The Pudgy Penguins Comeback Story with Luca Netz

Today on the show we're joined by Luca Netz, the new owner of Pudgy Penguins. Luca walks us through his story of how he got here, from a less than ideal childhood, to a full blown NFT empire. In addition to a massive new deal with Walmart, he also lays out the case for why he thinks the bright future for Pudgy Penguins has only just begun. ------ ❎ Visit dydx.exchange to learn about dYdX Chain https://dydx.zone/3SfJTP7 ------ 🎧 Listen On Your Favorite Podcast Player: https://bankless.cc/Podcast ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 💸 CRYPTO TAX CALCULATOR | USE CODE BANK30 https://bankless.cc/CTC 🦄UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap ------ TIMESTAMPS 00:00:00 Start 00:07:36 Intro To Luca 00:11:09 Building an NFT Brand 00:17:00 Deciding to Buy Pudgy Penguins 00:19:43 Earning the Money For The Purchase 00:23:35 What Did Luca Actually Buy? 00:26:03 The Masterplan 00:30:44 Post-Buy Learnings 00:38:57 First Steps Of Action 00:43:03 Licensing 00:45:46 Royalties 00:50:19 Walmart Deal 00:59:33 What's Different About Web3 01:03:54 Managing Expectations 01:09:43 Pudgy World 01:16:01 zk Sync 01:18:19 Lightning Round 01:22:59 Wen Flip Apes? ------ RESOURCES Luca Netz: https://twitter.com/LucaNetz Pudgy Penguins: https://pudgypenguins.com/ ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  The elephant in the room is people are spending tens of thousands, hundreds of thousands, billions of dollars on these things. And you have to have some empathy and respect for that. I, you know, I remember being a collector and being like, I wish you would just listen to me because I've spent a hundred grand on your shit. So listen, you know, just listen, dude. Pretending that this is your moat and you are here because of you and not because of the support of all of these people putting insane amounts of money behind you and behind the brand and behind the community is to be completely negligent of the truth. You have no other business where your core consumer, your core believer, your champion is so financially invested.

• 0:42Speaker 00

  Nothing else exists like that.

• 0:47Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is Ryan Sean Adams. I'm here with David Hoffman and we're here to help you become more bankless. Guys, we have Luca Nets. He's the founder. Actually, I shouldn't say the founder, David. He is the recent acquire of pudgy penguins IP. And this is an NFT. If you've not seen it of a punch, literally a penguin. It's like this cute little cartoon. Yeah, of a pudgy puggy penguin. And it has like absolutely rocketed up to number three on the top NFT list. And this is kind of like, I don't know, bringing something back from the dead, from the brink type of story. And I was pretty blown away by Luca's description of how he executed this and why and his vision.

• 1:31Ryan Sean Adams?

  I didn't expect to be this interested in an NFT story as we're getting this episode. But David, you scheduled it and I understand you were a former pudgy owner, not current pudgy owner, sadly. Well, I was never one. So I just like, I have no losses here, no wins here. But yeah, what's kind of the context that bankless audience should know going to this episode?

• 1:53David Hoffman?

  Yeah, I think Luca has really carved a path forward, not just for Pudgies, because he did that, but just for the entire NFT industry. A lot of promises were made by NFTs, the industry in 2021. Most of those promises were not held, but then in comes Luca, who acquired Pudgy Penguins in the middle of 2022, and really steered the ship straight for what Pudgy Penguins could become, and I think has carved a path forward for many other NFTs to follow. And so, who is Luca? Why did he have so much conviction in his ability to execute here? What was his plan for Pudgies? How did it change after he met the Pudgy community? What is his plan now? Pudgy plushies are in stores.

• 2:38David Hoffman?

  There's a physical stuffed animals being sold in Walmart and on Amazon, and they connect to a blockchain, to a ZK sync layer two called Pudgy World, that if you buy a plushie, you automatically have on-chain assets to play with. What is Luca up to? And what is he pioneering for the whole entire NFT Web3 industry? Guy is a man with a plan, and he definitely articulated that here on the episode today.

• 3:09Ryan Sean Adams?

  Yeah, absolutely. And I think if you're looking at how a brand, a digital brand can execute in the Web3 world, this is like a perfect case study for that as well. We have no disclosures. Neither David or myself hold any Pudgy Penguins.

• 3:22David Hoffman?

  I fumbled with some Pudgy Penguins.

• 3:26Ryan Sean Adams?

  When did you sell them, David? Did you sell them during the bear?

• 3:28David Hoffman?

  Literally, I think it was like one week before Luca acquired it, and it went from like one ETH floor at the very bottom to like a three ETH floor like that. And I was like, oh, great, that was the bottom.

• 3:38Ryan Sean Adams?

  Well, I'm sorry for your loss, David, but you know, you can still buy a Penguin, it's just a little more expensive this time.

• 3:44David Hoffman?

  It would be 18 times the price I sold it at.

• 3:46Ryan Sean Adams?

  All right, but before we get into the episode, a message from our friends and sponsors over at DYDX, the decentralized exchange, and also a chain. What do they want Bankless to know, David?

• 3:57David Hoffman?

  Yeah, DYDX, the Cosmos Chain. You probably knew it as DYDX V3 if you've been on Ethereum land with 37 markets, but on Cosmos Chain, DYDX V4, they're going to launch, they want to launch 500, Ryan, new assets, new markets in 2024. How are they doing this? They have this new markets widget thing, which streamlines the process for proposing a new marketplace, a new margin marketplace to the DYDX chain. And so if you have DYDX tokens, first, if you have DYDX tokens on Ethereum, get them over to DYDX and stake for USDC income from traders, but then you can also vote with, on the governance forum with your DYDX. This was how the recent Jupiter token got a market, and also how future tokens can also get markets.

• 4:41David Hoffman?

  There is a link in the show notes to getting started with all of that today.

• 4:44Ryan Sean Adams?

  Guys, we're getting right into the conversation with Luca, but before we do, we're going to thank the sponsors that made this episode possible, including our recommended crypto exchange for 2024, and actually, a place you can buy NFTs, that is Kraken. Go create an account.

• 4:58David Hoffman?

  Kraken knows crypto. Kraken's been in the crypto game for over a decade, and as one of the largest and most trusted exchanges in the industry, Kraken is on the journey with all of us to see what crypto can be. Human history is a story of progress. It's part of us, hardwired. We're designed to seek change everywhere, to improve, to strive. And if anything can be improved, why not finance? Crypto is a financial system designed with the modern world in mind. Instant, permissionless, and 24/7. It's not perfect, and nothing ever will be perfect. But crypto is a world-changing technology at a time when the world needs it the most. That's the Kraken mission, to accelerate the global adoption of cryptocurrency, so that you and the rest of the world can achieve financial freedom and inclusion.

• 5:40David Hoffman?

  Head on over to kraken.com/bankless to see what crypto can be. Not investment advice. Crypto trading involves risk of loss. Cryptocurrency services are provided to US and US territory customers by Payward Ventures. PVI, doing business as Kraken. It's everyone's favorite season in crypto, tax season. And crypto tax is always an absolute headache, especially for all you D gens out there. But it doesn't have to be a nightmare. That's where Crypto Tax Calculator comes in, the software built for D gens by D gens. As Coinbase's official global tax partner, Crypto Tax Calculator focuses on making complex transactions into easy ones, supporting over 300,000 currencies across Ethereum, Arbitrum, Optimism, as well as 1,000 other integrations as well. It's as simple as connecting your wallet, pulling in all your transactions, and following the automated suggestions to quickly and accurately calculate your tax obligations.

• 6:24David Hoffman?

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• 7:08David Hoffman?

  Toku provides practical tools to handle token grants, allowing for effective oversight of token distributions and payroll tax compliance for employees, contractors, advisors, and investors. They also handle tax withholdings through their real-time tax calculations that can be done by Toku or integrated into any payroll EOR providers in any jurisdiction. Toku is a trusted provider of Protocol Labs, DYDX Foundation, Mina Protocol, and many more. Get started for free and make token compensation simple at toku.com/bankless. Bankless Nation, I'm super excited to introduce you to Luca Nets, the leader of the Pudgies. Luca has a history of internet entrepreneurship before he acquired the Pudgy Penguins IP in mid-2022 for 2.5 million. Ever since then, Pudgies has been on an up-only tear in floor price, to say the least,

• 7:53David Hoffman?

  but also in public awareness and brand recognition. Under Luca's leadership, the project has expanded into physical products and major licensing opportunities and has carved a path forward for the NFT industry, which seems to have lost its way prior to Luca showing them the way. Luca, welcome to Bankless.

• 8:09Speaker 00

  I'm super happy to be here, David, Ryan. Thanks for having me.

• 8:13David Hoffman?

  Look, I want to start with this conversation around the promises that the NFT industry made in 2021. The 2021 bull market was really driven by NFTs and really emerged as society shifted online due to the pandemic. And perhaps also like the low interest rate phenomenon. It led to this surge in this metaverse concept. And the metaverse started to influence beyond crypto into the wider world with major companies like Facebook renaming into meta and social platforming, social platforms like Instagram and Twitter actually integrate NFTs. And this period in crypto saw a dramatic influx of new people, primarily through the PFP NFT phenomenon.

• 8:53David Hoffman?

  These types of entities, the valuations skyrocketed, fueling grandiose visions of digital realms with avatars and artifacts. And as, you know, these valuations of NFTs really hit their, their peaks, we even started to like speculate on JPGs with text because we thought that metaverses would spawn out of them. However, this bubble burst as interest rates rose and NFT prices plummeted, revealing these metaverse visions to be something closer to hallucinations. And the public of perception of NFTs has shifted from positive to overwhelmingly negative. Luca, you were in the crypto industry at this time. You were watching all of these shenanigans unfold. What did you think at the time?

• 9:34David Hoffman?

  What was your perception of the NFT industry as it developed throughout 2021 and 2022?

