Welcome to the Block & Mortar newsletter! Every week, I bring you the top stories and my analysis on where business meets web3: blockchain, cryptocurrencies, NFTs, and metaverse. Brought to you by Q McCallum.

Reading online? Subscribe to get this in your inbox whenever it's published.

After several weeks of cryptocurrency and DeFi madness, Block & Mortar is finally reporting on some, y’know, actual web3 use cases.

“Fashionably practical”

It seems that commercial NFT and metaverse efforts are plowing ahead in spite (“because?”) of the cryptocurrency turmoil. Last week Binance released its 2022 recap of institutional web3 adoption. Blockworks put out a Twitter thread on clothing brands’ metaverse adventures. And Timex has said that it’ll launch a limited series of watches tied to the Bored Ape Yacht Club (BAYC) NFT group. (No word yet on whether the watches, like the NFTs themselves, will be the subject of theft and ridicule.)

Two stories stand out this week, both from the fashion industry. The first is that the Council of Fashion Designers of America (CFDA) is launching a series of metaverse shows. Several major labels will be there to present their NFT collections. (And yes, these are NFTs With Benefits, designed to grant access to in-person events and the like.)

These shows move beyond simply recreating runway shows in 3D spaces. As Vogue Business notes:

A big part of the goal is also to educate American designers and creators on the possibilities that exist within this technology. It’s a move to introduce more high fashion players to metaverse and Web3 tech: not by looking at Web3 from a “fandom” community angle, but by offering experiences and assets that luxury fans would actually want to invest in. [ … T]he CFDA is aiming to reach true collectors who will value the in-person experiences and NFTs.

The second story is about clothing chain and shopping mall staple Forever 21. It really began in early 2020. The onset of the pandemic closed a lot of retail operations and revenue came to a sudden stop. Unable to keep up with rent, the company’s landlord offered to buy them out.

And when I say “landlord,” I mean real estate investment trust (REIT) Simon Property Group. The “investment” part is key, because investors – the ones that survive, at least – are adept at spotting temporarily underpriced assets. (It’s not as though F21 was failing because of poor business decisions. It was simply not prepared for the retail world to shut down overnight.) Simon saw an opportunity to buy a brand on the cheap and make money as in-person commerce rebounded. If it turns out they were right, you can call this a slow-motion arbitrage play to the tune of $81 million. Or maybe just a twist on the private equity playbook.

Bringing this story back to web3: F21, now safe from bankruptcy, is releasing clothes for avatars inside its Roblox property. “They’re getting into web3; who isn’t?” Fair. But they’re doing more than just dishing out NFTs. They’re using this metaverse shop to road-test products:

Forever 21 is now bringing that beanie and other digital-first items to its stores and website in what it has called the first clothing line tested in the metaverse.

“We love the idea of testing products digitally,” said Jacob Hawkins, whose roles at Forever 21 include chief marketing officer. “It costs us so much less to test a product digitally than to test it in stores.”

This makes a lot of sense. It’s safer to get real-world feedback on bytes and pixels before revving up manufacturing and making room on shelves for tangible goods. This goes double for the fashion world, where purchase decisions involve far more emotion and individual tastes than something like automotive parts or business software.

Both CFDA and Forever 21 are spending the R&D money to experiment with web3 technologies. This is a great way to see how web3 can support their existing endeavors and unlock new opportunities.

“Sometimes the headline says it all”

Granted, not all such experimentation pans out. In a case of The Headline Is the Tweet Is The Story:

[Logistics and supply chain giant] A.P. Moller - Maersk and IBM to discontinue TradeLens, a blockchain-enabled global trade platform

I don’t have any information beyond the official notice from Maersk’s website, so I’m not sure of the specific reasons this project wound down. “Supply chain management” was identified as an early use case of blockchain – it’s a situation in which multiple parties need to see and modify the same data, and would prefer that no one member owns the storage thereof – so I doubt this was a case of the technology simply being a poor fit.

