Did Nike's Phygital TINAJ Sneaker Drop Just Set a New Standard for NFT-based Customer Engagement?

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David Berlind: Today is November 1st, 2023. This is the Blockchain Journal podcast. I'm your host, David Berlind. I'm also the editor-in-chief of Blockchain Journal.

Our mission is to help enterprises figure out how it is that blockchain and distributed ledger technology can make other enterprises and global brands more competitive in their industries and drive new and creative business outcomes. We have a lot of content on our website, technical content, content about the different NFT programs that are out there, and how other enterprises are putting those programs to work to improve their business outcomes. And, joining me today is Sophie Waldman, one of our newest writers on the Blockchain Journal team. Sophie is very experienced when it comes to working with a variety of the NFT programs out there. In reviewing the customer journey, I spotted a review that she did of the Starbucks customer journey when it came to the Starbucks Odyssey program. And as soon as I read the review, I said, "I need to contact her and see if she'll do some writing for us here on Blockchain Journal." And, she agreed. And so now we're off to the races. She's written a few articles for us and we're looking forward to more. Sophie, thanks for joining us on the program.

Sophie Waldman: Thank you for having me. I'm super excited to be here and of course, excited to be writing and contributing to Blockchain Journal. So, thank you again for that opportunity, and excited to be here in this conversation today.

Berlind: Yeah, so awesome. It's just great to have you on board. And I know you and I have had a lot of conversations and gone back and forth on different programs that are out there. I think when I read your profile, it said you were a part-time degen. So for people who in our audience that don't even know what a degen is, let's start there. What's a degen?

Waldman: Yeah, that's a great question. A degen is short for what I'm embarrassed to admit, a degenerate, which is typically considered somebody who, in this space, in the Web3 space, probably buys crypto instead of the US dollar and prefers to hold JPEGs instead of physical art. So a degen also to me is the fact that I not only can help brands with their strategy and marketing and all that comes with this, is I also have a lot of experience myself in purchasing these NFTs and going through these metaverse experiences, creating wearables and being able to actually have both sides of the equation as a user and as the brand.

Berlind: Yeah. So, so the word degenerate or degenerate reminds me that over the years, there are generations of people who somehow get labeled as something and then they begin to wear that as a badge of honor and it becomes less of a, you know, derogatory word and more of like, hey, I'm in that group, you know, I'm thinking back to like slackers and I mean, it's just like people. Somehow they take something that was maybe originally thrown at them as an insult and they turned it into, you know, a moniker for going forward. I don't even know what the roots or the, you know, the history of the word degen are. Do you know where that comes from? Or you just know that you are one.

Waldman: Yeah, I mean, I'm not sure. It kind of just picked up from this crypto-space. Like everyone was saying, "Oh, you bought that NFT, you bought that meme coin, you're a degen, or you're just degenerate with all this digital stuff."

Berlind: Yeah.

Well, so you said you're a part-time degen. Why are you part-time? Like, are you doing something else the other part of the time, or do you actually now consider yourself to be more of a full-time degen? Are you so in it that like, you're ready to roll with the rest of the full-time degenerates?

Waldman: I guess that's the part-time comes from kind of the point that we just touched on that, you know, I'm very serious most of the time as a, you know, professional businesswoman and the work that I do. But then when it comes to kind of those out of the NFT experiences myself, I just as much am the user and customer as well. So part-time I'm wearing the hat building and then [the] other half of the time I get to just appreciate the experience and give some customer feedback as well.

Berlind: Okay, so we've been going back and forth on a couple of different programs that you've been engaged with and it's been very cool to watch you work with some of those programs and see what you come up with. What's the latest? What's the thing that really got you excited and you had a lot of fun with and what about that experience made you think, "Hey, this could be the future for some of these big companies?"

Waldman: Yeah, there's been thing after thing. I mean, when everything kind of first started picking off and we saw some of these bigger brands coming into the space, it was very much so — I would say capitalizing on that hype, it was very much so a fad or trend at the time. Everyone had to quickly jump to it. And now, two years later, pretty much from that big boom, we've seen a lot more innovation come about that's more focused on providing true value for the customer, potentially a more immersive brand experience, getting to learn more about what goes into the products that we're consuming. And so, seeing this trend now, I think everything is much more authentic, it's much more meaningful, it has more value for the users. And so, if you look at something like the TINAJ drop, which of course we're going to get into, that was a really fun experience because not only did you get to, of course, you know, purchase a pair of sneakers, but you really got to walk through the whole process with Nike and they were there every step of the way. And so it really just made a fun experience from purchasing digital stuff first, more utility to potentially come in the future, and then also receiving a physical pair of shoes within that timeframe as well.