• 9:39Speaker 00

  I think it was pretty clear as a physical collector that this was the future. I think frustration beginning, you know, I had personal frustrations that began to fester over the course of time because I thought that so many projects were claiming to be brands and building brands at the highest level for the last six, seven years. I thought to myself, well, some of the obvious things that are necessary when you're brand building, you know, even the best of the best weren't doing. And I think that kind of led to our purchasing behavior at the time or our purchase of Pudgy Penguins at the time shortly after that run kind of coincided. Though prior to it, you know, the mechanism of digitally collecting, I think, has a slew of pros that

• 10:23Speaker 00

  physical collecting does not. There's no inauthenticity issues. There's no spoofing issues. There's no friction when buying or selling. There's no insurance when, you know, selling a product and shipping and all of the logistics that come with it. And when you look at the $440 billion collectible market, 99% of it is in physical collectibles and 1% of it is in digital collectibles. Now, we're not going to argue what that spread should be, but we know that spread should not be 99 to 1, figuring there's a slew of pros that digitally collecting has that physical collecting is not. And I think eventually that that number will shift. And so whether it's 80, 20, 70, 30, 50, 50, we don't know. But it should not be 99 to 1. And whoever's leading the charge on what it is to, you know, build a digital

• 11:05Speaker 00

  collectible brands that are predicated on this technology, I think are going to win pretty big.

• 11:09Ryan Sean Adams?

  I'm wondering if you could help us there. What does it mean to build a brand? We say, like, these NFT communities, they all said they were building a brand, but they weren't really doing it. Like, I think that people saw the success maybe of CryptoPunks and things like that, projects like this. And they didn't see a lot of, like, quote unquote, "brand building." It certainly wasn't like a Disney-level, you know, company that was just pushing a brand out there and doing, like, marketing, doing commercials, all of these things. So they just thought, "All we have to do is issue the NFTs." When you say "brand building," and you say you've got all this experience with brand building, what does that mean? What does it take to build a brand?

• 11:46Speaker 00

  I love that you said that. I think there's a couple of different facets that we'll break into. I think when you're looking at the 2021 projects, you're completely right in your notion that CryptoPunks was the North Star. Everybody was doing, you know, replicating that, up until Yuga Labs came around, and Yuga Labs really reinvented the whole model. Yuga Labs, actually, I think, with BoardApe, were the closest to building a brand out of the lot. And I think they did it really well. I don't even think "close." I think they did build a brand, and they built it in a really amazing fashion. I think everybody else kind of then used the key words that BoardApe was using to then try to solidify their place, but they were Not doing what I felt like brand building entailed. So what I think brand building entailed is,

• 12:31Speaker 00

  you know, probably a couple of facets. I think first and foremost, product expansion, right? Like, what does that look like? I think in a digital, digitally native, you know, brand, you, you can't just stay there. I think you have to kind of meet consumers where they are. And so, developing robust product lines and expanding to hearts and minds of everyday consumers outside of your current base. Marketing, I think, is really huge. Like, what brand succeeds without a really great marketing arm? If you kind of look at Board Ape's success, something that I studied really early on is actually was a masterclass in marketing. And, and that's why, you know, for us, marketing is probably top of the totem pole in terms of priorities for pudgy. You know, if people, you know, when they think penguins, if they think pudgy penguins, that alone will make us a billion dollar business. I think there's enough people that

• 13:16Speaker 00

  love penguins and enough affinity towards that animal that if that's the case, that we will win. And so, you know, storytelling, content distribution, actual community building, and not just leveraging the fact that everyone's spending money on an expensive NFT. And that's what it means to community build. That's not, there just seems to be a community because everyone's financially invested, but there's actually a community to build, be built on top of that. I think one of the beautiful things about pudgy penguins up until this point is not hyper financialized, like I think most of the other PFPs, people are their penguin, their penguin is them. And it doesn't matter if the price is 10,000 or 50,000 or a million dollars, that will remain the case. And I think that's really powerful. Messaging, positioning,

• 13:58Speaker 00

  like, you know, what is the message and the positioning of 99% of these NFT projects? You couldn't know unless you just guessed. I think if you looked at pudgy penguins, you could understand what our messaging and positioning is. We're an uplifting brand. We're a, a brand for the family. You know, one of the things that I really want to accomplish is how do you bring crypto to the family? I mean, why is no one thinking about that? That is the highest TAM of the bunch. When I think crypto right now is a bro culture for the, the either super smart nerdy bros or the cool bros and the rich bros. But if that's all we are, then we have lost and we should might as well give up now. But I think we're more than that. And pudgy penguins, I think, is helping spearhead.

• 14:36Speaker 00

  What I believe that revolution is. And so, you know, what does it mean to build a brand? Tons of things, like I said, product distribution, content distribution, branding, positioning, messaging. Uh, you know, really community building outside of just having a hyper financialized asset that, you know, naturally brings people together. Um, I think would probably be to name a few, uh, you know, one of the obvious ones is I've never heard of a brand that doesn't post on Instagram. Before pudgy penguins, nobody was posting on Instagram. Really? That was like, ah, unbelievably strange to me.

• 15:06Ryan Sean Adams?

  Wait, you mean crypto projects were not like NFT projects were not posting anything on Instagram?

• 15:10Speaker 00

  It was just. They would do it once a month, right?

• 15:12Ryan Sean Adams?

  It's just all Twitter?

• 15:13Speaker 00

  It was all Twitter.

• 15:16Speaker 00

  Yeah. So it was a once a month thing and you can fact check me on that and you'll find that that will reign true. Uh, it was, you know, the, the best of the best in board apes case, you know, once a month, once every three weeks. I mean, you know, Twitter almost, we almost lost Twitter there for a second, uh, you know, right after Elon's acquisition. It was a real, it looked pretty shaky. Imagine if that thing would have went down. I mean, every NFT projects community would have been screwed. You, you, you cannot be dependent on any which platform or any which lever to completely destroy your business. In this case, I felt like every NFT project before pudgy penguins, if Twitter would have gone, their business would have failed and that's never a good sign. So, um, you know, I, it's just obvious things, right? You know, though we're digitally native brands to assume that

• 15:58Speaker 00

  it, it, there's a, there's two approaches you can take here. One's a proactive approach. One's a reactive approach. The proactive approach is creating a mass adoption and not waiting for it and meeting consumers where they are. That was the thought process behind our toy line was, you know, you know, we can wait for people to become digitally native and, and that, that will happen over the course of time. I think it's almost preordained at this point. If you kind of just look at human behavior and how humans are interacting with their phones and digital. But, you know, in the interim, it's going to be 10, 15, 20 years before we're living in metaverses. Uh, meet consumers where they are and, you know, give them a, a source of credibility and trust with the toy line. And then the other side of it is just like reactive approach, which is just sitting and twiddling your thumbs and just

• 16:40Speaker 00

  waiting for liquidity to come and price to go up. And then you can monetize and, you know, leave when the monetization isn't there and then come back when it comes back again. And so uh, I think, uh, the space needs a more proactive approach. We need to try to actually, you know, get rid of this intimidating and taboo narrative that our industry has. And, uh, I believe, uh, being proactive is the way to do it.

• 17:01David Hoffman?

  So Luca, we'll get to the conversation about actually purchasing the Pudgy IP in April of 2022, but I would imagine that that was not an impulsive move. I would imagine that you were looking at the landscape, you were looking at the brands or the attempted brands, the PFP NFT projects. And I think you came into this industry with some set of experiences that you had from a past life. Maybe you can kind of walk us through the thought process that you had as you maybe decided like, oh, I want to play in this arena. This arena is for me, I have a strategy here, I can bring something to the table. What were you seeing teams doing or not doing that you gave yourself conviction that you could actually enter this game of PFP and brand and IP?

• 17:42Speaker 00

  Yeah, so I actually tried to bribe, buy my friend's project before Pudgy Penguins. And so I kind of had like a little, I stood up like a three man unit, little marketing arm. And so if somebody wanted like marketing services in this industry, kind of went there and I'd helped him with it and I fell in love with that community and that brand. I tried to buy it, he wasn't budging and then ultimately he ended up doing a thing with it. But that kind of got me first excited about potentially buying or like even the thought of buying an NFT project. And then the universe just gave me a Twitter post where somebody was bidding on Pudgy Penguins. I was a really early Pudgy Penguin collector, was actually one of the only NFTs that I called, you know, I sent to my friends and said, this is the one. I mean, my natural immediate reaction to seeing a Pudgy Penguin in 2021 was this is

• 18:26Speaker 00

  the most universal IP out of the bunch that I've seen. And, you know, NFTs are very interesting in terms of how they work and I think how they succeed. It's as simple as a simple supply and demand model. And so what I thought was, okay, we have 8,888 Pudgy Penguins. They are the most universal IP that I think exists in the PFP space. Why that matters for demand is because the more universal it is, the more likely it sticks with certain groups, whether it's interest groups, ethnic groups, all types of demographics. Uh, it has the most potential for the most demand, uh, and, uh, obviously being a finite collectible on the bottom of the funnel, uh, enough demand, enough awareness, small enough

• 19:11Speaker 00

  supply, which I think eight thousand eight hundred and eighty eight is not that much. Eventually you have moments where, uh, the supply and demand curve kind of kick in. So, uh, just from a trader's perspective and a collector's perspective, when I first saw the pudgy penguins, I texted it to my friend group. I said, this is the one, buy it. It was like a hundred bucks at the time, obviously did his thing and went to ten, fifteen thousand dollars or twelve thousand dollars, I think it was its peak. Uh, and then, you know, the universe gave it to me in, uh, December of twenty twenty one, I believe, uh, I saw the tweet, I made the bid for two and a half, uh, took three months for the deal to close and, uh, the rest is history.

• 19:44Ryan Sean Adams?

  Okay, so this is so fascinating to me, Lucas. So you saw this big opportunity and like importantly, this is interesting, uh, that that seems kind of more unique to your story, though ma- many entrepreneurs might repeat it. You're not the co- you're not the founder of pudgy penguins, you didn't come up with the art. You're just like, at first you were just like a collector that saw a vision for the brand that apparently the, the founders maybe didn't see the full vision or didn't have the ability to execute. And so your strategy was just, uh, like, you, you got two, two and a half million dollars. But by the way, where, where'd you get kind of two and a half million dollars? Not that you have, like, this isn't dire, as you have to disclose, but like, have you been successful in brand building and businesses, uh, before? Like, where'd you get the money? And, um, how, what is it like to buy IP to an NFT like collection, right?

• 20:29Ryan Sean Adams?

  I think people listening are like unaware that you can actually do that. Tell, tell us the details here.

