The evolution of city-states to nation-states to Digitally Native Vertical Brands (DNVB)
The Six Percent Entrepreneur
The evolution of city-states to nation-states to Digitally Native Vertical Brands (DNVB)
April 6, 2021
In this episode we talk about the idea of building sovereign nations in the virtual space, and how digitally native brands can actually lead that way.
So the jury is still out on how we are evaluating companies and startups. People will come up with different conventions, and they will try to apply that convention onto a startup to figure out what metrics could be important to them, whether it's MRR your monthly recurring revenue or if it's evaluation or multiple, etcetera. However, I want to kind of look at companies in a different light and, more specifically, digitally native brands. 

So digital native brands. I think it's interesting how you have corporations that are developing so much power, and a lot of this power is also derived from the brand. And when you look at politics or political science and the evolution of governance, we've seen areas go from city-states, for example, where they're just self-governing themselves within a city. And then they banded together with other city-states to create a nation-state so a nation-state will have the same culture as the entire land. But it will have little mini governments inside, and we're still seeing an evolution of these types of governance because, especially now with the virtual world, people can develop communities and they can, they can start defining what their culture is within these communities. So for me, I feel like there's going to be a new emergence of a new governance structure which is going to be online. 

And I think one of the interesting things is, if you saw the movie, I read the book Ready Player One. It kind of alludes to what we might be able to expect, right? So in terms of political science, there is a theory that defines a state as a person in international law. If it meets the following criteria, a nation, state, or a state has to have a defined territory, a permanent population, a government, a capacity to enter into relationships with other states. And it has to be independent where it's not dependent on other states. And if you think about how this might work with digitally native brands, what we might see is an idea of sovereignty in the digital space. But how do you do that? The way you do that is by defining your territory in your culture in the virtual space. 

So I started doing a YouTube show. It's called the Startup Fix, where I look at different startups and seeing what they're doing right and what they're doing wrong. However, I think what I'm going to try to do is I am going to apply this framework, this idea of building sovereign nations in the virtual space, and how digitally native brands can actually lead that way. So the way that I would evaluate a company now is I would take some of the same things. So a sovereign state needs a permanent population-defined territory, the one government, the capacity to enter into relationships with other sovereign states and is not dependent on the power of any other state. 

So if you look at permanent population first, this basically means your community size and trajectory of that community size. So if you think about online communities and digitally native brands building these online communities, how big is the community? The bigger the community is and the more engaged the community speaks to the permanence of that community. And if there is a positive trajectory where the community is growing in size, then you could say that this brand is defining or is having a permanent population because it's creating a home for these type of people. I mean in a way that's permanent, then the second category, which is the defined territory. So this part is a little bit more difficult in the virtual space, right? In the physical world, we can have countries. We can have borders. We can define the territory exactly in the virtual space a little bit difficult. 

However, I think there is a way to do it. And the way you define your territory is really to define what your brand means and that brand culture and the type of people you are trying to attract. And this essentially goes into how verticalized are you? If you're trying to be something for everyone, then you you probably don't have a strong culture, and you're not building a strong tribe. But the more vertical as you are, the more you drill down in terms of niche for who you want to serve, then you're actually defining and territory. And when you start defining a territory in this way, you start eliminating competitors, right, because the more you niche down, the more difficult it will be for other people to start competing with you in that niche. Just because there's so many other niches to get riches from. I need to make some kind of poem or a rap song about that. So, in summary, for the permanent population part, if you look at the community size and the trajectory of the community size, that will give us an idea of the permanence of the population for a digitally native brand. And then if you are looking at a defined territory, the more verticalized a brand is, the more they can actually define that territory and then one government with the capacity to enter into relationships with other sovereign states. 

So essentially, a company usually just does have one government but this capacity to enter into relationships with other sovereign states. To me, this means how well are you working with other people in your space? Are you working well enough with them to create integration so everyone is friendly and talk to each other? The more integrations your brand has with other brands speaks to the confidence kind of kind of. It provides other companies away to recognize your sovereignty that you exist and because you exist, we're going to get into a relationship with you through this integration. So the more integrations that a company has than the more prominence there establishing themselves within in the space that they're going at, um, to give you an example. If I was to use the software and I realized that this new piece of software that I'm using is not, or it doesn't have any integrations with whatever I'm already used to sing or already used to using, I might not use that new software or am I abandon my old software? But if there was a way to integrate the two, then I'm establishing credibility among those two companies for the entire digital space. I hope that makes sense. 

I feel like I was going off on a little tangent, but we talked about community size and how that's permanent population. When you vertical eyes, you define your territory and the capacity to enter into relationships with other brands or sovereign states, those your integrations. And finally, how dependent is this brand? So for a state to be sovereign, they can't be dependent on a on the power of another state. So if your business depends on another platform, for example, let's say that you have a saas app and the Saas app helps Facebook group owners with some kind of thing that Facebook group owners need. 

Let's say tracking emails. Shout out to Kim Dang for her software. But let's say you have that. So you have an email or you have an app that tracks emails and you are dependent on Facebook. So this dependence on Facebook, if Facebook goes away or Facebook decides that it doesn't want to deal with you, then your company is gone. And that doesn't provide a lot of confidence for the sovereignty of your brand of your company. And then finally, we talked about how we can kind of use the idea of sovereign nation states to apply that to digital native brands. But there's also two other things that I think really matter for the reputation of a brand. And that's the brand essence. How well is the brand envisioned? Is the name of the company a good name? Do people recognize what your company does? Do people online with your brand? Is this something that speaks to people and attracts people? Or is this brand having to chase people? So that's your Miranda essence? 

And then finally, how well do these do these brands take care of their customers? And this kind of goes into your net? Promoter. Score your NPS right. The more that a brand will actually cultivate its community and take care of its community, the better chance it has for it to grow in community size and to establish its sovereignty within the digital space. So check out the startup fix on YouTube If you are interested on how I'm applying this to be able to evaluate other companies, I think in the future what will be nice is if I could hire a data scientists, which are probably planning to do to actually start tracking this data and build up a database of all these different companies. Put it in this rubric and see if if it's something that can actually be a predictor of success or not, and we'll see a pretty good idea. But yeah, applying the nation's the evolution of city states to nation states to virtual states. I don't even know what we would call it yet, but let's try to come up with a name for it. 

Boom. Bam. I'm out,

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