Berlind: Oh, wow. So much to unpack there. So let's first start off with, you mentioned Nike. So this TINAJ thing is a Nike initiative.

Waldman: 100%.

Berlind: And what is TINAJ? Like, what's that all about?

Waldman: Yeah, TINAJ, which is funny. When I first heard that their dotSWOOSH first physical collection was going to be called TINAJ, I honestly was like, "Oh no, this sounds like it's going to be a funky product." I don't know what TINAJ is. I thought it was maybe a person. So I'm like, oh, maybe we're meeting an artist named TINAJ or a designer named TINAJ. I had no idea. And most people thought the same too. They were like, what is TINAJ? Then when they did the big dotSWOOSH session, which is what dotSWOOSH does too. It's a live event that they allow all of their visitors or users on the SNKRS app to come in and listen to. They revealed that TINAJ actually was an acronym and it stood for This Is Not A JPEG. And that's when I was like, ah, okay, I'm down with TINAJ. I love the name. I think it was really cute that they pulled from something kind of like degen so cultural to the space but yet made it very much so welcoming for anybody who might not know about this stuff and just to call it the TINAJ sneaker.

Berlind: So you mentioned, first of all, I think you're sort of getting at that transition that the industry is going through from two years ago to now where literally Nike is out there saying, "This Is Not A JPEG. This is not what NFTs originally started out with." It's something very different. And then the other thing you mentioned, and I just want to make sure our audience understands the structure here, you mentioned dotSWOOSH. What is dotSWOOSH?

Waldman: Yeah, so dotSWOOSH is part of Nike's virtual studios and they are the Web3 native kind of brand under the Nike umbrella. And so dotSWOOSH launched originally last year, last November, so pretty much they're about to be celebrating their one-year anniversary. And ever since they've kind of been slowly hand-holding and unveiling like what the actual platform and roadmap to dotSWOOSH will be.

This of course was the first physical drop. However, prior to that, they allowed everybody who signed up for beta access to receive a member ID and that was kind of your piece within the ecosystem that would relate to you and create your own, like digital identity within the space. And so everyone was able to customize that first word. And then they got dotSWOOSH – kind of like a domain name – added to the end of it, and you also were minting that specific member ID as a token. And that was the first token that you could mint through dotSWOOSH and have connected to your wallet for the long run.

Berlind: Okay, so I'm just going to lean back a little bit here and paint a picture for other global brands and enterprise users that are watching this. You've got Nike, the company, and they decided they were going to start engaging their customers with blockchain technology and NFTs, non-fungible tokens. They have, you mentioned a group inside of the company called Nike Virtual Studios. This is the organization that's essentially responsible for these Web3 initiatives. And then they created an entirely new brand called dotSWOOSH, which is essentially the brand under which these Web3 initiatives are occurring. Is that right?

Waldman: Correct.

Berlind: Yes, okay, great. And so then one of those Web3 initiatives that involved an NFT is this TINAJ, which again stands for This Is Not A JPEG. And you went into thedotSWOOSH program, you got your credentials that showed up as an NFT itself, which is kind of neat. And now take us through to what happened next with the TINAJ NFT.

Waldman: Yes, so before they launched TINAJ, or at least before we knew exactly what TINAJ would be, there was a collection of Air Force 1 boxes. And those boxes pulled inspiration from Nike's Air Force One silhouette. And they also invited a bunch of community members, anybody who had a dotSWOOSH member ID, to participate in a campaign where they could create a mood board for... kind of the like inspiration or colors or whatever they wanted to go into this sneaker. So you actually didn't need to know how to design a sneaker. You didn't need any specific creative or design skills. You just had to kind of say, "Here's what I'm envisioning. I like blues and skies and grass or this kind of texture, these kinds of inspiration from other shoes that maybe Nike has produced in the past." And from there, Nike chose a couple of those designers to actually fly out to the headquarters in Beaverton, Oregon, and produce these shoes. And so they – four creators won, they sat down with Nike designers, they were able to create their first shoe.

