Magdalena Kala: "I'm a Consumer Needs and Wants Investor"

Brian: [00:00:51] Hello [00:00:40] and welcome to Future Commerce, the podcast about next generation commerce. I'm Brian.

Phillip: [00:00:55] I'm Phillip. Today we've finally hit [00:01:00] our 2021 OKR today, which was to get one of my favorite people on the podcast. We tried. It took us a year, but here we are. Welcome, Magdalena Kala to the show. Welcome, Mags.

Magdalena: [00:01:10] Thanks so much. Excited to be here!

Phillip: [00:01:12] She's on a press tour. This is her third podcast this week.

Magdalena: [00:01:16] And third podcasts of my lifetime.

Phillip: [00:01:18] What made you want to like [00:01:20] jump on a podcast all of a sudden because we've tried to get you on for years?

Magdalena: [00:01:24] Well, so when we initially canceled, it was not because I was scared of it, but because of unforeseen scheduling challenges and other. But I've definitely always been terrified of podcasting. I don't particularly like my accent. [00:01:40] I hate when it distracts from the message. And so it's one of those things that I've always felt very self-conscious about, and I am not scared of many people. I don't like operating out of fear. I almost never make any decisions out of fear, at least I try not to. And so when I realized there was actually a loop that was going on in my head, avoiding podcast [00:02:00] invitations and kind of finding excuses, etc., I decided, you know what? I'm just not just not going to do that, but actually, actively try to do some podcasts to kind of fight that fear.

Phillip: [00:02:11] Wow. Do things afraid, right? That's courage, right? Do it.

Magdalena: [00:02:17] And I'm an adrenaline junkie, and there are very few things [00:02:20] that give me an adrenaline rush these days. So surprisingly, this is one of them.

Brian: [00:02:25] We give Magdalena Kala an adrenaline rush?

Phillip: [00:02:31] I don't know that we can take credit for it. But sure, why not? Let's do it. Yeah, it's an honor to have you here. For people who don't know you, [00:02:40] I would describe you, at least right now as someone who is thinking about the future of the startup ecosystem. Well, kind of always. At least that's how I've known you. I had subscribed to your newsletter a few years ago, and at the time you were talking a lot about direct-to-consumer and consumer investing. Nowadays, [00:03:00] you're very focused on Web3, but maybe you give your own primer because I don't want to take it away from you. How would you describe yourself and what you do?

Magdalena: [00:03:09] So I feel very strongly about my identity as a consumer investor, but how I define consumer is very different than what most investors define as a consumer. So [00:03:20] for me, it's really, truly how and why people spend their time, money, and attention, right? So when a lot of people hear consumer, its brands or maybe consumers social marketplaces. To me, it's truly the totality of how we spend our time and money. And then so from that standpoint, one of the most interesting things [00:03:40] happening in that kind of layer of consumer behaviors and transactions was DTC revolution, what was happening there. But quite frankly, there's not that much new happening there in the last couple of years. And so I've been kind of thinking through what is the next thing and then how will our behaviors evolve? And I've been on this digital [00:04:00] goods train for a while. It makes all the sense in the world to me. And so kind of NFTs and kind of the Web3 world was a very natural evolution towards that.

Phillip: [00:04:10] And one of the interesting things is watching how you're not alone. There are so many of the folks that I followed [00:04:20] from, like DTC Twitter, who have also made that leap over. So I'm really excited today to dive in. We've never done a 101 on any of this, on most of anything on Future Commerce. So I really want us to have like a really informed deep discussion and get as [00:04:40] nerdy as we can today. But Brian, these are all brands we've talked about in the past. I mean, the ones that used to come up on your old newsletter, you know, Rothy's and Stitch Fix and they are names that were familiar. It's rare to find someone today who [00:05:00] has a few years now of having come through the old era and now into the new. I'm wondering how that informs your perspective. What are you seeing right now and how you know, even in the last year, how things have changed so much? What is the current state of affairs for you and what's exciting right now?

Magdalena: [00:05:19] In [00:05:20] DTC specifically?

Phillip: [00:05:21] Yeah.

Magdalena: [00:05:22] So I think in general, it's an interesting way where that whole cohort of start ups had product innovation, right? But also had this marketing innovation, especially early days of Instagram advertising and influencers and whatnot, which is [00:05:40] all kind of now a very old standard playbook. And so you have product, you have innovation, marketing innovation, and then kind of ancillary business model and other innovations. And right now, I feel like we haven't seen as much of a jump on those three dimensions. So in general, I am still very [00:06:00] bullish about consumer brands in general because the reality is people will always have needs, they will always buy things and services to fulfill those needs. New brands will be launching and so there's always going to be something interesting there. And I do think that the direct consumer not as [00:06:20] a channel.

Phillip: [00:06:21] So going back, so they had material innovation, they had marketing innovation and those things are commonplace now.

