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Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and

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Speaker 1: Tim Steneveek on Bloomberg Radio.

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Speaker 2: Yeah, just want to be your everything token?

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Speaker 3: Actually do you?

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Speaker 2: I don't know. Oh no, listen. We have a lot

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Speaker 2: of thoughts about this. We've talked to a lot of

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Speaker 2: guests about this. But the end of the crypto winter

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Speaker 2: man it has been heralded by rising token prices and

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Speaker 2: the long awaited approval of bitcoin exchange traded funds.

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Speaker 3: Yeah, okay, true, but a key segment of the digital

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Speaker 3: asset universe has lagged behind despite previously being one of

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Speaker 3: the sector's hottest corners. We're talking, of course, about non

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Speaker 3: fungible tokens NFTs. They're based on blockchain and represent a

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Speaker 3: unique ownership of assets like images or even physical objects.

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Speaker 3: They saw global sales plummets sixty three percent to eight

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Speaker 3: point seven billion dollars last year. That's accorded to data

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Speaker 3: tracker Crypto Slam.

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Speaker 2: Remember with Chris Rouser for pursuits about like fashion NFT

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Speaker 2: twenty twenty one. You go shopping in kind of a

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Speaker 2: virtual universe and you buy like clue, like yeah, design

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Speaker 2: or NFTs. You can't wear them.

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Speaker 3: You spend a lot of money, second life type of thing.

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Speaker 2: Yeah, I just know anyway.

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Speaker 3: Where your gucci in the in the metaverse.

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Speaker 2: I think our guess are gonna get nervous because we're

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Speaker 2: a bit skeptical anyway. Meanwhile, keep in mind the industry

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Speaker 2: Bellweather Bitcoin has surged almost one hundred and sixty twenty

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Speaker 2: twenty three. A little bit of perspective there for you.

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Speaker 3: Okay, So I'm really curious what our next guests have

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Speaker 3: to say about all of this, and we got some

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Speaker 3: time with them, so looking forward to this conversation. Scott

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Speaker 3: took Commoners is Professor of Business Administration at Harvard Business School.

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Speaker 3: Is also a research partner at A sixteen Z Crypto

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Speaker 3: and recent Horowitz that is, and Steve Kaczinski has worked

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Speaker 3: in communications at Progressive Insurance in Nestley, and together they

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Speaker 3: are the authors of the new book The Everything Token,

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Speaker 3: How NFTs and Web three will transform THEO we buy, sell,

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Speaker 3: and create. Scott joins us from Cambridge, Massachusetts and Steve

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Speaker 3: from Ohio. Scott, I want to start with you because

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Speaker 3: this book came across my desk and it's out now,

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Speaker 3: and I thought to myself, what a wild time to

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Speaker 3: actually be publishing this book, because fts to me seem

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Speaker 3: to have peaked a couple of years ago with all

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Speaker 3: the FOMO and like post COVID kind of yolo trading. Well,

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Speaker 3: how do you respond to that? That the book? Like,

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Speaker 3: you know that that right now seems like a strange

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Speaker 3: time for this book.

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Speaker 4: So, first of all, you know, I understand why you

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Speaker 4: might feel that way, But in many senses, I actually think,

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Speaker 4: you know, in the last year and a half and

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Speaker 4: especially really in the last you know, eight, you know,

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Speaker 4: six to nine months, we've seen far more exciting and

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Speaker 4: more creative and I think more you know, sort of

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Speaker 4: mass market and one might even say like sort of realistic,

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Speaker 4: like you know, applications of n FTS. You know, it's

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Speaker 4: really much more. As you said in the intro, these

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Speaker 4: are a general purpose technology for defining ownership of both

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Speaker 4: digital and potentially physical assets. And we've seen brands do

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Speaker 4: all sorts of new experiments with them, some of them

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Speaker 4: quite successfully, and really, you know, sort of part of

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Speaker 4: the exercise of writing the book was we were trying

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Speaker 4: to understand what are the sort of fundamental principles that

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Speaker 4: define this new asset class for business? Right, how do

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Speaker 4: you build a business around NFTs or integrate them into

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Speaker 4: your existing brand, And what are those principles that survive,

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Speaker 4: you know, sort of irrespective of the state of the

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Speaker 4: market or whatever. That are really about, you know, sort

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Speaker 4: of what is the value of n FTS for business

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Speaker 4: and society?

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Speaker 2: So what is the value of NFTs for businesses in society?

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Speaker 2: And Scott, let's stay with you for one more moment, sure.

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Speaker 1: Of course.

