Hi! I’m Ivan Landabaso, VC at JME.vc. Join >2.5K founders and investors surfing emerging tech waves, twice a month.
Summary
🌊 NFTs: The Good, the Bad & the Ugly
🦾 Leverage: Revenue²
💵 Deals: Paack, Fever, Domestika.
Investments in crypto-assets are not regulated. They may not be appropriate for retail investors and the full amount invested may be lost.The Good, the Bad & the Ugly: NFTs 🖼️
When people react so viscerally to a new way of applying technology with a strong “that’s stupid” - it is worth paying attention to.
I think NFTs suffer a lot from this phenomena, not without reason:
Lots of rug pulls
Lots of social engineering scams
Some early diamond-hands shilling garbage projects
Extreme levels of mania and speculation
And a long list of etc.
In this >2h video, Dan Olson takes on crypto and NFTs head-on - with frankly some solid arguments / things that also concern me, including:
Crypto / NFTs are a potential privacy nightmare
The current environmental impact of certain Proof-of-Work protocols
Important concerns are often dismissed as just FUD: fear, uncertainty, and doubt
Evidence of some recreation of existing power structures in a new environment
DAOs have proven to be problematic in many instances
And another long list of etc.
Yet - his conclusion is possibly flawed, offering only two options for the future of crypto: 1) Fails completely 2) It succeeds completely, trapping us in a hyper-capitalist world where the richer get richer and tighten their grip on humanity.
The Third Way
There’s a third-way - I like how Jesse J Rogers describes it:
“Cryptocurrencies” fail to dislodge fiat or disrupt nation states, but they evolve into taxed and regulated “digital assets” that are competitive with things like real estate, bonds, and gold.
In my mind, crypto represents a shift in internet culture that ATTEMPTS to put more power in the hands of builders and users. Wether it succeeds remains to be seen.
Crypto and NFTs open up a new decision-making vector - for consumers to consider where they spend their time, the ultimate currency - and for creators on how and what to build.
It is not black or white (as many would have you think).
Think about crypto / NFTs as opening up a space for new companies to move across a spectrum. On the extremes, you find total centralization and total “decentralization” (not the core point of crypto, see the great web3 debate).
The vector that opens up is a choice to share value between builders <> consumers across that spectrum. You can, and I think many will, live somewhere in the middle.
Here’s a great example of this decision-making vector at play in the play-to-earn (P2E) vertical:
There’s something interesting going on, or at least worth paying attention to.
I’m not what you’d call a GaryVee fan, but I do like how he “defends” the space in this interview. Here are his core points:
There are bad actors in every industry, not just crypto: “I don’t think the crypto space has any more issues than the internet, society at large, mainstream media, Wall Street… I think it’s a new avenue of innovation. Every avenue of innovation has good characters and bad characters. I look at it as a new platform where consumers and humans co-evolve, and all the good and bad that comes along with human behaviour will play out on the platforms”
You think too highly of your ability to predict what should and shouldn’t have value - that is the market’s job: “People thought that Andy Warhols and Jackson Pollocks should not have value. People thought that sports cards should not have value. People thought that sneakers should not have value. The thought of people deciding on their opinion on what should and shouldn’t have value has made me laugh my entire life, and has historically been incorrect. The market will decide if something has value”
Don’t try to predict the future, try to see the present very clearly: “For me its more about understanding WHY people buy NFTs. The same reason people buy Channel handbags, Nike sneakers and Mercedes etc. If you look at the behaviour of the under 15 year old crew - Forntnite, Roblox, Minecraft. If you look at why people care about blue checkmarks on Instagram, or how many followers you have on TikTok - we are living more and more in a digital landscape. NFTs become assets to communicate who you are. That is something human beings have done forever - bought things to communicate.NFTs will be the scaled version of that.”
This doesn’t take away from the importance of being careful, because although every innovation wave is exciting, you need to be aware of the mine field you are entering.
So how did we get here and where’s the frontier?
⏳NFT Crash Course: How We Got Here
I’m gonna move real fast here because I assume 90% of you know this already, but just in case your grandma asks 👇
NFTs for your grandma
Imagine Grandad’s annual membership to go see Athletic Bilbao didn’t just grant him access to the stadium - but also allowed him other benefits that have been unlocked automatically for being a member for over 40 years.
Imagine instead of a piece of paper with a picture of his face, this was an invisible contract that both him and the club had access to through the internet - which allowed him to use the VIP queue, gets a 25% discount on stadium food, better seats and an annual invitation to spend 5´ with the players prior to a big game.
Now, imagine if - instead of having to issue a new certificate every x years - the membership was immutable, making it in turn a collectible in itself. There could be a market where you could sell it, exchange it, rent it to others or even borrow against it.
That’s an NFT, essentially a certificate of authenticity that you can “program”.