• 20:33Speaker 00

  Yeah, I think, uh, not to bore you, because I've said the story a couple of times, but to give you the thirty second version for the bankless audience, uh, you know, I grew up homeless with my mom and my brother. I was fortunate enough, uh, to start my first business when I was eighteen, uh, found product market fit pretty easily and became a self-made millionaire when I was, um, you know, end of my eighteen years, nineteen years old. So, uh, I've been able to find some success, uh, In pretty meaningful ways up until that point, you know, some of my big wins include bringing back Von Dutch in 2020. So Von Dutch is like a pretty famous clothing brand that was basically going under and then had a huge run in 2020 and I was responsible for that and had a pretty lucrative deal with them. And then I was a CMO and one of the biggest shareholders in a company called Gelblaster, which was North America's fastest growing toy company.

• 21:16Speaker 00

  And I also have been like just a pretty elite internet marketer and opportunist, though probably not my biggest accomplishments. I've been able to do well in certain sectors and just, you know, leverage my marketing prowess to find opportunity and monetize on that opportunity, one of which was, you know, working with some NFTs in the past. And then, uh, once the opportunity came to buy pudgy, I thought to myself, well, uh, everyone's raised so much money off of community and venture, yet nobody has done anything that I think is relatively impressive. Uh, so how about we come in here and set the bar and obviously being an entrepreneur, I know what it is to build a great business.

• 21:56Speaker 00

  I, I see the total TAM and the growth of where I think this industry can go specifically with NFTs. But it needs somebody to shape it and it needs somebody to really care. I really care. I love this stuff. I love collectibles. I mean, I grew up with nothing. So the second I had money, all I did was hoard cool shit. Uh, and I think it's, uh, it is something that I believe is ultimately going to be the future of consumer products or at least direct to consumer. Uh, I, I think there's a huge category in direct to consumer in collectibles and then other, other categories in which this completely disrupts. And I felt like all of the approaches up until this point felt a little lackadaisical, uh, and lacked real, you know,

• 22:38Speaker 00

  too much reward was given for too little output. And I think that behavior, uh, created a level of complacency that is. Too hard to reinvent for the existing groups. I think the existing groups are already programmed. Uh, and not their fault, not that they're bad entrepreneurs or bad builders or bad executives in their companies. I don't think that. I think it's just when you've made so much money doing so little. You are now, it's hard to go the other route. And so we came in, honestly, I just talked to the team about this before. The bear market was the best thing that could have happened to this acquisition. I don't think we, I don't think things happen the way that it does. If we don't literally buy this right, but like the day of the bear market started is when we bought pudgy penguins.

• 23:21Speaker 00

  And I don't think, uh, this thing shakes out the way that it does without that, you know, actual grind. Uh, to get to where we are today. And obviously we have a lot more, you know, we have a lot further to go, but, uh, that was kind of the, the thought process and the ideation behind this.

• 23:37Ryan Sean Adams?

  Okay. Okay. So when you're buying an NFT collection or the right, rights to IP for an NFT collection, you're not importantly, buying all of the penguins, of course, that, that is continuously like it's owned by the community, right? This is crypto. This is web three. So like, what are you buying? You're buying some copyrights? Are you buying some licensing? I mean, different projects are licensed differently. So just clarify like what, like, how did you do this? What did you actually buy?

• 23:59Speaker 00

  We bought like 50 different things, uh, from social handles to contract addresses to penguins in the treasury, to the rights for, you know, certain, uh, you know, deliverables that we had to execute on. It was, you know, 40 or 50 different things. Probably the most important is, you know, the trademarks around the IP and the naming conventions. And, uh, you know, that's probably the most important details and obviously the contract addresses and things like that. Probably the most important things, but we try to put anything and everything under the sun, uh, except for the liability of the previous.

• 24:34Ryan Sean Adams?

  Yeah. So it's just an asset, asset purchase, straight asset purchase. And then like to, to clarify, what rights, what IP rights does an individual pudgy, uh, holder kind of like own? What, what can they do with their penguin? What can they do with their brand?

• 24:46Speaker 00

  They have the right to monetize up to $500,000 a year leveraging their pudgy penguin. But this is really just a caveat because we're in the business of doing real business at pudgy. And so I told our community members, if I know you're a community member and you have, you know, aspirations to build significantly, you know, it makes it significantly more money with your pudgy penguin. You're more than happy to. This stipulation is really just there so that when we want to do a deal with Disney, Disney just buy a bunch of penguins and circumvent doing a deal with us because there's endless upside and they can do that. Uh, and so that stipulation is really there because we are in the business of licensing. We're in the business of being in the biggest retailers in the world and being on Hulu and Netflix. And maybe your local AMC theater. And, uh, you just can't have a, a complete free for all, though I will extend the license every single time a community member asks.

• 25:31Speaker 00

  Uh, and I actually encourage, uh, you know, community members to try to go above and beyond. Uh, and then obviously like we're a brand for everyone. We want to be, you know, inclusive. We want to represent the, the space well. I'm a firm believer, uh, that we will be the space, the face of NFTs and the face of web three. Uh, hopefully we're the face of the entire blockchain and crypto industry. I think it'd be nothing but a net positive for this entire ecosystem. And so you can't go do things that are racist and sexist and, you know, you know, some, you know, pudgy penguin in a Nazi suit or something. I, I have the right to take that down.

• 26:04David Hoffman?

  Well, uh, Ethereum at least is known to be a place of rainbows and unicorns, but maybe with the success of pudgy penguins, you could add penguins to that list as well. At least that would be the, the success scenario. Luca, when you bought the pudgy penguin IP, it kind of, you kind of sound like a guy, a man with a plan. Uh, so what was the plan, uh, even before the deal was inked and things were official? What did you know that you wanted to, to do with it, you know, day one, month one, year one? What, what, what was the early low hanging fruit that you wanted to tackle first?

• 26:33Speaker 00

  So I think like in the simplest terms, I wanted to win. I wanted to be number one. I'm a super competitive guy. It's, I'm just how I find enjoyment in getting up every day. And, uh, fortunately this is, uh, you know, there's a, a lot of competition, not really inside of the space, but outside of where we want to go, at least in the IP realm. I knew we wanted to build a legacy IP, but our vision for what we wanted that IP to actually look like was a lot different, uh, to the, what it actually ended up being. And so to give you guys some context, when I first bought the project, I spent seven days for two to three hours in the Discord, talking to all the community members. And why I did that is because I knew this wasn't a democratic process. And I knew that half of the community actually didn't want me to buy it. They were, they were.

• 27:12David Hoffman?

  So people were pissed?

• 27:14Speaker 00

  Yeah, totally.

• 27:14Ryan Sean Adams?

  And at the time that you were purchasing, was this like, okay, so I'm actually, it's April 2022. What was kind of like the pudgy penguin price at this time? Like, what was kind of market sentiment? It couldn't have been all time high, right?

• 27:27Speaker 00

  Like, where were we? Point seven ETH, point eight ETH.

• 27:30Ryan Sean Adams?

  And that's off of all time. What was the all time high up to that point?

• 27:33Speaker 00

  The low was four.

• 27:34Ryan Sean Adams?

  All time high was four ETH, and we're at point seven now. So they're already kind of like down in the bear market. And then they see Luca enter the chat and you're like, yeah, I own it. Like, I own the IP. And so, yeah, so what was their reaction?

• 27:48Speaker 00

  They, you know, some of them were stoked, like some of them were not so stoked, you know. But again, like rightfully so, like the guy who I was competing with to buy this on paper had probably a more impressive resume. You know, he was an OG Ethereum guy, had built a really great product. You know, obviously, I think my resume is impressive for my age, but from the crypto native, you know, obviously, this idea of consumer facing, consumer facing crypto wasn't really a thing, right? Like, we just had done a bull run off of like DeFi leverage. Like, you probably, you know, this guy was a DeFi guy. So, you know, that's probably in your best interest to do that. And another, like, a lot of the affluent members of the community, who are also like real Ethereum purists, wanted me to like make it a DAO.

• 28:29Speaker 00

  And though I'm a huge believer in DAOs, I don't think the infrastructure is built today where a DAO can be hyper efficient. And I think just the nature of human behavior needs some sort of leadership. I think we've seen that over thousands of years. Every great empire was built with somebody at the helm. And I think that there's a reason why that structure exists and why CEOs are in place. And I think DAOs will get there. I just don't think they are today. And so this completely decentralized democratic process, I don't think is the most efficient for building quickly, efficiently, and with a powerhouse mentality in mind. So they, you know, I had some convincing to do, is basically what it was.

• 29:10Speaker 00

  And so I spent seven days, three to, two to three hours a day, going back and forth. And I basically asked the community, what's your vision? What do you see? And by the end of that week, my vision for pudgy penguins completely changed. I'm really thankful for that. I think if I wouldn't have done that, this business would have failed a long time ago and I wouldn't be speaking with you guys today. Uh, and it ultimately leans into what I think our biggest superpower at pudgy is, which is the leveraging of this hive mind that is this brilliant group of pudgy penguin holders. To actually build this business in the best way possible. And so I have a thesis and a statement that might upset upset some, but I believe it to be true based off of my learnings at building pudgy. Which is a web three company is not predicated on the technology in which you build, but the cadence in which you build it.

• 29:56Speaker 00

  And so a lot of people I think are web two companies selling digital products on the blockchain. Uh, and that's what they are, but they disguise themselves as web three companies because they're using the blockchain to sell those products. But this complete web two mentality. And so I think, you know, pudgy penguins and how we build it is very much in what we believe is the ethos of what web three is about. Which is a, a, a communal unit building towards an end goal, which is greatness. Uh, and we are all contributing to those factors, uh, whether it's through ideation, whether it's through marketing, whether it's through boots in the ground and. You know, pudgy penguin holders slapping, you know, pudgy penguin stickers and in New York City train stations. It is a, it is a unified effort to achieve one goal, which is to make the penguin the most popular penguin in the world.

• 30:40Speaker 00

  Uh, and if and when we accomplish that, uh, everyone, a part of this community will be extremely happy.

• 30:45David Hoffman?