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Speaker 4: So first of all, as I said, it's a general

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Speaker 4: purpose technology. Some uses are simply for improving the functioning

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Speaker 4: of markets that are have already been very complicated to manage.

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Speaker 4: So if you think about like digital tickets, right, every

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Speaker 4: time you buy a digital ticket, you get like a

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Speaker 4: QR code in your email. And if you want to

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Speaker 4: buy one in the secondary market, right, you're trying to

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Speaker 4: get to that like sold out Hamilton show or something

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Speaker 4: of the sort, you have to be like really concerned

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Speaker 4: that the person who's reselling the ticket to you might

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Speaker 4: have sold it to fifteen other people. Right, It's just

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Speaker 4: a QR code. They can forward the same email to

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Speaker 4: a bunch of people at once. And business has spent

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Speaker 4: a lot of time and energy, like building infrastructure to

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Speaker 4: try and make those transactions safe NFTs are just a

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Speaker 4: strictly better technology for this problem.

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Speaker 1: Right.

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Speaker 4: They're a unique digital asset, and the second it's transferred

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Speaker 4: to one person, they know that they've received it and

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Speaker 4: no one else has it. You know, you can prove

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Speaker 4: the owner of it. Similarly, we're seeing a variety of

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Speaker 4: you know, sort of new types of identity records. So

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Speaker 4: think about like, you know, have you know my friends

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Speaker 4: in Bloomberg Opinion. I've recently been writing lots of articles

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Speaker 4: about these concerns around AI and deep fakes. You know,

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Speaker 4: NFTs are cross platform identity records that you can use

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Speaker 4: to prove you are who you say you are on

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Speaker 4: many different platforms, like independent of the platform architecture, and

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Speaker 4: take with you as you move across the Internet. And

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Speaker 4: that sort of technology is becoming all the more important.

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Speaker 4: And then last and sort of like you know, sort

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Speaker 4: of what Steve and I write about is one of

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Speaker 4: the sort of the biggest category. There are these brands.

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Speaker 4: There's branded utility that can be built on top of NFTs.

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Speaker 4: So you start with NFTs as an ownership record, you

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Speaker 4: build utility on top of them, use that to drive

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Speaker 4: a new form of customer identity and from their form

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Speaker 4: customer community that drives the brand forward. And this is

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Speaker 4: something brands have been trying to do for a very

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Speaker 4: long time, right, They've always wanted to extend the relationship

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Speaker 4: with the consumer into the product experience, but it's been

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Speaker 4: very hard to do before NFTs.

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Speaker 3: And Scott, we should know you're a former columnists for

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Speaker 3: Bloomberg Opinion, so you certainly do have a lot of

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Speaker 3: friends over it at Bloomberg Opinion. Hey, I want to

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Speaker 3: bring in Steve Kaczinski here, who joins us from Ohio

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Speaker 3: this afternoon. For people who are watching on YouTube or

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Speaker 3: watching on Bloomberg Originals right now, Steve, they can tell

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Speaker 3: but just by seeing your background you are a fan

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Speaker 3: of NFS. I see an eight faest picture in the background.

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Speaker 3: Is that a real board eight back there? I can't

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Speaker 3: tell because I don't have the certificate. Is that a

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Speaker 3: real board aid back there?

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Speaker 5: It is? It is a picture of a real board

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Speaker 5: eight and I do have the digital certificate to approve it.

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Speaker 5: And it's funny because, like what you all talk about

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Speaker 5: is actually exactly the reason we wrote this book is.

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Speaker 5: I think a lot of people saw astronomical sales they thought, well,

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Speaker 5: this is like a weird sort of life, you know,

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Speaker 5: bad industry, But people forget that's how a lot of

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Speaker 5: industry starts in the tech world, right. I mean, there

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Speaker 5: are records of the Internet being a patis bad, or

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Speaker 5: video games being a patic bad, or cell phone not

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Speaker 5: having usig what it's hused. But of course the way

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Speaker 5: the technology improves and its built upon changes that. And

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Speaker 5: I can say, as somebody who was you know, in

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Speaker 5: the mid nineties in middle schools decoding websites between the

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Speaker 5: HTML like pre Google and all that, this is the

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Speaker 5: most excited I've been about a technology because of the

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Speaker 5: general perfect youth, particularly as it releas in my background

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Speaker 5: in brand building, and you know, I work with Starbucks

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Speaker 5: on their beta program, Starbucks Odyssey, and they use it

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Speaker 5: as a great example that has nothing to do with

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Speaker 5: the over financialization of the space.

