, it means giving up some control, ownership and having to genuinely listen to your flaws while rebuilding with your brand champions. It's ultimately about taking the features your brand has and putting them through the lens of adaptability, humility and decentralised ownership.

Braintrust

Brands like Braintrust have done just this. Their story began as any other talent network would, building up a community of talented freelancers, as well as a solid roster of clients in this age-old matchmaking scenario.

However, through the introduction of $BTRST, a DAO token, they've created a shared value system where talent is able to earn bounties or token rewards through strengthening their talent network, taking classes to learn more about the platform, referring more clients and even designing emojis and GIFs for the DAO's Discord.

While the brand helped craft starter assets for the community to work with, determining the copy, tone of voice, and creative direction of onboarding new members was left almost entirely up to the individual. It was a much more dynamic and open-sourced approach than the endless rounds of feedback brands typically go through with micro-influencers creating a #SponsoredAd.

Going forward, members are able to initiate proposals and vote on important topics, including determining the commission fees that Braintrust should take in. They're ideating on new token perks (insurance for freelancers anyone?!). And the token's already been developing some new market mechanics----clients are able to buy $BTRST as a way to prioritize their job listings and cut through the noise.

In this case, the adaptability in bootstrapping their talent network, humility to allow their community to shape key decisions, and then decentralization of ownership through tokenomics has allowed Braintrust to do something that no freelance union has ever been able to before. They're building a brand where their community can actually collectivize their participation and own.

The Hundreds

Another good example of mapping Web 2.0 onto Web3 is in the case of streetwear brand The Hundreds.

Bobby Kim, the founder, is no stranger to musings on blockchain technology. In past blog posts, he writes on the creative potential for minting NFTs as an alternative to courting art galleries and publishing houses, to put his photography work into the universe. The potential for Web3 was clearly brewing in this innovator's mind.

Then, on August 31st, 2021, The Hundreds decided to fully launch into the Metaverse, offering their community an opportunity to mint 25,000 unique combinations of their iconic "Adam Bomb" logo. They built in quirky personal touches that play right into the mimesis, scarcity and adoption of crypto, creating a mechanism where NFTs not sold at the end of mint period would "blow up", marking a poetic execution of a fixed cap supply.

Similar to previous NFT examples, by joining the "Adam Bomb Squad" (ABS), community members were signing up not only for ownership into The Hundreds brand, but also for unique perks, including exclusive merch and early links to drops.

The whitepaper continues,

"We are working on technology to allow Adam Bomb Squad NFT holders to 1) buy The Hundreds clothing featuring their bomb, and 2) be rewarded for the sales on the clothing to others. We want The Hundreds to win, but there's no reason why our community shouldn't also partake in the upside."

If there's one thing to note, it's that none of the mechanics outside of the NFT tokenomics are really groundbreaking to streetwear or fashion brands. The idea of exclusive merch, early access, and turning brand moments into collectibles is (for better or worse) native to what streetwear has become in the age of StockX, Yeezy drops, and Grailed.

Rather, what's unique is the ability to construct collective value and mutual interests through a digital NFT that positions The Hundreds and its community of ABS holders in the same boat. It's a way of going public for a privately owned brand, along with the Discord and social mediums that facilitate participation, and begin to dissolve the split between brand and community, where the two are one.

These examples mark only the tip of the iceberg of how legacy brands can tap into tokenomics, NFTs, DAOs and blockchain to unlock the true creative power of community.

On Letting Go and Becoming Permissionless

As we've seen, what's exciting about Web3 is that it's a constant social experiment, permanently in flux. Brands that step up now will define the conversation for brands of the future and learn with their community as they go.

We advocate for 'progressive decentralization', or making a series of decisions that bring your brand closer towards community ownership. After all, it's a big decision, and once you embark on this journey, you open the floodgates of philosophical questions regarding governance and voting rights to holders over its future.

It's not about dropping a shiny NFT collection or tapping into crypto slang like "gm" or "wagmi", but instead, this driving shift into Web3 will force brands to relearn and restructure the values and configurations of your organization altogether. In short, shifting into Web3 is not a marketing decision, it's a philosophy in practice.

Ultimately, it means letting go of the idea that you, and solely you, possess permission to tell others what your brand is. It means seeing misunderstanding, criticism and feedback not as an attack or assault on a brand you've worked so hard to create, but rather as a gift that someone cares enough about your impact on the world to try to help improve it.

It means seeing the dissolution between brand and community, where brand is community, and community is brand.

To help along with the journey to becoming permissionless, we've put together some Web3 thought-starters for brands:

  • A fashion brand launching a competition for fashion designers pitching a new concept collection; each submitter receives tokens (which they can hold or sell after receiving), while the competition winner receives additional tokens and revenue shares for their design and sales
  • A consumer tech brand could provide NFTs for each product purchase that provide holders the opportunity to propose new product ideas, vote for new product features, and tap into exclusive customer support
  • A brand with a humanitarian lens could create funding pools through limited sales where community members could direct reinvestment into specific parts of the brand growth, community initiatives, or redistribution
  • A brand with large global impact could publish on-chain proposals and updates to major brand decisions building history of documented transparency with community

Each of these examples create a long term relationship, where your community is involved in and can claim ownership over existing processes within your brand -- from start to finish, and beyond.

So, as more folks from brands enter the Web3 space, we encourage you to think about this: What aspects of your brand's operations can you partition to the community? What aspects can they truly own and participate in?

To leverage brand jargon, Web3 permissionless branding is the ultimate flywheel, in which the communities participate in the flywheel, shape the brand, and then become the ultimate direct "consumers" of the brand.

Brands that continue to stick by their guns, touting "brand values" and campaigns over true decentralization, will be left in the past, while their communities which used to love them will move onto brands they can own and build -- with or without their permission.

-- Fancy and Chu


Disclaimer: This article was originally written in October 2021. Some references and case studies may have developed new trajectories since original conception; but all principles remain intact.

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