  Well, Luca, I asked the question about like, what was your plan going into the acquisition and it sounds like your plan coming out of the acquisition was completely different. Maybe you can share some of the experiences or conversations or just, um, ideas that you gained in that week post-acquisition that really changed your mind. Like what, what was so powerful that you learned?

• 31:02Speaker 00

  Yeah. So coming off of a gel blaster, uh, you know, gel blaster really shook up the toy industry because no one had really went from zero to a hundred million dollars in basically two years. What we did at gel blaster was like a pretty hot, hot toy.

• 31:14David Hoffman?

  What kind of toys would we like? What? Yeah. What's a gel blaster?

• 31:17Speaker 00

  It's a nerf killer. So it shoots like little water orbies. So it's like a completely dumbed down version of airsoft, but like a way better version of like the darts. The darts are like so whack. Every time you got hit with a dart, you're like, what is this pointless? This gives you a little bit of sting, but like it dissolves, it's water. It's like a, it's, it's a really, it's like a Orbeez in a gun, like just shooting.

• 31:38Ryan Sean Adams?

  So it's somewhere between like airsoft and Nerf then, right?

• 31:41Speaker 00

  Yeah.

• 31:41Ryan Sean Adams?

  Nice. Okay, got it.

• 31:42Speaker 00

  It's the perfect medium. So complete disruptor to both categories. Uh, and so what I learned there is obviously I saw like the craze of Coco Melon and all of these. Right? And so when I came into pudgy penguins, I actually had a really, I had a come, I had like a toddler idea. I was like, I'm gonna go compete with Coco Melon. Like, we're gonna go do the YouTube series, like, but what I ended up being was like, no, we're like a kid adult brand for everybody, but like, we're not tapering to toddler.

• 32:07Ryan Sean Adams?

  So wait, just like, that's so hilarious to me that you, your brain goes to toddlers. Cause I'm like, toddlers don't have any money, Luca? What are you doing? Toddlers aren't gonna buy like a 10 ETH NFT.

• 32:18Speaker 00

  So, so this is the thesis, right? I think, and a lot of people, even, even, you know, some of our positioning at pudgy is towards, you know, you know, the 10 and 12 and 14 year old. But, you know, you know, toddlers and, you know, 10 year olds are also not buying Disney stock, right? Like the idea here, and I think the problem that, that, that pudgy penguins really solves. Is it's like, it is so much more of a compelling argument, I think, to the bunch. Uh, and I say that just respectfully, and I say that just, I believe this before we built, we built. But it's like, at this point, you know, you're a crypto guy. You have a ton of Ethereum. You want to get exposed to NFTs.

• 32:55Speaker 00

  You know, your, your, your wife is, you know, sending you pudgy Penguin texts and digesting pudgy Penguin content. It's making her smile. It's making her laugh. It's share, you're sharing, she's sharing it to you. Your children are playing with pudgy Penguin toys. You know, your, maybe your older sons, if you have any, are like starting with the figurines and maybe the gaming side. And so then you, you're like looking at yourself and, and this pudgy Penguin just doesn't leave your sphere of influence. You think like, the, the, the educated decision is that this is probably the PFP that I should buy. And then on, on the flip side, it's like, you also have every great, you know, executive team, somebody on that team in crypto has a pudgy Penguin, is wearing a pudgy Penguin. We have a, you know, a huge sphere of influence

• 33:38Speaker 00

  from the actual crypto culture, which I think is one of the most underestimated parts about pudgy penguins in our community is actually the affluent base in, in which the Igiluminati or the Pengpal Mafia, we call it.

• 33:51Ryan Sean Adams?

  Igiluminati.

• 33:54Speaker 00

  You know, there is a very real base of Ethereum purists and way, you know, call them whales or whatever. And, and, you know, so you're this guy, you're, you, you got your Ethereum, your family is enjoying it, your kids are enjoying it, your girlfriends enjoying it, your friends are enjoying it. And then the colleagues that you look up to, your peers, they're not only enjoying it, they, they are branding themselves around it. Some of the biggest innovators in crypto are anchoring their identity off of this penguin. And then it's like, well, what are the comparables? And when you actually just like stack up the comparables against the rest, it seems like, you know, pudgy penguins is the digital identity for the crypto native and for the people that believe that crypto should be

• 34:36Speaker 00

  a mass adoptable mainstream product that everyone can enjoy and not just this bro culture marginalized, cool and exclusive group that really has like, sure, a great lifetime value from the, the people that you can address, but it doesn't really support what we all I think are working towards, which is a crypto powered world, right? Like, if we want a crypto powered world, the family has to be involved. Women have to be involved, right? Like it has to be everyone. And I think pudgy penguins embodies that better than anybody else. I just really do.

• 35:13Ryan Sean Adams?

  Wow. That's so counterintuitive, but like, that's a pretty badass answer. And it's pretty smart. I like, I would not have connected those dots, but like, now you think of it, a lot of the NFT collections are kind of douchey. You know, like I just, they're just, I'm not going to name any ones out there, but

• 35:28David Hoffman?

  Name, name them.

• 35:29Ryan Sean Adams?

  No, I'm not going to name them. But like, yeah, this is a counter, but I, I interrupted your flow. So originally you said you got the discord, you're going to go with toddlers, right? And like, what changed then? Take us from there.

• 35:41Speaker 00

  It was going to be a nuke if I went toddler. So just to give you an idea of like how the IP business works, when you taper down, you make more money. So like,

• 35:51Speaker 00

  Like when an IP brand sells itself out is like when they start going toddlers like toddlers actually has the highest TAM. Because there's like, you know, there's, there's, there's, there's like, you know, there's baby showers, everyone sending toys like it's just like toddlers rule the world, you'd be surprised like at least like the toy business. Yeah, they, they run the show. And Cocoa Melon is the king, like Cocoa Melon prints and insane billions of dollars every single year. And it was the North Star for, for a new, nobody at the time, nobody had created a new brand. On YouTube that had made that much money on content and toys in the amount of time they did it, did it, right?

• 36:27Speaker 00

  And I also knew I was thinking about it because I was like, well, you know, you know, crypto, I had to move pretty quick. So I was just thinking young, I was just thinking like what I was seeing in the marketplace that was working, that was trending, that was hot. And then thankfully, the community completely grounded it, crowned me and kind of gave us a more mature approach, which is like, you know, understand the culture of pudgy penguins is memes. We are the best memers in the space. There is a memetic prophecy around the pudgy penguins that GCR kind of proliferated early on to the culture that they are stuck into that prophecy. You know, and so, you know, and then just, just understanding that this group of guys and gals, once I started to speak with them and get to know them.

• 37:08Speaker 00

  Was like, okay, these are people that I would be friends with. So I'm, I'm talking to people that. You know, are showing up to our Tory Lanez, you know, yacht party and like off white roadster, you know, uh, you know, roast with like the, you know, the, you know, you know, like, so these are my people. And so I say that in like, it's easy for me to identify and understand, which again, I was always into trading NFTs. I was never like, I had my own personal community that I was involved with. I was never like interjecting into other communities. So I never, that was the one part I didn't understand with any of the NFT projects in which I purchased and collected.

• 37:44Speaker 00

  And so they kind of tapered me up and they were like, no, dude, we're cool. We're funny. We're Lindy. Uh, we're, you know, we're, we're all, we're men, women, we have families, but like, we're not, we're not toddler brand. Don't touch our fishing rods. I was going to turn their fishing rods and like space suits. Or, you know, uh, I was. Do rocket ships, you know, thank God I didn't do that. The rod is very much the squiggle of the pudgy penguin ecosystem. It is a fine art personified into a JPG, a fishing rod, unlikes anything you've ever seen, truthfully. So if you're interested in art, I highly encourage you to look at these fishing rods.

• 38:22Speaker 00

  Real masterpieces. So, you know, like just little things that I was like, okay, we're gonna build something. We're gonna, we're gonna build Pokemon. We're not gonna build, you know, cocoa melon, or like Pepe the Pig, or like Paw Patrol. Like, we are gonna go build Pokemon. We're gonna make this thing a badass lifestyle brand, a badass community. We're gonna have fun games and fun experiences. And we are not gonna shoot ourselves in the foot and just try to, you know, target the toddlers and the small subsegment of whales who have toddlers. And, you know, we're just gonna go family. We're gonna go for everyone. And I think the position that we chose was ultimately the right one.

• 39:00David Hoffman?

  Okay, so that was the direction. That was the North Star. I want to get pretty concrete here. So what was the actual, what would you say is the first concrete first step? The first step on that direction there? Like, what was in the game plan on the roadmap?

• 39:13Speaker 00

  Yeah, I think first and foremost, just building trust, right? And so like, you know, we came into this, we bought the business with no money in the bank. We had a bankroll it with another half a million dollars. You know, we had 3% royalty set on pudgy penguins. Everyone, every other blue chip was set to five. I was like, I'm not setting it to five. You know, we spent way too much money on our first couple of events, but I wanted to do that because I wanted to show them we were serious.

• 39:37Speaker 00

  And setting up the foundation. So like, you know, we were pudgy underscore penguins on Twitter. We were pudgy dot penguins on Instagram. So I gotta get all the usernames. I gotta get blue checks on everything. At the time, getting a blue check on Twitter was a lot more difficult than it is now, right? Like, you know, I just had to, the brand, the foundation needed to be set. So honestly, the first six months, there was no business. There was no employee handbooks. There was no insurance. I mean, I'm so glad that the community didn't completely just annihilate us. And this is why I'm so like, this is why I'm so thankful for them. And I tell them this almost any time that I can. A lot of other communities would have just completely gave up on us because the first six months, there was no real progress. Right? Like there was, there was a little semblance of a social strategy.

• 40:22Speaker 00

  You know, obviously we consolidated the usernames, but it was, it was just like building the business, incorporating the bylaws, making sure that we had the right legal in place, the right operations. I had a, a core unit that I knew was good, but there was a lot more pieces that we needed to fill. Uh, obviously revenue went from, we made great money the first month and we basically made nothing the months after. Uh, royalties then went to zero. Uh, so like, there was just like a lot of figuring it out and it wasn't until we announced our toy line in August. Did things really start to gain momentum for us? So August of 2022, I think was like the huge moment. It was kind of like down only until then. Community was happy because they saw that we were trying. I think that was important. I wasn't, I was really, I'm like, one thing I think we did really well is just communicate. We do every two weeks.

