Is Soho Connect the future of Soho House?

The following strategy analysis & recommendation serves solely and exclusively for the purposes of initial exploration, serving as a basis for further potential discourse and doing so from an “outside-in” perspective, or in other words: without the full internal context and strategic direction already set out by Soho House.

If 2021 marked the celebration of Soho House’s storied first quarter-century of history with an IPO on the NYSE, 2022 will mark the beginning of Soho House’s next phase, representing a test to the brand’s long-term staying power, but also an opportunity to supercharge growth. At the risk of hyperbole, driven by both its own internal strategy and new entrants in the digital space, the brand faces a critical point in its history, risking a loss of its pulse on the zeitgeist and diminishment as the go-to community for the creative class.

To be clear, the danger is unlikely that Soho House will face sudden unforeseen and significant increases in churn with (most) consumers replacing their Soho House memberships with competitors’ offerings or exiting the membership club addressable market all together. Though past performance is no indication of future performance, strong annual retention rates are around ~92% (2020), and nearly 60,000 people are waitlisted (2020). This, despite the adverse effect of the pandemic, suggests that short of a massive exogenous windfall, there is still significant consumer interest in Soho House for years to come, particularly given growth in new cities such as Austin and Paris. Instead, the risk to Soho House would materialize much less dramatically and over a much longer time horizon to sneak up on the organization: erosion of cultural capital & relevancy. Soho House survives and perhaps even thrives but stops becoming the default and pre-eminent destination & platform of cultural exchange amongst the creative class. After all, WeWork is still around. The future would likely entail a pivot and transformation into a collective of gorgeous, well-design facilities albeit substantively hollow locales — a members-only NoMad Hotel + WeWork of sorts: for luxurious workspaces and relaxing destinations, rather than the go-to hub of cultural exchange designed for ubiquity and collaboration amongst the creative elite. To be sure, there is still incredible value and demand for Soho House as a collection of well-design locations, as evidenced by the aforementioned long waitlist, but to permanently pivot into such is a shift in strategy that could risk the long-term reputation of Soho House. This risk is particularly pronounced given the context of a new digital frontier, where pockets of community are instantaneously developed, formed, and scaled from the bottom-up.

Nick Jones, CEO of Soho House, emphasized in the NYSE filing prospectus, “much of the success of Soho House has been down to our ability to respond and adapt to shifting lifestyle trends as well as to the needs of our progressive and forward-thinking membership base.” Leadership is committed to this vision as it sits at a crossroads to evolve. This whitepaper will argue that to stay true to this commitment, Soho House needs to embrace its plans for a digital-native membership not merely as an extension of the current offline experience but a fundamental rethinking of the Soho House experience & engagement model. This can represent a return to the original ethos of being THE place where artists, musicians, designers, actors, directors can mingle, mesh, and mix ideas. The subsequent sections will then (1) trace the roots of the potential external threats & internal challenges — measuring their significance & magnitude; and (2) propose a radical reframing of the Soho House digital-first experience to supercharge its next era of growth.

The internal challenges: can an exclusive community scale?

To understand the context of this whitepaper situation, one must first understand the historical growth of Soho House. While it is beyond the scope of this discussion to underline the full details of its’ impressive trajectory, it can all be summed up in one word: exceptional. Undoubtedly, Soho House has experienced incredible growth over the last 25 years — growing from its’ first house on Greek Street to a global brand of 27 houses across ten countries with more on the horizon. In addition, the group has expanded into new verticals such as home products via Soho Home and co-working spaces via Soho Works. Since 2016, memberships have grown at 16% CAGR (2016–2020) and membership revenues 24% CAGR (2016–2020).

However, there is always a cost to explosive growth and popularity. For some companies, it is the sudden loss of a lean, flexible organizational structure. For others, it comes at the cost of reasonable product offering pricing. In Soho House’s case, this exact 16% CAGR in members has hampered its ability to maintain a tight, intimate, and networked community of creative elite. Reporting on the company’s IPO, The New York Times posed the question best, “Can Exclusivity Scale?