There are plenty of reasons why a given technology product doesn’t get traction, though:

• It simply doesn’t work as advertised. In my experience, when this happens, the problem is usually in specific products or implementations. Very rare that this is an issue with an entire technology.
• The Fancy New Thing doesn’t outperform the incumbent solution in terms of speed, total cost of ownership, or any other metric of interest.
• The Fancy New Thing wins in terms of pure performance, but switching costs – the effort to move away from the incumbent solution – is still too high. Switching costs can make for an especially tough sell when you need multiple parties, each with their own budget and internal challenges, to join up at the same time.
• Fear, uncertainty, and doubt (FUD) obscure tangible benefits. I saw a lot of this in the early days of cloud computing, when some IT professionals simply Could. Not. Believe. that it would be viable to run mission-critical services on hardware they did not personally control. I imagine there is similar FUD for blockchain products, fueled in part by the association with recent troubles in the cryptocurrency markets.
• You’re simply too early. Sometimes the left-hand part of that S-shaped adoption curve (The Diffusion of Innovations, anyone?) can be a lonely place. You then get to sit on your hands waiting for others to join in.

It may be years before we learn the real reasons why the Maersk-IBM effort turned out this way.

Hell, it could be something as simple as a spat between the two companies’ executives. Technology, for all its computers and code, involves far more “people” issues than one might expect.

“From Time to the Moon”

Newsletter #13 included a segment on Time’s adoption of web3 technology:

Time isn’t just dipping their toes into web3. All of this is part of a larger strategy. Keith Grossman, Time’s president, has done his homework on this space and is rethinking the company through a web3 lens. […]
This is especially noteworthy in light of how slowly the print media field has adopted technology in the past. Remember early news websites, the ones that tried to simply recreate the print experience through a browser? Those publishers were running on the web but not really embracing what it could do for them.

For any exec who is thinking about how web3 could impact or outright transform their business, we recommend keeping an eye on Keith Grossman and his work on Time’s journey.

That was from late July. Last week, Grossman announced his upcoming departure from Time in a Twitter thread. He will begin a new role at web3 infrastructure company MoonPay in January.

(If the name MoonPay sounds familiar, you may remember their work on the Universal Studios NFT-based scavenger hunt from newsletter #22. Or you’ve seen how they built on-ramps for buying NFTs directly with credit cards. They’ve also made news because of their self-service NFT minting platform, named HyperMint.)

If you have two hours to spare, the last tweet in Grossman’s thread links to the TIME Hall recording in which he goes into more detail.

The latest news on FTX, SBF, and related TLAs

No.

Not this week.

Not doing it.

“I imagine there’s a very small market for this”

Let’s say that you want to take a big risk, because you need a thrill. But you also want to stay on your couch, because it’s comfy.

This Venn diagram has pretty narrow overlap. You could throw your life savings into the crypto markets. Sure. Or if you’re numb to going crypto-broke, you could try … a killer VR headset?

No. Seriously:

[Palmer Luckey,] the original creator of the Oculus headset, which now serves as the backbone for Mark Zuckerberg’s metaverse ambitions, wrote in a blog post that he had modified a VR headset to explode when the wearer loses in a video game, killing the user in real life, too.

[…]

“It is also, as far as I know, the first non-fiction example of a VR device that can actually kill the user. It won’t be the last,” Luckey wrote.

I have … questions. So many questions. How do you beta-test it? If the device fails to kill you, do you get a refund? What sort of ads do you see after you’ve purchased this thing?

And what’s with Luckey’s second sentence there, “it won’t be the last”? This sounds like a threat.

The wrap-up

This was an issue of Block & Mortar.

Who’s behind Block & Mortar? I'm Q McCallum. I've spent the past two decades in the emerging-tech space. And I'm very interested in web3 use cases.

Credit where it's due. Big thanks to Shane Glynn for reviewing early drafts. Any mistakes that remain are mine.

Reading this online? Or as a forward? Why not sign up? Get Block & Mortar news in your inbox, whenever it's published.

Privacy statement: I don’t share/rent/sell your personal info. Seriously.