A lot of them were not sneaker designers or had any access to these kinds of opportunities before. Nike just wanted to kind of bring people in, show them their work processes, and provide them with really this once-in-a-lifetime opportunity through dotSWOOSH. And so that kind of kicked off the dotSWOOSH platform. And then when they launched the Air Force 1 boxes, which were digital boxes only, a couple of those winner's shoes were actually displayed within those. So the Air Force 1 collection was a whole bunch of randomized virtual boxes, minted them as a traditional NFT. However, a lot of the complexities there were definitely hidden on the backend, and you were able to mint up to four. So every single member could mint up to four. They were all unrevealed, meaning you had no idea what would be inside of the box. And yeah, that was the Air Force 1 collection.

That then led into...

Berlind: And so, you being a member of dotSWOOSH, you were essentially given the opportunity to acquire these four NFTs, these virtual boxes that were unrevealed. I just wanna back up one second.

I've tried to join the dotSWOOSH program. This is a, there's like a waiting list to get in and I've been waiting for a long time with a essentially been closed out. I have no emails, nothing to indicate that I'm anywhere near getting into the program. So I just want to point out [that] this program is like very exclusive. It's only available to a handful of Nike's customers because so many people are probably on the waiting list like I am. Is that right?

Waldman: Yes, I believe so. I do know that the waiting list is rolling and so they definitely are bringing in new people into the program as quick as possible. I just don't know how quick that necessarily might be. I do know that beta did open with like a real focus and priority on bringing in communities from Nike's like DEI initiatives and so they were really prioritizing educating people and getting them these, they were, they were hosting sessions actually all across the states in person and helping people understand kind of the fundamentals of the blockchain, why they were getting into gaming and digital assets and where this was all headed. And then with the program launching, they specifically gave out those codes to anybody in those neighborhoods or who attended those sessions. And then, also prioritize some other communities that Nike has like existing partnerships with to bring in more people from outside of this web through [the] native world as well.

Berlind: Uh huh, okay. And well, you were fortunate enough to get in early to the – off the waiting list and get into the program. I'll just wait and hopefully one day I'll be able to join. But in the time being...

Waldman: One day soon.

Berlind: Yeah, hopefully soon, but [for] the time being you had these four boxes that were unrevealed. What happened next?

Waldman: Yeah, so you actually have the choice to reveal them. Speaking on my personal experience, I had four boxes. I unboxed two of them. However, two are still shut to this day, and there's a lot that are still shut too. I don't know why, I just kind of felt like, let me save some fun for later on, and the sneakerhead and physical collector in me was like, well, if I don't unbox it, of course, there's gonna be a little bit more value, but again, that's all speculation, totally just playing into the gamification and the platform.

Um, so I unboxed two. I was pretty happy to see that I had two different colorways from those unboxings. So one of them was like a black sneaker that had a really cool purple accent and animated lightning bolt, like lightning coming down on it. And then the other one, which was pretty cute, it's actually a, um, a, I think it's called the generative something heart... heart something.

And it's a black shoe with some pink accents and it actually has an animated heart on it, like a little like, think of like a Valentine's Day candy heart that's on the back of the shoe, and it kind of like breaks open into a million pieces and then comes back together, which again, no physical shoe can do something like that. So it was pretty cool. And then with those, you also received the 3D files. And so at the moment, that's kind of the only real utility that's been unlocked. However, within the dotSWOOSH interface, you can see that there are some loading utilities that have yet to kind of like glow, but the 3D files is the one that is already activated, meaning that I do have the 3D files to those can plug those into either – like renders, remodeling, gaming platforms and that type of stuff.

Berlind: Did you have to pay any money in order to acquire those boxes originally?

Waldman: Yes, each of the boxes costed about $20. It was like $19–something to be exact, which was a year symbolic to the brand. And you can mint up to five ... up to four. So it was just under like $100 if you wanted to max mint, but you received up to four. Otherwise, it would have been like $20 for just one box.

Berlind: Okay, and during your description, you said something like, a sneakerhead like me. What's a sneakerhead?

