The Generalist - The Economy of You

Hello friends,

Social tokens are a much bigger movement than I realized.

When I started digging in a few weeks ago, I worried that it might be too niche, too small a topic to cover in The Generalist. I found the opposite to be true. Depending on how you parse the phrase, social tokens are already a massive part of life online, infiltrating the world of DAOs, NFTs, and even “Decentralized Countries.” (All topics we’ve talked about here.)

And yet, despite their sneaky ubiquity, social tokens seem to be under-explored and understood by few. In today’s piece, we dig into this new, weird economic structure and think through what it means for crypto, tech, and traditional industries.

Decentralized record labels, OnlyFans ETFs, and shorting influencers are all on the table. Let’s jump in:

If you like The Generalist, it would mean a lot to me if you’d forward today’s piece to a couple of your smartest friends. 🙏

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THE ECONOMY OF YOU

Actionable insights

If you only have a couple of minutes to spare, here's what investors, operators, and founders should know about social tokens.

• The term “social tokens” might not mean what you think. Often, social tokens are assumed to be a fungible currency that relates to an individual. Think $RON coin for football player Ronaldinho. This is just part of the story. The social token category includes NFTs and currencies used by groups.
• Running an economy has benefits. Starting a social token can be an excellent way to raise financing. It can also turn followers into investors and align a group around a common cause.
• New tools have made tokenization easier. Platforms like Coinvise, P00LS, Rally, and Strata have made it easier to create a social token. These products help with definition, distribution, and management.
• Liquidity can be hard to come by. A true economy requires a market. Social token projects often struggle to create sufficient liquidity given the upfront capital needed. As a result, even popular social tokens may not be available for trading.
• Composable economies will unlock innovation. The social token movement opens the door for new financial interactions and organizational structures. We can expect creator ETFs, decentralized record labels, and even short calls.

***

At some point in the process of devising a tech satire, you might come up with an idea like this:

What if every person in the world had their own currency? (No, no, no. Not like everyone had money. This isn’t a utopia.) I mean, like everyone had a token or a coin of their own that other people could buy and sell and maybe pay with. If you wanted to hang with your friend, you’d spend their token, and if they wanted your help moving, they’d buy and spend yours. Every human on earth would have shareholders, a market cap, maybe even a Board of Directors. Wild!

After a moment, you would dismiss this thought.

Too broad, you might think. Even in this – the age of social media, the era of quantification, the grand epoch of comparison – surely no one would choose to be erased by a blanket of human balance sheets.

Perhaps because of this logical stairstep, the fact that social tokens exist – and are not, for example, sitting on the cutting room floor of the Black Mirror offices – seems like evidence we live in dark times.

And yet, dismissing social tokens as doomed and dystopian may be a mistake. After all, the internet is studded with successes that sound bleak and soft-headed.

What if you could use your phone to summon a stranger’s car?

What if you could sleep in a random family’s spare bedroom?

What if you could sort sexual partners by channeling a windshield wiper?

What if you turned yourself into a human advertisement for skinny tea?

What if JPEGs were really, really expensive?

Chris Dixon famously wrote, “the next big thing starts out looking like a toy.” Looking at businesses like Uber, Airbnb, Tinder, Instagram, and Bored Ape Yacht Club, we might easily say, “the next big thing starts out sounding terrible.”

Social tokens may well be the next big thing. Today’s piece will explain why they may even be a good one. Here’s what we’ll discuss:

• What’s in a name? Social tokens can take a range of forms. We’ll outline examples, explore different iterations, and broadly make sense of the category.
• Tokens and value capture. Creators often struggle to capture the value they create on social media platforms and beyond. Social tokens may change that equation and offer other advantages.
• The case for investors. Consumers have driven demand for social tokens, both of the fungible and non-fungible variety. These assets serve as a novel form of patronage and as intriguing investments.
• What it takes to tokenize. Starting an economy is not trivial, though new tools have made it more accessible. Nevertheless, the creator or group in question will need to think through incentives, governance, treasury management, and more.
• The vulnerabilities of social economies. As with real-world economies, social tokens possess vulnerabilities. These include market volatility, logistical complexity, regulatory uncertainty, and psychological pressures.
• A weird frontier. We have only seen the very beginning of what social tokens can do. If they become widespread, we may see many new industries and assets take off.

Let's get to it. ​
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IN A MEME
​​​​For the pictorially inclined, here's the whole piece — all 6,500 words of it — in a single meme.

PUZZLER
​​​All guesses are welcome and clues are given to anyone that would like one. Just respond to this email for a hint.

Frequent riddle-meister Jim W returned to top spot, deftly unpicking our last riddle. He was joined by Kirk M, Keshav J, Tim S, Robert H, Nancy X, Steven R, Samuel R, Joshua K, Sukumar R, Alec Z, Mark C, Reed L, Joe H, Neil H, Jeff L, Kunal G, SM, Massimiliano B, Ed C, Attison B, Kathy A, Regis M, Steven V, Jake L, and Philippe B. All looked to the stars and found the response to the planetary puzzler.

The answer? The moon. Well played to all of you!

One final parting note: The Generalist community has been on fire recently. While that might make me sound self-congratulatory, I really deserve none of the credit. Thanks to members and a new Community Lead (hey, Eli 👋), some amazing things have been happening. We’ve had meetups in Bangalore and planned hangouts in Los Angeles, San Francisco, and New York. We’re running onboarding sessions, office hours, and are kick-starting a new learning game, “The Fantasy Article League.” If you’re looking to meet new people in tech, venture capital, and crypto, come join us.​

Until next time,
Mario