Trace-ing the Unknown: Tareq’s Blueprint for Fan Loyalty

[on-hold music] Welcome to another show of 51 Insights today with Tarek, co-founder and CEO of Trace.

Tarek, welcome to the show. Thank you for having me, Marc. Thank you. Yeah, I've been watching what you've been doing with 51 Insights, and it's a pleasure to join you. Yeah.

And, uh, it's a pleasure to watch you building in the space, Tarek. Uh, you've been in this space for a while. You have a background in consumer goods. Uh, you've worked at Adidas, Science Magic Studios before.

Um, can you tell us a little bit more? Where are you coming from, and why are you here today? Yeah, for sure. I mean, like, I mean, I'm from the UK. I was in engineering by training.

I did the management consulting thing for a few years with, with BCG, and I loved problem-solving and sort of figuring out, like, if you have the right questions, you can get to the best answers.

But I joined Adidas back in 2011 because I wanted to see how we could-- I could use that skill set really to try and figure out how we can create more products and experiences of value for consumers with something that I can touch and feel and what have you.

So I spent a long time there looking at innovation across the physical supply chain, manufacturing and logistics, and how we can make more products that people want and less of what they don't want.

But things got really interesting when I took a left turn into digital around 2018. I led the customization business there.

I led the build and launch of Adidas Confirmed, which is where you can get all the premium streetwear stuff, you know, things like what I'm wearing now. You can't see my feet, but I'm always wearing cool sneakers.

And, uh, that's where I also started to lead digital innovation as well, so looking at open source creation, and I was co-lead of the Web3 initiative over there, and that's what led me into the proverbial rabbit hole.

Because when I started to understand more about blockchain and digital assets and the role that they can play in connective tissue, for me, there was no really, there was no really go-going back after that.

So I jumped into the space as president of Start Science and Magic Studios, helping brands and sports teams and the rest figure out, how do we use this thing?

And we ended up coming up with, um, a use case there that we've actually spun out into what is now Trace, which I'm sure we'll talk about. So, um, you know, I, I guess I'm a serial innovator, uh, one way or another.

But, um, I've kind of decided that this particular patch, I think, is one where I can keep my career pretty interesting and busy for the next few years. Yeah.

And, and one thing that particularly excites me to have you here today is, uh, I think you have a very unique perspective on this space because you've been, um, at the big consumer brand, and then you switched over.

You, you worked, uh, in agency. You were president at Science Magic Studios. You were very early, uh, in the whole NFT digital asset movement.

Um, and we're gonna talk, uh, a bit more about this later, uh, but that gives you a very unique perspective of what's happening in the space.

And now what you're doing with Trace is, is focused on, on fan engagement and digital assets as well. So very unique perspective.

And I was curious, I, I saw that your LinkedIn tagline reads, "Culture X Commerce X Technology." Yeah. What do you mean by that, and what fascinates you about that?

I guess that's a little bit what you're describing with that perspective, you know, coming from a consumer goods brand, you know.

So-- And, and I think Adidas is a brand most people kinda get, and, and the, the interrelationship between culture and commerce, I think, is quite understood, you know.

And the way Adidas would achieve that is through the kind of the two big monolithic pillars of sport and lifestyle, right? Both of which are-- They speak to people's, um, humanity, right?

The pursuit of the possible as an athlete but also how that inspires how I identify on the street, um, and, you know, through sport-inspired fashion. And

when you start to think about, you know, going beyond just having a cool pair of sneakers or a cool tracksuit or a whatever,

and start to think about how, how culture is now feeding itself in the way that, you know, people are creating content and consuming content around that, the way that commerce experiences also need to evolve to just be less of a one-way relationship but more playable in nature.

That's what I mean about the technology part.

I think that every brand is trying to look to understand about how to resonate with a, you know, a generation of consumers who, you know, predominantly will interact through digital means, but not only, right?

And the pendulum tends to swing on that.

But are certainly used to experiences which are as much about entertainment as they are about commerce, uh, which is why gaming is such a big deal in every marketer's mind as well at the moment.

So when I talk about technology, culture, and commerce, I'm like, if you really want to have a great commerce experience, you need to understand how you're actually tapping into hearts and minds of people who consume culture.

