Write off NFTs at your own risk, says Gary Vaynerchuk. Rather than simply being collectible pieces of pixel art, they are tokens (literally, the acronym stands for “non-fungible token“) that represent whatever underlying value their creator writes into them. And because they are logged as data on a digital ledger — a blockchain — they offer a unique signature of ownership of that asset, be it intellectual-property rights, a ticket to an event, or a piece of land — either in a virtual world or this one. In the first half of 2021, investors spent $2.5 billion on NFTs. Vaynerchuk predicts that in a decade, every business on the planet will have an NFT strategy, “so you might as well get ahead of it now.” This is his advice for getting your business into tokens.
Think Beyond the Metaverse
Innovative ideas are being built on blockchain at a rapid clip — but at this point, most new businesses either create or sell digital goods (think collectibles or art), or they create infrastructure to host or display digital goods (think galleries or virtual worlds). While there are still ripe opportunities in these areas, Vaynerchuk believes it’s time to think more broadly about NFTs’ real-world values. “I don’t care if you own a home-brokerage firm or a dental office, there’s an NFT offering that makes sense for you and your customers,” he says. “If you sell anything, it’s a natural fit.”
Brand-Loyalty Opportunities Abound
One of the most immediate applications of NFTs — and one that’s still in its infancy — is their use in loyalty programs. “If you have a fashion brand, maybe NFT holders always get access to the first outfits of the new line,” Vaynerchuk says. “Or let’s say you own a Greek restaurant. You could make digital art of 10 classic Greek dishes and then offer 1,000 NFTs that give the holders 25 percent off their meals for life. A vineyard? A wine token for access to exclusive bottles. It’s instant loyalty to you.” As a bonus — since many collectors display NFTs in virtual wallets or galleries, for everyone to see — you’ll also gain brand exposure.
Don’t Forget to Create Value
Don’t embark on an NFT project before considering the real value to your customer. “A lot of people who are influencers or have fame are just like, ‘Here’s my collectible,’ ” Vaynerchuk says. “But that’s missing the point. If those collectibles came with something as simple as a one-minute FaceTime with the creator, they would be worth so much more. I reverse-engineered that kind of value into each of my collectibles — whether it was access to an online community or a dinner with me.”
The Big Ideas Are Still Out There
Because blockchains create permanent ledgers of transactions, ownership of an NFT can be tracked over time. Consider what that means for, say, musicians, who have long struggled to keep a piece of the action on uses of their work. Or photographers. Or any other creator.
In this light, it makes sense that artists have been NFT early adopters. NFT enthusiasts take this line of thinking a step further, holding that tokens are essentially “smart contracts,” as Vaynerchuk says, that could have broad implications for the future of all contracts — from memberships to licensing agreements to wills. For that matter, NFTs could transform who controls medical records and other personal data. Industries could rise and fall as a result, much as they did with the rise of the internet — but it will take a lot of clever and brave entrepreneurs to make that happen. Until then, it’s all speculative.
Stay Cautious and Do Your Homework
“There’s no right way of doing this,” says Vaynerchuk. It’s a gold rush — and, as such, plenty of folks are going to make foolish investments and lose money. To truly innovate rather than getting caught up in a frenzy, he urges entrepreneurs to join communities working on NFT projects to learn from them. “Get lots of different perspectives,” Vaynerchuk recommends. “Twitter has become an incredible hub of conversation for this community. Discord, too. Join 20 to 50 Discords about different projects or genres. By the 50th hour of homework, or the hundredth hour, you can start understanding where you want to navigate. Please don’t go hard into anything until then.”
From the November 2021 issue of Inc. Magazine