Suresh and Dave chat with Matt Smolin CEO of Hang.xyz

In this episode of the Web3 Marketing Association Podcast, hosts Suresh Balaji and Dave Wallace are joined by Matt Smolin, co-founder and CEO of Hang.xyz, to explore the future of loyalty and membership programmes in a Web3 world.

Matt shares his entrepreneurial journey from trading desks in finance to building consumer tech, and ultimately pivoting into Hang after an earlier business was disrupted by COVID-19. He explains how Hang was founded in late 2021 with the mission to reinvent customer engagement through NFT-powered loyalty—creating membership systems that are more flexible, interoperable, and rewarding than traditional models.

The discussion covers the shortcomings of legacy loyalty programmes—closed systems, extractive models, lack of interoperability—and how Web3 technology can address them. With NFTs, loyalty becomes portable, tradable, and even tiered in ways that benefit both consumers and brands. Dave and Suresh explore scenarios ranging from airline miles you could rent out, to employee loyalty schemes validated on-chain, to interoperable memberships that travel with you across platforms and experiences.

Matt stresses that the value proposition for brands isn’t “NFTs” as a buzzword but solving real problems: rising customer acquisition costs, fragmented data, and the need to build lasting community-driven engagement. He outlines practical paths for CMOs—from layering Web3 onto existing loyalty programmes, to experimenting with VIP segments, to creating new models entirely off-chain-compatible but Web3-enabled.

The episode also touches on the regulatory and financial implications of tokenised loyalty, the challenges of moving liabilities off balance sheets, and the potential role of agencies and consultancies in scaling adoption.

For marketers, the message is clear: loyalty is evolving from transactional points systems to community-driven value exchanges, where customers become stakeholders rather than just consumers. Web3-powered loyalty isn’t just the future—it’s already here.

Transcript

Speaker 00: 0:02

The future of memberships and loyalty programs will be tied to NFTs and Web3. And today to talk about that, Matt Smolin, the co-founder and CEO of Hang.xyz, will chat with Suresh and Dave about what the future looks like here on the Web3 Marketing Association podcast.

Speaker 02: 0:30

From the studios of NMD Plus comes the Web3 Marketing Association podcast. Latest thinking at the very cutting edge of marketing. We aim to bring you insightful and interesting discussion about Web3 and the metaverse and other emergent digital trends. And here are your hosts, Dave Wallace and Suresh Balaji.

Suresh: 0:59

Hello everyone, this is Suresh and Dave again on What the Web3 Podcast, which is Web3 Marketing Association's official podcast. And here we have yet another episode for you. And on this episode, we have Matt, the founder of hang.xyz. You all know that Dave and I are deep into the world of Web3, and we've been talking about loyalty programs and the future of loyalty programs. And we just recently saw Starbucks launching their loyalty program that we wrote about but we are super excited to have somebody who's in the forefront of this revolution matt thank you very much for joining us thank you great to meet you guys thank you matt where are you based

Matt: 1:45

i'm based in new york but we have a bit of a presence in a variety of cities

Suresh: 1:49

brilliant dave's in london i'm in hong kong it's nearly midnight here but i'm super excited to be speaking to you so yeah i have a nice cup of tea next to me and we can have a bit of a chin wag so hey first things first we would love to hear you know your story hang story how you got here so usually we ask the question what the web3 is going on with you

