Brands, Blue Jeans, & Bored Apes #8/50
How American denim toppled the Soviet Union & why NFTs will do the same.
On August 13, 1961 the Berlin Wall was erected as a last ditch attempt by Eastern Germany to keep its citizens from escaping to the West.
As a symbol, the Berlin Wall represented the most tangible part of the Iron Curtain, separating Western Europe and the Soviet Union.
The Wall symbolized the inability for people, products, and culture to be transmitted across borders. Despite speaking the same language, East and West Germanys were accelerating in a decades-long division. The Wall was a constant reminder of this fact. Radio and TV stations were jammed; the Internet did not even exist. The isolation of East Germany was very, very real.
So perhaps it would surprise you to know the hottest item on the black market in East Germany was not food or booze or medicine.
It was Levi’s blue jeans.
The Birth of a Brand
In 1853, Levi Strauss founded his clothing company in San Francisco. California had just become a US state and settlers were moving West. Cowboys, railroad workers, and farmers demanded durable clothing and Strauss’ products were perfect. He sold cloth wholesale and then as ready-to-wear pants, thanks to a riveting process which reinforced the pockets of the fabric.
The first pairs were made out of a canvas-based cloth, little like Levi’s of today. Here’s a picture:
Strauss was wildly successful in producing his “reinforced trousers.” But as his production patent was only good for a few years, he needed a way to distinguish his pants from the others now on the market.
Strauss created a label featuring two horses, each pulling in opposite directions, to display the toughness and integrity of his product. To live up to this promise, he began offering the pants in an even more durable denim fabric as well. Now having multiple products, he created distinct colors so customers could tell them apart. To distinguish the lots from each other on the factory floor, he gave each line unique numbers.
Each of these small innovations had a huge impact.
In 1890, the Levi Strauss 501 Blue Jeans — named after the producer, lot number, and color — were born.
The Origins of Branding
Brands started as a way to monitor the stuff people owned. Ranchers marked livestock with symbols; shipping companies marked boxes to keep track of freight. When Strauss stitched a label on his jeans it was because he wanted to prove that the goods came from his factory. Thus, brands have evolved from a symbol of ownership to transmission to a origin of production.
Today, the brands we choose to interact with says as much about us as it does about the objects.
I think this is why profile pictures have taken off as some of the earliest NFTs: profile pictures allow a user to broadcast their connection to a project as a means of social status.
We are, in effect, branding ourselves.
First They Ignore You (Because They Don’t Understand)
In a decentralized world, branding has a quick half-life. NFTs can fall off super quickly after making in roads — e.g. Mekaverse — because the startup costs for substitutes are low. (Unlike Strauss’s competitors, there’s no investment in physical plant, tooling, or inventory.)
Why bother? Well, a really iconic brand, one that can survive in the marketplace of ideas, can last for decades.
The Soviet Union forbade Levi’s, seeing them as both a function of American capitalism and as bucking the social cohesion the Soviets were attempting to bring about.
This is of course exactly why jeans became so popular: young Soviets were entranced by the American movies at the time where everyone wore jeans. In East Germany, a single pair of Levi’s would sell for a month’s salary on the black market.
Sound like where we are with NFTs right now?
Then They Fight You (with Knockoffs)
Whenever an asset increases in market value quickly, it attracts attention of substitute producers. I’m a big believer in competitive products — after all, competition inspired the invention of 501 jeans. But a substitute, like Sweet-n-Lo instead of sugar, is very different than a knock off.
The premise of a knock-off is that you can get the same utility of an object without paying for the “Brand Name.”
When I was in middle school, Coca Cola rugby shirts were extremely popular and hard to mint find. I asked my parents for one for my birthday; here’s how wicked cool they looked:
Instead, my parents bought me this:
We can agree, they are not the same.
When the East German ruling party gave up fighting and tried to manufacture knock off’s jeans, they failed miserably.
According to Levi’s:
Beginning in 1974… the first East German jeans [were produced] as an alternative to coveted Levi’s®. The “East Jeans” had names like “Goldfuchs” (Gold Fox) or “Boxer,” but as Joachim recalled, they were “a parody on jeans.”
“The cut was impossible,” he said, “and did not fit at all, at least not a normal person.” Joachim remembers “East Jeans” as having a gap at the back of waistband, lengths that were too short and a top block that cut into the stomach.
Frens, we are deep into the knockoff phase in NFTs today.
There are a lot of buyers and sellers who, like my parents or East German bureaucrats, are failing to understand the value of brand building.
Brand vs. Empire Building
Brands are perception of the experience that someone has with a good or service. The romance of the American cowboy, of Western movies, and of contemporary youth culture drove East Germans to pay significantly for the right pair of jeans.
The utility of NFTs are perfect for brand building when you consider:
Projects gather communities
Items exist in perpetuity
Owners can show them off
Owners are publicly identifiable via wallets
Projects can reinforce purchases through continuous updates
Participants can co-create the project roadmap
Imagine, for a moment, if the Levi’s could reach every one of those East German kids who bought a pair of 501s and airdropped them t-shirts instantly, before the Communist Party knew about it?
It’s hard for me, as forty-something-year old, to admit that I didn’t get NFTs the first several dozen times. But history shows that the future belongs to the young, not the middle-aged.
If you want to see what’s next, find out what’s captivating the next generation.
Then You Win
It took almost 30 years for the Berlin Wall to fall, but reunification happened so quickly in retrospect it was stunning. Within a year, West Germans did the unimaginable: despite being separated for over 40 years, they effectively adopted every East German back into the country, lowering their quality of life in the near term and risking their long term economic development.
Imagine if a country suddenly split their banks, roads, and hospitals with their neighbors, giving them all the same access to food, education, and quality of life. (This is absolutely something I hope to see in happen in Korea.)
When historians talk about this moment of cultural and financial upheaval, they resort to a bit of symbolic short-hand: they talk about the 1989 fall of the Berlin Wall.
Here’s a photo of the Wall at the time:
Notice all the kids are wearing American blue jeans.
Next time:
How Andy Warhol inspired the NFT movement
Why we create editions
Art as commerce
Tweet of the Moment
As always, I have so much more to tell you,
Paul
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