Thread
The Ultimate @doodles Thread

1/ Analyzing the project’s business framework and potential for mass adoption.

Challenge your feeble attention spans or bookmark and read over multiple sessions. 🧵👇
2/ TLDR

1. Flow will facilitate ease of accessibility, scale, and use case realization
2. Venture funding will accrue long-term value, rather than short-term gain
3/ TLDR

3. Partnerships will drive adoption and revenue in the near-to-mid term
4. A number of outstanding questions and concerns must be addressed, specifically related to holder value and DAO restructuring
4/ INTRODUCTION

My best friend, @jholguin, has entered into a multiple phase plan to bring Doodles to millions.

Phase I: Establish leading Web 3.0 brand
Phase II: Set up mass-market framework
Phase III: Monetize IP to become leading entertainment company
5/ Phase I of the Doodles business plan is over; the project has established itself as an NFT market leader. Now, with corporate intrigue growing and venture capital secured, Phase II has begun.
6/ The goal moving forward is mass adoption. That is, how can Doodles penetrate the wider entertainment market? And more importantly, how can they retain those consumers?
7/ In a volatile ecosystem — where engagement with brand is largely determined by the price of ETH — Doodles is looking to build a sustainable business model decoupled from market conditions.
8/ This requires (albeit, cliché) bridging the gap between Web 2.0 and Web 3.0. That is, leveraging the best parts of the established digital ecosystem, while at the same time integrating digital ownership and technology-driven experiences.
9/ The team has announced several updates that, if executed successfully, may accomplish the above. These are:

1. Flow integration
2. Venture funding
3. Partnerships

This thread will analyze each of the updates and discuss whether this framework is viable to achieve Phase III.
10/ FLOW INTEGRATION

Many NFT investors have been vocal about the pitfalls of integrating a separate chain into the Doodles ecosystem. Solana, Polygon, etc. have been largely unsuccessful in pulling in non-crypto natives.
11/ What this could result in, they argue, is fragmenting existing liquidity between chains and diluting brand. Possibly true. But if the goal here is mass adoption — i.e. bringing Doodles to millions — the most prominent L1s and L2s likely can’t bridge the gap.
12/ On the other hand, Flow’s ecosystem is the most conducive chain for mass adoption. It achieves this through (a) ease of accessibility, (b) scale, and (c) use case realization.
13/ Ease of Accessibility

The biggest preclusion to mass adoption is ease of accessibility. The Web 3.0 learning curve is high. And the value propositions of blockchain — digital sovereignty and community ownership — are hard to realize w/o intimate knowledge of the ecosystem.
14/ The vast majority of newly onboarded users hold their assets in centralized custodial services like Coinbase. Most connect bank accounts and use credit cards to make purchases.
15/ I imagine this is why, among other reasons, there are ~100x crypto investors than NFT holders. The pipeline of centralized platforms to NFT assets isn’t nearly as streamlined.
16/ Flow is one solution to this problem. It’s been proven to reach millions without system failures like Solana. NBA Top Shot was the first (and perhaps only) product we’ve seen to onboard over a million mostly Web 3.0-illiterate users.
17/ The conversion to purchase on Flow is improved via email signups, credit card payments, KYC only when withdrawing funds, and no seedphrases or lost keys.
18/ What is perhaps more important than acquiring consumers, though, is onboarding Web 2.0 developers. They will drive innovation and adoption, especially as the producer/consumer ecosystem becomes more open, transparent, and profitable.
19/ Flow’s language, Cadence, is one of the easiest to learn as a JavaScript coder. Its opensource tooling expedites the onboarding process. And @dapperlabs has allocated millions to fund developer acceleration platforms.
20/ Scale

