This tweet is funny because it’s true. My old neighborhood of Williamsburg, the now-gentrified, formerly hipster neighborhood in Brooklyn is today the unofficial capital of Web3, and represents a caricature of all the memes (good and bad) about crypto and Web3. But I don’t think it’s funny because it’s ridiculous; quite the opposite, I think that NFTs unlock new behaviors and potentially could allow small businesses to capture consumer surplus in a way that has never been truly feasible before.
And as it’s 2022 and I’m both the owner of a pizzeria and a Web3 aficionado, the time has come for me to announce the launch of my own NFT project: The Pizza Paraiso Collection 2022.
I want to explain the rationale behind the launch, and explain how my thinking has evolved since my last couple of posts on Memes and NFTs but before I do, let me give the overview of the NFT launch:
- Launch date: Thursday 26 May, 2022, 7pm Bogotá
- Place to purchase: https://opensea.io/pizzaparaiso
- Price: 0.25 ETH + gas
- Collection: Six 1/1 NFTs by six different Colombian street artists
- Benefits: forever 2×1 pizza in the restaurant (while a holder of the NFT), a private night of “make your own pizza” for up to 12 people, a monthly invitation to the “Flavor of the Month” taste tests with a vote on which pizza wins, input on new Pizza Paraiso initiatives, the complete sticker collection of Pizza Paraiso.
- Artists (clockwise from top left): Oniko Praxis, ERRE, Era de Rayo, Chirrete Golden, Skore, Inspektor de Bikinis
To my knowledge, this is the first NFT collection anywhere with utility in the form of free pizza :)
I’m really excited to once again work with some of Bogotá’s finest artists and embrace the new intersection of culture and technology that NFT’s represent.
We launched a sticker collection in 2021 which generated a huge amount of buzz and helped to create a direct connection between artists, the pizzeria, and our customers. The NFT collection takes that connection one step further, offering fans of both the art and the pizza to put themselves in an exclusive group of stakeholders with benefits unlocked that gives them a direct line of communication with me, the owner of the pizzeria, and a level of status that will be possessed only by the 5 other NFT holders. I’m both nervous and excited at the idea of bringing the Web3 world into my business’ day-to-day operation, but I believe that the potential benefits outweigh the risks of a muted response.
Unlocking Consumer Surplus for Small Business Owners
Economies of scale are very real and there is a reason that small businesses often suffer in the long run against larger businesses, but small businesses provide intangible benefits that can’t be directly quantified: a more authentic relationship between business/customer, a willingness to invest in their business with expectations other than just financial returns, or simply the fact that the diversity in designs, colors, shapes and sizes of small businesses adds more to the tapestry of our day-to-day life than a generic corporation.
NFTs give us a chance to extract some of the consumer surplus created by Small Businesses that until now have been out of reach. I think of NFT collections as a way to create an exclusive community of super customers, and create a deeper connection (financially and emotionally) than any form of loyalty rewards program or creator support contribution (eg. patreon).
The financial connection is important to why NFTs are different. Buying an NFT is buying an asset. Buyers are purchasing their way into a provably scarce community, and if the NFT has utility they will receive benefits for buying their way in that in theory have value to the buyer.
NFT holders represent a new class of stakeholder – more invested than a general “supporter”, but with less legal responsibility and focus on financial returns than a shareholder.
This is revolutionary because it allows for consumers to put larger amounts of capital into a project/business that they believe in, much more than a Patreon or Kickstarter where there is no re-sellable asset. Personally as a consumer, I would rather put $1,000 into a project NFT I believe in and could potentially resell down the road for that same $1,000 or more, than sign up for a $10/month subscription as a supporter on Patreon or put up $100 into a Kickstarter with the reward of a t-shirt and water bottle. And as a business owner, it makes much more sense to try and issue an asset that I can sell for a much larger sum and capture consumer surplus from my super customers, making them even more engaged with the business than trying to sell t-shirts at $15 each.
One-time transaction lowers ongoing transaction costs
The ongoing nature of the utility of NFTs is something that hasn’t been much discussed in my Crypto-Twitter circles, but is something that I have thought about as a small business owner who sells low cost, high frequency products like coffee and pizza in Latin America.
Crypto is building a decentralized financial infrastructure which involves paying transaction fees to maintain the network. I’m a believer in this model but it is not conducive to my type of business whereby a $6 pizza could incur a $5 transaction fee, even on a Layer 2 network like Optimism.
An NFT with utility in the form of discounts on purchases such as the Pizza Paraiso NFT collection represents a one-time transaction cost, with potentially a lifetime of benefits to the end user. This could make NFTs an easier point of entry to the Web3 economy than trying to ask people to make multiple transactions with high fees.
For the Culture
The broader cultural impact of NFTs in the mainstream remains to be seen outside of celebrities parading around their Bored Apes, but having engaged in some NFT communities I am convinced that NFTs will act as the underlying current which drives the next wave of culture for the next 10+ years. The ability to create and monetize digital files and create token-gated communities both IRL and online, and the ability to broadcast membership and ownership through the sharing of JPEGs, is a potent combination for creators and curators of all kinds.
I believe that every niche subculture will soon have its own NFT collection and several variations thereof to engage with, and “wear” them online to express who they are the same way we do today with clothes IRL. As Alex Danco recently put eloquently in this excellent piece on Token-Gated Commerce:
“NFTs are a more important achievement than you might think, because we’ve managed to package this atomic unit of culture and community – fitting in, and standing out – and capture it, almost like in a file format, that both people and computers can interpret and understand.”
Part of the reason I am an independent restaurant owner in Bogotá is for the culture, and it seems to me as though our Pizza Paraiso 2022 Collection is just another way of continuing to support my community and my identity.
So Williamsburg’s gym’s and coffee shop’s NFTs may have marked the local top on the latest NFT bull run, but there is something real there, and I’m willing to bet that we can unleash more potential for Pizza Paraiso with our own launch.
Hope to see you soon in the Metaverse!
Ross Rambles 