Magdalena: [00:06:26] Yes, exactly. I think  [00:06:29]where we are right now, people will have needs, continue to have needs, continue buying things. Brands will continue launching. And so it's not really not that different. What I'm looking for [00:06:40] is that product company innovation like, well, how are you differentiated? How are you bringing something new to the market that is not just a new color palette on your branding? And then at the same time, it's we're so saturated with all these different products that even when you are differentiated, how do you think about your go-to-market? How do you think about your customer acquisition? How do you think about [00:07:00] your customer retention? At this point, if you don't have true differentiation in the product and don't have true differentiation in kind of customer acquisition and customer acquisition arbitrage, it's just not that interesting from an investment standpoint. [00:07:13]

Brian: [00:07:14] Yeah. What I think I like about what you're saying is that you're [00:07:20] attracted to what's interesting, the new. And I think that's what makes your content and your thoughts so fun is you're I think you're like, ok, we saw this explosion of change in the world of consumer goods and the world of brands, [00:07:40] and that was really interesting. And it's going to keep having moments and they're going to be new things that come out. But it's not the same kind of new as it was a few years back. The new is now let's look at how all of this is going to roll out  [00:08:00]in a new way on top of a new web. So you're you're really bullish on Web3, and we started out 2021 talking about Top Shot, and it was about fandom and digital collectibles, and it morphed into like art and status and flex. [00:08:20] So we see this world of consumer. You're still in the world of consumer. We see this new web that's rolling out. So where does that leave us at this moment with the merging of those two? And does it look like Applebee's NFT or does it look like something else? {laughter} [00:08:40]

Magdalena: [00:08:41] Yeah, it's an interesting question, right? Because like, I don't think I'm a consumer brands investor. I don't think I'm a consumer tech investor. I'm a consumer needs investor. And so where that kind of connects with Web3 is flexing is a need, status signaling is a need. And I think actually the proper tech-like classification [00:09:00] there is really collecting versus speculating. I think art collecting is actually flexing and speculating in many ways. You can speculate on your collection. Those are, to me, it's you either keep it or you expect to flip it for profit and, [00:09:20] you know, obviously shades of gray. But where Web3 and NFTs, in particular, are going are actual utilities, actual benefits to the users that go beyond just one of those two things, collecting or speculating. I love, I think, it was a couple of days ago that Andrea actually tweeted about what [00:09:40] if a company like Eight Sleep dropped tokens for people based on how much sleep you get? So for every night that you actually got eight hours of sleep, you get a token drop. And then thinking it through like those things and how it incentivizes people to actually achieve the goals that they have. But they need a little extra push, a little bit more of like a dopamine [00:10:00] hit for doing that rather than because it's good for me. I love thinking through those applications. [00:10:05] I love thinking through how brands can actually use some of these technologies for better rewards to their customers and to their community. We keep talking with communities all the time, community to kind of build brands, etc. But most brands actually get built, you know, it's the classic [00:10:20] 80-20 rule. That 20 percent of your customers, fans, etc are actually responsible for 80 percent of everything: of word of mouth, of excitement, of sales volume. And so how do you think about rewarding those 20 percent and giving them a share of the upside, especially as an early-stage brand? So I'm thinking through a lot [00:10:40] of those real utilities from a brand standpoint and from the consumer standpoint. [00:10:44]

Brian: [00:10:45] You sort of differentiated two types of people there, which I find really interesting actually. I wrote an article on this. Sort of those that are like investing and speculating and what you're putting out and those that are enjoying it for the sake of enjoyment [00:11:00] and want to keep it. And like it actually brings them personal delight, and that's why they're buying in. And I think that's a huge point to make. Obviously, there's crossover. There's going to be people who buy things because they want to invest in it and they also enjoy it. And maybe some of the best investors do that like that's [00:11:20] their whole shtick. They find things that they really enjoy and they invest in them and maybe they'll flip them and maybe they'll consume them or keep them. But I think that that is like part of the human experience. So I think you're dead on. And I think that you know, when [00:11:40] you say you're about consumer needs, what you really mean is that you're about human needs, right?

Phillip: [00:11:47] But to live is to consume right, Brian?

Brian: [00:11:50] Right.

Phillip: [00:11:50] It's that sort of, well at least that's our default. Actually and to your point from the article that you wrote, sorry to interrupt, one of the points you made was [00:12:00] that there's this like symbiotic relationship that you need the speculative investor. You need someone who's looking to profit monetarily or someone to speculate, to profit as in their social status and like their outward display of their [00:12:20] group affiliation like they're going to profit in some way from whatever it is that they consume or buy, right? They're intrinsically linked, I think, was the point you made in that piece.

Brian: [00:12:31] Yeah, totally. Definitely. They've linked it also I think that what we missed is when we see the wild purchasing behaviors [00:12:40] is that collectors actually are the ones that set the stage. Without them, we get ungrounded, like we lose track of what's real and what people actually care about. And so we have to know what people care about in order to speculate. And so, yes, [00:13:00] they are intrinsically linked.

Phillip: [00:13:01] We were told, right Mags, that art was the thing we should care about, and then that conversation's kind of gone in full circle. Now I'm curious what the state of at least NFTs are at the moment for you.

Magdalena: [00:13:14] Art is actually an interesting example because I do like to think about traditional art market too, right. So before we get to the NFTs. [00:13:20] Like when a billionaire buys a Picasso, is it because he loves the art? Is it because it's a status symbol? Or because it's like a good way to park your money because you expect it to appreciate in value at least to some extent? Those are not very clean categories to brands. We do things for a variety of reasons, a mix of reasons, and [00:13:40] you might not even realize your true rationale for doing something or the rationale might change over time. And so with NFTs, we are so early on that whole journey, in many ways, NFT and DTC brands are actually very similar in that it became very easy to launch [00:14:00] one of those... NFT project or a DTC brand. And the early movers made a lot of money and which invited a lot of other people to try their hand at this relatively low barrier to entryway of making money. And so we got flooded with too many options that are not differentiated, and [00:14:20] the consumer interest was just not there anymore, right? Because there are too many things and you don't know what to buy. And by the way, like, why should I be excited about this frog versus that frog? And so people are actually, "Ok wait a second. We can't be in this situation. There needs to be more." And so people are thinking [00:14:40] through, you know, NFT projects that are a little bit more interesting. I think it's hard to speak to where we are right now, the membership pass or NFT as a ticket to a physical experience or NFT as a record of a changing relationship between me and the brand [00:15:00] or me and my resume. Think of NFTs as an ability to record your skills, right? "I have performed X number of podcasts and I've written X number of articles and I have completed this course online about X skill." Having that record, that is like your digital resume there [00:15:20] as an NFT, it's actually a really interesting way. Or just NFTs are collectible certificates that live on the blockchain. So there's so many things you can do. In many ways, we think of it as just, you know, certificates of ownership of a digital good, but there is so much more that you can do with that.