Matt: 2:11

you know it's a longer story but i guess the quick version of it is originally was working in finance at a big bank out of college doing stuff on their trading desk and then worked another kind of trading firm through that realized that wasn't exactly what i wanted and Left back to start my own business with some of my insights from my time as a trader, kind of bringing the concept of an order book to other more consumer markets, like ticketing entertainment. Started building that business, which turned out to be pretty successful until COVID hit and a lot of that business can't always have been there. So went to zero overnight, had to shut down our office, let go of some people, keep kind of tinkering away on a few products and had this other product that had a small feature in 2021 that was really NFT based. for artists and creators and realized that that feature of making it really simple and easy in 2021 to launch an NFT was something that was needed. And so kind of pivoted into this other business that is now HANG, which we quickly saw where there was a large opportunity for brands in a world where acquisition costs truly are at an all-time high. And as a matter of fact, like, you know, you can't really hack away at CAC anymore. And so why not instead find ways to offset that by increasing the overall value of your user base? And we just thought that loyalty and membership were the best way to do that. And so launched this thing at the end of November of 2021, really focused on kind of building out this future of membership and loyalty platform for brands. It was like a next-gen customer engagement platform. And, you know, I think it wasn't the most consensus idea then, but something that we really did believe in, even over the summer when we went to raise our Series A, I think still it wasn't the most consensus. And just over the past few months, I think a lot has changed. And I really look at three factors. One is just cap continues to rise, you know, which changes the pixel in iOS. Like those are nothing new as of this week. or this month or even this year, but it's just become much more clear, especially with Facebook now having its first set of layoffs ever or announcing that, which are coming. The fact that the NFT market crashed, which meant that brands, all of which you want to be in Web3, many of which don't know why, which is totally fine, really needed to kind of refocus on doing things that one, will impact their end user in a beneficial way, and two, hit their bottom line directly or indirectly. I think loyalty and membership is a much more way to do that. And the third reason is kind of what you mentioned, big brands like Starbucks getting into this world, which is turning the heads of so many CMOs. And so as a result, I think now this concept is a little more mainstream, I think almost too fast, and it's been quite a wild ride.

Suresh: 4:40

Wow, fascinating. Thank you for that. Yeah, Starbucks, I don't know when they will launch. I don't know what it will look like, their partnership with Polygon. Just them talking about it, suddenly, clearly CMOs are thinking about it, saying, oh, what are we missing out? So there's a bit of FOMO going on, which is quite good in terms of when new technologies come in every one saying, hey, how do we get a piece of that? To your other point, I think there is definitely a challenge around what's the future post the cookies, what's going to happen with programmatic advertising. The internet as it is, is not the internet that we are all proud of in many ways because it does feel like stalking. So therefore, to your point about how can we create real value to customers using the engagement they have with us is kind of a noble thing for CMOs to go after. So it's pretty cool that you're building a solution that can respond to that problem statement. But here is a probably connected question for you. One of the challenges that I've seen with loyalty programs in the past, and I don't know if CMOs, when they come to you, if they're comparing old world loyalty programs to the way that you're setting it up, there are a few challenges with the old world loyalty programs, right? The first challenge that I see is loyalty programs are captive and extractive, right? You're stuck with a brand, you're stuck with, let's say, an airline program. You have to spend more to earn more. The burn ratios can be changed anytime by the program. You don't necessarily have the power in your hands. The other issue is there are not many loyalty programs where reward programs are interchangeable between brands and businesses. So you're sort of stuck with that vertical, that category. And somehow, I mean, airline loyalty programs are a clear case in point, especially during COVID. When no one traveled, what on earth were you doing with it? So now loyalty, you know, maybe this is called loyalty 3.0 or something, you know, creating tokens creating the ability for it to be in a secondary market for the business to be off balance sheet it just feels like a normal course of action for loyalty programs to go to blockchain and organization how far do you think this is sinking in and how far do you think this is uh reality

