The Urge to Merge

Welcome to The Web 2.5 Newsletter featuring news, content, musings, and memes at the intersection of Web 2.0 and Web 3.0.

Hi Everyone, it’s Dana here. Trying something new this week — an intro piece before the news roundup.

Yes, this week was a busy one between Starbucks, Doodles, Patagonia, and the Merge. So with a coffee in-hand, I picked the most Web 2.5 topic to dive into this week — Starbucks, which just announced the details of its forthcoming new blockchain-powered digital loyalty program, Odyssey. Here’s my two cents on what’s interesting about it.

1. The blockchain is fully in the background. It’s clear in Starbucks’ communications that it is talking less about the blockchain and the underlying technology — and more about what it does for the customer. For example, Starbucks is using the term “journey stamp” in lieu of “NFTs” to describe the achievement badges participants can earn through the program. Starbucks’ CMO Brady Brewer said as much in TechCrunch, noting, “It happens to be built on blockchain and web3 technologies, but the customer — to be honest — may very well not even know that what they’re doing is interacting with blockchain technology. It’s just the enabler.” We’re seeing this trend I refer to as “burying the blockchain” more and more from web2 brands launching into web3, and I expect it to continue.

2. The program is integrated, not parallel, to its existing web2 loyalty program. On the front end customer side, the login experience will be via Starbucks’ main app as well as use customers’ existing login credentials. This is a HUGE deal in web3, where cumbersome wallet-connecting login processes are the norm to gain credentialed access to a site. On the backend, this means Starbucks seems to be avoiding a dual CRM system world — one based on email/mobile as the unique customer identifier (web2) and another based on crypto wallet (web3). This is one of the best examples I’ve seen of a web3 launch that’s actually, from a data perspective, truly web 2.5.

3. Starbucks is reducing the participation barriers to purchase for crypto newbies. While the backend is hosted on the Polygon blockchain, the NFT collectibles available for purchase in the app will be available for purchase using a credit or debit card —with no crypto wallet required. The gas fees, transaction fees commonly paid by consumers when buying NFTs, will also be bundled into one seamless consumer price. It’s clear that this web3 launch will be marketed squarely at web2 customers.

4. A web3 peer-to-peer ethos will be part of the program. A hallmark of web2 was using loyalty initiatives to strengthen the two-way connection between a brand and its customers. Web3, on the other hand, is about enabling peer-to-peer connectivity, and it’s clear that Starbucks understands this. Per their blog, “For the first time we are connecting our Starbucks Rewards loyalty program members not just to Starbucks, but to each other.” A web3 ethos is clearly embedded in the activation in a way that many web2 brands don’t yet understand.

5. Starbucks is doubling down on loyalty. A primary component of Odyssey is to incentivize participants to complete quests and challenges in exchange for “journey stamps” and other digital rewards. For years, retention marketing teams have found it time intensive, manual, or just simply impossible to incentivize and track loyal customer behavior at scale (think of things like how to reward customers for tweeting about the brand, watching a video, or completing an in-store task). Starbucks is using the blockchain to bring better transparency and traceability to these loyalty activities — and mark my words, while many approach launching into web3 as a customer acquisition tactic, some of the most interesting applications for the technology will happen on the loyalty side.

6. Oh and lastly, SEO still matters in web3. h/t to Zeneca for this gem.

What’s notable about all of this is that rather than deploying a common market entry strategy for web2 brands of “borrow before you buy” (aka just partnering with existing web3 native projects to test the waters), Starbucks is setting an example for a non-stunty, fully integrated web2 + web3 launch. This will be one to watch for sure!

And now, to the news…

The Urge to Merge

Last night was a huge deal in cryptoland with the Ethereum blockchain’s long-awaited switch to a more energy-efficient infrastructure. Commonly referred to as the “Merge,” the switch from a “proof of work” to a “proof of stake” approach appeared to go smoothly, as did the ever-important Google easter egg countdown clock. There are articles across the web on the Merge including here in NYT, CNN, CNBC, and Coindesk.

Celebrity Sightings

Actor Jim Carrey revealed that he secretly dropped NFTs under a web3 alias, StringBean, earlier this year. While there were subtle hints and clues regarding Carrey’s identity, this marks the first time the actor reveled he was behind the five animated, autobiographical paintings.

Big Brand Energy

GameStop announced that it is partnering with FTX, the crypto derivatives exchange. The deal is a customer acquisition play for FTX, who is looking to GameStop to drive new customers to the FTX ecosystem. In exchange, GameStop will become become FTX’s “preferred retail partner in the United States.” In the most Web 2.5 part of the deal, the partnership will mean that GameStop retail stores will start carrying (drum roll) FTX gift cards.

The MoMA is hinting that it is eyeing the world of web3, considering using the proceeds from the sale of physical artworks from Picasso, Bacon, Rousseau and Renoir to expand the museum’s digital presence, including the possible purchase of NFTs.

iHeartMedia is entering the Metaverse with iHeartLand on Roblox where you can “join your friends at amazing real concerts from your favorite artists and become a music tycoon.”

Financial services powerhouses Charles Schwab, Citadel Securities, Fidelity, Paradigm, Sequoia Capital and Virtu Financial are all teaming up to launch a new crypto exchange, EDXM.

Crypto is Alive and Well

Merriam-Webster adds ‘Metaverse’ and ‘Altcoin’ to the dictionary in recognition of the expanding adoption of crypto.

A San Diego car wash is using NFTs to drive up demand.

The Chicago Bulls are releasing NFT artwork reimagining its iconic logo.

Crypto is Dead

NFT renting protocol Rentable shuts down, failing to find product market fit.

South Korea issues an arrest warrant for the developer of failed cryptocurrency Luna.

Trademarks Don’t Lie

Paramount filed for NFT trademarks for its 2004 teen comedy Mean Girls.

Yuga filed for a gaming trademark for METARPG.

$$$

Doodles announced a $54M raise at a $704M valuation this week. NFT sales surged 1200% in the aftermath, with the floor price up 19%. The round was led by Seven Seven Six, and despite headlines suggesting that the firm’s co-founder Alexis Ohanian led the deal, Ohanian took to Twitter to direct the praise toward the deal’s lead Katelin Holloway.

Dust Labs, the creators behind the buzzy launch of y00ts, announced a $7M raise.

Arpeggi Labs landed funding to build web3 music software.

Alchemy, a web3 developer platform, is raising $12M for a new venture capital fund.

Stacked, the web3 version of Twitch, raised $12.9M.

Drops of the Week

Goblintown launched Grumpls NFTs.

Her Majesty Queen Elizabeth II’s NFTs are no more.

Longer Reads

How Web3 Is Uprooting The Relationship Between Brands And Creators. Forbes.

Can Web3 Remake Hollywood? Coindesk.

Jobs

Vice President, Web3, Crypto, Fintech, & Metaverse Business Development Manager, JPM Payments. Apply. Article.

General Counsel, Web3 and Metaverse Legal and Business Affairs, Creative Artists Agency. Apply.

Corporate Counsel, Web3, DraftKings. Apply.

And Finally…

Crack open an ice cold one for the Merge this weekend. You deserve it.

And that’s a wrap! See you out there in the interweb3s.