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Speaker 2: So does this mean it's interesting? We had a conversation

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Speaker 2: with an individual over at Adobe and whereas people start

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Speaker 2: to use generative AI to include images NFT in terms

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Speaker 2: of kind of protecting the license of a logo, is

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Speaker 2: there something Steve that that makes a business case for it.

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Speaker 5: I mean, they could, but actually, to be honest, I

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Speaker 5: think that a business case like that is narrow compared

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Speaker 5: to the wide spectrum of uses and the ways they

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Speaker 5: would do it. I would say a business would more

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Speaker 5: use it to prove ownership of a asset that a

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Speaker 5: customer owns, to turn that customer from maybe a sort

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Speaker 5: of individual who supports the business into a super fan

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Speaker 5: in various ways, which again we can discuss what.

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Speaker 2: The like get, but I get it for art, like

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Speaker 2: right that you get? That makes sense to me to

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Speaker 2: have kind of an NFT associated with a piece of art,

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Speaker 2: like a certificate of authenticity, right, yeah, exactly, A d

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Speaker 2: down a home makes sense to me.

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Speaker 3: Okay, what about for you know, and thanks to Crypto

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Speaker 3: editor Mike Reagan, who I spoke to ahead of this interview, Yeah,

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Speaker 3: he made the point to me that, Okay, imagine you know,

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Speaker 3: you buy a concert ticket and and you know we

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Speaker 3: have about a minute left, Scott, so come back on

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Speaker 3: in here. What about like the use of a concert

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Speaker 3: ticket for example, that uh, would would you know, give

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Speaker 3: you access beyond just actually seeing the show? We have

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Speaker 3: a minute and then we're gonna come back and do more.

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Speaker 2: With your backstage access?

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Speaker 3: Yeah, yeah, what do you think of that?

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Speaker 1: Scott?

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Speaker 5: Exactly? No, one.

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Speaker 4: And what's cool about them is, you know, both the creator,

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Speaker 4: the artist whomever can provide that sort of value, and

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Speaker 4: also third parties can again because these things are you know,

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Speaker 4: it's it's more like having a physical ticket than like

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Speaker 4: having a QR code that just anyone could replicate. You know,

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Speaker 4: you can prove that you are the owner of the asset.

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Speaker 4: And so if a local restaurant wants to, you know,

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Speaker 4: provide you with a coupon, you know, for a you know,

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Speaker 4: for a drink or a dessert after the show, you know,

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Speaker 4: you can do that too, and they can do it

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Speaker 4: without having the interface with the uh, you know, with

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Speaker 4: the original creator. And so both the artist can give

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Speaker 4: you a backstage tour and then a local restaurant can

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Speaker 4: give everyone who had a certain tier of ticket a drink.

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Speaker 4: And like, all of this can happen around a single asset,

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Speaker 4: you know, and NFTs are particularly powerful for this because

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Speaker 4: of the third party component as well.

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Speaker 2: All right, interesting stuff, We're going to continue. We have

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Speaker 2: lots more to come. Scott do Commoners is going to

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Speaker 2: stay with us professor of Business Administration at Harvard Business School,

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Speaker 2: a research partner at sixteen Z Crypto, and of course,

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Speaker 2: a former Bloomberg opinion columnist.

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Speaker 3: Also Steve Kazinski, who is the co author, along with Scott,

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Speaker 3: of The Everything Token, How NFTs and Web three will

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Speaker 3: transform the way we buy, sell and create.

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Speaker 2: I want to get back to her, guest, Scott do

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Speaker 2: Commoner's professor Business Administration, former Bloomberg opinion columnist. He's at

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Speaker 2: Harvard Business School, a research partner at sixteen A sixteen.

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Speaker 3: Z A sixteen Z and dres and Horowitz.

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Speaker 2: Yeah, and Steve Kazinski also with us. He's worked in

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Speaker 2: communications at Progressive Insurance and Nessley. Together they are the

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Speaker 2: authors of a new book, The Everything Token, How NFTs

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Speaker 2: and Web three will transform the way we buy, sell

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Speaker 2: and create. Scott's out there in Cambridge, Massachusetts. Steve is

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Speaker 2: joining us from Ohio. I feel like we've been talking

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Speaker 2: though about this happening for years now. Having said that, Scott,

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Speaker 2: let me kick it back to you for a moment,

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Speaker 2: so to quote kind of a Beatles song. I woke up,

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Speaker 2: got out of bed, tell me how NFTs could impact me, Carol.