Matt: 6:47

I mean, it's definitely a reality. And on one side, a lot of what's out there, I mean, so many brands in this world don't even have loyalty programs, big and small, when you don't count getting an email on your birthday with a discount code. And so that alone, I think, is just insane. And even the ones that have been built, to your point, you know, there's a lot of shortcomings. Many of these programs are built using legacy software that was built internally, or kind of these older school technology platforms that aren't great at incentivizing you users aren't great at enabling changes to the program are hard to integrate with your software. And so I think they're very limiting and abridging factors. And so what our brands do, I think that there is actually like just an opportunity to build a more modern loyalty technology for getting Web3 entirely that can solve a lot of problems for a lot of businesses on this earth. There's a number of factors that could help there around data and analytics. And just the fact that like a consumer now, so many consumer businesses created brick and mortar stores. And a big problem there is that brand not knowing when you buy online versus when you buy in person to be able to join that data. And there's a number of problems like that. And so I think just alone, building a new, more modern technology for loyalty that can enable brands, agencies, marketing teams to actually solve some of the problems that they see today are really interesting. And then when you take that next step and you think about more of the problems that you're talking about, I think it becomes inevitably even more interesting. Things like liquidity and interoperability that will enable you as a consumer to have this passport that you can carry with you across the earth and it's almost like you're affinity to any brand. But what I would tell you is like for many brands that we're speaking to, sure, if you find the Venn diagram of relevant brand and brand decision maker who gets Web3 and NFTs and you get that middle area there, like it's the easiest sell in the world. But in many cases, that isn't where things are right now. Honestly, in many ways, we try to make brands understand that this is just a better solution to solve their problems. And really, they should forget the word NFT entirely because it's just technology. Knowing going to be saying it in three years. No one comes to your platform, your app, your website saying, hey, what is this built on? They're here to buy this product or service. And so much of the conversation is more so around what do you care about? What actions are you driving users towards? What benefits and incentives can you put in place? And then from there, having kind of like a brief conversation that might add in these elements and thoughts behind things like interoperability and liquidity, but in a much more contextualized way that makes sense for them today.

Dave: 9:12

You can see how the industry is growing up, because as you say, it's actually about how do you solve the problem with the technology rather than leading with the whole thing around this is about NFTs or whatever. You know, to your point, there will be some people because of their interest from a Web3 point of view would have been early adopters around this. In terms of your go to market for approaching just businesses, the sell is very much about kind of loyalty and building community, isn't it? Rather than, you know, going in with that Web3 story. So Have you kind of had to really think that through over the last few months because you haven't been going for that long in terms of how you approach the marketing community?

Matt: 9:56

We try to keep the same concepts, but again, Michael Taylor didn't leave. To this point, to be honest, we haven't spent a dollar. Now we're spending a few hundred bucks a day on Google ads, but we haven't spent a dollar really on real marketing and we haven't sent a single outbound email. It's all been inbound between our press and kind of being really first to market in this new category. And also our investors who are some of the best in the world when it comes to like actual financial investors, but also many of the biggest brand founders on earth. It's been pretty cool just having all this inbound come to us, which is great because there's always a conversation to be had. I think the other side of that's like, well, we have certain areas that we want to focus on and it would be interesting to actually go target those businesses and brands. But when you have really big behemoth companies coming to you, you have to take the conversation. In any of these cases, we try to, again, just like be very clear on what the unlock is today. And a lot of that being, you know, really relevant as a result of NFTs, but then what that future unlock looks like. And don't get me wrong, like if I can get someone on the phone and tell them, you You know, think about Delta Sky Miles. And right now, as a consumer, you spend money with them and you get miles and you rank up. When you get to a certain tier, you get more benefits and that's cool. But what if now, because there are liquid secondary marketplaces where these things can be resold that have been bootstrapped, it would be very difficult for any business to build. And the fact that you can own your status with a brand through this digital asset, now you're actually incentivized not just to get those benefits, but because as you rank up, you're actually appreciating the value of an asset that you own. that you can then resell or rent out. And as cliche as it sounds, really turning your customers into stakeholders, you know, with this concept that like, at the end of the day, it's not even just pure consumption anymore. You're actually getting paid to take an action you're probably already going to take and you're appreciating your network.

Dave: 11:42

I love that idea. You rent out your airline status to someone else for the weekend or something like that. So I guess when you start thinking about it, it kind of is mind-blowing what the potential around all of this is. What's fascinating is that opening things up to the community much more. And I look at your website, you talk about community as a core aspect of that. It's really interesting how you build things around this, to be honest with you.