This trade-off can best be explained by the underlying economics of Soho House, of which the author draws extensively from the musings of David Litwak. Summarized here: as the group continued to scale, the initial connection and community became less and less intimate with each incremental member. This is, of course, a natural progression of growth — but not one that was entirely inevitable.

At least from an outside-in perspective, rather than employing strategies (such as creating sub-communities, for example) to retain the community intimacy, the company seemed to doubled down on its inarguably beautiful locales and world-class facilities. To be clear, there is still a significant draw in the events, talks, and parties held at Soho House. Still, it became secondary: the value proposition of Soho House shifted, becoming less about being a place of community with proximity to cultural thought leaders and industry titans in media, entertainment, and arts to more of a “facilities-based bundle” as described by David Litwak. However, as any network- / community-based enterprise will tell you, it is all about the people in the same way that one would argue that the value of Instagram, TikTok, or any other social media is not in its’ UXUI, or arguably even its’ algorithm, but in the underlying network of members and creators. This is no more evident than the fact that both Instagram and TikTok’s 2021/2022 roadmaps consist of predominantly creator-oriented strategies (i.e., Mark Zuckerberg announced the company would be paying $1B to creators through 2022). Where the spheres of influence are, people will follow.

Subsequently, the “facilities” strategy then manufactures a dynamic of a metaphorical race to provide new value to members by adding even more locations globally, which further emphasizes the need for more locations to maintain the value proposition. The problem is that the incremental value proposition of physical spaces is not scalable and increases fixed costs. In fairness, Soho House aims to control this by leveraging the strength of Soho House’s brand and design to negotiate favorable leases and increase tenant improvement allowances and often receiving in-bounds from landlords / developers to install Soho Houses on properties — reported to have reduced costs by around 50–65% from $10M previously to $3–6M. Nonetheless, the systemic issue of the model stands, creating a problem that can only be solved by the following tactics, each equally met with unique challenges:

1. Adding more members: Yes, Soho House can add more members (and it certainly has already, adding more than 50K new members from 2016–2020), but this further exacerbates the issues of community erosion. “Every extra member that adds economies of scale reduces the economies of community,” David Litwak expounds. To Soho House’s credit, they are experimenting with tiered access in adding members like Soho Friends — which can keep the sanctity of the Local House or Every House community experience. However, this is not only met with limitations in community building but also does not as readily cover the fixed costs issue, given Soho Friends’ membership fees are significantly less than that of traditional memberships.

2. Increasing membership fees: If Soho House can’t increase quantity, they perhaps can increase the price by making membership fees more expensive. The firm has already done this, but primarily to combat inflation, possibly understanding the real dangers of price hikes. This danger is that (a) they risk existing customers churning, particularly given the landscape has much fiercer competition than when Soho House first started. And (b) there is also a risk of pricing out potential future customers, much of which could be up-and-coming artists that are the exact demographic that Soho House needs to bolster its’ community. It is akin to how Brooklyn, New York, was once home to leading artists, but perpetual co-opting and gentrification pushed out the very people that made it “cool.”

3. Expand into new verticals: Soho Home and Soho Works (to a lesser extent) are extensions of the membership-driven core. While commendable, these lines of business, at 20%, only take up a portion of revenue. Further, many of these new verticals (except for Soho Home and Soho Home Design) are still oriented around physical spaces. Scorpios, Soho Works, and standalone restaurants still leverage a capital-intensive fixed costs approach, albeit without the expansion of the core Soho House community. Therefore, expansion into new verticals, particularly ones that can scale quickly and profitably, will be the strategic imperative moving forward.

The situation is exacerbated because Soho House reportedly had a net debt of $600M preceding the IPO, which raised $420M, $223M of which was planned for debt service. Moreover, despite its’ tremendous brand recognition and acclaim, Soho House has failed to turn a profit to achieve profitability in 2022. Under the current logic and strategy, these financials further underscore an even more accelerated expansion and need to employ one, both, or all three of the tactics laid out above.

