Dec 9, 2022

Starbucks Rewards is one of the most successful loyalty programs in retail, with about 60 million memberships worldwide.

Video transcript

The Starbucks rewards program making the transition over to Web three based on Polygon. New way to send incentivize fan well, user loyalty and engagements joining us today to talk about that and his new venture is Adam Brotman. He was formerly the head of digital, actually check that the Chief Digital Officer at, at Starbucks and is now a co CEO and founder of Forum three, which is in the news today with a fresh raise. Adam, thanks for being here. How are you? I'm, I'm glad to be here. How are you? We're doing well, we're doing well. You're, you're all over the place on coin desk. Recently, you were featured in our most influential package. We're talking about the rollout of the Starbucks program yesterday and now you're here fresh on the heels of a 10 million round led by Decca Sonic and including participation from Polygon Ventures and others. So congrats on that. I wanted to start on the Starbucks thing. It was real talker for us yesterday and I wanted to pose the question to you. Why does this need to be on the Blockchain? What are the advantages of making this more Web Three friendly. Uh, that's a great question and, uh, it's exciting to be with you guys and talk about it. So to the answer of like why Blockchain, uh, stems from the idea that these are digital collectables, these stamps that you're gonna be able to earn and at times buy and, and sell, uh, as part of the Odyssey program, they're, they're digital collectables and you are going to own them. And, um, you know, if you think about loyalty programs today, you earn points, uh maybe even there's certain games like Starbucks for Life or mcdonald's Monopoly and other things that you've all played that you can earn badges or stickers, but you don't really own your points and you don't really think about why would you want to own your points? But with Blockchain and digital collectibles, there, there's this opportunity to not only be rewarded for engaging with the brand in a form of loyalty, but instead of just getting points, you can earn points. And these digital collectibles and the digital collectables can be redeemed for rewards, they can be collected because they can have their own sort of fun intrinsic value or rarity. And they can also be programmed to and you can form community around them. And it all stems from this idea of turning a, a simple point in a loyalty program into an asset, a digital collectible that can come to life in all these ways. And um you can't really, I I don't know how you own a digital asset if you're not using a Blockchain. So um Blockchain is perfect for it. Polygon is a great example of how you can, you know, create these digital collectables and infuse them into a gamified brand, engaging loyalty program. Adam, welcome again to the show and congrats on the ra can I keep you on the hot seat for a second? Because the point you brought up there made me think of the Airline Miles Blockchain developer ideas that float around 2017, 2018. And this sort of never really came to fruition. Obviously, this is a little bit different. Like this is more about loyalty, brand engagement. The whole credit card system or like using a brand credit card is very well established. Uh The Airline Miles idea just sort of fizzled because it never quite made sense in the first place. This seems to have like a little bit more depth to it. But I do want to put the question over to you. Is this just the next iteration of that or how is this going to separate itself from the predecessors that failed? Um It's I think it's much more than just the next it next iteration of that. I mean, that what gets let me go back to what got me so excited about the space in the first place, the idea of a branded digital collectible. I mean, I I collected uh physical things when I was a kid and my whole life, you know, baseball and basketball and football trading cards and art. And my daughter collects, you know, these stuffy dolls and people collect sneakers and you talk to anybody that collects anything. There's a sense of fun and discovery and storytelling that happens and you own it and there's intrinsic value to you because you have a personal connection to the thing that you want to collect. If you can add to that, the additional utility that can come from the fact that a collectible can be digital, it can be ownable, it can be branded, but it can double as an access pass. Because now if you hold this digital collectible, you can also potentially get access token gated access. In this case to rewards experiences community, you can be programmed to you, you can receive air drops. You can, there's a built in interoperability for collaborations and all of those things I just mentioned are different than what happened in the past with Blockchain and what happened in the past with airline points. And so to me, this is about storytelling and emotional engagement combined with utility and that combination is new and you throw that into a fun gamified loyalty system. And you've got the makings of, you know, an incredible layer that you