Matt: 12:08

Yeah, I mean, I think the interoperability piece is really the true unlock. There's this concept of like digital identity that I think is interesting. A lot of people say immutability, which to me, I don't think is relevant for consumers or brands. No one is concerned about American airline servers going down so that i can't use that stat for a second within social media i think there's a lot of artists and creators know what happens when you have all your users build up the status with you in this platform and then it goes down but the truth is like the only example that is myspace like there's no concern about a mr beast getting kicked off youtube in my opinion and so when you think about in a more tangible way around brands you know i think this other concept of interoperability is very powerful and that means that it could be powerful for creators as well as nft integration endpoints become standardized across the physical and digital world something that you're already seeing with a number of platforms it becomes orders of magnitude it to easier to integrate an NFT-based membership or loyalty program into third-party apps and websites. That just wouldn't be possible with your traditional loyalty apps. Think about some of these ones, like one of these big coffee apps that might be worth more than many banks on earth. All you can do is buy coffee from this one place. Like you said, you can't take that out of there. And the effort for them to integrate with Ticketmaster, Twitter, Fortnite, Shopify, you name it, it's just impossible. Uber at one point had integrated with one of these big airlines to share points between and it took like 10 months just to build an integration. Yeah. But when you think about the vehicle of integration being an NFT, what it does is enables new forms of perks, benefits, earning moments, experiences to live on in places that they never could before. All enabling a brand's customer base to come together anywhere in the physical and digital world. And so when you put that concept together with this concept of liquidity, it's almost like credentializing your status or affinity to a brand and enabling you to carry that with you. That can create so much more collaboration within this world. And if I get other benefits outside of this one brand, because of this, it actually can make me more likely to use that brand in the first place.

Dave: 14:05

So true. It's so true. Absolutely. I mean, I think it's such an interesting area. The other

Suresh: 14:11

connected question I have to this is, let's say that a CFO buys into this concept, right? Of course, looking at it from a marketer's perspective, I can see the logic here. The axioms are quite strong. Interoperability, secondary market, the ability to provide tokens, NFTs, rewards to people more than your customers. It could be somebody who is a promoter of your brand and somebody who's responding to a customer research request, somebody who's a shareholder, this loyalty doesn't have to be just spend and be loyal. You can be loyal to a brand in so many ways. The opportunity here, in my view, is to touch all of them in your ecosystem in some ways, right? It's your suppliers. You can just drag on and to connect to all those points. If a brand had to move from their current position loyalty program, which is probably hard-coded with their CTO, their technologist, it's on the cloud. They've just migrated from mainframe to the cloud, let's say, and they're sitting on these huge data sets and all of these points. It's scary to think about unwinding that and switching over to an NFT-based loyalty program or on-ramp, on-chain loyalty program, just imagining the transformation that's required. Even thinking about people within the organization who can do this, it's a bit scary to think about what the process might look like. What do you suggest? Where should the CMO start?

Matt: 15:42

What I would say is there's a few different ways to do this. There are big brands in this world that don't have any loyalty program at all. Crazy as it sounds, start fresh. There are small brands as well that also we can work with. There are brands that have existing loyalty programs, which they can then make this an extension of that. We're seeing some trying to make it into a VIP part of their program or find a segment of the market where they add loyalty to a greater membership system. We can do paid membership programs as well that have earned mechanics, subscription-based loyalty NFTs. There's ways where you can actually add this as a test to a part of your system for your VIP users or some segment of your market. And then the other way to do it would be you actually can pair an NFT that has their existing status and just port it over that way. And so you basically take your existing user base, you send them all out an email with the NFT that has all that data already inside of it so that you keep your status and you don't have to start fresh. So there's a few ways to do it. I think it does depend on the business and the program. We're talking to a number of loyalty software providers that are CRM systems as well about adding us as almost like an earn engine. So we're part of their platform and that way, like through our API, that brand can actually pull this in and make it a part of their existing loyalty solution.

Dave: 16:55

I presume you'll then have a full partnership program because you want to be a product company at the end of the day, don't you, rather than and consultative. So you do have a partnership program that you're looking to roll out with agencies and consultancies?