Phillip: [00:15:37] I think that you touched on the thing that we [00:15:40] had in our prediction show last week. Brian will correct me, every week is a prediction show. I get it. But one of the biggest challenges, I sense, is there is a lot of fatigue around the number of projects that are launching. It's really hard to keep up. There's fatigue around which groups are [00:16:00] Discord servers that you have like, I have 15 of them, and I don't really pay attention to that many. You could easily be in hundreds of Discords if you really tried. It becomes very noisy. And so I sense there's some fatigue happening there. The utility [00:16:20] has to evolve. The thing that stood out to me very recently is that the amount of acceleration in the tools and infrastructure that are allowing folks to launch projects much quicker. I think Nifty Gateway is a good example, but there's a number of like tools [00:16:40] that we would have seen as like SaaS infrastructure for eCommerce, we're seeing similar tools for the blockchain. Didn't prep you for this... But do you think that there is an opportunity for the old era of Web2, web infrastructure, [00:17:00] SaaS products, maybe Zapier is a good example, to give themselves like a new lease on life, to allow more interoperability with these new Web3 opportunities? Or is it still too early for them to even consider such a thing?

Magdalena: [00:17:15] It's an interesting question. My gut [00:17:20] feeling right now is that Web3 is about technical capabilities and it is about user needs. But it's also about culture and ethos and kind of mentality around what that actually means and then kind of why decentralization matters. And so as I think about [00:17:40] this 1) tools very important, 2) I do think that we should be trying to launch and grow and have access to tools that allow anyone to kind of capitalize on their ideas and innovation. I don't know whether it's going to come from kind of Web3 native [00:18:00] solutions that are integrating with kind of your traditional companies or whether actually, it's traditional companies by the virtue of having their customer base will be able to actually provide it from the trust and relationship perspective, even if technologically or, you know, ethos wise, there might not be [00:18:20] 100 percent there. I don't know who the winner is. The same way I think a lot about if you take a crypto native founder who decides to play in consumer or you take a consumer founder who decides to play in crypto, who is actually better positioned to win? And I don't think I have a good answer, and I think it depends. It depends on the person and kind of why [00:18:40] they do what they do. But I think you can achieve success either way. If you approach the kind of the right way with the right steps and the right reasons for why you're doing what you're doing.

Brian: [00:18:52] Yeah, that's really interesting. I think that the question that I have kind of coming out of this is we [00:19:00] look at NFTs and how they're being used right now, right? And you talked about the consumer trying to come into NFTs and the tech, you know, the crypto trying to come into consumer and you can be successful from another side if you're resourceful and you care and you do it [00:19:20] right. The issue isn't necessarily where you come from, but I do think the question is where is it headed? So if someone comes from consumer and they're headed into crypto and they're like, "Ok, I want to do NFTs, and I want to do them well [00:19:40]. I don't want it to be some splashy thing that gets featured in Ad Age and in a top-five list. I want it to be something that..."

Phillip: [00:19:47] Cough... Applebees. Right.

Brian: [00:19:50] "I want it to be something that actually matters for five years." Like, what would that investment look like to you?

Magdalena: [00:19:59] I [00:20:00]t depends. As the favorite dancer of everyone, it depends. I've been working with a number of my very traditional consumer brand investments and the founders. They are thinking through that like, what does that look like if you go beyond the just pure experimentation [00:20:20] or pure PR grabby ness of a project, which so many of those have been exactly that. And I always started with like, what is your objective, right? Like, do you want to truly just push the realm of possible? Do you have some unmet need in the community? Do you have some amazing storytelling [00:20:40] that you want to do? And NFTs are actually an interesting way of doing it. And so it truly depends on like what you're trying to do. One of the ideas I've had and I'm kind of tempted to still execute on is actually creating a crypto coffee shop where if you're a holder of the NFT, you get a free coffee [00:21:00] every single day. If you decide you don't like my coffee shop or you move or you're no longer drinking coffee, you can sell that NFT to someone else. And so like, [00:21:08] I'm looking for people to start experimenting with interesting things like that that is not a full revamp of your business, but you are actually starting from what could be an interesting thing to offer to my users [00:21:20] or an interesting way that's like so brand-centric that benefits kind of the overall ecosystem, my brand equity, my users and consumers kind of affection and offering and whatnot. So I really encourage all the founders to kind of think through that lens first. What are you really trying to [00:21:40] accomplish and then thinking through what technology allows you to accomplish that best? [00:21:44]

Phillip: [00:21:45] Isn't that the physical to crypto pipeline? You know you look at at least the ones that are top of mind for me are actually trying to bring crypto back to the real world. Poolsuite's a good example. This concept of a pass [00:22:00] and, again, belonging membership, people group. I think that that's a good example of sort of transcendent, you know, a company we featured many times that we would have said three years ago was media company question mark, then a physical [00:22:20] goods, direct to consumer brand question mark and now a crypto company. Maybe the way of the future is, well, brands of the future are all of the above.

