Discover more from Charterless
What is a brand? When Don Draper Met the Nouns
The Nouns Project. The Past and Future of Brand Building.
Brands Are Toasted
What is a brand?
In the pilot episode of Mad Men, a young advertising executive named Don Draper sits silently in a meeting with a cigarette company.
The FDA has just told cigarette companies they cannot advertise that their cigarettes are healthy. So the companies need a new pitch to sell their product. And since their “filtered tips” were the primary way they differentiated their product before, the companies all need a new story to sell. The only problem: every cigarette is functionally identical. So what do you say to differentiate Marlboro from Lucky Strike?
Finally, Don looks up and says to the meeting: “This is the greatest advertising opportunity since the invention of cereal. We have six identical companies making six identical products. We can say anything we want."
This might seem cynical, but what’s more remarkable than Don’s glibness about selling snake oil is that this is really how brands were invented.
After all: what is a brand?
On one level, a brand is just a way to differentiate one product from another. It’s a name on a box. It’s a logo on a website. It’s an ad campaign that tells you why to buy this shoe rather than that one.
But on another level, a brand is modern alchemy. By telling a story about a company, about its products, about who buys it - you can transform a commoditized good into something extremely valuable. You don’t buy Nike sneakers because you know, for a fact, that they are a better quality shoe than a generic brand you can buy online. You don’t buy Apple AirPods because they are the best headphone on the market.
You buy them because Apple and Nike have told a story that makes their product uniquely valuable compared to competitors.
They have turned a common element into gold.
This is a distinctly modern phenomenon.
In the mid-1800s, the early consumer packaged goods companies got their start selling goods like soap. Their advantage, in the beginning, was that they had a superior and consistent product. Over time, they built massive distribution networks. From New York to San Francisco, Proctor and Gamble sold the same product in every store.
But by the 1900s, that playbook was starting to wear thin. Their patents had run out. Competitors could match their quality. And startups had cracked into their distribution advantage.
So rather than having a monopolist's advantage, P&G was now selling identical products to its competitors at higher prices. How could they justify that?
They stopped selling the soap itself. They started selling a story about what the soap meant about you as a consumer. Tide wasn’t just about cleaning your clothes. It was a statement that you cared that your family was clean.
In the 1960s, American enterprises transitioned from masters of product and distribution to master storytellers. Rather than utilizing the mass transit afforded by railroads, they started utilizing the mass media afforded by television. Mass Media gave rise to Mass Brands.
Brands spent billions on telling a consistent story on TV and in print about who they were, what they made and what it said about the buyer.
It's a magical and meticulous misdirection. Pay less attention to the product, and more attention to its story.
In one amazing example, Dawn dish soap introduced an ad campaign in 2002 highlighting how Dawn was not just the best-selling dish soap, but was so powerful and gentle, that wildlife groups were actually using Dawn to rescue ducks from oil spills. What does that have to do with its suitability for cleaning your dishes? Very little. But the ad worked. One report found that Dawn had a 337% ROI on ad spend on the campaign.
As Don Draper explains in his pitch, “Other cigarettes cause cancer. Lucky Strike is toasted.”
For 100 years, brands have worked like this. A team of marketing professionals crafted a story. They fed that story through the media platform of the moment. They sold products in-line with that story. They created value by using their stories to sell more goods at a higher price point than their competitors.
But the internet shifted who controlled the brand’s story. Rather than speaking with a single voice, a brand’s customers started shaping the narrative.
They complained on Twitter about a bad flight. They evangelized the power of their iPhone camera via social media posts. The celebrities who wore a product in real life, rather than just in commercials, communicated what that product was about.
But things have gotten stranger than that.
In their 2019 piece, Laura Lotti, Sam Hart and Toby Shorin wrote about Headless Brands using Bitcoin as their primary example. In the 1960s, there might have been a Bitcoin Corporation who would pay an ad agency to explain what Bitcoin was useful for and who should buy it.
But there is no Bitcoin Corporation. The founder has disappeared. There is no central marketing push. And yet – Bitcoin is known worldwide. How?
A community of true believers were inventing the story of Bitcoin as they went. Bitcoin’s brand was an emergent construction of its community. And that story changed over time. It was magical internet money for buying drugs. It was an inflation hedge. It was the investment opportunity of a lifetime. It was a tool for fighting tyranny. It was digital gold. Bitcoin’s brand is a collage of its users’ stories – told ceaselessly across the web and the wider world.