Matt: 17:09

100%. Yeah, we're not a consultant by any means. We'd rather have someone else do it. It's just like with some of our early customers, especially the bigger ones, or just if it's a really interesting use case, we want to make sure that this works well for you because we know it will. It just means you have to do it in a way that is good for your users. And while we should totally trust every brand in the world to know what's best, I think we just want to make sure we're keeping it close. But Yeah, I mean, like when you look at our funnel, it's brand direct, it's agency partners, and it's platform partnerships. So it could be the bigger chains or other big players in this world or in the traditional world that want to onboard brands into their version of what crypto or Web3 is, but you can't just sell brands on collectibles anymore. And so it's cool to have business logic that actually drives your business forward. I would say on the agency side, one example is this company called The Trade Desk, which did a really good job of selling directly to agencies as this early partner in what was actually more competitive market, but still a new product when social media managers and Facebook paid marketing managers were not really a job. And I think what they did a really good job of, which you've seen happen with a number of other enterprise SaaS businesses, was create an academy or an EDU where they would actually have coursework that would teach these agencies how to use the product and they can expand that. And so I think us making agencies our best friend is actually a really good approach. I know there's a lot of startup businesses that don't take that approach because they're worried about agencies and not giving them all the information that they need, being a step between them and their customer. But I think for us, especially in this kind of unique use case where these agencies are so ingrained with so many brands, it just makes sense. It's a really good partnership.

Suresh: 18:42

That is super clever. Here's another technical question, Matt. So I've always wondered, so for example, with Starbucks doing their NFT loyalty program, is it a bid to get the loyalty program off the balance sheet in fiat so that they are creating their own ecosystem? Because any reward, is redeemable. Redeemable reward equals spends from your balance sheet. There are millions and millions of dollars of rewards sitting on the program, which means there is a huge liability and there's just cash stuck. What's your view here in terms of why should brands do this? Is there a way to escape keeping cash on the balance sheet, which is unutilized?

Matt: 19:24

Well, it's an interesting idea because I've thought a lot about it. We're pretty close with some of the really well-known consulting businesses who have very strong loyalty practices. And I've talked about it because my thought was like, you know, you come from a credit card background. To me, credit card loyalty programs are actually, in many cases, not the best incentivizing users because you earn these points and you spend them and it's like nothing ever happened. And then you look at these airlines where I'm taking five flights in December just to keep the status I built up. And it's like, do I even care about having these benefits next year? Or do I care about not losing what I've already accumulated? I think the status or tier-based system is so powerful. And you see that across a number of other businesses in different industries beyond just airlines. When I was first getting into this world, I did kind of think that, oh, well, if you do tier-based, it's not on the balance sheet. But actually, it still is. And so I think it's really hard to escape this. We've thought of things like financial engineering. There's a way to convert it into marketing spend versus it being a liability. But I think regardless, when you open up the network, these points are still on a brand's balance sheet i don't know if there is a way to escape it and so it's something that we've been thinking about and saying i'd love to be pitching to brands is like another reason why you should be doing this but i do think at this point it isn't as clear as to what it's going to look like and i think many of them are still expecting to be on balance sheet with many of these brands saying actually like a big kind of counter argument to doing this at all is that oh well it's easier for you to redeem points now so actually that being not so much of a benefit i have 100 reasons why that doesn't matter and why it will be net positive to do this because you incentivize users in a far more meaningful way. But it's an interesting thing. I'd love to get your thoughts

Suresh: 20:58

on it. I want to do more research on this. If you look at tokens and regulation is going to play a big role here, right? So what will tokens look like? What type of token is this? Eventually, in some markets, the view that regulators might land up taking is this token is a security or is it a currency or is the store of value? What is it? And then if it is, then each regulator in every market might land up taking a view on it. So far, loyalty reward programs, though they are like one-to-one, could be connected to a fiat, but it's never been seen as currency, a tradable asset. But then if it comes with this big Web3 crypto token wash, a view that a regulator could take on it could have huge implications on the way that you build a loyalty program.