Think about an NFT as having a lawyer living within an excel spreadsheet. Imagine you buy a piece of digital art, anyone can click on it and see who owns it - by meeting your lawyer on the other side of that link. It just so happens that the lawyer is a program. Because of this programmable lawyer living inside a spreadsheet (database), we can make digital objects scarce, provable, and valuable.
What is also really cool, is that you can infuse NFTs with “terms” within it (just like the grandad football pass example) - going back to the lawyer living inside the spreadsheet, you can instruct them (with code) to do some amazing things like:
Pay me, the original creator, a x% of every resale that takes place
Let the holder of the NFT access XYZ physical or digital space
Let the holder of this NFT “breed”/”mint” another NFT
Let the holder of this NFT get paid $X following Y conditions
As a result, a new world of opportunity has opened up - where artists and creators are the explorers & pioneers in this experiment.
If you want a good deep dive of the history of NFTs, read this article. Otherwise this visual should do 👇
🎢 Where Are We Now: The Hype Cycle
More likely than not, we’re in peak hype - also evidenced by the fact that despite a relatively large crash across crypto in the past few weeks the top 100 NFT collections didn’t get anywhere near as affected (when looking at floor prices).
With market hype (maybe?) at an all time high:
And yet, its still likely very early - less than 3% of the US population owns an NFT:
And the velocity of adoption is outstanding. This is likely exacerbated by some flashy names entering the mix including Visa purchasing CryptoPunk #7610 for $150,000:
Adidas selling 30.000 NFTs at 0.2 Eth a piece in minutes:
And big celebrities buying into and pushing collections:
Watch out for three big factors which will, imho, open the flood-gates even further:
Coinbase NFT marketplace fr MasterCard- with more than 3M people on the waitlist - which will also integrate MasterCard payments (make it frictionless for non-crypto audiences).
More celebrities with massive audiences influencing people to pay attention at the space.
Big Web2 players itching to make a play in this market.
When things are this hot, it’s time to be extra careful. This is an exciting field, full of land mines - and particularly suited to make you fall for survivorship bias.
Knowing this, I’ve been trying to put on my scientist hat - trying not to judge based on biases & assumptions, evaluating the reality on the ground, with a heavy dose of:
Critical thinking & healthy skepticism
Open mindedness
🧑🔬The Experiment
I’ve been going in there getting my hands dirty in the NFT space as a learning experiment for the past few months - its been really interesting. I’ve gone down many rabbit holes, but here’s 2 that stuck out:
Fractal
The crypto-space is an information overload nightmare - so I’m very deliberate about what information sources I consume, and what communities I join. I’ve got 2 discords I pay really close attention to. One night, a message pops up about needing to hurry-up and checkout a project called Fractal.
It turned out to be Justin Khan’s (founder of Twitch) gaming NFT marketplace play on Solana, which is arguably really cool.
I got lucky and got in early, and within 72h the discord had exploded to >100K members. The incentive structures / GTM tactics used on this project were interesting and fun to experience:
You got a coloured “badge” and label depending on how early you were, which gave you clout (they’ve since removed them).
There’s a bot you can hit to check your rank / status within the community
Mods where trying to figure out who’s helpful “promoting” people to the “good vibes” badge and private channel - where we got to hangout with some members of the Fractal team.
They airdropped me an NFT for being an early adopter (mine is a quad and looks a little like this one, the earlier you got in the more “rare” it is).
The utility is supposed to be a not-yet-well-defined access to early P2E NFT collections, exclusive events in the future, and a list of TBD.
Some wild stuff that happened / take-aways from the adventure:
There was a hack on the discord (social engineering) where 373 people lost a total of $150.000. The team reimbursed it all to those affected. Justin Khan stepped in personally.
There were tons of bots and bad actors in the discord and on twitter attempting to take advantage of people, especially new people in the space who aren’t trained to spot scam artists.
The Fractal marketplace initially offered NFTs that priced out anyone who wasn’t already moderately wealthy - this has gotten a little better with new projects being published on the platform.
The Fractal team had a lot of issues figuring out how to onboard people to the discord, and at some points were completely overwhelmed.
All in all, the community was actually mostly really fun - with the great majority of people genuinely excited about a seemingly legit business going online in which they could take a part of. Plus I think the value prop is actually really interesting.
Wagmi Monkeez
I had been playing around in the ethereum ecosystem and experimenting with OpenSea - but quickly got tired of the constant shilling / FOMO pushing early ethereum NFT adopters on twitter (to the point of muting), especially considering how crippling the ETH gas fees have been (cost-prohibitive for most people, and yes, I know their on their way to fix this with the merge, still not cool in the short term).
So - I got to exploring. Thinking maybe 2 deviations away from mainstream NFT mania could be a good learning opportunity - I dove into the Terra NFT space (which is particularly under-explored).
After spending some time reviewing collections on both Knowhere.art and Randomearth - the two “most known” NFT marketplaces on Terra - I landed on WagmiMonkeez. I chose them based on: 1) cool pixel art 2) discord seemed friendly enough 3) non-prohibitive gas fees, achievable floor price (that changed).