Ethereum sharding loads the hardest part of blockchain scaling onto application developers rather than solving it at the protocol level.
21/ Flow’s multi-role architecture (i.e. separating the work of miner and validator across four different roles: Consensus, Verification, Execution, and Collection) allows validators to specialize in (and increase the efficiency of) their particular step of focus.
22/ This results in thousands of times higher throughput and lower cost while preserving a shared execution environment. Millions of wearables microtransactions can’t exist on Ethereum; but they can on Flow.
23/ Finally, Flow’s contract mutability can help refine the Doodles ecosystem overtime. Developers can release a “beta” version of their contract to main net and iterate before making it immutable.
24/ This gives developers the flexibility to optimize contracts based on consumer market trends and purchase habits. I promise you the Doodles team would have made several changes to their original contract were they given the opportunity.
25/ Use Case Realization

The biggest outstanding question is whether people will want to buy Doodles products. Their brand is one of the strongest in market. But there needs to be an underlying use case behind the IP.
26/ No one buys skins on Fortnite unless they play the game. No one goes to Harry Potter World unless they love the book. We need to explore the forms this IP may take. And where this content may be distributed.
27/ Content Forms

The most readily apparent use cases I see for flow integrations are (a) in-game wearables / avatar customization, (b) social media filters, and (c) media experiences.
28/ In-game wearables and avatar customization are largely proven. Fortnite generates $3-4 billion per year largely from in-game items. Virtual influencers are gaining serious traction (@lilmiquela has over 3 million followers on Instagram).
@lilmiquela 29/ In April, @genies raised $150mm Series C at a $1bn valuation. And Meta recently announced partnerships with Gucci, Balenciaga, Prada, and Thom Browne in which branded wearables will sell in the avatar store between $3 - $9.
@lilmiquela @genies 30/ It’s easy to see how the Doodles IP will translate into these products. The markets exist, and the distribution platforms are realized. And if Doodles outsources development to holders and other studios, the process becomes even more streamlined.
@lilmiquela @genies 31/ Social media filters have the largest upside but least proven track record. Paid filters are largely untested. The closest comp is geolocation filters on Snap for businesses. Successful, but not all-encompassing.
@lilmiquela @genies 32/ Filters as NFTs is an interesting concept. But also a difficult one to navigate. Will users pay for these products in general? Will users pay specifically for Doodles filters? And what is the total addressable market? Your guess is as good as mine.
@lilmiquela @genies 33/ Finally, the Doodles media experiences and IRL activations are some of the strongest in the space. And it’s easy to see how media and events companies will integrate Doodles into concerts, movies, and games. The Despicable Me 2 Pharrell album is a great example.
@lilmiquela @genies 34/ The most successful projects and platforms will be the ones that seamlessly integrate NFTs without people needing to understand the inner workings of the underlying product. Expanding via Flow into these entertainment verticals will likely drive most of the revenue.
@lilmiquela @genies 35/ Distribution Platforms

In the virtual world, we need a shared common space (something akin to the metaverse) where users can immerse themselves in available content forms. Where will Doodles content live?
@lilmiquela @genies 36/ The most likely virtual distribution model is user-generated content (UGC). Social media platforms like Facebook, Instagram, TikTok, Twitter, YouTube, Twitch, and Snap. And gaming platforms like Fortnite, Roblox, and Minecraft.
@lilmiquela @genies 37/ Over 20 million visits have been made to Gucci Town’s Roblox experience, where users can compete in games, create UGC content, and customize digital avatars with Gucci wearables. This sort of distribution platform enables consumer self-expression and company brand-building.
@lilmiquela @genies 38/ Flow integrations will allow Doodles to incorporate UGC seamlessly, potentially reaching billions of users. Instagram has announced plans to integrate NFTs onto their platform via Flow. And I expect a Doodles x Instagram collaboration in the next few months.
@lilmiquela @genies 39/ VENTURE FUNDING