The external threat: who challenges the future of Soho House?

Being the envy of the Members Club world, Soho House faces direct and indirect competition from a plethora (including Neuehouse, Norn, the Well, the Wing — to name a few) from those looking to replicate its’ success. None, however, have been positioned as the “next Soho House” outside of a buzzy Discord chat that has quickly sprung up as the internet and web3’s most exciting new community. What started an “informal crypto social club” in Discord, Friends with Benefits ($FWB), has skyrocketed in popularity and acclaim since its 2020 inception. The group now has over 6,000 members (token holders), most of whom are not even crypto-natives but creatives, including notable artists Erykah Badu and Azealia Banks. It is also garnering interest from leading global brands such as Reebok, Hennessey, etc. And as of last year, it had amassed $10M in fundraising at $100M valuation from leading investors: a16z, Spark Capital, and Pace Capital — despite only being a “minimum viable product” — a show of how bullish the investors are in the group’s potential.

Friends with Benefits landing page heralds itself as a group of “cultural creators”

Most critically, FWB is blazing forward and staking its claim as the future of community for the creative class (at the intersection of crypto and creative) and pioneering as the poster child of community-based governance. The comparisons as the next evolution of Soho House are endless, but perhaps none more notably & poignantly than from the New York Times, who analogizes that “Friends with Benefits is the ‘decentralized Soho House’ (further explained below) and a VIP lounge for the crypto creative class.”

As of this writing, the group has banded together to launch an app for “token-gating” in-person events (enabling entry only if the sufficient token holding requirements are met), which was debuted in Paris kicking off a crypto conference, an NFT gallery, an editorial focused on the intersection of the creative arts and crypto, investing in its first physical product a yerba maté drink, and hosted numerous meetups globally, including an event that featured DJ sets by Caroline Polachek, Doss, Pussy Riot, Channel Tres, Physical Therapy, and more.

The group is also already scaling quickly enough, despite its ~$4000 USD entry price tag (at time of writing) and application process, to form independent “neighborhoods” within the FWB “city,” sub-groups that cover different areas of interest — from fashion manufacturing to the metaverse — adding to the community’s dynamism.

Why has FWB taken off?

To understand the thesis behind FWB and why it works, it is imperative to understand why it is called the “Decentralized Soho House”: FWB operates as a decentralized autonomous organization or DAO. DAOs are digital-native collectives that leverage a flat, non-hierarchical structure and use cryptocurrencies to share resources and build products & services — working together for a collective vision. Importantly, all members of a DAO have incentives aligned as they hold tokens (in this instance, $FWB) and act as stakeholders towards a common goal, which in turn grows the community and makes the token more valuable. Tokens can be bought and sold on the open market through marketplaces such as OpenSea.

To gain an appreciation of the power behind these internet-based global memberships, Chris Dixon, a prominent internet entrepreneur, and partner at Andreessen Horowitz, compared it to Venice, stating that while it did not have the most groundbreaking inventions, it had created “a radically elevated merchant class with ownership and representation in government, which enabled them to assemble the best of the world’s resources. New ideas, concepts, and inventions could be combined, organized, scaled, and sometimes even reinvented in Venice.”

In the case of FWB, it has utilized the DAO structure to spark interest and curiosity amongst some of the most exciting creatives and thought-leaders alive today to drive the “lightning-in-the-bottle” exclusivity that Soho House commands in the physical world. One only need to refer to this exchange, as written in CoinDesk, a notable crypto & web3 publication, to get a sense of what it means to rub shoulders with the best and the brightest:

[One widely respected crypto researcher] remembers an incredulous friend telling him, “This is ridiculous … You’re asking me to join Soho House [the exclusive social club], and it costs as much as joining Soho House, but there is no house.”

“That’s accurate,” [he] told his friend. But then he had a comeback. “Chris Dixon isn’t hanging out in Soho House … If you want to hang out with Chris Dixon [prominent internet entrepreneur and partner at Andreessen Horowitz], he’s in a freaking Discord server.”

