Strength in Numbers: An Untapped Business Model in NFTs 💯

GM 👋

I’ve just touched down in New York for NFT-NYC 🗽

If you’re here, send me a DM on Twitter to say hey 💪

To wrap up this Easter Week, we’re jumping into:

🤝 An emerging Web3 business model
📖 Diary of a Founder: How MrBeast’s strategies are helping me grow faster
🎯 Building the Newsletter

Let’s get it 💯

🤝 Strength in Numbers: An untapped business model in NFTs:

NFTs aren’t just about floor price…

For PFP projects, yes, floor price is considered the most important metric for success.

But what most people miss are the core elements of NFTs that make them incredible. They have:

• High liquidity through marketplaces

• Community building at their core, with highly engaged users

• Funding for projects upfront with an expectation of benefits that come after launch

This creates a perfect storm of variables for a unique wholesale business model.

The Core Concept: Buyer Aggregation & Wholesale Arbitrage

How it works:

You are building a community around a niche (e.g. fitness)

Launching an NFT collection,

Using the strength in numbers of upfront funding to negotiate wholesale prices on products through bulk purchases (voted on by the community).

Passing on massive savings to holders (in the form of free products).

Whilst capturing a margin on those savings.

I know what you’re thinking…

“Alex, that sounds great in theory, but what if the community votes on products that I don’t want?”

That’s where the advantages of Web3 come in.

Instead of directly receiving a product, you are airdropped an NFT that allows holders to redeem that product.

That way a holder can choose to either:

🔥 Burn the NFT to redeem the product

OR

📈 Sell the NFT at near market value for the product

In order to operate this business, you need to take on two key jobs. A Web2 job, and a Web3 job.

Your Web2 Job: Negotiating with suppliers

This is the hardest part, because you have to 1. Source products that your community (and people outside of your community) actually want.

And 2. You need to negotiate favourable enough terms with suppliers to create a profit margin.

Lucky for you… most e-commerce businesses are f*cked by customer acquisition costs.

This is your major advantage.

With many e-commerce brands, the cost to acquire a new customer can be so high that it’s higher than the price of the product itself.

If you help them acquire new users with zero costs, whilst purchasing in bulk,

You have a strong negotiating position to get over 60%+ off for your holders.

This has been proven by Web2 businesses such as Groupon & AppSumo

Your Web3 Job

You need to create a thriving Web3 community around a niche that you are passionate about.

If you’re not passionate, don’t do it. You’ll burn out way too quickly.

It could be:

🍷 Wine
🏋️‍♀️ Fitness
🎮 Gaming
✨ Beauty

Interests with large user bases and relatively high participation costs are best.

But be warned…

You can’t half ass this part. If you do, the community will die, and as the lifeblood of this business model you can’t let that happen.

You need to stay connected with your holders,

Understand who they are and what they care about.

So… if you’ve made it this far, you probably want to know the numbers…

*Scribbling on the back of a napkin… 📝

If you raise $2,000,000 of funds through selling 5,000 NFTs at $400,

Purchase the wholesale products at 60% of market value,

And pass on the savings as 50% off to your holders.

You generate $400,000 in profit from this business.

Realistically speaking…

You could downsize this model to a quarter of the size (1,250 users & $100,000 profit) and scale up from there.

What’s great about this model is that it benefits every stakeholder

It’s not a floor price zero-sum game like most of the NFT market…

The Holder:

Wins by getting 2x the value of their purchase, NFTs they can liquidate and a community based around their passion.

The Brand Partner (Supplier):

Wins by acquiring new customers immediately, at zero cost, and potentially still makes marginal profit on bulk orders.

The Founder

Wins by taking a margin on the savings that they are creating for holders.

Okay, so what are the biggest obstacles to executing this…

1. Creating a community is HARD. This will take a lot of up front time investment, before you are able to launch an NFT / product.

2. Uniting the community on product purchases. Whilst this sounds challenging, the bigger role is ensuring that the products that you purchase are ‘in demand’ so that if holders want to pass them on, they can get liquidity from them. (There’s no value in buying the bulk dead stock of an e-comm brand that no one cares about).

3. Choosing the right category. One of the strongest and easiest categories is wine. You can bulk buy scarce releases and create clear value for holders. A challenging niche would be sport, because it is too broad and most sports are low cost to participate in.

Key takeaway…

The biggest thing I want you to take from this article is that NFTs don’t need to be PFPs in order to be a part of successful businesses.

After the 2022 crash, most Web2 businesses stopped paying attention to NFTs,

And Web3 is almost entirely obsessed with Profile Picture NFT projects.

That leaves a MASSIVE gap with zero competition for people who understand how to integrate both and explore new business models.

The gap is there, it’s open.

Keep experimenting, and keep pushing.

Because if you do, you’ll create businesses that no one has ever imagined.

📖 Diary of a Founder: How learning from Mr Beast has accelerated my content creation journey

TLDR: Find people at a similar level to you and learn together.

Learning from experts that are too far ahead of you will cause you to miss important nuances.

Whereas learning from peers will give you what you need to take that next step.

🎯 Building the Newsletter

^{If you’re new here, one of the core principles of the content I share is that a newsletter is the most linear and simple business you can start in Web3. It has high sponsorship revenue and can go from being a side hustle to a full-time business in under a year. I am building this newsletter in public, to share the progress each week so that you can be a part of the journey. Now let’s get into it 👇}

With my focus being on our launch, I haven’t posted a single thread this week.

This Week:
Subscribers: 2,094 (+13 subscribers)
Open Rate: 46.3%

Quick Recap on tracking my current goals:

🚧 Get my newsletter earlier in the week: This has been a killer, especially with Bricktopians work taking the central focus of my world. Let’s keep pushing on this 💪

✅ 2,000 / 2,000 Subscribers: (Complete)

🚂 Expand the content categories: Continuing to explore. Starting to get more interested into how I can bring more Ai content into this newsletter.

Another awesome week in the books, let’s get it 💯

— Alex

Thanks for reading this week’s episode of Grow Faster ❤️

I’ve been in Web3 for 8 years, ETH since $45 and am building on my NFT project Bricktopians every single day.

If you want to join my world, and be a part of a project that grows with me.

Grab a Bricktopian NFT and let me build for you.

Have a great weekend 💯