And, you know, there's a whole series, an array of technology which is available to help us to do that.

So I think it's a really interesting Venn diagram, and the reason that the X's in the technology X culture X commerce is so important is because there are people who belong in each

of those three things, but there are very few who can weave them together.

And anything I've ever done that was cool has always been with a team which has been able to understand how these three circles of the Venn diagram really interrelate and can jam with people from disci-different disciplines.

So maybe a long answer to a short question, but I think that's where the magic is. It's in the intersection. Yeah. Yeah. Uh, and you've been in the space for over fifteen years now, focusing on consumer engagement.

If you look at that interrelationship of those three things, how did that change over the last fifteen years? Did it change or, or is it still the same? Wow. I mean, no, it definitely has.

And, and, you know, earlier in my career I was really focused on how the supply of physical product could meet demand, right? So very much like this kind of pipeline mindset of,

you know, we've created products, we've marketed them, and we've, you know, made them even and pushed them into the marketplace.

How do we try and make sure that we maximize, you know, what is sold and we minimize waste, right? And the more responsive in the supply chain we can be, the better.

And I think that kind of speaks to a time where the traditional business model, and that is still the dominant business model, by the way, in fashion and in sporting goods and whatever.

Like that is still mostly how it works.

But I think it speaks to a model where, um, you know, a push model where reacting to what's going on actually live and in the moment in culture has not really been historically how those businesses have been set up.

So, you know, social media obviously made a big change to that.

Like, you know, there was, there was a day where, you know, social media was taken care of by an intern back in, you know, the 2000s and, uh, it was like a little thing on the side of all the big stuff like, you know, TV advertising and out of home and all of the rest of it.

And gradually you've seen that just become so much more important to have reactive content around the stories that you want to tell as a brand, um, or as a, or as a rights holder, like a sports team or whatever.

It's so immediate. But the product side of that has been, you know, relatively, let's call it like static in how that has worked over time. Manufacturing timelines are still kind of relatively long and the rest of it.

But what you can do and what has been happening, certainly like 2015 to, to '20, we saw this in the sneaker side, is that you start to understand that like, you know, although it takes time to make a sneaker or it takes time to make a, a T-shirt, that commerce can become a lot more playable.

So you saw things like how, you know, hype drops would work, right? Very limited supply, scarce- the scarcity model. Like sometimes people wouldn't even know when the sneakers are dropping.

There might be a big name behind it, like the whole Kanye West and Yeezy stuff I think was a obviously like one of the, one of the main...

Right? And they are belonging to a subculture.

So commerce, I think has started, and you see that elsewhere and you definitely have seen, you know, in 2021 and '22, the commonalities between what was going on in NFT subculture and what was going on in sneaker subculture are so clear, right?

The idea of if you know, you know. Um, the idea that like I have an asset, not just a product, something that like may have value to somebody else.

It's all a big game about the perception of value and the perception of status.

And I, I think you've seen culture, um, almost adopt those aspects of commerce and those different asset classes in a way which basically turn- turns it into a bit more of a game. And now you start to see it almost

going full, not full circle, but the, the deepest extent of that is the gaming environment is where the social network is.

It's where people play, it's where people spend hours, and the idea that a brand or a product should be available in a gaming environment is now normal, right?

So I think in short, the idea of the intersection of consumer engagement and commerce becoming more like play is the gradual trend. It's become more immediate, it's become more real time, it's become more social.

If only there was ways for physical products to be as reactive as culture is, you know, to move at the speed of culture is kind of the holy grail. Tarek, just quickly, uh, the video quality is good for you?

Do you see me- Yeah... you see my image is sharp? Okay. I do, yeah. Oh, act- okay. Um, I also s- yours is not very sharp, but I just see your actual recording is in higher quality. Yeah.

So- That I've seen a few times on Riverside. Yeah. And usually it's come out- Okay... yeah. Okay, perfect. All right. Okay. Um,

so, uh, build- building on that, Tarek, um, you've been president at Science Magic Studios before, and one of the things that came into the mix there were digital assets.

And I read your thesis when you were at Science Magic, and I found it very intriguing how you mixed all those different parts together, what you just told us now.