And FWB members work tirelessly to ensure that the right “vibe” is maintained. In an interview, Alex Zhang, Mayor of FWB, states that he is invested in understanding “what makes a scene a scene?”, seeking to ascertain typical cultural textures in the formation and death of a cultural hub.

Put the two factors together — incentive alignment and a hungry, curious and talented userbase — you have the secret sauce for FWB: Not only leveraging a DAO structure to align its members’ incentives, but also to garner membership from the most influential people in crypto, and more importantly, creatives today — bound together by a token and a desire to create “the next big thing.” This sense of opportunity to be part of something groundbreaking with notables further creates demand to be in the “in-crowd.” Having one without the other could doom the project to only unrealized potential. Align incentives without the quality of members, and you have just any other DAO (and there are hundreds of them, all of which are doing inspiring things — but for this discussion, not at the level of cultural influence as FWB). Assemble the best creative minds (as Soho House has done) without incentive alignment, not only will you miss out on the collective spirit of collaboration, but also risk extraction and churn.

In addition to staking a claim as the next iteration of members’ clubs within digital and web3, FWB is also “backward integrating,” using their network and brand to build a physical presence: FWB Cities — aiming to bring real-world benefits to members, bringing it in more direct competition with traditional social members clubs like Soho House. Today, the group has branches in Los Angeles, New York, and London, with ambitious plans for further growth.

What does this mean for Soho House?

As evidenced, FWB is already gaining significant interest. While it is likely very early days for users to churn off Soho House for FWB, the cultural significance and novelty of the model cannot be understated. Given this, Soho House should view this with the following takeaways:

1. Dynamism as a Defense Strategy: In contrast to Soho House’s evolution towards facilities-driven, there is a passionate community-driven attachment towards FWB, which is arguably a much stronger defensive strategic moat.

2. Members are Owners: It represents a more “member-oriented” approach than Soho House’s existing models with the ability to provide a voice through the voting mechanism and a stake in its’ growth through token ownership, the appeal to users is not only undeniable but in juxtaposition also puts into question Soho House’s Member First ethos.

3. Be Ground Zero for Creativity: If one believes that crypto is the future of the arts & entertainment industry (and the explosive growth and unbelievable payouts of NFTs alone can make that case), then FWB could be the “port city” and home of web3’s burgeoning creative class and relegate Soho House to not be the hub of cultural exchange that it strives to be.

4. Fast to Market, Faster to Scale: While bottoms-up governance is challenging to coordinate offline, digital (& crypto-based) use-cases unlock flexibility & speed. It also enables the ability to scale quickly and cheaply.

The current strategy: Soho Connect

How best should Soho House respond to the challenges of:

1. Debt servicing through scaling without significant increases in fixed costs

2. Prioritization of facilities over community, and potential adverse effects on the Soho House brand as the cultivator of creative culture

3. New digital attacker that upends the membership club model with a fierce following and aligned incentives

With its’ intention to launch a digital-only membership known as Soho Connect, Soho House seems keenly aware that developing a digital-first membership allows it to scale without increasing its fixed costs — problem #1 seemingly solved, assuming there is a value proposition unique enough to pique new member interest.

Based on the listing prospectus, the strategy seems to be pursuing a digital membership that “[allows] likeminded individuals to connect, communicate and collaborate, in a purely digital space through the SH.APP. [Making] our membership truly diverse and [enabling] the best creatives from all over the world to make meaningful connections with each other”.

This ethos is spot-on, and this whitepaper further adds that it cannot merely mirror the offline, physical experience — where, as established, the value proposition is driven in part, if not primarily, by facilities & amenities. Online, however, the same value proposition cannot hold and should focus on being a hub to “connect, communicate and collaborate” with leading creative minds. Again, Soho House is already on the mark here by returning to an ethos of connection — a quick look at the Soho Connect landing page has the tagline: “Connect with members who share your interests. Send DMs, host a discussion in a small room or join a wider conversation in a big room”.

