Businesses typically pay technology vendors for services provided. The opposite was the case with Starbucks' foray into cryptocurrencies on its soon-to-be-defunct Polygon network.
Polygon Labs will give the coffee giant $4 million in 2022 as part of a deal to build and host a blockchain-based loyalty program, Starbucks Odyssey, on the Polygon network, according to two people familiar with the matter. He said he paid it. The payment ends a competitive hunt by at least three blockchain ecosystem backers who wanted to partner with Starbucks, a third party said.
The previously unreported numbers add context to the origins of crypto's most splashy crossover (and subsequent failure) into U.S. consumer culture.Last week at Starbucks unplugged Odyssey was an 18-month experiment in using collectible, non-fungible tokens as the anchor for a loyalty program.
This number speaks to the cost of developing a business in cryptocurrencies. In 2022, Polygon Labs will partner with Nike and Starbucks, the kind of company that could raise Polygon's profile. If a major brand uses his Polygon as a launchpad for cryptocurrencies, its large customer base will likely follow suit.
“These kinds of big, flashy deals are a vestige of the past and the strategies of previous management,” said a person familiar with Polygon Labs' current thinking. The company, the primary developer of the Polygon blockchain, is now focusing more on: building innovative technology rather than entering into a partnership, the person said.
The deal with Polygon was probably not just about money. It appears that Starbucks was genuinely interested in finding his Web3 partner to host Odyssey. The study was led by marketing consulting firm Forum3, co-CEO of Adam Brotman. Once upon a time Chief Digital Officer at Starbucks.
Mr. Brotman met with representatives from Polygon and Solana in early 2022, according to two people familiar with the discussions. Samson Mo, a longtime Bitcoin backer, told CoinDesk that he lobbied Starbucks to choose Bitcoin’s Layer 2, Liquid Network.
According to one former Polygon employee, Forum3 chose Polygon as its technology. But in addition to the grant, the deal also included extensive technical and marketing support to help Forum 3 launch its Starbucks loyalty program, the people said.
Case study says Starbucks Odyssey tried to reimagine the coffee company's popular loyalty program with shades of cryptocurrencies published According to Forum3 in January. Members earn “stamps” (collectible NFTs) when they complete tasks. These stamps can be used to qualify for rewards such as invitations to coffee-themed experiences and exclusive branded merchandise.
of loyalty program It promised to be a moneymaker for Starbucks. These stamps he sold for $100 each. By taxing secondary sales of stamps, they probably made more than $250,000 in profits. according to On-chain data.
However, the Odyssey also had a positive side for stamp buyers. They were able to resell the stamps to others through a digital storefront set up by Starbucks and NFT marketplace Nifty Gateway.
Forum3's case study praised the “measurable monetary value” that Odyssey can create for Starbucks and its fans. The first monetized Odyssey NFT series (siren collectionAccording to Forum3, it sold out in 18 minutes and quickly traded at a 4x premium.
As happens with many NFTs, Odyssey has found a community of collectors who believe in its value potential and bet big. One such collector is Dan Elitzer, co-founder of his venture capital firm Nascent.
“We're not making a huge investment compared to what we normally do,” Elitzer said in a January interview. Still, he said, Nascent believed Odyssey NFTs could have long-term value if Odyssey persists as the first major NFT loyalty program.
Even before Starbucks announced it was shutting down Odyssey, the company's NFT value proposition was under stress.last Siren NFT will be sold Prior to Starbucks' March 15th announcement, the price was $215. On Tuesday, prospective buyers offered up to $86 per Siren NFT, while sellers wanted at least $165.
Forum3 representatives said the company used to call itself a Web3 company, but has since shifted its focus to AI. Websitedid not respond to requests for comment.
Starbucks Odyssey ran as an invite-only “beta” program for 18 months and was successful in developing a niche following. In addition to a vibrant Discord server, it has inspired a cult following, whose supporters trade NFTs, boost the program on social media, and even…chip” website will help you develop a strategy for earning points.
Last week, its community was shocked when Starbucks suddenly announced the end of Odyssey. Members exchanged messages of sadness, anger, sorrow, and fond memories on a private Discord server, according to screenshots of messages reviewed by CoinDesk.
Cryptocurrency consultant and Odyssey member Brian Cain said: “As someone who has invested time and money, I'm definitely a little upset, but overall I understand the point of big companies, and Starbucks is a big fan of the concept.'' I'm happy that they tested it.” Telegram message to CoinDesk.
In an email to CoinDesk, a Starbucks representative said, “We look forward to applying our learnings to the future of this program.” She did not elaborate on what its future will be or whether it will continue to work with Web3.
“We value our relationship with Polygon and the contributions they have made to the Starbucks Odyssey,” a representative said. She declined to discuss the financials of the partnership with Polygon.
The Starbucks deal was a prime example of the high-flying, big-name, corporate-dealing style that Polygon pursued under Ryan Wyatt's leadership. The former online gaming executive was president of Polygon Labs from early 2022 until mid-2023, after which he was fired, according to two people familiar with Polygon.
“If you look at Polygon Labs now, in the last nine months they have focused on ZK technology and becoming a technology powerhouse focused on transactions that have direct on-chain impact rather than marketing value. It has been moved,” a source said. .
This switch also reflects the challenge of building a crossover Web3 product for a non-crypto audience, with or without paid transactions. Multiple Odyssey users and supporters told CoinDesk that this feature caters to people who don't have a cryptocurrency wallet or don't understand blockchain, which is most humans (and by extension, most Starbucks customers). He said it was built in.
A former Polygon employee who worked on the Starbucks deal said it was no surprise that Odyssey would close.
“In my opinion, going after Web2 is a fool's errand,” the person said, referring to existing tech giants. “The crypto-native story can be big enough if played right.”
Mr. Wyatt declined to comment through a spokesperson for his current employer, Optimism Unlimited, but emphasized the marketing value of closing the deal in a recorded speech he gave after leaving Polygon.
“We were in a really good position where people were looking for positive stories, so a lot of our efforts were amplified,” Wyatt said. interview In September 2023, a few months after leaving Polygon, he joined virtual currency investment company Valiant. He said the partnership with a “household brand name” helped Polygon “establish credibility.”
A former employee said it was common for Polygon to combine grants and partnerships, a practice commonplace across cryptocurrencies.Wyatt said the same thing on his show. coin desk tv In December 2022.
“All protocols have paid transactions,” he said at the time.
