Hybrid Brands

I am obsessed with the idea that blockchains offer new ways to build culture.

When I say new what do I mean?

Well normally brands (of all kinds) get built by centralized teams. For example, a group of designers creating a video game.

Now in blockchain land, that sort of top down content creation can be complimented by simultaneous bottom up content creation. In our gaming example, this could look like fans making a set of mini games using the same items from the core game.

When you combine these two approaches you get a hybrid way to build brands that is more than the sum of its parts, and in this post I want to explore and riff on that idea.

At first glance, the hybrid nature of top down and bottom up builders working on something together might look like a simple re-run of the user generated content (UGC) ecosystems we see with games like Fortnite or Roblox where communities form around a core game and developers can charge money for creating alternative experiences connected to that game.

But there are key differences between UGC as a general concept & what blockchains unlock for brand building. This comes down to two ideas: alignment and permissionlessness.

In short…

• Working with crypto rails gives builders (from both top and bottom) economic alignment because they own and build with the same assets.

• The assets in question exist in onchain environments and so they can be used in pemissionless(ish) ways i.e. they are often interoperable with other onchain experiences, services, and products.

While it’s still early days for this hybrid approach there are some cool examples already out in the wild. Let’s look at just one for a quick illustration.

Bored Ape Yacht Club.

Yuga Labs is the company behind the Bored Ape Yacht Club NFT collection as well as a handful of other IP like Mutant Apes, CryptoPunks, Meebits, Otherside, and more.

As the Yuga team continues to build games and experiences around the ‘Yugaverse’ from the top down, they’ve empowered their wider community to work from the bottom up as well, through both their “Made by Apes” licensing program and through their ApeCoinDAO (and common currency, $APE)

Made by Apes is straightforward: Yuga wants to support and amplify products and brands that are made by holders of Bored Ape or Mutant Ape IP. People who fit into that category can apply for a license and receive relevant support.

On the $APE side, that currency governs ApeCoin DAO, which Yuga describes as a decentralized layer for community-led initiatives. It acts as an accelerator for new products and services built around the same Yugaverse that the core company is working on. For example, a DAO-funded game publisher focused on Apes is currently under consideration.

I never thought I would say this, but at a high level there are some really compelling aspects to Yuga’s approach here.

It’s exciting to me that communities of creators can gather alongside a core company to build out IP. This ethos has produced projects that are cultural extensions of Yuga like Jenkins the Valet and Mutant Hounds, which use Bored Apes and Mutant Apes respectively as starting points for their own brands. In a sense, these examples can be thought of as cultural layers 2s.

That said, some question marks remain.

First, there are challenges around incentive alignment for different parties in the examples I’ve mentioned. Why would someone want to build with an Ape when there is often more upside starting something else from scratch?

Second, there are debates around how open or closed the IP should be. Should it be tightly managed? What about creative commons? Do options exist somewhere in the middle of that spectrum?

Third, how can you solve voting capture of the DAO by whales or oligopolies? If you can’t do that, is the process really decentralized at all?

While it’s early days and there are open questions, I do think the idea of hybrid brands is here to stay. That is… IP being built in open, multi-modal ways where people, games, assets, items and so on have economic and cultural linkages.

What makes this so cool is you transcend the binary of top down or bottom up and create a third way forward instead.

There will be many experiments along these lines, and while lots will fail, I think the next Lucas Film (Star Wars) or Wizarding World (Harry Potter) will come from this kind of approach because supercharged user generated content is hard to compete with.

Thank you to Josh, Herbie, Lambo, Emmy, Patrick, tylr, and Apix for feedback and review.