Unfortunately, this model is likely to face significant challenges — a lookback at Clubhouse

Granting that the author has no insider knowledge regarding the details of the app and based solely on the siloed description above, this functionality alone, while has the right “spirit,” is not strong enough of a value proposition to survive on its own — meaning problems #2 and #3 are left unchecked. The description for Soho Connect is akin to that of Clubhouse’s: “Clubhouse is a new type of social network based on voice — where people around the world come together to talk, listen and learn from each other in real-time.” Even the user interfaces look similar!

Left: Soho Connect UI; Right: Clubhouse App UI

Clubhouse, of course, is the famed social voice app that launched & came into vogue with unexpected aplomb in March 2020 by featuring some of the most influential minds on the planet, such as Bill Gates and Elon Musk, and is gated by an invite-only entry. Unfortunately, its’ popularity fell just as quickly as it came, and it is crucial to understand why. For the purposes of this discussion, only the reasons relevant for comparison with Soho Connect are included (i.e., having no revenue stream is irrelevant for Soho Connect).

1. Right Place, Right Time: First, Clubhouse was a case of “right place, right time.” Very much a function of the social climate of 2020 — that climate being a global pandemic leading to most sheltering-at-home with a lack of in-person interaction. This was the perfect petri dish for Clubhouse to launch. However, once restrictions began to loosen globally, interest in the service dropped significantly, with an almost 90% decline in April 2021 vs. only 2-months prior (based on downloads). Soho Connect would be launching in a post-COVID world where it might not see even close to the same interest levels.

2. Competing with Giants: Looking back, Clubhouse is a prime example of launching as a “feature, not a product.” Without a defensive moat, their innovative new social medium was implemented within much more popular platforms of Big Tech, such as Twitter, LinkedIn, Spotify, where integration for audio-based virtual conference rooms felt much more natural since discourse already occurred on those social media platforms. Notably, Twitter Spaces has been well-received and has now been the de facto social audio platform. Furthermore, the speed at which they could provide new updates and functionality, such as an Android launch (for now, it appears that Soho Connect is also iOS only) or the ability to record a chat, lagged the expedient development cycles of the tech giants. Therefore, not only would Soho House be entering an already crowded market with comparable functionality, but it would also compete with incumbent tech giants with an established userbase. Taken a step further, even if Soho Connect struck gold with a new digital social interaction paradigm, it is not unreasonable to argue that Meta, Twitter, LinkedIn, Amazon, Spotify, Discord, and others could replicate functionality as they have so often done so (see: Instagram Stories vs. Snap Stories) as Soho House struggles to keep development pace, much like Clubhouse.

A Twitter poll highlighting likely platform switch to Twitter Spaces conducted in March 2021.

3. User Churn & Content Moderation: Clubhouse leveraged an invite-only system. In the beginning, this was great but also highlighted the vulnerability of the userbase. The luster of having Elon and Bill Gates drive rich discussions had to inevitably end because, unlike a Tweet, genuinely hosting a discussion room takes actual time away from these very busy people. Subsequently, the most exciting users churned or went inactive because nothing tied them to Clubhouse. What followed was the rush of the masses, hoping to get on this hot new social platform “people figured out ways to get on. They were exchanging invites, creating public spreadsheets of invites”, co-founder Paul Davison recalls. One early adopter laments that the crowd that followed did not have anything substantive to add, with many fake gurus and spammers using it to promote their own brands rather than having genuine discussions, “’ Influencers,’ who love nothing more than themselves, seemed to be in control. And there was no real way to meet interesting people”. With an independent application process, Soho Connect is unlikely to have this problem of the same magnitude. Still, the company needs to carefully re-consider its’ current strategy of automatically porting all its’ current Local House & Every House members over — which could over bloat the app — especially considering those that find may derive more of their membership value from enjoying the Soho House facilities vs. community. Instead, it may be beneficial only to add those who genuinely seek to contribute to the platform, which can be screened for via a supplemental application. If it were to include all current members, it should, at a minimum, utilize a phased approach to support test-and-learn to adapt the platform to users’ needs.