Waldman: Yes, that's a brilliant question. So [a] sneakerhead is somebody who is just a big sneaker enthusiast. Sneakers have been something I've been collecting forever. I was born and raised in Philadelphia, and it was just kind of the culture to look at someone's shoes before their outfit. For me, I always chose my outfit based off of what shoes I was going to wear first. And then when it comes to – kind of this like – evolution into this digital age that we're now living in, it made perfect sense to me, solely because I was living this kind of non-fungible physical world my whole life with these collectibles, and I just had this pre-existing knowledge that digital assets could, you know, better all of the problems that I was facing. And so, if you look at like traditional sneaker collections and how the sneaker market moves, there's a $500 billion counterfeit good market that all of these brands and their customers are fighting.

So, there's a lot of fears in, "Is this product real? How can I get it authenticated? Who owned it before me? Was there really only one owner before me? Was it really kept in pristine condition? Is this even real?" And so there's a lot of those problems that the sneaker market is currently facing, and we have to deal with third-party, either authenticators, any middle man who will do that service for you, and pay for it. So not only are the brands losing, but also the customers have to pay for this to ensure that it is legitimate and ensure that it is, you know, a genuine product of Nike, for instance. And it was just, you know, really unfortunate when people did discover that their products weren't real and, you know, they already paid that premium price for it.

So, those were kind of some of the problems that the sneaker community was facing. And when NFTs came around, to me, it made perfect sense that this, you know, the blockchain and smart contracts were going to help with this problem and specifically in tying all of these digital pieces to a physical item just because it's going to unlock much more value for the customer there and the brand.

Berlind: Right. And then they call that we hear this term these days called phygital, where you're tying a physical item to something digital. And more often than not, in the blockchain world, that digital item is the NFT. So they kind of match one another. So I've heard that. But I guess one of the things I want to touch on there, based on what you said, is that Nike and in general, the sneaker industry, there's this kind of – collectability mojo or momentum – that was already in place when NFTs came along. And so NFTs kind of are about collectability, but there was, there was definitely some commonality there. Like, it makes me wonder if certain industries where that commonality doesn't already exist, where there isn't a lot of collectability already. Whether or not NFTs really lend themselves to those industries. And I do think of the Starbucks Odyssey program because they have an NFT program. You have some experience with it. And, as much experience as I have with it, I was able to get off the waiting list in that case. I still don't really find anything to be terribly collectible. I know there's a few people out there who are collecting coffee mugs, but those don't really seem to be a part of the program that much. And it just seems like, the momentum that Nike has and other companies, adidas, have with the collectability of their physical items is something that could carry them through success with NFTs. What do you think about that?

Waldman: Yeah, 100% because – I mean, it's not going to be a perfect use case for everybody. But I look at some of the stuff that like legal firms are doing with smart contracts and real estate and mortgages and pretty much anything that you used to get physical papers for that would be tucked away to collect dust can become digitalized and placed on the blockchain now. And so I just think there's different use cases. But when it comes to collecting something, 100% do the brands like, for instance, sneakers have so much, they resonate so much to this. And that's mostly because honestly of like the market, the tradeability aspect to these, because when you look at like, to me, supply and demand made sense because of sneakers. So I understood that if a brand was charging a hundred bucks for something, and I purchased it at retail for a hundred bucks, and there was someone else who didn't get that shoe from them, they had to pay the premium just because the supply was less than the demand. And that's what you see with NFTs. And that's where you see the prices fluctuate all the time. And it really is just that similar, like sneaker collector, sneaker market model that was applied in a digital setting for NFTs to really take off. But kind of like I alluded at in the beginning with what brands are doing nowadays, it's finding more ways to provide the value for the consumer. So it's not just like, "How can we mint out this collection?" It's, "How can we actually create more value?"

And, in this case, what dotSWOOSHd id is, they brought you into the story, they were providing opportunities, they were educating, they were giving you access to sneakers that other Nike enthusiasts were going to want, but only dotSWOOSH members could have. And so to me, they really made perfect use case of creating value as opposed to just extracting it and tapping into that kind of like speculation and like [the] volatility of the markets. They were like, "We will make these soul-bound tokens. We will not launch the marketplace from day one" – which there still is no marketplace to trade these assets on. We don't know if there ever will be. We don't know if they will be even tradable in the future. And so it kind of removes that whole layer of speculation there and viewing it like, oh, I invested in this. And it's more of just like, "Here's the product you bought. Here's what you'll get. Here's what you'll eventually get. And if you wanna be a part of this experience, feel free to participate." But there's no "You bought this, you promised this" and you know, there's all the speculation that may come with that.

