Adidas & Web3
Adidas entered the web3 space with a bang in late 2021, releasing 30,000 NFTs at a cost of 0.2 Eth. They are one of the few projects that has insisted on community engagement being rewarded via NFT upgrades along the way - something that I love but does have risks (we’ll get to that in a bit). They’re also one of a very few projects (only one at this scale) that rewarded holders with physical merchandise for free - My tracksuit and beanie have just arrived! These two items alongside a hoodie are being delivered to over 24K holders located in 138 countries globally - quite a feat if you ask me. All of this, plus their recent capsule drop being revealed sparked my desire to write about their entry into web3 as I think they’ve done a hell of a lot right but also made several mistakes along the way. My caveat here is that I really like the project but will try to remain as impartial as possible when looking at their web3 track-record. Anyway, I’m getting ahead of myself and want to dive into the details but if this post is enjoyable, I’d recommend checking out the recent Admit One podcast where gmoney interviews Erika Wykes-Sneyd. It really makes me bullish for the potential of the project, to the point where I need someone to dampen my enthusiasm.
When looking at established brands that have entered web3, you can quickly spot which have been most successful purely from a demand and interest standpoint. Financially, it’s a little bit more complicated as some, such as Adidas, have worked with partners whilst others have worked individually and taken 100% of revenue. Annoyingly I’m not too sure how up to date the Dune Analytics dashboard is, but it still provides valuable context when it comes to NFT revenue by web2 brand. Adidas is listed 5th, behind the likes of Tiffany and of course Nike. Interestingly, RTFKT, Nike’s web3 project, is way ahead and probably confirms the narrative that, to date, they’re the brand capturing people’s imagination and interest. Unfortunately for Adidas, RTFKT will always be the company that they’re compared to in this space, rightly or wrongly, but what it does mean is the bar for success is set bloody high. IMO that can only be a good thing. Adidas also took a different approach to RTFKT in that they didn’t immediately release their profile picture (PFP) NFT and are instead building up towards it in 2023. This has pros and cons - the major con being that the collection lacks an identity and digital wearables that Adidas NFT holders own can’t yet be worn by the Adidas PFP. The major pro to waiting and doing it gradually is literally having a treasure chest of data and intel on what works and what doesn’t work in this space. More on that later. The final point that i think is worth recognising is Adidas probably being the frontrunner of web2 brands that is marketing this space globally, the Adidas world cup advert paid homage to their project and the Adidas BAYC (Indigo Herz) was projected onto the Burj Khalifa. Jeez.
I mentioned earlier, one thing that Adidas has done that no other established web2 brand has is release free merchandise to all of its holders that claimed it, be in no doubt that this would have been a mammoth task and pull on resource. A total of three products were released and are currently being received by holders all over the world. This really did reward holders. Ironically, and maybe controversially, I think they could have simply released the hoodie and it would have gone down just as well, saved energy and resource, and most importantly time. I also would like to have seen the free merch play into building communities across the Adidas web3 landscape. I’ll plant that seed there.
The Adidas capsule drop was their third major milestone in the Metaverse after their initial NFT sale and the release of free merch. The capsules were Adidas’ opportunity to announce their arrival in the space with a bang, and was again a time when they would be compared and judged against RTFKT that has also released similar gamified NFTs. Unfortunately the reveal didn’t live up to holders expectations and the team received a hell of a lot of feedback which hopefully they’ll take on board in the future. IMO the biggest “own-goal” was the lack of actual designs, releasing a total of 16 across 24K items was never ambitious enough and if I’m completely blunt, would never be deemed successful by a hugely demanding NFT community. They’ve since announced that holders of the wearables will be rewarded for their conviction and have the chance to upgrade them - I can’t quite tell whether this was all part of the plan or if it’s the team reacting to the disappointment of capsules. Regardless, what I love about this is that it again plays into rewarding the community members that trust the process. My main dislike is that Adidas only gave holders of the capsules a 12-hour warning that the burn would be happening. IMO the reward should have done two major things, reward those that opened their capsules and (just as importantly) encouraged more holders of capsules to open theirs. 12 hours isn't enough to do the second bit and if I was advising the team I would have encouraged a three-day countdown and made sure that the community as a whole knew about the proposed burn. Not doing this means that the capsule supply remains stubbornly high with minimal incentive (in the short term) to burn them and you have community members disappointed and possibly disengaged.
All that being said, I think the greatest downfall of the capsules, beside the lack of designs, was the prematureness of the NFT space and the relatively small number of people actually here. The designs are adventurous and standout which is needed plus they’re the genesis items of Adidas in this space. That alone will be important in five years if you believe that millions will join us here. Both of those points make me think that longer term demand for the wearables (and capsules) will gradually build and, in turn, see their price appreciate. Remember it’s all subjective and what a boring world we’d live in if everyone agreed and enjoyed the same designs.
The final major delivery milestone by the team was a recent Art Basel Adidas event, bloody hell it looked good. It’s the first event that I have seen in this space that was built around showcasing digital wearables and, from the pictures, it looks like they smashed it out the park. Add in the fact that Pusha T performed live wearing the hoodie that community members received and you’re definitely creating something special. Personally, I’m excited to see more of these events globally with community members beyond those just located in the USA easily attending.
What next? Well, it looks like 2023 will be the year that the 30K Adidas NFT holders are able to access their PFPs. I can’t stress enough how important a milestone this will be for the project and my hope is that they’ve learned from the past 12 months and continue to make bold decisions. The company also seems to be pursuing the digital wearable opportunities that NFTs present and they may even be gamifying these via their partnership with BAYC and Otherside. All really exciting IF delivered properly and Adidas learns from past drops and listens to the community. Fast forward a year, if done properly, the Adidas PFP will be a top ten collection in the wider space, maybe even top five (call me crazy) - although the caveat to this bold prediction is that the team listens to the community, learns from the past 12 months and analyzes the shortcomings of current PFP collections. Damn, I’ll even spell out a few (IMO) do/don’t right now;
Do ensure that the PFP has a reveal mechanic built in.
Do ensure that the collection plays into the digital wearable landscape with a diverse number of wearables.
Do include a rarity rank across the PFP collection.
Don’t let any of the PFPs be wearing already released Adidas wearables or any future wearables that will be released.
Don’t pursue an opt-in mechanism for the PFP (it muddies the waters for those that don’t).
Do introduce innovation that recognises the size of the PFP collection (one of the largest), gamifies it and changes the approaches used to date.
I’ll finish by saying that if the Adidas team wants to hear my own personal thoughts on the PFP and how they can innovate like no other project has before I’d love to share ideas :) Damn, what a plug.