Magdalena: [00:22:30] Yeah, I mean, you already saw that with the content community commerce kind of amalgamation that was so popular over the last few years, and crypto is just kind of yet another in [00:22:40] that mix. So I wouldn't be surprised if that happens. I mean, [00:22:43] in so many ways, initially, it was every company is a tech company and then there was every company is a Fintech company, and at some point, every company will be a crypto company. [00:22:53]

Phillip: [00:22:53] There's a pull quote.

Brian: [00:22:55] There is a pull quote. Yeah. The example you brought up at the coffee shop...  [00:23:00]

Phillip: [00:23:00] Talk about liquidity.

Brian: [00:23:01] My question would be like in a coffee shop... I understand that a coffee shop is an example. But for coffee shop owners out there that are listening to this, I think their question would immediately be, "Ok, if I hand someone an NFT or I sell them an NFT [00:23:20] and I give them free coffee for as long as they hold the NFT. How do I make money?" That's going to be their question. I think first question like, "If I'm just selling an NFT one time and that becomes how I  [00:23:40]sell coffee, how is that like re-monetizable? And how is that profitable? And also, why don't I just like do that through a credit card?"

Phillip: [00:23:51] I mean, Magdalena, you're an early-stage startup investor. Do you even know how to make money? You're asking the wrong person, Brian.

Magdalena: [00:23:59] {laughter} It's a  [00:24:00]fair pushback. I come from a private equity background. We're all about making money. I mean, it's a good question, right? And then usually it's about pricing and how many of those you have out there because it also is partially a marketing strategy at the end of the day. So your initial pricing  [00:24:20]is part one. Part two is what do you actually expect about user behavior, right? So there have been marketing activations of your traditional companies. I'm forgetting the names. I'm sure Panera or someone like that has done that where, you know, if you come, you get the free coffee every day because of X, you're a member whatever, right? Because there's an expectation there are going to be buying other goods, [00:24:40] and coffee is actually relatively cheap cost basis to provide with the expectation that they are going to actually recoup it because you made someone come to your location. Maybe they don't buy something every day, but if you have a good merchandise you might actually sell a bunch of other things and make that back. And then third, the beauty [00:25:00] of NFTs is if I just sold you a physical card that if you have this card and you come and you get a free coffee, that is a one-time sale made. If it's an NFT, I can put it into the actual NFT that if you resell it to someone else because you [00:25:20] no longer want it, I will get a percentage of that right. So "I'm moving to a different neighborhood. I'm selling my coffee NFT to someone else." The coffee shop owner retains some portion of that secondary sale. It's one of the things that made everyone excited about NFTs in the first place that as an artist, you can [00:25:40] benefit from sales in the secondary market, that as a ticket issuer, I can benefit from sales in the secondary market by the scalpers, right? And this coffee example is actually no different.

Phillip: [00:25:51] Class Pass and Movie Pass were too early is what I hear you saying.

Magdalena: [00:25:54] {laughter} Well, they both have a number of other issues, but yes.

Brian: [00:27:50] But [00:27:40] what I'm surmising is that NFTs are a loyalty. They're a loyalty play. They're a way actually to assign value [00:28:00] to what it means to be associated with the brand, which actually leads me to, so I believe in this because I believe that commerce and transactions are actually identity transfer. So if you are providing value to someone through the [00:28:20] sum of their purchases and you're providing something back to them and saying, "Oh yeah, you are very, very much part of this, part of our coffee shop, part of our movie theater." Whatever it is, then they should be able to say this is an asset [00:28:40]. Building up this identity as a part of this, it means something. It actually has more value than just, oh, a transactional back and forth exchange of money. And that, I think, is an exciting idea.

Phillip: [00:28:57] I'm going to interject something here because [00:29:00] I'm the king of bad analogies, as we know for years now. But this to me doesn't feel like a revolution at all because this exists in the real world and everywhere that you choose to look for it. I used to work at a restaurant and I waited tables and we had a specific [00:29:20] button that if you were a law enforcement officer, you got a discount, right? This affiliation and a tangential benefit to an affiliation to a group is a thing that already exists. The Panera example is another good example. I'm an American Express Platinum cardholder. I get free Panera Plus, so I can have a cup of coffee every day for free. [00:29:40] I don't always exercise it, but it's a benefit that I have that was extended to me. Why? Because I'm a token holder. I mean, a cardholder, right? So these are an evolution of really not the means, maybe Mags validate whether I'm right or wrong, but maybe the access of who it is who actually gets [00:30:00] to opt into the benefits of that community.

Brian: [00:30:04] You're saying that NFTs are the digital equivalent of flashing your badge, like literally.

Phillip: [00:30:09] That's kind of, I mean, that is at least right now in this moment. That can be a thing that it is. It's many things.

Magdalena: [00:30:14] Well, the transferability in the democratization of access is an important part of that, right? [00:30:20] You are not getting someone like, I cannot legally take that badge and now pretend to be a police officer, but I can buy someone else's NFT and that's totally solid. Or it's actually an interesting question around membership clubs, right? Because there is so much exclusivity around golf clubs, for example, versus [00:30:40] what LinksDAO has done, which is anyone who is a holder of NFT will be then able to buy a membership, right? We don't care how rich you are, where you come from, who knows you. If you're a holder, you can buy access. It's still exclusive in that there is a limited number of those passes, but it's not gated by these very traditional [00:31:00] old-school factors. And when I hear the like, all of this exists in some way. It's no different than Postal Service exists. Why do we need email, right? It delivers the same need, but it does it differently. It does it better, right? I think we still don't have enough of the faster, cheaper, better dimension of [00:31:20] NFTs or Web3 in general. But like, that's coming and some say, "Oh, we don't need it because it does the same thing, but slightly different." I think it's kind of missing the potential here.