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Speaker 4: Masser, Okay, like from from the morning in the month

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Speaker 4: you get up, Yeah, you probably okay, so you maybe

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Speaker 4: you're like getting some coffee, So you get some coffee

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Speaker 4: from Starbucks. And Starbucks's new Odyssey reward program is you know,

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Speaker 4: sort of taking charge or taking a track of what

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Speaker 4: you've consumed and discover you've finished a journey. You get

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Speaker 4: your new coffee stamps. That's one thing. And maybe you

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Speaker 4: chose your coffee because Odyssey as part of the program

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Speaker 4: also directly incentivized you to go and learn some things

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Speaker 4: about the different coffee varieties they have, and you become

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Speaker 4: a more educated consumer of Starbucks. You read the newspaper too, right,

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Speaker 4: so you're probably logging into Bloomberg Opinion to read the

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Speaker 4: morning opinion reports or their opinion articles. But then also

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Speaker 4: you're gonna like go cross platform and maybe you have

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Speaker 4: an NFT for a subscription that lets you into three

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Speaker 4: different newspapers at the same time, or all the news

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Speaker 4: associated with your local sports team. You know, it's just

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Speaker 4: each page you log in. Yeah, you connect your walt

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Speaker 4: your crypto wallet, It reads the NFT, it shows you

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Speaker 4: the sports news. Well, you see if your Starbucks coffee

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Speaker 4: and earn rewards.

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Speaker 3: Okay, are you satisfied, Carol, You're getting there. Okay, she's

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Speaker 3: a skeptic, but she's getting less skeptical. Hey, each of us,

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Speaker 3: I gotta tell you, each of us were struck a

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Speaker 3: couple of weeks ago when we heard Blackrocks Larry Fink

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Speaker 3: talk about tokenization with our own David West and I

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Speaker 3: want to play a clip of that. Check out what

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Speaker 3: he had to say.

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Speaker 6: We believe the next step going forward will be the

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Speaker 6: tokenization of financial assets, and that means every stock, every

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Speaker 6: bond will have its own basically q SIP. It'll be

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Speaker 6: on one general ledger. Every investor, you and I will

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Speaker 6: have our own number, our own identification. We could rid

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Speaker 6: ourselves of all issues around illicit activities around bonds and

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Speaker 6: stocks and digital by having a a tokenization. But the

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Speaker 6: most importantly thing, we can customize strategy through tokenization that

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Speaker 6: is fits every individual.

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Speaker 3: Tokenization that fits every individual. That once again was Black

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Speaker 3: Rocks Larry fing talking tokenization with their own David weston

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Speaker 3: just a couple of weeks ago. Steve, I want to

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Speaker 3: bring you in here and get your reaction to that,

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Speaker 3: because we do hear a lot about tokenization of financial

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Speaker 3: traditional financial ashsets, potentially disrupting a lot of middleman and

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Speaker 3: intermediate intermediary work that has done on Wall Street. But

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Speaker 3: take us through what exactly that would mean for the

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Speaker 3: financial industry.

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Speaker 5: Yeah, I mean for the financial industry. What that means

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Speaker 5: is that it sort of does exactly as you said,

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Speaker 5: remove those middlemen and make for a more clear transaction,

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Speaker 5: meaning that it is a very clear ownership going from

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Speaker 5: one to the other tract on a ledger. This applies

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Speaker 5: to the entire financial industry. This can apply to real

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Speaker 5: world assets that you're talking about, where you physically pin

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Speaker 5: a digital asset to something to prove digital ownership, which

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Speaker 5: takes away a lot of potential issues you have coming

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Speaker 5: from one media intermediary to the other. It makes it

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Speaker 5: a much more clean transaction. As again, the blockchain is

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Speaker 5: just a cleaner technology that removes a lot of friction

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Speaker 5: as you start to tokenize not just sort of the

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Speaker 5: financial assets, but any physical asset you own in order

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Speaker 5: to sort of build upon it.

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Speaker 3: Steve, is this the biggest opportunity for Web three for

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Speaker 3: the blockchain?

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Speaker 5: I mean it depends on sort of who you ask

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Speaker 5: and how you ask it, right, Because there is the

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Speaker 5: really poetic use of the blockchain where when somebody is

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Speaker 5: fleeing a company of unrest and they have a blockchain

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Speaker 5: based credential, like say a teaching degree, Well, when they

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Speaker 5: go to a new country, if they have to flee quickly,

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Speaker 5: their money digitally can go with them, and their sort

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Speaker 5: of degrees and credentials can then go with them in

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Speaker 5: a provable way, meaning that they don't sort of have

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Speaker 5: to start over when they get there. So that to

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Speaker 5: me is always the sort of end goal right there.