Can you tell us a little bit more about what was your thesis there and, and how did digital assets and NFTs played into that? Yeah. Um, well, digital assets and NFTs I think were at the very, very heart of it.

So the thesis was, and I think there are things which I carry forward for sure, uh, beyond Science Magic Studios, but the thesis really there is if you have the kind of the holy trinity of cultural currency,

community and intellectual property, that the medium of digital assets would be a way which could amplify that, that, that formula, right?

So imagine, to make it sound less academic, imagine that, for example, like, you know, back in '21, I would think that this was like a thesis that would've been shared by many, which is one day there's gonna be like a Beyoncé token, right?

And you can imagine that that would be something that Beyoncé fans would, would accumulate through engaging.

There'd be these economies surrounding these, these, um, icons in culture or brands or sports rights holders, et cetera.

And the thesis really was, well, there might be an operating model here, which is that because the Web3 way is everybody in the network can be rewarded for their contribution to the network, then when value is unlocked through the tokenization of culture and a team that could combine the science, the strategy, the magic, the creative, et cetera, and the technology to be able to help make that happen, that we would be able to sort of all share in that economic value, which is, which is created.

Now, I think the, you know, the timing of that obviously was, you know, end of '21, early '22.

I joined in the middle of '22, and I think by the end of '22, I think we could sort of imagine that like, you know, token economies was probably not things that people were ready for potentially because, you know, securities law, crypto winter is setting in.

Uh, but the idea that that formula of cultural currency, community and intellectual property being There being latent and trapped value in that, I certainly still hold onto, right?

So when we were working with brands and sports teams and the rest of it through 2022 and 2023, we certainly found curiosity on how we can use the medium to, to address the business problem of how do I get more consumers and monetize those consumers.

But the mechanics were different, and so we ended up actually deciding that, okay, if it's not about token economies, it's probably about applications because we've got all of these currencies around.

We've got the primitive of NFTs, but what's the meat in the sandwich?

Like, what is the application layer that is going to actually demonstrate that a consumer or a fan can have a better experience and get more of what they actually already want by interacting with this technology?

And so we ended up coming at it much more from a business problem first as opposed to sort of an economic and technology enabler first, um, approach, uh, when we started to move into Trace.

We'll soon talk about Trace as well. If someone wa- came up to you today, um, three years after the initial NFT hype and, and asks you, "Are NFTs dead or, or is this still a technology to hold onto?"

What would you answer them? I'm s- I'm, I'm a bit of a gimp when it comes to the formulation of, like, the question. So when I, when I hear the question like, "Are NFTs dead?"

To me it just feels like, you know, you're sa- it's like, are, are bricks dead, right? Yeah.

Um, and I'm like, well, you know, there was, there was probably a time when, you know, there were, like, wooden shacks everywhere and somebody came up with a brick and said, "Check this out."

And people started to, like, you know, buy and sell bricks or whatever and just, you know, like, it almost would've seemed ridiculous that like, well, hey, maybe one day that we might actually build, like, houses with these things, right?

And I think we're at that stage now where I think there's a, there's a lot of people who pay attention that would say, like technology-wise, blockchain's not going anywhere, probably crypto is not going anywhere, although many, many cryptos will probably come and go, um, um, in, in the space.

And the idea that the primitive of the NFT has no role in our future I, I think would be absurd.

Like, I think if you were going to place a bet there, I think that would be absurd because the idea that we actually have something which constitutes digital matter, provable scarcity in the digital realm is our kids', most of their balance sheet is going to be held on that medium, on that primitive at the end of the day most...

I, that's what I believe.

So I don't believe that they are dead, but, but I do sympathize with the question because what most people are visualizing in that question is, you know, was the tissue paper fire of PFP collections, is that coming back or not?

And I think the answer is, like, it, it'll be different re- it'll be a different incarnation.

I think there will always be some degree of financialized behavior that's associated with anything which can be bought or sold, but I don't think it will be coming back the way that we saw it in the 2021 vintage or the 2017 vintage either.

Um, so I think that that probably I wouldn't mind laying that to rest myself, to be honest.

I think we should be focused a lot more on how the medium can solve problems for consumers and, and fans rather than focus on the headlines of, you know, trading volume going up or down, which to me there's no real so what that comes from that.