Phillip: [00:31:31] Well, skeuomorphism. We always rebuild the real world in a new medium when we first come to understand it and then it'll take its own form over time. I'm [00:31:40] mostly blown away at how fast that has happened. I mean within the last year, the evolution here has been really breakneck every month something changes. I also believe that it's kind of its own monoculture to some [00:32:00] degree. Crypto has, like everyone, is all aware of the big things that happen, which I think also signals to how early it is, is that it's actually quite a small community and things like LinksDAO, you know, a $10 million fund in any other world is a nothing burger. A $10 million [00:32:20] raise in that particular space as a DAO is notable and maybe signals something different, right? So I think that that's a...  I find it fascinating. I wouldn't want you to come on Future Commerce for the first time without giving you an opportunity to have [00:32:40] some hot takes because I feel like you have some especially spicy takes on things. You broke the DAO seal. This is your fault. But what's your take on DAOs and sort of the crypto urge to solve everything with the DAO at this exact moment?

Magdalena: [00:32:57] I mean, it's cute, but also that's the only way [00:33:00] we're going to find real innovation, right? Like trying to think through what actually matters, what it enables. So me DAOs are actually just a coordination technology for groups of people to do something together. It doesn't have to be a purchase, like the Constitution DAO, it can be like a research DAO. And we're coming together to coordinate [00:33:20] on doing something and how we reward and how we benefit, right? And so from that standpoint, it's better than a group buying experience because so many purchases are not just one and done. If you come together and create a DAO to buy a sports team, there are so many decisions that need to happen afterwards, right? And like [00:33:40] who holds what and how decisions are made and how profits are distributed. Like, there are so many decisions to be made. The purchase is just the start and having DAOs actually be able to solve that is an interesting idea. It's not an idea without its challenges. It's an idea with a very shaky kind of legal understanding right now. [00:34:00] Although states like Wyoming are granting the same rights to DAOs as regular LLCs right now. And so I think that will just evolve. But again, to me, it's less a brand new legal framework and much more and new technology to coordinate group behavior that [00:34:20] we're kind of in the learning phase of challenges, legal front or otherwise. I always say that in many ways, the United States of America is a DAO, right? The rules are set by the Constitution. The US dollar is a token. Like it really was issued out of thin air and given to people. We [00:34:40] can debate on it out of thin air. But like it certainly now being issued out of thin air. And given to people, to a certain set of like distribution rules and then traded by people for goods and services. And now we even have the delegate structure right where you vote, not [00:35:00] directly, but through your representatives, which any large DAO will have to do as well. It's just it's people on the internet coming together to do something and not just a bunch of founding fathers coming in Philadelphia to do something, but it's really not that different mentally, it just now enabling that coordination on the internet for something that's a little bit more than just one and done.

Phillip: [00:35:19] I, [00:35:20] for one, am really looking forward to every corporation in the future being as efficient as the US government.

Magdalena: [00:35:30] {laughter} Challenges and opportunities.

Phillip: [00:35:32] {laughter} Yeah.

Brian: [00:35:32] I was just going to say it sounds to me like the benefit of the DAO is the speed of organization. Like the benefit of a D [00:35:40]AO is it's you're coming to the market fast and you can organize people to accomplish something that they all want to do very quickly. That sounds like what the main...

Phillip: [00:35:52] Or not.

Magdalena: [00:35:52] Well, I think that three actual benefits of a DAO are 1), this democratized access and democratized impact, right? Like no one's [00:36:00] telling you you can't do this or you can do this. Community votes. It's not one person at the top of the organizations like we're going to do this versus we're going to do that. So that is a huge benefit. 2) its alignment of incentives, right? Especially for DAOs that have kind of the token associated with that and how you reward people and how you give ownership and impact all [00:36:20] of that. And then the last is this kind of the automatic rules which actually out of DAOs right now don't have this autonomous part within them quite yet. But if you think about the ability to have these rules that you cannot change, no one can change, they're just part of [00:36:40] the organization as opposed to, you know, so many companies are operating on the whim of the latest executive. There are actual benefits, it's probably not a solution for every single thing, but [00:36:52] we will not grow it and expand it and innovate on it if we don't keep trying and kind of seeing these challenges, as we did [00:37:00] with the Constitution DAO where it became very apparent, you know, just the legal dimension, the distribution dimension. And then when the transaction happened, the return of capital dimension. There are so many challenges there, but they're challenges with any new technology. [00:37:18]

Phillip: [00:37:18] There's also [00:37:20] the running joke is, you know, the difference between an LLC and a DAO is that an LLC is legal. And what I think is at least in the example of the Constitution DAO, I know you said you checked out the podcast where Brian and I were sort of discussing it. We [00:37:40] haven't really done a follow-up there, but I feel like the real challenge there was the thing they were trying to purchase and the channel in which they were trying to purchase it. And they're sort of the sacrificial lamb for everyone that will come after them and to sort of understand what the boundaries are. So [00:38:00] I'm very bullish on solving specific problems with DAOs. I think what I observe here that I know from my open source, you know, my 15 years in open source background is that there are some terrible inefficiencies to having a group dynamic [00:38:20] to making decisions for a long-lasting and durable project. Because the fact is that groups don't always arrive at consensus. Groups tend to drift towards stagnation, whereas some of the most durable open source projects, or ones [00:38:40] that are sort of headed by a BDFL, benevolent dictator for life. It's somebody who has a vision and can cast the vision and organize and rally the voters around that. I'm curious if we re-implement the rest of the real world and [00:39:00] sort of in a skeuomorphic way into all new technology as we tend to do, at least for the past 50 years. I wonder if that's not something that just emerges as well as a human dynamic is to sort of follow the leader.