But it’s not just cryptocurrency. Consider the modern Republican Party. In 2015, the “brand executives” at the RNC thought they controlled what it meant to be a Republican. And that meant to be someone like George W Bush, John McCain or Mitt Romney. Then came Donald Trump. The party elite viewed him as an aberration. If they were a centrally managed brand, Donald Trump would have been thrown out the door. But the Republican Party’s brand was not controlled by a party elite, it was controlled by the party electorate. And that electorate decided the Republican Party was now the Party of Trump. Except that wasn’t quite right either – not even Donald Trump controls what his party represents.
At a rally in 2021, Donald Trump proudly took credit for the success of COVID vaccines. His supporters booed him. MAGA was an emergent construction. It no longer needed to attach its values or its brand to a single man.
In the decades to come, communities – not marketing committees – will create the brands that matter.
Meet the Nouns
We can draw a through line connecting the three major projects that shaped the modern NFT space.
First, there was Cryptopunks. Punks, launched in 2017, consisted of 10,000 pixelated, computer-generated pieces of art. Their buyers started using them as profile pictures. Punks became an identity and a status symbol.
Then there was the Bored Ape Yacht Club. Apes differed from Punks in that they went a bit beyond status symbols. Buying a Bored Ape was not just a status symbol, it also granted access to a community of other high status owners. Bored Apes added community to the identity value of Punks.
Then there were the Nouns. Punks was a standalone status symbol. Apes offered a community and the promise that the founding company, Yuga Labs, would create cool projects for the community. Nouns went a step further. Rather than having a company control the project’s proceeds and determine how to spend it, they handed the treasury over to the community itself. Nouns’ members get to choose how to spend the profits from Nouns.
On June 1, Punk 4156 (not coincidentally a cryptopunk holder) outlined the contours of the project. “Initial supply of 0. One randomly generated Noun (avatar) auctioned per day, until the end of time. Auction proceeds are trustlessly donated to the Nouns DAO, providing the community with a perpetual source of capital from new members. Each Noun is one membership in the Nouns DAO.”
To put it even more simply, Nouns works like this:
Everyday Nouns auction off a single image of a computer generated character. Whoever bought that Noun would receive the digital art and become a member of the Nouns DAO. Whatever amount they paid would go into the Nouns DAO treasury. Only members of the DAO (those people who had purchased a Noun) would be able to vote on how to spend the treasury.
While the original launch provided little guidance for what the DAO should do or how its Treasury should be spent, it soon found its raison d'être: to support the growth of the Nouns brand.
The bet is simple. The larger the imprint of Nouns – the more people see and value the brand of these computer generated characters – the more valuable every member’s NFT will be. The better work they do together to create a Nouns brand, the more money they make.
We’re used to brands being something that tells a story about a product or set of products. But Nouns flips the script entirely. It asks the question: What if the brand comes first?
That’s not as crazy an idea as it may sound. Before she was the CEO of a billion dollar company, Rihanna was a singer. Rihanna’s brand meant something about style before she ever launched a single makeup product.
In a world where attention is the scarcest commodity, the Nouns community is focused on trying to find ways to get attention. Products and services can follow from that.
To figure out what Nouns stands for, what its characters will become the brand of, the community has decided to cast the widest possible net. They have addressed the question of What do we do? With a collective shrug. In the place of guiding principles or guiding value propositions, they have a set of guidelines for ensuring that as many ideas as possible can take root, and the best flowers will bloom.
The Nouns System works like this:
CC0 Rights – The Nouns Project has the least restrictive copyrights on all of its artwork. Anyone – internal to the project or external – may use Nouns branding however they want.
Open Treasury – Anyone can pitch the Nouns community to fund any project that they think will resonate.
Daily Auctions – Every day, the DAO auctions off a new NFT to help fund its treasury and welcome one new member. If it does its work well, the value of membership will increase over time thereby rewarding early adopters.
Founder Rewards – Noun founders do not receive any royalty or have any special rights other than ownership of 10% of the Noun supply for the first five years. This aligns their incentives – their Nouns are only valuable if yours are – with the community.
So what does this look like in practice?