If you look back at, at the last three years in your journey at Science Magic and now, uh, leading up to Trace, what are some of the learnings or what is part of the thesis that you could validate in the market and that you take now with you and say, "Hey, this is, this is working, and this is what we're now focusing on and, and take with us when we're building Trace"?

That is a really good question, and I'd say that, I'd say that, like, probably more than half the things I would've said I held onto maybe two years ago, I've, I've sort of jettisoned some of those and decided what to, what to keep.

For me, the, the, the thing to keep is that, um, let's start with the human beings at first, right?

Human beings in general, especially when it comes to culture which is back to that formula where I, where I like to play, people will always obsess about the things that they love, and whether that's sport or music or film or fashion or whatever, whatever flavor it might be, they will always obsess about the things that they love.

And that is a fantastic playground for innovation when you're talking about ways to feed that obsession or ways to celebrate that obsession.

And so that sort of community cultural currency and intellectual property thing to me is absolutely a carry forward.

And I do believe that NFTs and digital assets are a medium which can achieve things that no other medium can achieve by virtue of its, of its nature of provable scarcity.

I think interoperability is probably overhyped a little bit, but the idea of like proof, um, and scarcity I think are real. They have emotional value, and they are part of the love equation, right?

And so those things to me are absolutely carry forward. I think what's changed in my view is that it's more to do about the relationship between love and money, I would say, right?

Uh, we used to talk about this a lot at Adidas, right? Especially when it came to things like the scarcity model on sneakers, right?

I think a lot of people have assumed, and I think are still assuming by the way when you see products being built out there, that wh- when people are sort of behaving from a place of love like, you know, I'm a fan of a team or there's something I want to talk about or advocate for, that the economic incentive to do that is,

is like some kind of justice equation which needs to be solved for, and I'm not so sure about that.

So when it comes to like the tokenization and like incentivizing networks to behave in a certain way when it comes to culture,

I think that there are very few places where when financialized behaviors come in, come into it where that does not corrupt the core Authentic

love that you have for the thing that you, that you care about, whether it's fashion or sport or music.

I think that we need to make sure that you just don't forget that the love has to come first and that money has to follow.

And I don't believe that everybody ha- has to earn currency for everything that they do ever in order for that equation to remain balanced because it perverts, I think, the natural course of things.

So like, it should I be paid for my attention, um, if I'm watching a movie or playing a game? No, I don't think so. I think there's such a thing as entertainment.

But can the medium of digital assets and NFTs amplify my entertainment experience, give me another way to express my obsession, deepen my connection, which is a score in the love column, but I don't w- not, not necessarily getting paid or remunerated for that.

That's what I think is different for me.

And I think that's one of the things that we are, we are carrying forward in Trace is if you're helping a sports fan have a deeper connection with a thing that they already love, just focus on giving them that.

And if you do a good job of that, money will follow, and it will follow in fairly conventional means, you know, buying more merchandise or selling more tickets or subscriptions, like things that are products that, you know, true fans actually look for.

What we're looking to do is how do you actually amplify the love part of the equation so you earn the money, right?

As opposed to mixing kind of economies with, with sort of cultural relationships and social relationships and, and that's where I would say I'm skeptical, um, about products in that, in that kind of space personally.

Mm-hmm. Mm-hmm. I need to give you more concise answers. [laughs] No, it's, it's, it's super interesting, Derek, and a perfect segue also to what you do with Trace.

And I just wanna share this number because I saw that you posted on that and, and you shared this, uh, in your post, which is that 99% of fans aren't at live sporting events. Mm-hmm.

And I also, uh, know from, uh, a couple of European, bigger European football clubs that, that we've worked with that, um, most of the fans they have, they don't have a direct connection with.

So if a club has several hundred million fans around the world, they maybe have a, a couple of million email addresses, and the rest is just in the void.

So, um, you're arguing, uh, there's a big gap in, in fandom today and, and also big opportunity. Can you explain us a little bit what's going on and, and where is that opportunity? What is that opportunity? Yeah.