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Speaker 5: And then from a financial perspective, I just think the

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Speaker 5: actual way companies are going to be able to create

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Speaker 5: entire new sectors within their companies is actually the biggest

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Speaker 5: financial aspect and opportunity because it means that a company

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Speaker 5: is going to be able to create entirely new revenue

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Speaker 5: streams while creating aligned incentive structures with their customers all

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Speaker 5: at once. It's an interesting system where everybody can win,

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Speaker 5: both the consumers and the brand. The brand can build

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Speaker 5: value back in the NFTs. The NFTs can then raise

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Speaker 5: and value and so the customers can then decide where

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Speaker 5: they want to purchase or utilize them all.

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Speaker 2: Right. Well, with anything that's kind of new, there is

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Speaker 2: the question of oversight and regulation, and this is something

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Speaker 2: we've been trying to figure out. You know, the whole

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Speaker 2: idea of digital you know, currencies, is this idea that

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Speaker 2: it's outside the traditional network. So you guys write in

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Speaker 2: the book. At the same time, as with any novel

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Speaker 2: asset class, NFTs raise questions about regulation. So, you know, Scott,

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Speaker 2: come on back in here. Who who will ultimately have

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Speaker 2: oversight of this because we're going to need something yes.

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Speaker 4: Yeah, and again. And I don't have a clear answer

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Speaker 4: or prescription on this. But it's very complicated of course,

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Speaker 4: because you know, these digital assets can have many different functionalities,

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Speaker 4: and their functionalities can evolve over time potentially, right, and

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Speaker 4: we talk in the you know, we're talking the book

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Speaker 4: of something that starts as a collectible brand asset and

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Speaker 4: can potentially take on other functionalities. Right, You get a

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Speaker 4: ticket and then gradually like it becomes the anchor of

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Speaker 4: a rewards program or something of the sort. I think

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Speaker 4: it's very important to think through, you know, sort of

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Speaker 4: how those different assets like interact across different categories and

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Speaker 4: so forth. And it makes it a really challenging problem.

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Speaker 4: But unfortunately I don't have any easy answers.

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Speaker 3: Hey, uh, Scott, we have like thirty we have like

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Speaker 3: a minute left, and I just want to talk about

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Speaker 3: the metaverse real quick, because a couple of years ago

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Speaker 3: there was a lot of hype around it. I mean,

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Speaker 3: look at Facebook's name change to meta how NFTs would

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Speaker 3: play an important role. But a lot of that has

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Speaker 3: seemed to died out and many big tech companies are

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Speaker 3: chasing the shiny new object of AI. Was the potential

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Speaker 3: of the metaverse overhyped?

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Speaker 4: So, you know, Steve and I talk about this in

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Speaker 4: the book. We take a very expansive concept of the metaverse.

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Speaker 4: We think the three D world thing is not exactly

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Speaker 4: the right way to think about it. The metaverse is

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Speaker 4: all the digital spaces we interact in. Like we're in

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Speaker 4: a metaverse space right now, I'm calling in over zoom

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Speaker 4: talking with you. And what NF Tease enable you to

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Speaker 4: do is to bring your digital asset from place to

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Speaker 4: place right like that. That what is your NFT day.

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Speaker 4: It's like you have a single master account. That is

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Speaker 4: what holds your subscriptions, to hold your coffee of rewards.

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Speaker 4: It's all your different social media identities, lets you share

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Speaker 4: your reputation across them. And so in that sense, we're

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Speaker 4: having more and more metaverse interactions as we spend more

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Speaker 4: and more digital time, especially since the start of the pandemic,

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Speaker 4: and NFTs are a key enabler of that. And as

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Speaker 4: you say, AI is going to be flying into this

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Speaker 4: as a component. But the more AI starts to distort

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Speaker 4: and like confuse those spaces, the more important it is

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Speaker 4: for people to be able to build core and trust

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Speaker 4: it and cross platform digital identities for themselves.

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Speaker 2: All Right, we're gonna have to leave it there, and

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Speaker 2: hopefully we can continue this conversation in the future because it.

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Speaker 3: Is is got to come back.

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Speaker 2: We have a lot of questions, but it's really fascinating, Scott,

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Speaker 2: do commoners. Steve Kazinski. There a new book, The Everything Token,

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Speaker 2: How NFTs and web free will transform the way we buy,

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Speaker 2: sell and create. Guys, thank you so much. This is

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Speaker 2: Bloomberg