can add on to a loyalty program that's not just buy things and get coupons. Yeah. So I'll I'll continue our kind of current train of questioning. Uh So this is honestly a kind of exciting interview for me. Uh Back in 2014, I launched what I think is the first Tokenized Rewards program for my uh podcast network. Let's talk Bitcoin Network at the time. Uh And we did things like token gated access and our first implementations of that. That was 2014. This is 2022. It's only been eight years and already Starbucks is doing projects like this and I suspect they won't be the last. So I mean, my question here is NFTS are loved by a lot of crypto speculators, but they're more controversial once you get outside of the crypto kind of world. Uh And they're even problematic in some areas like gaming where they kind of are really muddying the water. I think. Um I think the metaphor of collectible stamps is an interesting one here, but I'd love to get your take on how the element of speculation fits in or maybe doesn't with programs like what you're doing over at Starbucks. Yeah, that's a great question. Um I think uh I think that the best way I would answer it is if you're gonna have a collectible that you feel like you own, you have to really own it, you have to have the ability to sell it and, and buy others from the secondary market. And um and so I think the ignoring the idea that this digital collectible may have value and may go up or down in value is disingenuous. However, I think it's secondary, I think the primary purpose is to collect, to have access to the benefits that come from it, from the fun of collecting. I mean, I, I, you know, I, I collected, um, like I said, baseball cards and, and stamps and coins and whatnot and, you know, if they went up in value that was just sort of part of the fun, but that's not why I did it. Um, at the same time, if I happened to open up a pack and got a, a rookie Ken Griffey junior card, um I would get excited about the fact that, oh, that might be worth something. So I don't want to be disingenuous and act like the value of the asset doesn't matter. In fact, I think it's part of the network effects that makes this interesting because if you're a brand and you have all this intangible value around your brand that customers of the brand and brand fans love. This is another way to put that on rails and put that into an actual digital asset. And so the value matters, but it's not the primary thing and I think it's dangerous to be taught in this world, in the loyalty world. Like I think there's going to be a lot of free digital collectibles, it could be earned by customers or brands. Um I think they're, you know, there's gonna be an element of um, speculation that might come up. But I personally don't want to talk about that or, or highlight that only, only not because I'm not trying to, not trying to sweep it under the rug. I just feel like that's part of a broader, more interesting thing that happens with collectibles in general. And if you're collecting sneakers or anything else, like, you know, you're doing it for the love of it, you're doing it for the engagement, you're doing it for the community. Um And in fact, you might even be doing it in this case for the utility that can come from rewards and access that you couldn't get without it. And then on top of it, the cherry on top might be that the thing could maintain its value or be worth something and that's particularly a cherry on top if it was free to start with. Um But in any event that's, I feel like that's important to highlight and, but you don't just ignore the fact that a rare one or an interesting one could go up in value because that's part of the fun too. So I think that's what's such a cool thing about digital assets is you get to have the both the best of both worlds. And I do think that um there's been in my opinion, almost too much focus on speculation and I, I think I can actually, at times in the NFT world. Um get people to sort of miss the, the fun of collecting and the fun and the community and some of the aspects that happens from digital collectables. Adam. Good answer. Um and good question by other Adam. Good to have you both here. Um I wanted to pose this to you. So we're gonna look forward now. We talk about Starbucks. That's great. I want to talk about the new company form three says you've done some work with Boston Globe on the website, but leak a little alpha. Give me a, give me, give me a hint. There's no lawyers here, no lawyers are listening. Leak me a little alpha in terms of what projects you guys might be attached to next. Well, uh I can't, I can't speak to the specifics of the brands that uh we're talking to right now. But you can imagine that there are a lot of brands out there that uh feel the same way we do that loyalty programs and customer acquisition and, and, and driving frequency and a lot of the things that a lot of marketers and, and, and brand executives are responsible for. There's a lot of brands out there that feel that it's time to, to make loyalty at brands a little bit more experiential, a little less linear. Uh and, and they're excited about seeing some of the things that Starbucks and even brands