I mean, look, I think you've actually almost-- You said the first part of it already, which is

as a, you know, as a sports team or a league, or by the way, even an athlete, I think there's a recognition that like, you know, my cultural capital coming back to that, that formula that I was talking about earlier, my cultural capital is up here, which means I have a following of several hundred million or, or 50 million or whatever it would be across all my channels.

And people love to brag about that, right? Especially to their sponsors. Look how many eyeballs there are on us, right?

Um, but it's a little bit of a fig leaf because I think everybody really kind of knows that like most of them are not engaged.

And, you know, if by contrast, I've got my following here, I've got my season ticket holders here, and I've got my email addresses here, that there's this, there's probably this kind of next layer of fans probably estimated usually between 5 and 15% of, of a total following

who they have no idea who they are, how they are engaging, what they're engaging through, when they are engaging, and certainly cannot activate those people directly.

And the question is, well, all right, posting on social media or whatever or having my own team app, like there's certain apparatus that I have in order to try and get that fan to opt in

to a direct connection with me, and I'll explain why that's important. Our take is, well, they're, they've already opted in with their hearts. They're already watching somewhere or following on social or, you know,

sitting by the pool while their kid is, you know, like getting their swimming lesson, just trying to keep up with what's going on, right?

Like fandom is, you know, we think of like people waving scarves in the stadium, but that's, that's the 1%. The 99% are people trying to like, you know, feed their obsession around their daily lives.

And we believe 5 to 5 to 15% of that social following, if you give them something to mark their fandom, to stand up and be counted and to be recognized officially for their ritual commitment,

that that is a way to turn around that relationship and create a direct connection between a sports team or a league or an athlete and that fan. And why is that important?

Well, I think from a fan perspective, that love equation, our view is that if you are giving them something of value to mark that moment in a way sports fans really care about, which means it can't just be like a generic type of POAP thing, it's gotta speak to the drama of that moment, and you can treat that as a credential, something which like the more I collect, the more access I get, then you're actually correcting an imbalance in the relationship that currently exists today.

Now, as a sports team or a league, that's also important because, you know, if you're sitting in that seat, and that's why these football clubs are, are keen to do it, is because not only might I be able to actually monetize that fan by giving them things that they actually might want, whether that's the merchandise or, or content subscriptions or whatever, you know, there's $100 billion every year invested by brands to sponsor those rights holders, and those sponsors expect rights holders to be able to activate that, that group of fans.

And it's kind of a bit of a fig leaf that falls off when it's just like, well, actually we only really can activate a tiny, tiny fraction of them.

So even being able to say like The 1%, it's usually between.5 and 1.5% of, of the total following that people actually have direct connections with.

And that's information from like conversations like the one you've had across football, across motorsport, et cetera.

You don't need to get all the 99% or the 100%, but if you can 5x the number of fans that you have a direct connection with, that is of value to your brand sponsors, and that is of value, um, in direct monetization of that fan, right?

And this kind of idea now of starting to think not just about selling the rights I have to third parties like broadcasters or being intermediated via social media, that that cultural capital is something I should be able to see and touch and feel and manage as a rights holder.

That is-- that I think is an era that we are moving towards, right? And if there's no money on the table, it's not an opportunity. But when you start thinking about the lifetime value of those fans that you don't know,

getting your fair share of it is something which a lot of these teams and leagues are interested in making sure that they, they don't miss out on. Let's break it down a little bit. Um, let's get specific about Trace.

Um, and here I-I-I would be really interested in knowing how do you now, uh, unlock that hidden value? How does that solution look like? What is Trace? Yeah.

So Trace is basically a, a, a platform which helps sports rights holders and sponsors get to know their un-unknown fans using the medium of digital memorabilia, right?

So to bring that to life a little bit, let's imagine, for example, that, um, you are an F1 fan, right? I am an F1 fan, and so this is easy, easy for me.

I've not missed an F1 race in five years, and I've got absolutely nothing to show for that, right?

I've like all of the weekends that I've had an argument with my wife and my kids about wanting to spend the middle of the day on a Sunday and a Saturday to consume the sport. It's, it's a true commitment, right?

Like there's only one thing which can compete with marriage, and it's, I think it, I think it's that kind of relationship.

Now, what we want to do with Trace is to say we believe that that obsession needs recognition, right? So, and we, we tried this out with F1 fans, by the way, last year.