4. Building for “Anti-Interaction”: Even at the platform’s inception, it was a great way to meet people, but once these like-minded individuals connected, there was nothing preventing disintermediation. Disintermediation is the classic user interaction dilemma that Airbnb and Tinder (or Bumble, Hinge, or any other dating app) contend with. Given the diverse network heterogeneity of Airbnb (users often use it to book across different cities) or the frequency of dating apps (users often cycle through dates quickly and reappear on the platform), they can counteract these naturally. However, Clubhouse acted only as a great “ground floor” for meeting people before they would then interact via Whatsapp, Twitter, Discord, etc. It is not unlikely that the same interaction pattern could manifest for Soho Connect, meaning that MAUs / DAUs would be spike in the beginning and drop off once users felt sufficient industry or interest-based connections were established.

As shown, strictly following in Clubhouse’s footsteps is problematic. In fact, Zhang refers to Clubhouse in his interview with On the Ledger as a precautionary tale, “as soon as [Clubhouse] popularized, users, whom were without a stake or a voice, left the platform.” Of course, Clubhouse was operating without the brand cache that Soho House would have to its’ advantage. Still, one would have to imagine that similar challenges could arise. Soho House can instead learn from the failures of Clubhouse and the current success of FWB to build an exciting new network to be the cultural hub of tomorrow’s digital creatives.

What could be: Soho Connect 2.0?

Given the potential challenges with the planned iteration of Soho Connect, how might Soho House enhance its strategic approach to cement its place as the hub of creative activity while also addressing an up-and-coming digital attacker? In doing so, Soho House needs to drive strong membership demand, ensure user stickiness and justify the value proposition for premium membership dues.

Introducing Soho Studio. Admittedly, the name could use some workshopping and assistance from a copywriter. Nonetheless, Soho Studio captures the spirit of collaborative creative experimentation and open dialogue, driving towards a forward-thinking possibility together.

Soho Studio starts at the heart of Soho House: Members. It empowers them to not only be passive participants but members in the truest sense of the word: with ownership and voice. To execute this, Soho Studio would need to be structured as a decentralized autonomous organization and issue a community token (let’s call it $SOHO) — all secured on the blockchain. Let’s review why this would be advantageous:

1. Soho Studio is Proactive: launching via a DAO structure and unlocking the bottoms-up governance that is truly “by members, for members.” Soho House can directly answer the challenge FWB poses because surely no one should be the “next Soho House” or the “decentralized Soho House” other than Soho House.

2. Soho Studio represents Potential and is Participatory: The organization will be attractive to prospective members as it means the promise of being part of a new creative cultural movement under the Soho banner. The value proposition for members fundamentally shifts from “use Soho Connect’s platform to meet likeminded people globally” to “use Soho Studio to grow the future of Soho House, with some of the leading voices in the creative industry.” On top of that, members can reap the rewards of their engagement in $SOHO’s value appreciation.

· By attracting users through creative possibility and earning potential, Soho Studio can easily bypass typical difficulties with user acquisition (incl. high user acquisition costs) while still maintaining membership quality via applications.

· By giving members a voice and a stake in its’ success, Soho Studio helps mitigate the risk of churn that many traditional platforms face. By being empowered with stake and voice, members are more incentivized to grow the value of their stake while also raising their hands to voice any discontent instead of leaving the platform.

3. Soho Studio is Profitable: From day one, Soho Studio will be self-sustaining by achieving liquidity for developing the $SOHO token. Further, by empowering members to create new experiences and products — those could further drive value to the $SOHO token, which Soho House would have a reserve of.

The Soho Studio Experience

Members apply for the digital-only membership using an application similar to that of the Every House or Local House applications to ensure the same, if not higher, level of quality applications are accepted. The existing Soho Studio members review these applications. Once members receive their acceptances, they are asked to purchase and hold a certain number of $SOHO tokens, upon which they are accepted into the community!

