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    Empire

    Pudgy Penguins Path to Legacy Brand & IP Powerhouse | Luca Netz

    Tue Jul 18 2023
    NFTsPudgy PenguinsLicensingMonetizationLegacy Business

    Description

    This episode covers the journey of Pudgy Penguins, from its acquisition to its new business model focused on creating real products. It explores the advantages of NFTs, the importance of licensing and monetization, and the future developments in the NFT space. The revenue and team behind Pudgy Penguins are discussed, along with insights on building a legacy business and the speaker's perspective on success and financing.

    Insights

    NFTs as Real Products

    Creating real products like toys and collectibles adds flexibility and value to NFT projects, helping maintain their monetary value.

    Licensing for Sustainability

    Licensing is seen as a solution for sustaining monetary value accrual and providing utility for the community in web3 NFT projects.

    Gradual Onboarding to NFTs

    By gradually introducing people to digital collecting behaviors through physical products, familiarity with NFTs can be achieved without explicit awareness.

    Building a Legacy Business

    The goal of Pudgy Penguins is to become a legacy business, focusing on understanding culture and creating characters based on supply and demand.

    Success and Financing

    The speaker believes in achieving undeniable and impressive success, avoiding complacency caused by excessive funding.

    Chapters

    1. Introduction
    2. Acquisition and Business Model
    3. Creating Real Products and Growing the Brand
    4. NFT Advantages and Onboarding
    5. Licensing and Monetization
    6. Ownership, Licensing, and Future Developments
    7. Revenue and Team
    8. Building a Legacy Business
    9. Success, Financing, and Pudgy Penguins
    Summary
    Transcript

    Introduction

    00:00 - 06:26

    • At the bottom of my funnel is my 8,888 first edition Pudgey Penguin Ethereum NFTs.
    • It is the asset that gives you utility and access.
    • It is the asset that allows you to monetize and be a part of the growth.
    • Every product and every piece of content that we make, we actually license the NFT from the collection and make products out of that.
    • You can make monies on royalties.
    • The 60 second version is group homeless with my mom for 10 years, 14 different places, bouncing around guest bedroom, a guest bedroom, couch to couch.
    • We settled down when I was a teenager in Los Angeles, went to Fairfax High School, went to a couple different high schools.
    • I got a job packing boxes at Ritten Doorbell's first office in Santa Monica.
    • I started my first direct-to-consumer business when I was 18, sold that business for quite a bit of money when I was 19.
    • Notable big wins include being the CMO Von Dutch and biggest investor at the time for Gel Blaster, North America's fastest growing toy company.
    • I came into Pudgy Penguins when it felt kind of dead in the waters as a project and bought them for two and a half million bucks because I believed in NFTs and digital collectibles.

    Acquisition and Business Model

    06:10 - 12:14

    • The business had $7 million net profit in six months after buying it for $2.5 million.
    • Pudgy Penguins had a die-hard and affluent community, making it a successful NFT project.
    • People bought Pudgy Penguins because they loved the penguin and it made them feel something.
    • Pudgy Penguins had historical significance and received significant media coverage, adding to its value.
    • The business was acquired with personal funds from the majority owner and other members of the sea level team.
    • For the first nine months, nobody on the sea level team was getting paid but still worked for free to build the brand.
    • The previous business model of Pudgies was focused on creating hype, minting collections, and relying on royalties for revenue.
    • The new business model aims to make real money in the real world and control their own destiny.

    Creating Real Products and Growing the Brand

    11:51 - 18:30

    • To be a good entrepreneur, you need to control your own destiny and not rely on outside variables.
    • Royalties are not the core revenue driver in the NFT space.
    • Creating real products like toys and collectibles adds flexibility and a safety net for collectors.
    • Diluting supply has been a major issue in the NFT space, affecting value.
    • Selling physical toys helps maintain the value of digital collectibles by avoiding endless minting.
    • Selling toys also creates more emotional attachment and awareness for the brand.
    • The goal is to become self-sustaining, control destiny, and create products that people love without high prices.
    • The focus is on growing the top of the funnel by creating content that people love and expanding familiarity with the brand.