Well, it looks a lot like a giant treasure chest for community funded arts projects featuring Nouns. So far, the community has funded (among other things):
For artists and creators, Nouns is a phenomenal partner. As one put it in a YouTube interview, “It’s like an incubator of weird. Well, if you were to apply for an arts grant, my lord, the paperwork, and this and that and the waiting time, and you don’t know who’s voting, and you to got to get nominated… So to have something that’s a ton more nimble in terms of its funding processes, it’s fantastic for artists.”
The bet of the DAO is fund interesting people doing interesting things featuring Nouns.
To enable that, the Nouns community has focused on making finding and funding artists extremely easy.
To find more artists, Nouns has done something that few other crypto communities have – it has deleted its Discord. In doing so, it flushed its members into the wider world to connect. Ostensibly, this was about ensuring a few members didn’t exert outsized influence. In practice, it’s been an effective way to ensure that Nouns community discussions happen on Twitter or other places where the wider world might hear what’s going on.
To fund more artists, the community has built infrastructure to streamline the time it takes to go from idea to funding. Major projects are proposed through the entire DAO through Treasury Votes. These votes can take a month end-to-end – still pretty fast for the world of b2b contracts or art funding. But smaller projects move even faster. They are funded by quick popularity votes in response to themes/prompts posted by the community. Nouns has even made the tool they use to fund these projects open source to other communities. It’s called prop.house.
If the goal is to make the Nouns price go up, then the record of success is… mixed.
After an initial speculative spike for early holders, the NFTs have settled in at a daily price point of ~30ETH. That’s only ~20% of the value in ETH that it was commanding in its early days.
But this is a matter of perspective. Even in the middle of crypto winter – while Bitcoin and Ethereum traded at fractions of their usual value – the community is managing to sustainably add $45,000 per day in pure profit to its warchest. I know many startups that would be thrilled to say they were doing the same so that’s not bad for a media brand with no products to speak of.
Whether Nouns will ultimately build an enduring brand or collapse in on itself is an open question.
The newly funded Nouns movie could work. It could spark a new narrative ecosystem – a Marvel or a Disney or a Simpsons extended universe of Nouns characters that makes owning a character and a vote on its future direction extremely valuable.
Their restaurant model could work – Nouns could end up with a chain of coffee shops/delis with its branding across Australia. And all of these things could make owning a Noun – owning part of the brand and its future – even more valuable.
But Nouns is very different than any business that operates in the world today. Brands make money by closing themselves off and licensing their imprint to products to make them more valuable. Nouns gives that value away for free. Instead, it monetizes by selling the right to join in their brand building story. You win if their brand equity grows.
If that model fails – if people just don’t really care about the Nouns brand or making a productless brand grow, then Nouns will just be one more weird experimental chapter in the history of the world wide web.
But even if Nouns itself fails, the model seems to be catching on. There are already a few hundred – mostly crypto native – projects that have imitated the Nouns model. There’s Lil Nouns which offers a more affordable entry point (read: $200 rather than $45000 characters) into the Nouns brand. There’s PurpleDAO which sells membership in a fund supporting an unrelated web3 project called Farcaster.
If the ideas of crypto stay in the world of crypto, then all we’ve done is built an expensive echo chamber. But the promise of Nouns is that it could change the way we build brands in the real world.
Imagine, instead of Nouns characters, there was a daily auction of new sneaker drops for a limited collection of designer shoes from a hot new designer– with a shared treasury that would pay to promote the sneaker brand through pop up events, creator partnerships and other brand activations. Try to tell me those sneakers wouldn’t become a hot status symbol.
Imagine Taylor Swift auctioning off memberships to her fan club, with one new member allowed to join per day, and a treasury that helps to promote Taylor’s catalog through fan club events and brand activations. Imagine Swifties fighting over access to Taylor’s official fan club, and voting together on funding fan-made videos, fan events and designing official fan club merchandise to spread the Swift brand. Try to tell me that you don’t know a millennial who would jump at that opportunity.
Sitting in that conference room, Don Draper tells the cigarette executives that when crafting the story of their brand, “We can say whatever we want.”
Don’s still partially right. The only difference is now his “we” refers to all of us.
The story of the next great brand isn’t being written by ad executives during an afternoon meeting on Madison Avenue. It’s being written by every one of us, from wherever we open our phones or sign-on to our computers.
What is a brand?
It’s the stories that we tell about the (small-n) nouns – the products, the artists, the ideas – that matter to us.