• 41:06Speaker 00

  We do an inner igloo 90 minute sessions, ask whatever you want. Let's ideate, let's brainstorm. You have a problem, discourse is welcome, let's debate it. Like I want to, I am pretty open outside of like just giving the total alpha. I mean, I'm pretty, you know, there's a real open dialogue. We've been consistent there for the last two years, every two weeks, not missing a beat. So really there's no room for resentment to fester because if you have a problem, go up and talk about it and we'll figure it out. Uh, and so, you know, community was really happy and, and just understanding that we were trying and they respected that. And they respected that we put up our own money to try and that we were trying hard. Uh, and I think that mutual respect really was played a huge role in this.

• 41:47Speaker 00

  And I think it's one of our core advantages because most people can't really say that we have just as much money to lose as our holders do, but we do. Uh, and I think that gives us a kind of a, a, a, you know, we look eye to eye and not like one looks down on the other. And I think that's really important. And, uh, and then it wasn't until we got our toy line and our toy deal, uh, did people really be like, okay, well, the consumer product guys are getting into consumer products. And, uh, they're going to do what they, they're doing what they're saying they're going to do. And so we're getting excited. And the idea that we actually licensed the NFTs for these products was revolutionary at the time. No one. No major project had basically said, we are going to make a product line. And instead of creating our own characters within this universe that are not NFTs,

• 42:29Speaker 00

  we're going to take NFTs that holders are holding and license them, right? So the value proposition with pudgy penguins is not licensing. It is a feature benefit for, you know, initiatives that we do. But it's really the concept of it, right? It's the concept of we're doing this together. It's what it symbolizes, not really necessarily what it yields or who it yields it for. Cause all the cope and seethers and haters of pudgy penguins will be like, well, yeah, only a hundred people can get licensed a year. And well, dude, it's, it's not about that. It's about the symbolism that we are doing this and we are not leaving you out of the, of the upside. And we are including you in this journey. And that was really.

• 43:05David Hoffman?

  Can you just explain a little bit more about that? The licensing, just for people who aren't, uh, aren't familiar with how that works or the significance or, or meaning of that. Like, uh, unpack that a little bit more, the relationship between the license and the toy.

• 43:16Speaker 00

  So the idea is, is, is simple. Like I'm a believer that to expand the brand and to do what's in the best interest of the NFT collection and the NFT holders. I have to create awareness and I also have to create revenue. That's not predicated on sending and minting more digital collectibles. Again, it comes down to supply and demand. The second I start issuing more NFTs, I better hope I have overflowing demand. And 99.9% of NFT projects who issue more NFTs do not have overflowing demand. The only situation in which that worked was mutant apes, because bored apes truly had overflowing demand. Every other time it's been a huge net negative and has symbolized the beginning of the end, right? And so what I don't want to do is I don't want to be desperate for cash, right?

• 43:55Speaker 00

  And I don't want to like have to go force and make a new collection because ultimately that puts my community at a disadvantage. Right? What I want to do is actually make real money and be self-sufficient and cash flow positive. So that I can actually build an evergreen collectible that over time, I think you can't beat that, right? The just demand increase, you know, awareness increases, supply stays finite. It's just a recipe for success. Uh, and so ultimately the idea is, is I, you know, to accomplish the awareness goals and the revenues, revenue goals. I have to create products and content that people love and enjoy, just have to do it. Though I have two options on the table. I can either make them myself, which has kind of been the standard prior to pudgy penguins, which is like, hey, I want to do a collectible.

• 44:37Speaker 00

  I'm going to draw a collective, one of our artists who drew the NFTs are going to draw a collectible line. We'll make it, we sell, make a million dollars on it. Company makes a million dollars. Thanks, community for buying our collectibles, onto the next, right? And so, and then the other side of it is, hey, we are an NFT. This NFT is the first edition collectible. This is the origin story to the brand. We are not here without our first collectors or our early believers and our NFT holders are what made us so great. And so when we make collectibles, instead of just reaping all the upside to ourself, how about we just include you in that? So we license the NFT, call it NFT 1111, Pudgy Penguin 1111. I'll go to the holder and be like, look, I want to give you a royalty for every toy that we sell. Call it 5%.

• 45:22Speaker 00

  You know, I want the right to turn your Penguin into this toy. We sign an agreement and every time one of those toys sells annually, they get paid a royalty distribution. And so the idea is, is you know, we have 16 toys on the shelves of Walmart right now, 16 different SKUs, 16 different holders and 16 different payouts. Some of which we are beginning to pay out as of recent. So that is the, that is the thesis here and how that works.

• 45:49David Hoffman?

  Okay, so Pudgy Penguin toys, plushies, they're in Walmart. You can buy them on Amazon, they're in stores all over. And there are 16 different types of pudgies. They are pudgies that are real pudgies. I'm sure you can go and find their corlet on OpenSea. And these are deals that you've made with the 16 holders of these 16 pudgies that you've manually like sent out and inked and then sent back. And these 16 holders are getting royalties anytime one of their versions of a Pudgy Penguin gets sold in Walmart. They are getting the kickback. That's all correct?

• 46:22Speaker 00

  They're getting a portion of the kickback. So obviously the Pudgy Penguins make some money, but you know, they don't get the whole, they don't know, they'll make all the money. But they make, I think when we did the math, it's like 15% of net. So they're, they're making-

• 46:37David Hoffman?

  How did these 15 pudgies get selected?

• 46:41Speaker 00

  Aesthetics. We were trying to think of like a rubric, but we just hand this off to the creative team. Creative team picks, you know, the, you know, CEO, we did it before and like now the way that we do it just creative picks the ones that they want, goes through a submission funnel. And then creative picks the ones that I think has the best product market fit.

• 46:59Ryan Sean Adams?

  What, what?

• 46:59David Hoffman?

  Will there be more in the future?

• 47:01Speaker 00

  Yeah, so we're actually doing this by the time this thing airs, probably. We are actually announcing a really exciting product, which will be on Friday. That product is overpass IP. Overpass IP basically makes NFT licensing and web three easy with a couple clicks of a button. And so what we kind of found when we licensed the first, you know, 16 toys. Was it took two months and it was ton of friction and it cost tens of thousands of dollars in legal paperwork. It was an insanely, I was, I was no wonder no other project did it before us because it was like a huge burden. It was actually a liability to kind of do it when you factor in all the costs. And we thought to ourselves, well, there's probably should be a web three way to do this. So we're actually launching opportunities for 88 big pudgies and little pudgies alike.

• 47:44Speaker 00

  For season two of toys, we expand our toys in more markets and new lines. And then that will also debut the beta test for overpass. And as long as the beta goes well and there's no glaring bugs, we will open up the beta and officially launch overpass in February. For not only pudgy penguin holders to enjoy, but all projects to enjoy. It's kind of going to be our gift to crypto and our gift to web three. It's a platform that we needed to complete our thesis. It solves a huge problem for us internally. But we will also offer this opportunity for others to follow in our footsteps and license the whole of the IP of their holders and initiatives.

• 48:16Ryan Sean Adams?

  That is really cool. So you, so you're building some of the kind of the tools and the infrastructure as you go. Let me ask you, so these 15, is it 15 or 16 that? Okay, the 16 that were in Walmart. What has happened to the price of these, of these 16 penguins, right? So you like, has, has that gone up and has that been discorrelated with the rest of the collection?

• 48:37Speaker 00

  So there's a, there's two ways in which I think, uh, obviously there's some monetary value and, and, and what a licensing deal kind of brings. Obviously there's the royalty. Uh, you know, that royalty can really fluctuate. You know, it could be, you know, depending on the initiative, we've had like a very limited, like, uh, some collectibles like you see here. You know, you get paid a couple of eth for that. It's like five, six grand is not much because there's not much gross there. Uh, but what it really symbolizes and where I think the monetary value really accrues is, you know, there's only so many penguins that are licensed and, you know, you typically probably want one that's correlated to a physical product, which makes it really cool. And so, uh, there is a, a premium for those. Uh, those premiums fluctuate depending on obviously the rarity and what already is kind of baked into the metadata and, you know,

• 49:22Speaker 00

  how those things are structured. But, uh, we are finding that licensed penguins definitely have a premium.

• 49:27Ryan Sean Adams?

  And so if it's a licensed penguin and they sell that licensed penguin, does the, the, the new owner of that licensed penguin then inherit the royalty or do they have to re-sign with you?

• 49:37Speaker 00

  Yeah. So that, so you have to re-sign and we have to renegotiate the deal. You know, if you were to do it that way, then I think it would define a security and a pretty, uh, it'd be a pretty good argument for there. Uh, you know, for us, you know, two parties are interacting to make this deal happen. Uh, and so that's kind of what transpires, uh, when we license a penguin and it's not just, you know, selecting and, you know, you're going through a bidding process, you are submitting it, you are making this deal happen and, you know, because of your efforts, this deal is coming to fruition. Uh, and so, you know, it, the, the, you know, you can't just sell it to somebody and then somebody just like walks into, you know, a, a thing that yields some sort of income. Uh, you know, that stuff has to be renegotiated and re-talked about and, uh, has been a pretty, uh, one of the

• 50:19Speaker 00

  things that overpass will solve for, because that's also been a pain in the ass process.

• 50:23Ryan Sean Adams?

  Yeah, I bet. I mean, it's kind of bespoke, I guess, with each of these. So let me ask you the big question here, though. How in the world did you get a deal with Walmart? Okay. Like this, just, that seems like a big deal to me. I don't know. You, you come from kind of toys and branding, but like, how, how does something like that happen?

• 50:41Speaker 00

  I think it's just Walmart being a bunch of chats, I think, if we're gonna be, if we're gonna be honest. You know, it is a really big deal. And if anybody who knows consumer product, which I'm sure there's a lot of people listening who do. It's the type of program and the brand in which pudgy penguins is today. Walmart basically put 2000 pallets in the center of stores across the country. To a brand who has no movie, no TV show and no game. And, you know, or hasn't done it before, right? Like that was their first crack. And for them to do that. I think just symbolizes how excited they are about web three and specifically innovations. So just so you know, I've talked to

• 51:22Speaker 00

  some pretty high level. I'm not just talking to buyers at Walmart. I've talked to some pretty high level executives up at the corporation. They are taking web three and specifically just like technological innovation very seriously. I mean, they're way more innovative than I thought. I mean, I think sometimes Walmart gets a bad rap because they kind of cater to maybe low income neighborhoods and you see some of the videos, but you know, they've actually got it really figured out and they're actually really trying to improve the customer experience and to make that experience more fun and more intriguing. And ultimately just create a better value proposition. So one of the things I think is really unique about digital collectibles, and I think this web three universe is Walmart is in the, in the business of having the best deal, right?