From there, members can shape “the Studio” to their liking. It would not be the Soho House’s role to set a “top-down” vision, though as token holders, Soho House representatives would undoubtedly have a powerful voice. Ultimately, the specifics of what the group “does” are almost secondary from the ability to voice and create collaboratively — reducing “corporate planning” as much as possible. Certain guardrails and brand protections would need to be developed to insulate the core Soho House brand. These guardrails would need to be further explored, set as guiding frameworks for the team to build an ecosystem around.

Members would set the agenda and direction of Soho Studio while also identifying key leaders that emerge through participation. Soho House would provide frameworks such as voting structures, onboarding, education, providing tooling and resources (I.e., offering physical spaces for informal in-person meetups), and ensuring the ecosystem is vibrant. The role of Soho House in this new paradigm becomes less service provider-customer relationship as opposed to a mayoral-citizen relationship where the group’s job is to enable the citizens’ ability to contribute to that economy. Any work they do to improve the “economy” will then be reflected in the value of the underlying $SOHO token. The membership would act as a laboratory to incubate new ideas within the Soho ecosystem, much like FWB has done — creating apps, newsletters, and developing IRL products.

Further, by being the ground zero for such vibrant co-creation, members meet and develop genuine connections / friendships that can flourish into valuable relationships for further creative exploration. Such was the case with David Greenstein, an FWB member, who met his co-founder in FWB last year. The pair has since created, a buzzy music start-up focused on helping artists create NFTs and raised $5M. It’s a win-win model where the rising tide lifts all boats.

Competitors are already eyeing up web3 as the next frontier — Soho House can leapfrog

At this junction, perhaps you wonder if this is all too new and untested for a traditional company. While certainly pushing the bounds of “traditional” norms, other members clubs are beginning to embrace web3 with open arms. Albright Collective, the women’s only members club, welcomes this new paradigm by launching AllBright Meta, which creates an ecosystem for women in the metaverse. First, they launched a virtual club in Decentraland, a shared, decentralized virtual world, where users can interact, play games, exchange goods. In addition, they are also minting 10,000 NFTs that members can purchase on Rarible. The group also aims for this group to be an industry-group that helps with female representation in web3, which has historically been low (16% of NFT artists and 4% of NFT sales globally) — this community will both be digital and offline with promises of future benefits for NFT holders. Therefore, while not operating as a DAO, AllBright illustrates that the web3 frontier is a strategic imperative and essential battleground. Soho House now has an opportunity to leapfrog its developments.

Entity Spin-out to Soho Studio NewCo

One possible solution — arguably the most elegant execution of Soho Studio, given that Soho House will be, in essence, distributing the stock of the digital offering, would be to spin out the business unit as a separate entity. In return, Soho House would receive additional value capture in 2 tranches; the below is illustrative:

1. Licensing fee from Soho Studio: given that it originated from the Soho House brand, it would stand that they could command a conservative 10% licensing fee of membership revenues. I.e., members would pay a cryptocurrency or USD for $SOHO, of which 10% would be remitted back to Soho House.

2. $SOHO token distribution: Assuming a 15% pre-issuance allocation of token to Soho House, this would mean that Soho House would hold 15% of the coins in the max supply. The token appreciation of $SOHO would primarily drive earnings.

Please note: this is not the only way to execute Soho Studio, but a clean and simple implementation that creates long-term value for all parties involved. This is especially true given that Soho House is now a publicly listed company via MCG.

Admittedly, the author is by no means an expert on DAO tax and regulatory compliance, or tokenomics, particularly in the context of listed companies — so further work will need to be done to evaluate the feasibility. Nonetheless, this whitepaper intends to start a robust discussion on what could be an exciting future for Soho House as it responds to the strategic imperatives for economically viable scaling in the face of debt, return to its’ ethos of community / member-first, and to respond to agile digital attackers. This author hopes that this work continues to be debated, remixed, and built upon with readers — because we could be on the cusp of something big, and I can’t wait to see what’s next.



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Matt Cheung

Matt Cheung

🤙 really just spitballing here • an eclectic assembly • Dark Horse Comics • formerly BCG | LSE | USC