We're saying that like before a race starts, when true fans are like, you know, on social or in the app or, you know, or, or even like watching on Sky Sports all of the qualifying sessions and everything, and trying to figure out, you know, what might happen, set my fantasy team.

That zone in the two days before the event is a real ramp up in cultural energy.

If you could see it, it would look like this kind of weird ethereal energy, which just collects around the globe around these events, right? But we can't see it.

And that's a moment when if a true fan is paying attention, we're saying, "Well, look, come here. Come to the Trace platform and claim this thing called a trace," which is a digital asset, right?

It's almost like you marking your presence. I'm here, my, my, my virtual ticket stub almost for free, and stand up and be counted. Now, you can only get that up until the event starts. After that, you know what?

Like maybe there's a fair weather fan who thought it was a cool race or a cool game who says like, "Maybe I should try and get that."

Yeah, if you weren't here at that moment, not a true fan, not paying attention, you've missed out, right? And after it's called lights out in the case of Formula 1, but after that moment has started, that's it.

It's on chain. Those who have claimed have claimed it, and those who haven't, haven't got one. Now, if you want one, you have to find somebody who's willing to part with one. Then after the event,

we thought, well, look, we want to give those fans something which actually speaks to the heart and speaks to the mind and feeds into that obsession.

So we used data from the race by basically going in slow motion, capturing a bunch of stuff, and generating artwork out of it, and we dropped the artwork as a piece of digital memorabilia to those fans.

And what we saw is that like, people just dug it. They dug, they dug it because of the intrinsic value of like, wait, how many of us are there? There's like 7,000 this or 8,000 this week. Wow.

Like, I mean, you know, how many of us are there now, right? So this idea of like the lonely fan, you know, arguing with their family about Formula 1 on a Sunday or whatever. Now there's more of us.

So there was that aspect of it, and there's the aspect of like, well, when I look at this thing now, this, this piece of, it's quite a sort of visually arresting art. You can check it out on our website.

So please link that in the description. People, they see the race that happened that they watched, so there's a memory recall aspect of that.

Now, some races or some sporting events are gonna be more dramatic than others, but true fans are there no matter what, right? So sometimes those pieces of art are gonna mean more than other times.

But for us, we, we want to give a fan, um, a marker of that. And that thing, the more you collect, the more you kinda get.

Treating these things as credentials is now something that we're experimenting with as we start working with rights holders, because intrinsic value is great and there's lots of things we wanna do in terms of gamification, like, you know, different rarities and not every fan gets the same one.

Maybe it's linked to your predictions, et cetera, et cetera. But these are effectively credentials, which, you know, you're already turning up anyway.

Now just collect over time and get the recognition that you deserve for that. And as a result of that, and this is where the, the heart of the Trace platform comes in, is almost like a fan passport, right?

Where I'm bookmarking my collection is two things.

It's something I cherish, but it's also the bookmarks and credits, if you like, that, that help me accrue status as a fan, which means as soon as we pair this with the rights holders, they can now...

They understand who their most engaged are fans. They're self-selected into this experience to say, "I'm a true fan.

I'm here every week," or, "I'm here X many weeks and I want that recognition, and I want the best that you have to offer or that your sponsors have to offer." Fantastic.

Because now a rights holder has people who are coming out of the woodwork, where before they might have just been skimming past on social posts to say, "I'm here." That's more new information, more new fans.

And from a sponsor perspective, this kind of digital inventory as they call it, right, something that fans are seeing and touching repeatedly, is potentially a great place to actually have your, your, your brand exposed to those true fans.

Not to mention that because these things are digital assets, they're not just memorabilia, they're not just credentials, they're also keys, right?

So if this season's Trace is sponsored by Jack Daniels, for example, and Lando Norris wins his first race in Miami, which happened this year, then Jack Daniels should be able to say, "Well, hey, we've got a special bottle that we've been saving for Lando's first win.

Anybody who has a Trace from Lando's first win race, you can come and get that from here. This is just for you," right?

So to be able to connect proven fans with products and experiences for true proven fans, which give rights holders the data they need and give sponsors a much more measurable way of seeing how is the engagement driving towards commerce, that's what we think a Trace can do, right?