I started hanging out a little on the discord and people where mostly super friendly, thinking of ways of expanding the collection’s “utility” with a mixture of online hangout events, swag and breeding capabilities (if you own a monkey and kong, they can have babies). Reminds me a little of a mixture of Pokémon + tamagotchi + a random online community / emerging group of friends on the internet - its hard to explain but it has been an enjoyable / pretty fun experience so far. Because I held a monkey, I was whitelisted for the mint of Kongz, and I’m now waiting on the breeding process to take place - Im very aware this all sounds completely ridiculous but again, it has been inexplicably fun.
P.s. this is not an endorsement of this project, and it can easily go to 0.
🧗 The Frontier
Here’s a list of interesting projects - some have arguably some utility, others are just completely random / likely useless - that will show you how wild this space is:
NFTs + DeFi: Mobox, DeFi Kingdom, NFTX (liquidity protocol for NFTs).
IP-NFTs: VitaDao is experimenting with a generalizable Legal Framework for Fractionalized IP-NFTs - the idea is launching a fair, reasonable, ethical and non-discriminatory sublicensing system for drug development .
Programmable Cashflows: Superfluid - With Superfluid, you can stream tokens over time to an NFT. If the NFT changes hands, the stream is automatically redirected to the new owner.
NFTs As Access / Redeemability Autograph.io - access to exclusive celebrity content and experiences | Flyfishclub - members only private dining club | Laagam - future access to fashion events | Crypto No-coders - access to discord and future airdrops / royalties
NFT Platform Whitelabel for Community - Rarecircles - an all-in-one community membership platform that allows for creation of NFTs across multiple chains (no coding required) and a set of tools to engage / reward a community.
NFTs as fundraising - SyncityHQ - they released 8000 NFTs that sold in 18mins raising 3M to develop their game | Partyround - web3 social investing tool reinforced with NFTs.
Raising awareness - CocaCola launched a charity project in 2021
NFT + Storytelling - Storyverse - user-generated no-code game publishing platform. Just checkout the onboarding page.
NFT Loans - Pine.loans, Zharta
NFT Indexes - Imagine Christie´s NFT ETF and the liquidity it offers.
NFT Communication - ChatWallette - randomly connect with other NFT holders | Sylo - Multi-chain, NFT integrated, communications empowered web3 wallet.
NFTs as Virtual Wardrobes - Draup platform
NFTs Portfolio Trackers - Floornfts.io - Check your NFT portfolio movement, browse your collection, find new NFTs to add and more with the Floor iOS app.
Verticalized NFT platforms - UFC Marketplace (ft Dapper Labs) | Gamestop NFTs | Fractal - Gaming NFT marketplace | Enefty - marketplace for Youtubers where people can collect and trade video highlights and other digital assets secured on the blockchain as NFTs. | SocialNFT - NFT markeplace for influencers | The list here is very long, with lots of projects hardly differentiated beyond a more or less narrowed-down niche.
🚩 The Red Flags
Borrowing from a good review from the metaversal folks, here’s the tl;dr of things to watch out when looking at NFT projects if you ever consider the space:
🚩 Indefensible / excessively high mint prices
🚩 Sketchy social media activity - ex. excessively large number of twitter followers for a new project, none of your followers follow them, bot activity etc.
🚩 Artificial floor maintenance - see if there’s pressure within the discord to push people around establishing a floor price (not good)
🚩 Abusive Discord behavior - are people getting banned from discord for asking hard / reasonable questions?
🚩 Bots everywhere - if you see a big twitter account posting and within seconds some random account shills an obscure project, multiple times.
🚩 No audits
🚩 Low-quality art - subjective, but ask your artsy friends for a check
🚩 Unverified on Etherscan
🚩 Poor ownership distribution - lookout for the concentration of nfts in the hands of few. Ex. a 10K item collection has 100 owners.
🐇 Follow the white rabbit
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📈 Revenue Squared
My friend Jorge (Head of EMEA @Canva) and I are running an experiment - launching a sales leader in tech community (starting in Spain).
The idea is to give sales leaders an online community space to share experiences, learn from each other, solve problems others might have already experience and hangout (with the occasional dinner / potentially events).
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💵 Recent Deals In Spain
You love startups and want to enjoy a Spanish lifestyle? Come join the Spanish startup ecosystem. Here’s a list of recently funded startups:
Paack (logistics) raised 200M
Fever (entertainment platform) raised 200M
Domestika (edtech) raised 96M
Rosita (Longevity) raised 2.4M
Plexigrid (energy) raised 2M
Alter.School (Travel, education) raised 1.7M
Pink Albatross (Foodtech) raised 1.2M
Harbest Market (Agrotech) raised 1M
Nanoligent (biotech) raised 1M
Berba (language tech) raised 1M
Wegaw (energy) raised 1M
Oubita (crypto) raised 1M