    NFT Advantages and Onboarding

    18:11 - 24:19

    • First edition NFTs have advantages over traditional collectibles like Pokemon cards, including authenticity, rarity, and ease of buying and selling.
    • Penguins are popular and cute, making them a good choice for branding.
    • The top of the funnel for building a brand is through touch points such as views, impressions, and followers.
    • The goal is to create a character that people love and resonate with, regardless of the crypto or blockchain narrative behind it.
    • A toy brand can onboard people into the world of NFTs by selling toys with QR codes that lead to creating a blockchain wallet and receiving free NFTs.
    • By gradually introducing people to digital collecting behaviors, they become familiar with NFTs without even realizing it.

    Licensing and Monetization

    23:52 - 29:56

    • The character on the screen is an NFT owned by one of the holders, who receives a royalty when the toy is sold.
    • The goal is to bring NFT technology to people through consumer products like toys with blockchain wallets.
    • The company focuses on IP brand building and monetizes in various ways.
    • Licensing is seen as the ultimate solution for web3 NFT projects to sustain monetary value accrual and provide utility for the community.
    • Ownership is considered as monetization, and licensing agreements are being explored to define what can be done with the characters.

    Ownership, Licensing, and Future Developments

    29:33 - 36:02

    • Ownership is about monetization and protecting the brand.
    • There is a $500,000 cap on licensing deals to prevent big brands from circumventing the agreement.
    • License extensions have been granted to genuine community members who want to make more money using the IP.
    • A complete free-for-all can be risky and boundaries are necessary for a healthy society.
    • Carbon is a decentralized exchange that enables concentrated liquidity with custom on-chain limit orders and ranges.
    • Synthetics v3 allows any protocol to tap into synthetics liquidity for derivatives markets.
    • The Perps product has seen great traction with $500 million in daily volume.
    • Synthetics is becoming the modular liquidity layer for DeFi derivatives with new partners joining in.
    • $1 million was made from the toy drop launch of plushies, collectibles, mystery igloos, etc.
    • The business was bought for $2.5 million in April 2022 and revenue is expected to reach $6.5-7 million this year.

    Revenue and Team

    35:37 - 41:55

    • The company is on track to generate six and a half to seven million in revenue this year, with half of it coming from physical products.
    • The team is assembled with the best people the speaker has worked with in the past, including a chief creative officer who has had multiple nine-figure wins.
    • There are only five NFT projects worth investing in, including CryptoPunks and D-Gods.
    • Frank from D-Gods is highly respected for his critical thinking, execution, innovation, and design skills.
    • The speaker attended an event where many people were wearing D-Gods shirts.

    Building a Legacy Business

    41:27 - 47:20

    • Frank is a hyper elite marketer and brand guy with an impressive eye for design.
    • Experience and resume don't matter in the web three space, it's about understanding culture.
    • Minting new characters and introducing new stories should be based on supply and demand.
    • Project Overpass solves the problem of licensing at scale on chain in web three.
    • The announcement in quarter four will be one of the most meaningful in NFT history.
    • Pudgy Penguins has a big announcement coming that will validate their strategy.
    • The future holds exciting developments for the next six months.

    Success, Financing, and Pudgy Penguins

    46:52 - 50:36

    • The speaker believes that when he achieves success, it will be undeniable and impressive.
    • He is not interested in raising money just for the sake of it or to stroke his ego.
    • He thinks that being a little uncomfortable and hungry is necessary to succeed.
    • Some projects fail because they have too much money and become complacent.
    • The goal is to take the business all the way through as a legacy business, but there may be opportunities for more financing if needed.
    • To buy Pudgy Penguins, you need to pick one that resonates with you.
    • There is a science behind what makes a good PFP (profile picture).
    • No other important information was missed in the interview.
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