Memorabilia, credential, and a key. That's what the Tr- Trace platform is aiming to achieve. How was that? Did you manage to ch- Are you tracking with me? Yeah, yeah. I'm still going. Yeah.

[chuckles] Uh, I, I fully understand, and it sounds, sounds very exciting and, and a- appealing also on paper, and I'm sure you've already like, uh, worked with that solution in the market, and that's my next question.

What was the feedback from the clients you worked with?

Well, the first, the first feedback from the clients that we're working with is, is coming up because the, the test that we've done with the Formula 1 fans, so and depending on how, you know, we, we wanna capture the story on, on the show, I'd say there's, there's a few things you need to prove, right?

The first is, if you do this right, do fans care? And what we saw with the F1 fans, which we did completely permissionlessly, totally unofficial,

within four weeks, there were 15,000 fans making this part of their race ritual, right? And we saw 60% of them sharing online or in person as well their experience.

And even though there's only a race every one or two weeks, they were coming back to the application two or three times per week, right?

Now, I used to run the Adidas Confirmed app, and I can tell you that like I-- my stat- my stats were not that [chuckles] as good as that, right?

And that just speaks, I think, to the difference between emotion around sport and the emotion around commerce. So we saw that like, okay, you package this right, fans care.

The next thing to see is, well, does a rights holder wanna try this out and use this as an acquisition and engagement tool?

And I think we should be able to say by the time this airs that actually right about now, so around the fourth of November

until the end of the month, you can go and see and try Trace, um, by going to check out the ATP Finals, right?

So the ATP is the governing body of men's tennis, and the finals is like the jewel in the crown of the tennis season, where the top eight players in the world are competing basically like to win tennis this season.

And we're creating traces for all 15 matches of the tournament to now dial up what we did with the F1 fans and start to see, well, what happens if a rights holder now puts the full weight of their communication channels behind this?

What kind of new fan acquisition can you achieve? What's the kind of repeat engagement look like? How does the community react to that?

And we're also linking that to a very basic commerce experience, which is like you can actually buy the traces as physical posters as well. So I hope that's not a spoiler by the time that this, this comes out.

But like that goes from what we did with the F1 thing to now like let's, let's dial it up with the weight of a real rights holder and get a proper baseline of what's possible here. Because our hypothesis is,

uh, that, um, they should be able to say that they've definitely had material growth in the number of consumer records that they have, and they'll have done it not by paying for it like with paid marketing or whatever.

They'll have done it by giving fans something which is actually celebrating the drama of the sport, which is really what fans want. Derek, this sounds super exciting. Congrats o- on that.

I'm, um, looking forward to see how this, uh, uh, comes out and, um, uh, goes live at the ATP Finals. Uh, I have great memories of that. I once saw a match there as well in London.

I think there was Roger Federer versus Wawrinka. Uh, amazing tournament, and I'm sure, uh, that's gonna, uh, make waves. So excited to see that.

One of the, uh, last questions I wanna ask you now, given, given all that context you gave us, now Trace, if you're in an elevator with a digital leader or CIO of one of those sports clubs, you have two minutes, what would you pitch him?

What's the thing you are focused on? Is this about engagement? Is this about revenue? Is this about direct fan connections? Is this about data? What, what is the thing you would pitch them?

I would pitch it probably like this, and by the way, I could-- I think that this would apply to the head of digital, the head of marketing, and the head of commercial ultimately as well.

So there are many people who I think this should appeal to.

And I would say that, you know, the, the cultural value of your intellectual property is gradually going to be limited by the, your connection with the people who love your, your brand, your symbol.

So, and you cannot monetize fans that you don't know as effectively as you can monetize fans that you do know.

So in the long run, there's money being left on the table, and when there's money being left on the table, there's performance being left on the table.

So it's only a matter of time before competitive advantage on the field of play is going to be linked to your ability to understand who your fans are around the globe, right? It's not about who turns up anymore.

The stadium is only 50,000 people. There could be 500 million people paying attention to what you're doing. And all of that value is accruing to third parties right now.

So, you know, as a rights holder, you've got to get the balance right and start to, um, start to basically know who those fans are. And it is, it is a data question, but data has to lead somewhere.