Magdalena: [00:39:15] Well, I wouldn't be surprised, but it's a funny example of that is group projects [00:39:20] in school, right? Like everyone hates group projects because inevitably someone's not pulling their weight and inevitably someone ends up doing 80 percent of the work. What happens in the DAO context that if everyone recognizes that one person is doing the work, at least they can reap most of the benefits, right? And if you want more of the benefits and you're not pulling your weight, well, start pulling your weight. And so it actually is an interesting [00:39:40] way of incentivizing behavior. And I think in reality, for a long term, you will have to emerge above delegated voting, right not the entire community has to be involved in every single thing and then have emerged kind of the community chosen leaders who kind of proven their value and want to be involved, and they're going to reap disproportionate amount of [00:40:00] benefits. And if the moment they stop contributing or decide to move on, like if they lose that right, but it is very flexible setup. I don't think DAOs mean everyone's making every decision or every decision is up for the community and/or everyone is kind of equally involved. It just means that you can have these ways of incentivizing behavior [00:40:20] and then rewarding community contributors.

Brian: [00:40:23] Also, Phillip, I think there's something interesting here you talked about like durable open-source projects and the mass effect of a community that's sort of it's brandished by a leader that they [00:40:40] all sort of follow. But what if the opposite is true with the world that we're entering now of Web3, where we talk about the nature of power sometimes on Future Commerce and we've written about it. And if you think about it in some ways, that leader is here already [00:41:00] for Web3, his name is Elon Musk. It just... The way that he goes about accomplishing his will isn't through sort of command central. It's through inspiration and incitation and inciting people to accomplish [00:41:20] things. His followers follow him sort of blindly as they accomplish a multitude of projects that are not led by him. And if that's not the sort of definition of like decentralized power... It's centralized [00:41:40] by personality and by thought.

Phillip: [00:41:43] There's actually a really great parallel here, at least in the Web3 or the Twitter-sphere. Bored Elon Musk is an account that's, you know, pseudonymous, and one of the supposed tenets of the decentralized future is that pseudonym [00:42:00]ity is a powerful force and something that doesn't have a real-world parallel. Hot take on the pseudonymous future and anything from you on how you see that panning out?

Magdalena: [00:42:12] I'm a big believer in a future. I think there's a lot of challenges right now. If you try to hire someone who's pseudonymous, if you try to [00:42:20] get hired as a pseudonymous person, even if you try to invest in it, there's so many charges actually come through that if you truly want to retain the pseudonymity. I think it's such an interesting way of fixing some of the problems that we have in the digital world today, starting with the cancel culture. And  [00:42:40]I think, you know, we can debate, is it a good thing? Is it a bad thing? But I don't believe that someone should be for the rest of their life, have an issue attached to them that could cancel them, right? And so especially if it was something that was not actually real or factually true. Sometimes people get canceled for things [00:43:00] that are not real. And don't get me wrong, people should be held accountable. But I think there is something to this mob mentality on the internet and you have only your name and like, that's it. And so the ability to perform online in a pseudonymous way if you choose to is interesting. A lot of people don't [00:43:20] actually want to be famous, but they are kind of famous by their own kind of activity like they didn't choose it. It is just a side product of what they do. Like, imagine being famous as a pseudonymous person, so you can still go out on the street and go to a bar and not be flogged by like bajillion people, right? Or for me, the most interesting [00:43:40] aspect of that is I am not pseudonymous at all. Right? My Twitter handle is @MagdalenaKala. My name is Mags.eth, but I have a Bored Ape as a profile picture and the number of people who think I'm a guy is astounding.

Phillip: [00:43:53] Wow.

Magdalena: [00:43:54] I get messages, DMs, comments all the time with like, "Hey bro," or like, "Dude, I have a question," [00:44:00] right? And like, I love that. I actually like it, I don't mind that at all, because it's so much easier to be a guy on the internet. And I don't mind that people think I'm a dude. And then, you know, I would show up at an event and they're like, "Wait, what?" {laughter} And so like, there are benefits. And then I think we're just again exploring, what does that look like? I [00:44:20] also love the fact that you could have three different careers in three different sectors, and that's essentially three different personalities and no one needs to know. But, you know, one doesn't need to know about the other two. And so I think there is a lot of potential there that's interesting.

Brian: [00:44:34] I mean, we only know the real you, Mags. Actually, that's not true. We might know [00:44:40] other yous as well, potentially already. {laughter}

Phillip: [00:44:43] I'm sure there's a spicy account or two I follow that you're behind, and I wouldn't even know.

Magdalena: [00:44:49] Burner account.

Phillip: [00:44:50] Yeah. Other hot takes. You know, there's in this old definitely fix us firmly at one specific point in time, as if all this hasn't already. You know, right now, [00:45:00] some things that some smart people are saying is, "Hey, we're potentially coming up on a liquidity squeeze here in 2022." What does that do to the startup market and particularly crypto markets, which look like they depend on a ton of liquidity to continue to appreciate? What happens [00:45:20] to the speculative investor who maybe exits a bunch of crypto projects in 2022.