To me, the funding round is the most bullish announcement. Not because of the amount of capital raised nor the valuation assigned. But rather, because of what it signals. Remember: quality of funds is more important than quantity of funds.
@lilmiquela @genies 40/ My second-best friend, @alexisohanian, defined his career by empowering creators via digital communities. Raising with @sevensevensix instead of funds like @a16z and @sequoia (which tend to push for tokenization) signifies long-term conviction in the brand.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 41/ As for the valuation itself, I’ve always said it would be ~25% of BAYC (see the attached to boost my ego). It seems that’s where they landed. Had they raised in more optimal conditions, I imagine the absolute valuation of Doodles would be ~50-75% higher.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 42/ The capital injected gives Doodles the necessary runway to survive extreme market downturns like the one we’re seeing. More so, it allows them to scale at a much faster pace. Becoming a global media brand requires capital-intensive production, development, and branding.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 43/ Doodles is likely sitting on over $100 million of cash on their balance sheet. I expect acquisitions in the not-too-distant future. Probably starting with a gaming / animation studio. In the near-term, we should expect synergistic partnerships.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 44/ PARTNERSHIPS

The most likely source of near-term adoption (and revenue generation) will be strategic partnerships with leading brands looking to increase Web 3.0 exposure.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 45/ Most Web 2.0 large-cap consumer brands are exploring Web 3.0 integrations. Starbucks, Adidas, and Coachella have all announced NFT integrations.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 46/ But if the blockchain / NFT learning curve is high for retail investors, executing at a company-wide level can be just as difficult. Most lack the intimate knowledge to rely on internal growth alone. And hiring isn’t cheap.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 47/ Conversely, if the goal for Doodles is to become the next Disney, they’ll need hundreds of employees to develop and build out their IP. This could be years away.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 48/ The solution here is a series of joint ventures between (a) the high cash generating, Web 3.0-illiterate companies and (b) the short-staffed, strong IP-owning, Web 3.0 experts running Doodles.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 49/ I expect a number of high-grossing and wide-reaching partnerships in the immediate future. These deals will likely take the form of one-time flat fee payments and revenue sharing potentially with equity components. 20bps of equity in Doodles will go a long way.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 50/ CONCLUSION

Mass adoption can come about in two ways: directly and indirectly. That is, Doodles can onboard non-Web 3.0 natives into their ecosystem organically or wait for the trickle-down of wider NFT adoption. They’re optimizing for the former. And hoping for the latter.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 51/ If the status quo is maintained, I think the company valuation of Doodles may surpass BAYC. This largely comes down to IP. Yuga Labs’ IP doesn’t carry the same mass appeal. Very few non-Web 3.0 natives resonate with the brand.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 52/ What’s more, Yuga Labs is sitting in the nebula between gaming, social, events, and fashion. This sort of fragmentation with unconsolidated IP may impede long-term adoption. They’re targeting everyone. And in doing so, they’re targeting no one.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 53/ But company valuation is not equivalent to holder valuation. And I don’t think Doodles core 10,000 assets will be worth more than BAYC’s for a while (if ever). Yuga Labs has made it their priority to return value to holders.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 54/ I imagine Doodles is broaching many solutions. But as of now, the path forward is unclear. Issues around holder rights and long-term value accrual as well as DAO structure need to be addressed.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 55/ Doodles’ IP needs to remain with the company. It’s their strongest value proposition, and the executive team knows how to build it better than holders do.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 56/ At the same time, the holders’ tangible and intangible value-adds must be rewarded. The team needs to incentivize collectors to continue contributing.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 57/ The most prudent approach is IP licensing, where Doodles holders can earn a % of company profit. If the Doodles community controls and earns from the supply of wearables via Dooplicators and the Doodles team controls the demand, this may act as an interim solution.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 58/ Alternatively, a DAO structure that rewards community participation would allow holders to see some ancillary benefit. CoffeeDAO and Rainbow Pukes are great examples of communities within communities that the Doodles team should propel forward to drive engagement.
@lilmiquela @genies @alexisohanian @sevensevensix @a16z @sequoia 59/ All else aside, there is no stronger company framework that exists in the market. And with @jholguin at the helm, I’m convinced the company will be worth $5bn+ in a matter of years. As always, reach out with any questions. Retweet or whatever idgaf.

-Degen
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