like Nike are are are doing in this space and um and they're asking us at form three, you know, can you help us as well? And so we're excited that at form three, that we just raised this $10 million seed round. And we're planning on building a platform and, and, and staffing up to be able to scale up our advisory services division. And uh I can't get into the specifics but uh it crosses not just consumer brand, retail, uh but even, um you know, there's, there's uh you know, organizations and communities at large that are looking for different and fun ways to engage with their fan base or their members and they're seeing what some of these big brands are doing. And for three is uh in a position to be able to both advise them but also build a platform to help them. Ok. We got to ask about the Bear market. It's December, it's cold outside. Token prices are down and you guys are building just launching or announcing this uh funding round. Tell me about what the future holds for digital collectibles and specifically for form three. Well, you, you know, it's interesting. We got, like I said earlier, what got me excited about this entire, you know, crypto web three Blockchain NFT space had nothing to do with the price of any token or the price uh or volume of any particular sector. It was the possibilities that were opened up by a digital collectible that could be branded that could do storytelling and that could double as an access pass and that's just a magical tool. And so, um uh you know, our philosophy has been the same at forum three when things were uh booming and when things are busting because they really have nothing to do with price. It's about the possibilities of how brands can use this new technology and this new, this new tool set to better engage with their customers. And so, um what I would say in terms of the future is we believe that branded digital collectibles is gonna become an incredibly fast growing space. You're just seeing the tip of the iceberg now with some of the brands that have gotten into it. But I do think over the coming five years and that sounds like a long time because it's not gonna all happen in a year. I think that you're, this is gonna be paving the way for what you're gonna see pretty much every brand, be able to take advantage of in their own unique way and in a way that's right for them and their brand and their community. And so it's a great time to be building in a bear as they say, OK, Adam, so we've got just enough time for a very quick answer here. Uh So I've been tracking this technology, like I said for a very long time. And what I've seen is it start from being really weird and something that people didn't know how to get their heads around or how it would work to something that's becoming increasingly sort of mundane and normal. I think this is another kind of important step along that path. I'm curious for what you think is kind of what, what's the end result of all of this? Is it just a pervasive system that, you know, every single company out there will be using these technologies in the background or, or how do you see this going? That's a great question, Adam, because the, the, the you bring up a good point. I want to mention that Starbucks, uh you know, and for three, you know, we've been working together, but there's a, this has been a village and you've got Nifty Gateway, uh the Gemini uh company, you've got uh polygon and there's just been a number of different uh partners in this process. And one of the reasons that Starbucks is working with Nifty Gateway is that Nifty Gateway pioneered this idea of a uh uh the ability to buy a digital collectible, an NFT using um a hosted wallet solution, but also being able to do an external wallet, connect for a self custody or sovereign wallet uh capability most consumers today, I, you know, anywhere if you start to ask them, do they own an NFT, what do they know about NFTS? And you and the, the most of them are gonna say, no, they don't really understand them. They don't know how to buy them because the idea of using a crypto wallet is difficult for the average person. I mean, we all had to kind of get on board it in, in our own way. And so what I I'm excited about is the idea of this technology getting abstracted into the background so that everyday people can get into the space and figure out how to own a digital asset or a digital collectible without having to learn about crypto on day one. So they get the, the chance to get the feeling of owning a digital collectible, the fun of it and then they can do an external wallet, connect and move those assets around and sort of play with it in a, in a self custody, self sovereign way which we know is sort of like the best, actually, most fun way to do it, but it's actually complicated right now. So there's an, there's this opportunity to bridge that for, you know, everyday consumers, but don't, don't, you know, abstract the, the complication, but don't hide it entirely and let people sort of discover like we all did sort of the fun and beauty of self custody, uh your digital assets without having, requiring that to get into the space.

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