Matt: 21:47

Totally. I mean, there's a lot of upside to thinking through like how this can change things, but given that there's a lot of ambiguity there, we try to build the business off these core things that we can keep in our control. And so I definitely am interested in seeing how that plays out because I think it's something that we've thought a lot about.

Dave: 22:05

Yeah. Are you looking at things like employee schemes as well? There's various segments out there. They need better loyalty from their workers. So have you kind of thought about that or at the moment you're just purely going after the loyalty marketplace?

Matt: 22:19

Yeah, so it's a blessing and a curse that this is just a massive market, that there is no cap on it. It's just such a large market for us to go after. And I think it's almost like saying, they were asking each other, like, what's your biggest weakness? It's like, I work too hard, right? It's like, well, what's the biggest concern? It's that you want to stay focused, but there's so many things to do. There's a number of different categories within loyalty and membership with brands and their end consumers customer. But one area that we've definitely talked about quite a bit has been exactly what you're saying, employees. There is a very large company that wants to use this for their end customers that we're in talks with, but it's going to start with their employees. And everybody can tell you on LinkedIn that they were the third employee at Facebook, but what if we can validate that and then give you benefits on a monthly basis based on performance or a number of things. Or when I worked at this one company, we used one of those perk businesses that gave us 20% off the gym membership and all these different things. Like why can't that all be done through this internally? And so there's a number of ways for it to be really interesting. I think right now certain areas that we're most focused on are things like we have a few really strong integrations with different platforms and so want to lean in there. But things like apparel and food and bev or chain restaurants and coffee shops, beauty, categories where there is just like a ton of inherent fandom or loyalty or just like crazed users or businesses where there's is like maybe a more competitive market that has low barrier to entry and a lot of velocity of purchasing or just value. And then there are some other interesting businesses that are already built around membership that this can enhance as well.

Dave: 24:00

As you say, I mean, it's an embarrassment of riches in terms of the opportunity. So if brands and the world has to look at, you know, how it helps its consumers or the people involved with it earn that data and that trust around data, I mean, it's a sort of fundamental change. You know, again, this is part of what excites us about the opportunities of the Web3 marketplace is it's really tipping the dynamic away from the command and control of the old world into something which is a much more consumer-driven thing. For me, this has been brilliant.

Matt: 24:35

We would like to build this solution for, Hey, we don't show up on any brand's website. We're all on the back end. Like we want the brand to be able to provide something to their consumers where they're not sending them to somebody else's app or obstructing the experience. And so the idea is like at some point or some scale, we're basically this fabric that sits between brands and their consumers that no matter where your users go in the future, that brand can always be there with them, enabling them to earn and be rewarded in every facet of life. And at this point, you know, it's almost like a cookie only that can the consumer has now opted into it because there's value to being a part of the system.

Suresh: 25:10

Amazing. Matt, thank you so much. This has been an incredible chat. It was sort of an accidental podcast for you. So I really appreciate, you know, jumping into the bandwagon, the Web3 podcast bandwagon, having a bit of a chat. I mean, bringing your passion to this game. Congratulations on launching Hang. Congratulations on your Series A. Congrats on all these brands calling you, wanting to partner with you. And the route that you're taking is just amazing. We are glad that we got a ringside view, Dave and I. Definitely, if there's anything that we can do to support, you know, development of this ecosystem to give us a shout. I'm sure we'll get some calls from our listeners who are CMOs and senior marketers in the Web3 Marketing Association. Thanks, Matt. Thanks again for joining us.

Matt: 25:54

Yeah, thank you so much. I think it's probably the first of many conversations. And yeah, for anyone who's listening, you know, feel free to email me matt.hang.xyz or just check us out at hang.xyz as well. Cheers, Matt.

Dave: 26:06

Thank you so much.

Speaker 02: 26:11

You have been listening to W3MA, an NMD Plus production.