Social Commerce: Web3 & The Digital Franchise Model

 In the abundance driven world of the Internet, the dynamics for multiplayer retail change. Instead of increasing the retail distribution of a fungible brand, brand platforms must provide the tooling to adjust the geometry of a brand for specific pockets of demand. Web3 tools can enable more composability via the creation digital franchisees.

Web3 tools allow for a the creation of a new franchisee class that can tinker with brand’s inputs to create the products, landing pages, content, services, customer support, memes, etc. that approach product market fit for their group.

To me, brands are like software. A brand is made up of a finite number of input variables (product form factor, color schemes, tone, personality, aspirations, price, ingredients/inputs) that are its source code. These values and aesthetics are programmed, but unlike software they are not deterministic. Each consumer transacts with a brand based on ... See more

Web3 primitives allow for a franchise to adjust its brand depending on demand, making each franchisee less fungible and more niche to best serve specific sub-pockets of consumers.

Growth no longer is limited by supply scarcity and geography, but by how you can best acquire and convert an abundance of demand. 

In the offline world, supply scarcity is the main constraint on growth. Franchises can distribute their brand (and acquire customers) at a national and international level via linear and digital advertising, but revenue — and consumption — still occurs at a local level. Thus to grow requires growing a franchise’s retail footprint, and the franchise... See more

The franchise model is a positive sum flywheel — the franchisor can sell a high margin subscription product (annual licensing fee) and increase its retail distribution in new markets without the capital cost, which heightens brand awareness, which increases the value of their trademark.

Specifically, the franchise model allows businesses to monetize their brand equity and create new, high margin licensing products that provides leverage on its existing fixed costs. In the process, certain cost centers (like marketing spend) turn into revenue drivers (through trademark licensing). At this point, the business crosses the chasm of be... See more

The development of the internet economies in the West spliced this inherent relationship of commerce and socialization and resulted in a bifurcation of eCommerce and social networks into two different verticals.