Berlind: Understood. Well, I do think that, you know, what we're seeing here is like a cultural shift in the relationship between companies, big brands, fashion brands, sports fashion brands, and their customers. It sounds like they're trying to say – and use NFTs to do this, by the way – they're trying to find a balance where it's less take and a little more give like, you know, whereas before it was always about "What can we sell to this customer?" Now it's a little bit more about "What can we give to this customer?" And I think it's fascinating just to watch you go through the process. So let's get back to the process with Nike. You revealed the boxes, what happened next?

Waldman: Yes, so once they revealed that the TINAJ would be dropping, they kind of released some kind of alpha information to allude to the customer, something's coming, here's how you make sure you're involved, or here's how to make sure you qualify ahead of it. So you had to not only purchase one of those boxes, you didn't need to purchase all four, you had to purchase just at least one, and you had to reveal at least one of those, meaning the unboxing of it by October 16th. And so, you had some time to do so if perhaps you, you know, purchased the box and didn't want to open any of them. I, in that case, already had unveiled one of them. So I already qualified from the start to get access to the TINAJ collection. However, a lot of people did go and unbox at least one just to make sure that they could qualify. And then once you were qualified, you were able to participate in the drop, which would be on October 20th.

Berlind: All right, well –

Waldman: Here it is, yeah.

Berlind: So then it was just a couple of weeks ago, where let's get a look at the TINAJ. You have it there in front of you?

Waldman: Of course I do. So here is the shoe itself, which of course is the physical. So as you can see, I don't know how much of a "sneakerhead" you might be –

Berlind: Not much.

Waldman: – but this black leather right here is actually much more premium than the white leather, which is the traditional Air Force 1 here. So. As you can see, it's kind of like a more marbled, higher-end leather. I've worked with a lot of luxury brands and products before and I've never seen Nike use such high-quality leather here. You also could see the icy sole, which is that blue right there. It's kind of like a translucent, hence the icy blue. They also did a little bit of embroidering there with the dotSWOOSH. So you see the traditional swoosh logo and then you also get the dotSWOOSH right there. When I wore these out, I got a lot of questions. What's the... they said, "period swoosh" and I had to clarify that it was dotSWOOSH. And then here's like a cool little – I don't know if you can see that there – but they do a laces accessory, which is like also known as a charm. The dotSWOOSH is on there as well. I also changed the laces to blue. I actually have the black here as well, just in case you're more of a traditional sneaker collector –

Berlind: Very cool.

Waldman: – and not into the blue colors yet. And then last but not least on the back you have the, This Is Not A JPEG.

Berlind: So you're making me, I'm having a serious case of FOMO here. You know, like you're making me want to become a sneakerhead and be a part of this. I'm kind of jealous. You're showing off these shoes that you got, you know, you only paid $20 for the NFT. You're wearing them, which surprises me because I would be like, I'm gonna put these in a glass case, you know, and hermetically sealed.

Waldman: Which many people do.

Berlind: So, you know, in some ways, I think that could be a little bit of the intended effect, which is it's kind of like that, you know, the velvet, you know, the velvet rope syndrome, which is like, "Boy, that person's got exclusive access. How do I get behind the velvet rope and get some of that same exclusive access experience on these same benefits for $20?" Like, I definitely have some FOMO. And so I guess my question to you, Sophie, is you seem excited about it, but if you lean pretty far back, what's – how do you feel this is changing your relationship with Nike as a customer of Nike, as somebody who was once a sneakerhead, as somebody who picked all of their clothing out based on the shoes they were gonna wear that day.

Has this changed that relationship in a way that other enterprises and global brands should be looking and saying, "Hey, this is, there's, there's something here." There's something about the relationship that is strengthening between the bond between you and the brand Nike that other brands should be trying to do with their customers.