Magdalena: [00:45:25] Yeah, it's the liquidity squeeze is an interesting question because it requires a catalyst, and there is a number of potential catalysts we could discuss, but the reality is it doesn't just come out of thin air. You need the catalyst [00:45:40] and there are so many counter forces that might actually result in that not happening is one. And then two, well, you know, markets generally suffer and not all markets suffer equally. And so it's also thinking through like that dimension of what actually gets impacted. At the end of the day, do I think we're in a bubble? Yes [00:46:00] and no. And then kind of again, maybe we're in a stock bubble. Maybe we're in the private start-up bubble where you were in a crypto bubble-like maybe all of the above, right? Miami real estate feels like we're in a bubble because I way overpaid for my apartment. But it's like, is it? Or is it just a continuous progression? And [00:46:20] we're going to keep going like this for six months, 12 months, two years. I don't know, because you need that catalyst. And then the one thing that I always am very careful about is when there is an emerging consensus that we might be facing some issues, that's not [00:46:40] when the issues come up. The issues almost always come up pretty unexpectedly. And actually, the government has a pretty big role in that as well. So much of what could happen here is based on what the administration decides to do around the legal treatment of some of these assets, around [00:47:00] the tax laws for crypto and non-crypto. The tax increases in general and the capital gains... There are so many different things that could spark something. And it's so you know right now, like, who knows what the probability of that actually happening is? I certainly don't.

Brian: [00:47:19] Do you think this changes [00:47:20] how the tech industry interacts with the legal world and political environment? So are we going to start seeing like DAOs take over?

Phillip: [00:47:30] Lobbying arms.

Brian: [00:47:31] Yeah, yeah, exactly. Is that the future of how lobbying happens?

Magdalena: [00:47:37] It's a funny question. I mean, you already [00:47:40] have so much of the tech impact. So many lobbyists and for general tech and for crypto as well. I think the biggest impact we're going to see is actually just crypto donations like that is going to be a huge issue for the elections, right? The election loss, donation [00:48:00] laws, which candidates appeal to kind of the crypto community? How much do you actually want to appeal to the crypto community, right? There's so many of these things that are going to be very impactful. And then in many ways, the biggest issue that government has with tech is how much power it has. Well,  [00:48:20]decentralization can actually help with a lot of that. It doesn't solve all the issues, right. The joke on Twitter like Web3 solves it because it solves everything. No, that's not true. But there are some aspects of it that actually are aligned with government's goals and having this kind of blanket, you know, it's all bad out there [00:48:40] mentality is not good for either one.

Phillip: [00:48:43] Someone should do it. I don't want to do it, but someone should do it. We need to figure out like the sort of research pipeline of the very notable Twitter accounts in [00:49:00] Web3 at the moment, you know, those who have amassed massive followings. I have to believe like there is a Bernie Bro to crypto bro pipeline over the past 10 years that, you know, is very real and it wouldn't be hard to figure out who they are.

Magdalena: [00:49:16] That's why the bitcoin market is really taken into [00:49:20] New Hampshire, right? Live free or die. {laughter}

Phillip: [00:49:22] Yeah, for sure. Absolutely. We're kind of coming up on time. Brian, go.

Brian: [00:49:29] I feel like the Ron Paul pipeline and the Bernie Sanders Pipeline, they both fed that.

Phillip: [00:49:35] We're showing our age now.

Brian: [00:49:37] Oh wait, wait, go. Yes, [00:49:40] I thought we were going to debate live streaming live with Mags. That kind of want to...

Phillip: [00:49:44] Do you want to? Do you want to get into this? I love this.

Magdalena: [00:49:46] I'm happy to chat about live streaming.

Phillip: [00:49:48] Yeah, it feels like there's a desperation in eCommerce, especially, to try to uncover new channels for arbitrage. That's really the thing that I think is powering a lot of the [00:50:00] groupthink around live streaming. There's a need for new channel arbitrage. It could be that digital goods is that channel. But there's for whatever reason, the DTC cohort of the last four or five years hasn't really caught on to [00:50:20] it yet. What's your thinking around why live streaming is the thing that most folks are looking at is, you know, the next channel for development in eCommerce.

Magdalena: [00:50:30] Live streaming is another example of a technology that actually is not that new, right? That TV shopping experience that you know so many people [00:50:40] buy stuff with is not new at all. And actually, when you look at some of the data around it, people have a very strong emotional attachment to it. Really, there is a level of trust that people get from that kind of TV shopping relationship that you wouldn't expect and that you don't get from just walking into a store and [00:51:00] then interacting with a salesperson. And so live streaming is actually, you know, takes root in this mechanism and in consumer behavior that's existed for decades. It's obviously you describe all the reasons why people are excited about it because it is a potential new customer acquisition channel and [00:51:20] whatnot. There's a number of companies doing things in the US and on this front, some more successful than others. Everyone is still relatively early, and I think it's one of those things where live streaming is great from a brand perspective if there is already an existing audience, so you just like come in, plugged in, and [00:51:40] you have all these eyeballs that are now going to hear about your product. Well, guess what? As a live streaming company, you have to find that audience in the first place. So now we just shifted the customer acquisition from like the brand to their live streaming company, right? And yes, it's an aggregated audience and there are probably efficiencies, et cetera, et cetera. Like, there's a lot of [00:52:00] rationale why that's still more efficient, but it doesn't change the fact that it is competition for attention yet again. So I think it's, you know, in the US I always felt that if someone had a chance for a good livestream product, it was going to be Instagram because we already buy some new products from Instagram ads and influencers and whatnot.  [00:52:20]So you already have the eyeballs, you already have influencers who could be those people kind of performing the stream and essentially just new product feature. Talk about a number of reasons why that hasn't caught on so far. In many ways, not exactly live [00:52:40] in the live streaming, but like TikTok is that. The amount of volume of commerce that goes through that, especially like from Amazon actually right? It is this amazing pairing when people talk about the Amazon leggings and then you go on Amazon and you buy them. And because that's what everyone is talking about and you can kind of track the [00:53:00] videos that go viral and how quickly that SKU, Amazon, or otherwise, it's completely sold out, right? So it's not exactly live, but with the pace of distribution and kind of the how quickly things come and go, it is almost life-like and there's an existing audience that you have and existing [00:53:20] creators where there's a relationship and trust between the audience and the creators. There's a distribution magic and then the commerce just happening must be a platform is almost like meaningless. Like, does it really matter? And then how much will that actually get incorporated? Because it is an interesting direction [00:53:40] for that platform. But I see it more emerging out of already existing behaviors rather than trying to build it from scratch because live streaming should be a thing.