• 52:01Speaker 00

  And giving these digital unlockables and really exploring with this, like imagine a world, you know, at least this is one of the value propositions that we hope to accomplish with pudgy penguins. But imagine a world where you buy Pudgy penguin toy for $10. You unlock some ZK sync NFTs that you unlock, you know, in the trait packs that kind of come with the toy. And you sell those for maybe 11 or $12, but you keep your physical item. So you buy the physical, the physical costs you 10, you unlock some digital traits and wearables, you sell those for 12. You made two bucks, not, not gonna, you know, maybe get you a burger at McDonald's, get you a lunch, right? But you got your physical still.

• 52:41Speaker 00

  Is that when you, when you think about the art of the deal and the art of the value proposition? If you can build the economy in which that actually works. It is an unbeatable mechanism to anything on shelf. Now, the economy and how that works is really tough. So to give you some context, we actually pulled our marketplace for a trade because we we just realized like if this thing's gonna work. We cannot let it be a speculative like disaster because we've seen how that works. We've got to build like a real economy for this to make sense. So we we launched the toys initially with a marketplace and we've since pulled the marketplace. We have it ready, but it's like we need a real thoughtful economy to actually to see this thing churn and work. And that's one of our big challenges over the next years. Like, can we really pull that off? And if you pull that off, the toys sell themselves.

• 53:26Speaker 00

  Right? Like they you you you will beat everyone on shelf if you can tell that story and if that economy can work. And this is something that's only possible in NFPs. Right? Like this is it's the free economy, right? And and obviously, there's a lot of infrastructure that's predicated on that success that, you know. Other people are building. So it's like it's a real communal effort to like. I hope I hope all the pieces fall. I mean, so far, the pieces have been falling for us up until this point. Uh, and hopefully, we see that come to life. But Walmart, long story short, I had a relationship with them. They they, you know. Gel Blaster is one of the top selling toys at Walmart, so we were able to get through the door in that respect. Uh, I knew some connections there. Uh, and they believed in the brand. They believed in the technological innovation. They wanted to be on the forefront of that. They didn't want to be following. They wanted to lead it.

• 54:12Speaker 00

  And, uh, you know, that's, uh, that's kind of the Walmart story.

• 54:16David Hoffman?

  Well, it's great that Walmart is, uh, ready and willing to take a chance on a web three product. Uh, it would have been a different outcome, however, if if it was a flop. Uh, it sounds like it wasn't a flop. It sounds like pudgies were had some volume. At Walmart. Are there any numbers or metrics or like sales or revenue numbers that you can share with us about just how to quantify the success of pudgies in Walmart?

• 54:39Speaker 00

  I can't tell you with Walmart specifically, but I can say pudgy penguins has sold 750,000 toys in the last seven months.

• 54:45David Hoffman?

  Wow. What's the average price point?

• 54:48Speaker 00

  Uh, it fluctuates, so it goes for as cheap as three to 25. So I in in gross retail sales, it's over $10 million. So median would be about 13.

• 54:59David Hoffman?

  Wow. And this has made the pudgy penguins company completely self sufficient.

• 55:05Speaker 00

  We spend a lot of money every month.

• 55:09Speaker 00

  I would say when we raised our seed round, basically 12 months ago, we have the same amount of money in the bank than we did when we raised.

• 55:18Speaker 00

  So, you know, figuring we've, we're growing and socials are growing and business is growing and awareness is growing and we're pretty, we're pretty cash flow positive. Some months we go in the red, some months we go in the green. So, but we're, we're pretty, we're pretty good in that respect.

• 55:33David Hoffman?

  Mantle, formerly known as BitDow, is the first DAO-led Web3 ecosystem, all built on top of Mantle's first core product, the Mantle Network. A brand new, high-performance Ethereum Layer 2 built using the OP stack, but uses Eigenlayer's data availability solution instead of the expensive Ethereum Layer 1. Not only does this reduce Mantle Network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle Treasury is one of the biggest DAO-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle. Mantle already has sub-communities from around Web3 on-boarded, like Game7 for Web3 gaming and Bybit for TVL and liquidity and OnRats. So if you want to build on the Mantle Network,

• 56:15David Hoffman?

  Mantle is offering a grants program that provides milestone-based funding to promising projects to help expand, secure, and decentralize Mantle. If you want to get started working with the first DAO-led Layer 2 ecosystem, check out Mantle at mantle.xyz and follow them on Twitter at ZeroXMantle. Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the real world, driving real-world use cases like mobile payments and mobile DeFi. And with Opera MiniPay as one of the fastest-growing Web3 wallets, Cello is seeing a meteoric rise with over 300 million transactions and 1.5 million monthly active addresses. And now, Cello is looking to come home to Ethereum as a Layer 2. Optimism, Polygon, Matter Labs, and Arbitrum have all thrown their hats in the ring for the Cello Layer 2 to build upon their stacks. Why the competition?

• 57:00David Hoffman?

  The Cello Layer 2 will bring huge advantages like a decentralized sequencer, off-chain data availability secured by Ethereum validators, and one-block finality. What does that all mean for you? With Cello Layer 2, gas fees will stay low and you can even pay for gas natively using ERC20 tokens. Sending crypto to phone numbers across wallets using social connect. But Cello is a community governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello forums. Follow Cello on Twitter and visit cello.org to shape the future of Ethereum. You know Uniswap? It's the world's largest decentralized exchange with over 1.4 trillion dollars in trading volume. You know this because we talk about it endlessly on Bankless. It's Uniswap, but Uniswap is becoming so much more. Uniswap Labs just released the Uniswap Mobile Wallet for iOS.

• 57:45David Hoffman?

  The newest, easiest way to trade tokens on the go. With Uniswap Wallet, you can easily create or import a new wallet. Buy crypto on any available exchange with your debit card with extremely low fiat on-ramp fees. And you can seamlessly swap on mainnet, Polygon, Arbitrum and Optimism. On the Uniswap Mobile Wallet, you can store and display your beautiful NFTs. And you can also explore Web3 with the in-app search features, market leaderboards and price charts. Or use Wallet Connect to connect to any Web3 application. So you can now go directly to DeFi with the Uniswap Mobile Wallet. Safe, simple custody from the most trusted team in DeFi. Download the Uniswap Wallet today on iOS. There is a link in the show notes.

• 58:21Ryan Sean Adams?

  Luca, I'm kind of struck by this. This conversation is going in a direction I didn't know for sure it would. And like, you know, like fair context, like I didn't have all the context for pudgy penguins. Haven't been, you know, tracking it closely. I was sort of vaguely aware of all the work that you were doing in the background. And then obviously I saw the Walmart news and I was just like, how? Wait, what? And I guess like, I'm struck by how wholesome this story is. And the reason I'm struck by that is because I think that crypto has been in sort of its nihilist phase with respect to NFTs for a while. And certainly like the wider non-crypto community is like even more so. I'm just like, all of the videos, you go on Reddit, you ask about NFTs. Everyone's like, that's a scam.

• 59:06Ryan Sean Adams?

  Yeah, little pump and dump, like you fraud. And it's true, there have been a lot of lazy attempts at NFTs that have been like little more than rug pulls. But like here is a founder who is like going into this project and like partnering with the community and rolling up his. Sleeves and actually like getting shit done. And there's something about that that just like feels wholesome because you're kind of building real world utility like that. That has been the promise of NFTs from the, from the beginning. So I just wanted to reflect on that. It's just like, it's kind of cool to hear this story and I didn't expect it at the beginning of this conversation. There, there's one quote that I saw from a video. I'm wondering if you could reflect on, uh, and you said this, when you were

• 59:50Ryan Sean Adams?

  building in web three, it is not your company. You're the muscle to the brain that is the community is not your company. You're the muscle to the brain that is the community. You, you've built in kind of like the analog world, toy companies and kind of web one, web two type of world. What's different about web three? You kind of zoom out.

• 1:00:12Speaker 00

  There's a real investment that is kind of taboo and I guess people don't speak about it, but like the elephant in the room is people are spending tens of thousands, hundreds of thousands, billions of dollars on these things and you have to have some empathy and respect for that. Like, that's like a real thing. I, I, you know, I remember being a collector and being like, I wish you would just listen to me because I've spent a hundred grand on your shit. So listen, you know, just listen, dude, you know, and, and, and process the feedback. And I think part of the strength is I was also in the shoes of the disgruntled community member, really frustrated. I mean, like at one point I had millions upon millions of dollars worth of NFTs, you know, like, you know, I wanted, and I felt like I had really good valuable input. And, and I think

• 1:00:54Speaker 00

  pretending that this is any other thing, it will lead you to fail. I think it's just a recipe to failure. It's a straight shot to failure because pretending that this is your moat and you are here because of you and not because of the support of all of these people putting insane amounts of money behind you and behind the brand and behind the community is to be completely negligent of the truth. This is just the truth and the nature of the business. You have no other business where your core consumer, you know, your suit, your, your, your core believer, your, your champion is so financially invested.

• 1:01:36Speaker 00

  Nothing else exists like that, right? I mean, it's like, you know, you you have a responsibility. And so this is very much a publicly traded startup. Like, just think about what that means. Like, this is a startup, has all the cons of a startup and all the cons of being publicly traded. And you have to leverage those cons and turn those cons into pros. And those cons can be very much pros. I used to look at them just cons, but I was like, that's kind of a pro. Because, you know, it kind of keeps me in check and keeps me, you know, leveraging the superpower that is the group. And I just believe that 5,000 people are exponentially smarter than 10 people in the room in this room behind me. You know, I think they're just going to beat us every time.