It has to lead to money, and I think there's a fairly strong hypothesis that, that, uh, that's the direction we're heading in. Yeah. And, and if you extrapolate that pitch into five, 10 years into the future,

how do you think fan engagement for sport clubs will look then? God, I'm only trying to be right on a two-year horizon right now, Marc. Um, so how do I imagine that will look?

I mean, if I, if I'm honest, I think that the... I think it's possible, let's put it like this, over a 10-year horizon, I think it's possible that there'll be a team or a

s- so in existing sports leagues, I think there might be a team who could be at the top of their game, who is not at the top of their game today, and who got there because they were able to channel the, the cultural capital with their fan base and grow that to drive performance on field.

Right? I think that's possible. So it's, it's a bit like saying, you know, the u- the best university in the world may not exist yet today, right? Like I, I think it's a little bit of, of that genre.

I think that will be happening on, uh, 2D surfaces. I think that will be happening through gaming environments.

I think we will see virtual environments go through only another couple cycles of evolution, whether that's headsets or video games or whatever. I don't have a particularly

strong opinion about, but I do think that the immersion that a fan will be able to experience is going to be completely different to what it is today.

Um, and, um, I'd also potentially say that, um, and you see this happening now, there will even be new sports,

new sports or new leagues in existing sports like Ultimate Tennis Showdown appearing in the tennis side of things, uh, Kings League on the football side, uh, One Championship on the martial arts side.

You know, that's just massive meteoric, uh, rise on, in Asia.

I think that, I think that new franchises can be born when fandom and community of fandom is put at the heart of how the entertainment experience looks as well.

So again, a long answer to a short question, but I've clearly placed my bet that we're, we're moving in a direction where, where digital's going to be a massive enhancement to the fan experience. Yeah.

Tarek, we're almost at the end of the show. I would have loved to keep this going, uh, for hours.

It's extremely interesting, and we only touched the surface of, of fan engagement and fandom and everything that's possible with new technologies and what you're building with Trace.

Uh, before we end the show, I would like to do a very quick lightning round. Uh, so quick questions, quick answers, uh, very choosy. Um, and the first question is digital or physical sport experiences? Both.

NFTs, overhyped or underrated? Both, but I'd say right now underrated. Gamification, same questions, overhyped or underrated? Under- underrated. I think play is...

Stop, uh, people don't like buzzwords, but like a playable experience is a better experience. Then same with augmented reality, overhyped or underrated?

I think at this stage of the cycle, probably mo- more overhyped than underrated right now. But yeah, you get the picture. It's just a question of where we are in the cycle, you know.

The biggest opportunity for sport clubs, more data, more engagement, or more revenue? Um, just, just put them in sequence. Data, well, engagement leads to data, leads to revenue.

If you could make up one Sunday afternoon, uh, for a sports events that you would like to watch, which, which sport event would it be? F1. F1. [laughs] That one's easy for me. All right. That is- Yeah. Yeah...

my Sunday whenever I can make it happen. Yeah. All right. Uh, Tarek, it was awesome to have you on the show. Thanks so much for joining us.

Um, before we head out, where can people find out more about you, find out more about Trace? Uh, you can find me on LinkedIn is probably best, but I'm also @tareknazlaoui on Twitter. Our Trace website is trace.fan.

You can go check that out. Definitely go check out the ATP's socials as well, and you can experience it for yourself, and we're @trace.fan on Twitter as well, @trace.fan.

So plenty of places, and look, we'd love to hear about what you think about the experience over the course of the finals. Okay, perfect. Uh, thanks so much for tuning in.

If you like this, please, uh, share, retweet, re-share. This helps us to keep the sh- the show going. And, um, Tarek, I wish you all the best. Uh, I hope to talk to you soon again.

Um, and, uh, yeah, let's, let's keep the space growing and, um, flourishing with, yeah, all those- I really appreciate being-... amazing applications... a pleasure, Marc. Yeah.

I appreciate you having me and, um, I'm a big fan of what you do for, for the space as well, and keeping everybody abreast of what's going on, what's working and what's not.

And hopefully we'll have a good story to tell you in a couple weeks' time. Yeah. Looking forward, and talk soon. Bye, Tarek.

Take it easy. [outro music]