Waldman: 100%. I couldn't agree more with what you just said there. So, the way that I look at it again, coming from that sneakerhead mentality, but also just the collector in general is that every single SNKRS drop that Nike has had thus far has millions of bots. And so you yourself are fighting a whole bunch of programmed bots that are probably going to beat you to getting access to all of these shoes. This was the first time in history and I've been a SNKRS member since 2016. This is the first time that I was able to successfully go to the SNKRS app on drop day and know I would get a pair of these shoes. I knew that there were no bots that were going to be there. And even if they were, I mean, I would be ready to fight them because I had the tokens that I needed. I qualified in the ways that I needed to, to be able to have access to purchasing the TINAJ sneaker, which was a huge "thank you."

I don't even think a lot of dotSWOOSH members may have even like recognized the value there, but coming from someone who does try those sneaker drops weekly, if not daily, it is very hard to what they say, "got 'em" in one of those drops. You typically don't. You typically lose. And a lot of the times the bots sadly win. And a lot of times, you know, anyone who has kind of like more in-depth kind of just like access to these drops wins as well. And then the average customer has to end up paying secondary, which takes me back to, you know, where all of those other problems come from when you're buying from a secondary market.

Berlind: Yeah, so you said that you are a SNKRS member, and I just want to clarify for our audience members that SNKRS spelled S-N-K-R-S is an app, a mobile app that Nike, I believe, has traditionally used to make these limited edition drops available to their customers and these sneakerheads. And so if you're a member of the app, if you're a user of the app, that's where you would see a typical physical drop, but this is... as you're pointing out, sort of the first time that they managed access to that physical drop ...

Waldman: Yes.

Berlind: ... by incorporating blockchain technology and requiring that somebody, a participant have a former, an NFT that was issued earlier that you paid $20 for and revealed it. There were all sorts of conditions here, but by what they call token-gating, they kept the people like you in and gave you fairer access to participate in that limited drop, right?

Waldman: Exactly, that was exactly the case. So this was actually the first token gated to an extent drop that SNKRS app has ever participated in or ever even, you know, ran by Nike. And so they – the app itself was tied to pretty much the non-custodial Polygon wallets that were on the backend of dotSWOOSH. And so your Nike ID, which is connected to the SNKRS app, is also connected to your dotSWOOSH ID. And so with those two IDs, it kind of did the fact check through the blockchain for the dotSWOOSH holders and then gave you access to your – when using SNKRS app with your Nike ID. That makes sense.

Berlind: Yeah, so when you say you did the sort of the fact check, basically what it did was it confirmed that you in fact were both a user of the SNKRS application at the same time that you were a holder of the original box NFTs in a way that, okay, you meet the criteria, we're gonna let you in. Also, they had to look for the fact that it was open, but this token gating, I think, is something that you're not hearing about too often. But, it is going to be a theme that we hear more about? Because I'm noticing more brands and enterprises experimenting with this idea of using token-gating to get access to something else could be another drop. It could be a physical event. There's all sorts of things that they're doing in terms of using NFTs for this idea of token-gating.

Waldman: 100%. token-gating is kind of changing the way and what we were touching on earlier with making the customers feel more a part of the brand and build on that kind of just like [an] organic enthusiast of the brand or supporter of the brand. Token gating is definitely a way to do so because you're not only rewarding them with the NFT, but you're also giving them that exclusive access that you just touched on.

Berlind: Well, listen, Sophie, we could go on forever because of some other programs that you've been playing around with. I know I've been playing around with some programs. But, we've taken so much of your time already. And I feel like let's save the next discussion or, you know, the Williams F1 racing program, which we both are playing around with. Let's save that for another discussion. We've covered so much ground already and I'll let you go. So thank you so much for writing the articles.

Waldman: Of course.

Berlind: For those of you out there who want to see what Sophie has written so far, just have to come to blockchainjournal.com and you can click around, you'll find the articles that she's been writing about these different programs. We'll be publishing this video there. There'll be more videos like this one coming. So Sophie, thanks so much for your time today.

Waldman: Of course, it's always a pleasure.

Berlind: Yeah, it's great to have you. Okay. And for those of you who are discovering Blockchain Journal for the first time, we sure would appreciate a like or subscribe. We don't really make any money on this. We're just doing this to help other enterprises understand what their journeys are going to be like. And so when you do that, it helps them find our content and learn more about how blockchain can make them more competitive in their different markets. So thank you very much for joining us and we'll see you at the next podcast.