• 1:02:17Speaker 00

  I also had to be the filter. Trust me, there's tons of ideas that come to my thing. I'm like, okay, you know, thanks for the idea, man. But this, in the back of my mind, I'm like, this thing's not going anywhere. But but that's the beauty. It's about the diamond, you know, the the needle in the haystack and catching that. And there's definitely been a couple of needles that this community has given me that have absolutely changed the trajectory of what this company looks like.

• 1:02:38Ryan Sean Adams?

  Okay, so I want to ask you about the, you said a publicly publicly traded startup, right? And I want I want to ask you about the double edged sword that is speculation and that is price. So, you know, another NFT project that I've been observing over the last year or so, and indeed, we've we've had him on a couple of times is Kevin Rose. And like Moonbirds, right? And so that launched to absolutely massive price appreciation. Over the, you know, like, Christmas holidays, I listened to an episode of him just kind of like talking to Tim Ferriss about it as a podcast episode. And apparently, the whiplash of the Moonbirds project, right? He said like it spiraled, it it almost spiraled him into like a like physical depression.

• 1:03:21Ryan Sean Adams?

  Because he he would hear from some community members who had purchased a Moonbird, like, kind of like at the bottom. And just like, they'd come up to him and give him a big hug and just like, Kevin, thank you so much. The price is appreciated. And then he'd hear from other Moonbird holders who'd like bought the top and lost a whole bunch of money. And like, were absolutely pissed off at him. And like, he was just reflecting on the the double edge sword that is speculation, right? Which is like, you know, live by the price, die by the price. And Luca, I'm interested in your take as kind of a, an NFT, you know, founder, I suppose, right? Like, so things are going well now and part of that may be like, obviously you've been incredibly successful.

• 1:04:04Ryan Sean Adams?

  You're executing against a plan, but also there's like, you've got the, the tailwinds of price appreciation, my friend. I was just looking at like the price of these pudgies and it's 18 ETH now. So like well off the lows, like, and I'm sure the

• 1:04:17Speaker 00

  Number three.

• 1:04:17Ryan Sean Adams?

  The community is beaming, right? Like you've got the third largest NFT, like 160,000 ETH in terms of total market cap. If you multiply kind of the price floor, they gotta be happy with that, but that could turn against you at some point in time. And like when it does, uh, you know, have you considered that? Do you have any wisdom or reflections on that?

• 1:04:38Speaker 00

  I think the key kicker that we've done for the last two years, that I think some of the projects you mentioned did not. And I think a lot of people got caught in that, the trap of the tailwinds is expectations. The expectation of what it means to own a pudgy penguin is exponentially clear. I am giving you no reason to speculate. I'm giving you no reason to theorize. You can theorize things and think things may happen because you know, other projects did it, but I am not giving you room to do that. What you get when you buy Pudgy penguin has been the same when it was two ETH. It is the same today when it was 18 ETH and it'll be the same one day when it's 100 ETH or 200 ETH. If God willing, we get there, right? It is, it is gonna be the same.

• 1:05:20Speaker 00

  And that is the key, right? That everyone is aligned on the North Star and we have marching orders towards that direction. And whether you, what you decide to do and you make the conscious purchase with your hard earned money is your decision. My North Star will stay the same. I will keep treading in this direction and I will be the world's next great legacy brand and Web three's first ever true breakout brand and the face of crypto and blockchain in ways from a consumer facing standpoint. I will be that. I will do that. I am conscious of supply and demand. I will keep our resource finite on the bottom unless something changes. And I think people can't get into the, to the, to the, and I think it can be a net positive to the community.

• 1:06:03Speaker 00

  Thank you, Lorenzo. Um, sorry, I need a computer charger and that, and that's it. And at the end of the day, people have to. You know, accept their buying decisions, right? Like, I bought a bunch of Chamath's backs. I don't blame Chamath for the millions of dollars I lost on Chamath's backs. I blame myself, right? I bought Doge at 50 cents when Elon Musk was going on SNL. I don't blame Elon Musk for the loss of my finances. And so I know that as long as I rein in the expectations and I don't give people a reason to speculate, which right now there is none outside of your own theories, which you could make up in your own head,

• 1:06:42Speaker 00

  that any, you know, disgruntled, you know, behavior or negative sentiment towards me will not be inflicted because of decisions that I made or things that I did. I will really just tell people, you know, if I did make a mistake, I will fix it. And I try really hard not to make mistakes. And though I'm human, those will probably happen. So, you know, I can't say I'll never make a mistake, but I try everything in my power not to do it. But, you know, things ebb and flow. I mean, pudgy penguins were seven and a half ETH in December, and they went down to three and a half ETH, you know, you know, over these last 12 months. And now here we are. These are things I can't control. I can only control what I can control, which is showing up every day. Lead by example. I think I'm the most transparent founder.

• 1:07:26Speaker 00

  I have a whole YouTube series following us. I do, you know, enter id lose every two weeks. There's no holder that can't get access to me if they have a critical question or thing they want to ask or an observation or thing they want to fix. And that's all I can do. And they know I can't control price. And at the end of the day, the community members too, I found, they don't bully me for this stuff, which I think, I think it comes down to the purchase, right? Like, it still comes down to, okay, I know you're down bad and I'm sorry, but I'm in the same boat as you and I'm working to fix it. Versus maybe other founders, they're like $100 million up and they're like singing kumbaya and they have a great life and, you know, and great salaries.

• 1:08:06Speaker 00

  And everybody else is, is, you know, and is now wishing they, you know, is so pissed that you are now in this position of, of amazingness and we are not. And My relationship with my group, which is my community, like that will stay the same. And I think as that, as long as that stays the same, you know, we're all in the same boat here. And, uh, and, uh, and yeah, I think that's probably the answer to it. But I will say, I, I do have a lot of empathy for some of these founders that go through it. Because I see some of the things that people say, and I don't think people understand this, this criticism and how mean, especially the anonymous culture.

• 1:08:47Speaker 00

  It is so easy to poke holes at somebody and to be so nasty and aggressive. And it's just, I just really, and just to keep, to be clear, I've been this nasty individual in the past. When I was younger, right? Like, I totally was this internet keyboard warrior. And I have empathy for those people today because one, it stems from an insecurity. It stems from something that's going wrong in their life, right? And they are lashing out and they are projecting. But I will say, if you are that person, to be conscious and to fix that behavior. Because never has that behavior ever yielded a positive result. It never has, right? And to really just emotionally bully people over the internet is never okay.

• 1:09:30Speaker 00

  Though I think people should be held accountable, but I think there's a way to communicate that accountability. Uh, and I don't think a lot of, you know, the anonymous culture will really, uh, incentivize some things that nobody would say if you knew who they were, uh, behind, uh, the cartoon PFP.

• 1:09:48David Hoffman?

  Well, there's a, definitely a current in this conversation of stability. If you will, you talked about leading and creating a bull market, not waiting for one to happen. Uh, having, uh, having a plan and sticking to it and just overall just vibes of, of stability in this whole, uh, project seems to be coming forth. Luca, we talked about the toys, um, and that is the in real life manifestation of pudgies, the, the actual, actual physical material. But also on the roadmap, on the pudgy roadmap, there's pudgy world. Uh, and this is the digital landscape, the digital frontier. This is the promise that I think many, many NFT projects made in 2021. It's like, oh, we're going to create a metaverse.

• 1:10:29David Hoffman?

  And it was also the promise that ultimately broke a lot of these, um, NFT projects. Cause you know, creating a virtual world's hard. Uh, so maybe you can talk about what is pudgy world? What is the plans for it? Uh, and where, where is it on this roadmap?

• 1:10:43Speaker 00

  Yeah, so not only did we put, you know, NFT IP in the world's biggest retailer and the story of Web 3, which is like licensing and, you know, doing this together on the shelves of the biggest retailer. But we actually put blockchain technology on the shelves of the biggest retailer. So every toy that we sell actually comes with a birth certificate. And on that birth certificate, there's a QR code. That QR code points you to Pudgy World in which you are tasked to redeem your digital trait pack. You then put in the email and a password. You're given a custody wallet through our custody wallet solution. You then redeem three to five traits, depending on rarity, you know, three if they're super rare, five if they're more common, through a gas experience powered by ZK Sync. So shout out to ZK Sync for the help.

• 1:11:24Speaker 00

  And you are then redeeming these traits for nothing short of a five to $10 purchase of a toy. And it takes you about 60 seconds to walk through that flow. And so the idea is, is we're bringing blockchain into the hands of regular people and they don't even know it. And so you buy a toy for 10 bucks, you make an account on Pudgy World. And within 60 seconds, you have a little bit of a taste of what it's like to digitally collect on the blockchain. Though it's not super front facing, I'm a firm believer that blockchain is the back end, not the front end. For some reason, it's been the hook for everybody's project and, and, and brand or company that they're building. And I think that's a fatal mistake. This stuff has to be abstracted. It has to be what powers this, but it cannot be the, it cannot be a source of confusion or a thing that somebody has to learn. They will learn as they get involved, but you have to ease them in.

• 1:12:09Speaker 00

  That's how consumer behavior works. It can't just be a complete conversion. It has to be stepped towards that process. And I believe that in this scenario, it is going to be the product that I refer to as the middle of a funnel. Right? Top of the funnel is expansion, toys, marketing, content distribution. How many people can I get to love the Penguin? And then, you know, boom, we'll sell products. Well, products onboard you into this digital ecosystem. This digital ecosystem is Pudgy World, an MMORPG, a place that you can kind of just have fun, a casual game. This is not a Fortnite triple A game. I don't, I don't believe in that. I believe that Web 3 games need to have something that's simple, sticky, fun, something that, you know, a seven-year-old can enjoy in a 25

• 1:12:53Speaker 00

  Year old can enjoy, you know, our thesis here is, you know, beautiful, creative, fun, simple, stupid, you know, really good game loop and a thing that, you know, people can do and just enjoy and interact. And more importantly, socialize with their friends, all kind of driven through this distribution, through the toy distribution that then kind of gets them in this immersive digital world, gets them collecting, you know, trading and all the whole nine. That eventually I think trickles down to eventually becoming an NFT collector. So that's the middle of the funnel of our product. And it's, if you ever hear me saying we brought a blockchain on the shelf of the world's biggest retailer, that's what I mean when I say that.

• 1:13:31David Hoffman?