Phillip: [00:53:51] My chief criticism there has been let's look at TikTok for just one second. There's an ephemerality to that [00:54:00] platform where you may not even actually know the creator that you follow by name. You may not even remember. Like, there's almost no mechanism for you to go find a video that you saw at some point in the past. It's gone. But the inspiration for a purchase decision is something that does remain. And [00:54:20] so we did some research in October, I believe of 2020, Brian, something we called The New DIY, which was DIY trends as inspired by social media and big bumps in musical instrument purchases or DIY crafting, even [00:54:40] DIY cocktails. You know, the Stanley Tucci Negroni movement. That was a point in time. These are all things that are not just inspired by TikTok, but various places for inspiration. What tends to be said specifically is that there is a concept of [00:55:00] shopping as entertainment, where the modality of the entertainment, the sole purpose behind the entertainment is to sell you. And my hot take there has been isn't that the whole purpose of all entertainment? Always, period. That is. So then, like everything [00:55:20] is live shopping always because we're always being inspired to purchase something. At least in the West, that's how entertainment works.

Magdalena: [00:55:29] You saw that actually, with so many fashion trends coming out of Emily in Paris, where you saw kind of spikes on certain SKUs and certain styles. [00:55:40] You know, maybe not exactly from the show, but inspired by their show on platforms like Depop and whatnot. And it is an excellent example of that dynamic, right? Like we get inspired, we get influenced by things we see in the media because you might not be selling the product, but you're selling a lifestyle or you're selling a vision board. And [00:56:00] people are buying that. And whether they execute the transaction on that platform or elsewhere, it's almost secondary.

Phillip: [00:56:07] I don't ever want to purchase something from my Apple TV while I'm watching. I have my phone in my hand already. I'm such a boomer. Brian, I'll give you the last go around [00:56:20] here.

Brian: [00:56:21] No, I totally agree with everything you're saying. I think that there is an audience out there that wants to watch shopping as like the main thrust behind why they're watching it or like the product description and so on, and they already do it. They already [00:56:40] do it,

Phillip: [00:56:42] Someone's already captured all of them, every one of them.

Brian: [00:56:44] Yeah. And maybe there is an update on this. Maybe there is. Maybe there's some iterative improvement that can be made upon this, but it already exists. Otherwise, I wrote an article on this back in 2020 about how product [00:57:00] placement as a concept, I think that's kind of what you're talking about, inspiration. It's not product placement, it's product influence. And so hiring storytellers and creators and people that understand narrative and they understand like real story and understand [00:57:20] where your product actually fits in the world and why it has relevance for a moment and where that product fits into a broader story... Hiring those people is going to be essential for doing what the two of you were just talking about. And I think that [00:57:40] is better than live streaming. That's reaching a different sort, a broader audience that wants to be involved in real things. The real stories, real interesting engagements, real art. And that's where I'll leave that.

Phillip: [00:57:57] Yeah, that's great. Mags, last word.

Magdalena: [00:58:00]  [00:58:00]Live streaming [00:58:00] is just a part of content, and we already talked about how important content has been and how important content will continue to be in the future. And in many ways, consumer brands and consumer founders are furthest along on that journey. But storytelling doesn't matter just for consumers. I was recently talking with a biotech investor who was thinking through storytelling [00:58:20] around his portfolio because there is so much kind of mystique and especially with the pandemic, people being scared or not understanding technology's potential impacts. And so storytelling is important in every single category, and I think that's going to be probably if I had to pick one ad [00:58:40] hoc prediction, the people of the storytelling skillset across mediums and being able to combine kind of strategy and storytelling is going to be one of the hottest jobs. [00:58:51]

Phillip: [00:58:52] That's full circle for Brian because it was our very first episode, his take was the future of [00:59:00] commerce writ large and the way we buy things will be governed by people who are humorists and writers and storytellers. And they're creative in communicating in, I would say, like the traditional arts and communication mediums. Couldn't agree [00:59:20] any more with you. Wow. Thank you for spending an entire hour. Mags, where can people find you so they can get more of your hot takes on the internet?

Magdalena: [00:59:28] Definitely Twitter for now. @MagdalenaKala, and I will be launching something soon for longer-form content. So follow me to find out more.

Phillip: [00:59:39] Oh [00:59:40] wow, I was a big fan of your Clubhouse series. Rest in peace. Can't wait for longer-form content from Mags. That'd be awesome.

Brian: [00:59:49] Yes.

Phillip: [00:59:50] Thank you for spending time with us. Hey, thank you for checking out Future Commerce. We want you to subscribe because we need more of your eyeballs and ears so that we can sell more [01:00:00] advertising. That's how this works. Just kidding. But it's true. And you can find all of that at FutureCommerce.fm. We're in your inbox now three times a week: Insiders on Monday and The Senses on Wednesday and Friday. And hey, check out our sister podcast hosted by Ingrid Milman Cordy. It's called Infinite Shelf and it's about how the world around us is really bringing [01:00:20] people to the table and convening over the shelf in the way we buy things. Really excited for the wrap of Season 1 there, and Season 2 will be coming shortly. Go subscribe everywhere podcasts are found.

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