  Okay. So right now it's primarily a place to collect properties. Will, how much, how much further investment into this middle of the funnel are you going to, are you going to make? Is this going to be like a sole focus? Like, how, how important is this as a product line, would you say?

• 1:13:47Speaker 00

  I think it's really important because it's, you know, not only does it complete the toy loop, right? Which is like, right now, if you go to Pudgy World, it is not this robust explanation that I just gave you. It's really just a character builder and a mini game, a mini, a couple of mini games and maybe some daily rewards. We, we raised our seed round, predicated off of building an IP, not building a game, two completely different feats.

• 1:14:10Speaker 00

  You know, we're currently in the process of, you know, probably doing our series A here pretty soon to actually like really give this gaming a real crack. It's important. I, I think it's, it's important to really, to, to do what I think Pudgy Penguins ultimately is, which we haven't really talked about. But, you know, under the hood of this cute Pudgy Penguin, what Pudgy Penguins actually is, what this company actually is, is it's Web3's distribution company, right? We are distributing blockchain technology and blockchain product, powered products through IP, right? Like, that's how we do it. The IP is the Trojan horse vehicle in which people feel comfortable. They develop a love and an affinity for, you know, IP has been known to garner the hearts and minds

• 1:14:52Speaker 00

  of millions of people very often over many, many, many different titles. And for us, we want to onboard people into the space. And how we're going to do that is through cute little Pudgy Penguins, but. It depends, you know, the the second layer to this is really the suite of products in which we onboard them to. So when you sign up via pudgy world, you're actually signing up to pudgy wallet, right? Because I'm making you a custody wallet and you now have this interface. What does that build out look like, right? When you onboarded a pudgy world, you're onboarded on pudgy wallet, but then you're also onboarded into a web three game, right? That has, you know, NFT redemptions out the wazoo and a whole game loop that's powered by, you know, a blockchain loop.

• 1:15:31Speaker 00

  And so eventually like the goal is, is like, we know the the North Star is we can say, hey, we brought 10 million people onto the blockchain and we actually did. Right? And and here is why, and then actually educating them, maybe there's an, maybe there's a an ed tech platform that we either partner with or we create. And then we actually teach them and maybe like a Coinbase earn program leveraging the Penguin. Like, like how you actually look at this from a five to 10 year horizon, it gets extremely deep. And I don't want to bore you guys with those details, but you know, obviously we have to achieve what's right in front of us, which is like a legacy IP brand that's working in the real world. And then, you know, all of that stuff comes secondary.

• 1:16:05David Hoffman?

  I want to ask about the the collaboration with ZK Sync. Using a ZK roll up makes a ton of sense because this is going to be a consumer product. There's going to be, I mean, hopefully millions of people using these things and we also need native account abstraction, which I'm sure is part of the pudgy wallet. Can you just shed more light around the collaboration with ZK Sync and what's come out of that?

• 1:16:23Speaker 00

  Yeah, I think ZK Sync specifically, from a tech perspective, they have the cheapest fees. I mean, dude, we're, you know, even with the cheapest fees, this stuff costs a lot of money and gas to kind of front. And, you know, this has to be optimized for that. As of the last month, per my call with them, they had the cheapest transaction fees out of any L2. And so, you know, that was kind of the direction and the promise they made us, and so far they're fulfilling on that promise. They're also just huge help from a developer and a partnership standpoint. I mean, they've offered tons of resources that have made the difference for us. Again, you know, our core competency is in building brands and building IP and in marketing and gaining awareness. We are not the most robust game developers, we'll own that, right? But I believe building a fun, simple and, you know, creative game is not rocket science.

• 1:17:05Speaker 00

  I think what's rocket science is the distribution and the IP and actually being able to get people to play that game. And I think we have that part down pat. The part we really need to figure out and we're working towards right now is getting the right partners to help build this thing. And they've been instrumental in that process. So I think they're just a great partners, they're great people and the tech speaks for itself. And so far they're, they're the one, the chain that made the most sense.

• 1:17:29David Hoffman?

  When is pudgy world slated to go live?

• 1:17:32Speaker 00

  We alluded to quarter one. It seems like a goal that we want to hit. Obviously, you know, gaming is a lot more deep and complex than I think people think. I'm slowly accepting the fact that there might be a delay. You know, it is what it is. You know, we run with the punches, but we know we need to get that product out sooner rather than later. Time is of the essence. Every day we're selling toys. Every day there's people scanning these QR codes and every day that we don't actually have a fun playable loop is a day in which we're missing out potential super fans and community members. So we need to get that out sooner rather than later and we're on the clock, but it is not a cheap feat. It's not an easy one and it's definitely going to be our biggest challenge yet.

• 1:18:15David Hoffman?

  Luca, right before this podcast, I asked the Bankless Nation what questions they wanted to ask you. So I've got three quick lightning round questions. You ready for them?

• 1:18:23Speaker 00

  Yeah.

• 1:18:25David Hoffman?

  The pudgy gifs. Why do I run into so many pudgy gifs everywhere? Whenever I'm looking for gifs on Discord or in Telegram or on Twitter and I type in some prompts to show me some gifs, every once in a while, there's always a pudgy version of the gif I'm looking for. Like, where do these come from?

• 1:18:39Speaker 00

  Content distribution. We make 200 to 300 gifs a week. It's an own seven-person department. It is no joke. So it's intentional. You got gif game then.

• 1:18:53David Hoffman?

  Yeah. All right. Next question. What is your personal favorite pudgy trait or traits combo?

• 1:19:01Speaker 00

  Don't tell anyone this, but I'm a big wizard hat guy. For me personally, I think the bowl cuts are like, I love the bowl cuts and the cross eyes because I think they're just the most memetic and they probably have like the biggest lore in the pudgy penguin group. Obviously, I'm a gold skin. We do a little luxury over at pudgy penguins, so we got to keep the gold and the ice. Gold, ice, goggles, the clout goggles. You know, that was actually my first winning product. So I was dropshipping when I was 18 because I had no bucks in my bank account. So like, you know, what am I going to do? Clout goggles was actually the thing I first made money on. So the little like clout goggles Playboy Carti was wearing them. We actually have a trait

• 1:19:42Speaker 00

  of those in pudgy penguins. So I love my clout goggles. Bowl cuts Vikings because of Alex, you know, wizards, Brian Pellegrino really set the bar for the wizards and he's kind of just migrated the flock of giga brains to the wizard community. So those will probably be my bunch.

• 1:19:58David Hoffman?

  Amazing. All right. Last lightning round question. What's your biggest worry? Your biggest worry about the Pudgy Penguins?

• 1:20:03Speaker 00

  Uh, my biggest worry, let me give you a really thought, let me give you a true and honest thoughtful answer. My biggest worry would probably be.

• 1:20:16Speaker 00

  You can make fatal mistakes in this business. It's the truth. Yeah, you know, one move can be fatal. And that, that is, that is worrisome. Because try, it's like, you know, build a reputation for 20 years, you know, one day you can lose it all. You know, this, this business is unforgiving and rightfully so, right? Like if I, if I make a fatal move and pudgy penguins go from, you know, 20th to 10th, like, you know, elephant in the room, it's really taboo, I think, for founders to talk about floor price. I, I don't know why it is.

• 1:20:53Speaker 00

  You should just talk about it head on because it really matters to people. I just dress it for what, what, what people are really, you know, it, it matters to a large segment of community members. You know, you, you never want, you know, I always think about the person who made the highest sale. Like that's all I think about, right? Like I, I, I think about them. My, you know, you can't not. So. You know, it's, it's a, you know, putting your group, who is so passionate and cares so much and does so much for your brand and potentially putting them in a spot that, that they don't deserve to be in, is my greatest worry, is my greatest fear, but it's also the thing that I work hardest to supplement.

• 1:21:35Speaker 00

  Meaning like, I had, you know, everyone has these like, good, uh, NFT councils or community councils, dude, I've, I've had that since day one. Like I, I run this thing by 20 people, you know, we had one little move with our rods. We like opt, we like made a mistake. We didn't optimize for people who like multiple, multiple. So I already kind of been in that situation. This thing is top of mind always when we announce something or when we start to post things because it is like, you know, you also have this other side that this group that wants to see you fail because they're not a part of the community and they're just so mad that they picked the wrong one. And then so then they'll they'll take like narratives that everyone's okay with and try to reinvent it. So what you really have to do is you have

• 1:22:16Speaker 00

  to jump ahead of all of the objections, right? Before you do something and think, okay, well, where's people going? Where are people going to object? And and why are they right? Or why are they wrong? And if they're right somewhere, how do we fix that? So, you know, the actual rollouts, as we call it, of this is probably the most important part of this business. And out and it's the thing that we are the most thoughtful of. So I though it's my biggest worry, it's the thing we supplement for the best and is the thing that we talk about the most in the company. And we have many, many people running, we run these things by.

• 1:22:50Ryan Sean Adams?

  Luca, thank you so much for spending time with us on Bankless today. You know, I appreciate the approach and certainly congrats on bringing Penguins back from the dead and now maybe to the masses. I have one last question. This wasn't from the community. This is my own personal. When are you going to flip in the apes, my friend? You're you're on the cusp of it. Is that gonna happen?

• 1:23:11Speaker 00

  Look, man, I have so much respect for those guys, the apes. You know, we are not here without them. I don't have the confidence to buy pudgy penguins without the bored apes. I'm just being frank. I think if anyone did a good job, it was them. I think their run in 2021 was amazing. I think I don't want to win at their expense. I think they're going to win regardless of whether we go. I think I think my hope and dream for the space and where I believe the future lies, I think pudgy penguins being number one will be nothing but a net positive for everybody involved. I just do. I think I think. Yeah, and that's my answer to that. And hopefully, we rise together and, you know,

• 1:23:55Speaker 00

  huge fans of everybody in that group. And you guys have been super helpful in just communicating with us and, you know, mentoring us in some of the things that, you know, we have questions. And so, you know, I want to see them win. And I want to see both of our brands win, though. I do want Pudgy Penguins to be number one. I think that will be good for this space.

• 1:24:13Ryan Sean Adams?

  There you go. And then we'll go, we'll flip in Pixar after that and Disney folks too. Got to end with this, folks. Of course, risks and disclaimers. NFTs are risky. If you don't know that by now, wow, you haven't been here very long. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us in the bankless journey. Thanks a lot.