Episode 64: NFTs In Marketing (Part 1)

On this episode of The A Game we explore the future of NFTs in marketing with CEO and Founder of Fandem (www.fandem.com) G.I. Zaratsian. Episode 1 of this 4 part series lays the groundwork for what NFTs are and how the early focus on art has shaped the perception of their utility. Hear G.I. Zaratsian in conversation with Jeff Culliton, Adcom President, and Nadya Scheiner, Public Relations & Positioning Specialist.

For more information, contact Jeff Culliton jculliton@engageadcom.com

Podcast Transcript

Jeff:                 

Welcome to a long-awaited refresh of the A-Game, the Adcom podcast about what’s new, now and next in marketing. We’ve a really fun series that we’re going to be kicking off today about the topic of the moment, NFTs. So GI Zaratsian, who’s somebody I’ve known for a few years now, through one of his previous positions, has joined us in, frankly, just to have the [00:00:30] conversation around what it is, and then we’re going to blow it out. So, where we’re going to start here is with a four-part series.

There’s so much to discuss in this space that I think it really behooves us to start from the beginning, because people right now are asking these very inflated questions. And so, I think most of those inflated questions need to be based [00:01:00] in some degree of fact and foundation. So with me today, from my team, Nadya Scheiner and GI Zaratsian. So GI is the CEO and founder of Fandem, which is pivoted and is now knee-deep in creating NFTs and NFT experiences for brands in the sports space. Is that correct?

GI:

That’s correct, yeah. And thanks for having me on, guys. Excited to talk [00:01:30] about NFTs. Little bit about my background. I spent about 10, 11 years working with Fortune 500 brands, helping them with their go-to-market strategies. We use data as the conduit to marketing. And I started the business, of Fandem, about two years ago. We began building cool technology to better connect brands with athletes, and then we got really distracted by this thing called NFTs. We saw a property called NBA Top Shot that was launched. It was gaining a ton [00:02:00] of traction.

We had conversations with some of the sports properties we were working with and we saw the demand. And we really, honestly, did not understand NFTs that much at the time, other than the fact that people were interested in them. Sports properties knew that they had content that they could license that could be sort of NFT-ified. So we said, “Let’s put our heads down, let’s learn this topic as much as possible, try to be early to the curve.” And we’re not looking back. We are, like you said, knees-deep in NFTs and we’re having [00:02:30] a lot of fun doing it.

Jeff:                 

What I think, this episode, what we really want to cover is setting the stage, the basics, because people hear things like Top Shots, people hear like CryptoPunks, people hear things like Bored Ape and they hear these massive valuations, and it automatically creates speculation. It is a speculative thing right now, the values of what an NFT is. So, really, [00:03:00] what I want to do is I want to get as far away from that stuff and the hype curve of it as possible and talk more about foundation.

GI:                   

If you look at it from a definition standpoint, what’s fungible, what’s not fungible, right? Break it down simple. So I’ll use things that are in front of us today. So, non-fungibility could be the property that you live on, right? That property’s unique, it has various traits to it that either make it worth more or less more than the property adjacent to your [00:03:30] house.

When it comes to what’s fungible, I’ll use the crypto example, bitcoin. Bitcoin is fungible. Jeff and Nadya, if you guys each have one Bitcoin, there’s nothing that says Jeff’s Bitcoin is worth more than yours, Nadya. It’s the same thing, dollar for dollar, based on what someone’s willing to pay for Bitcoin at the time. That’s a fungible token. Whereas, a non-fungible token is something that has uniquely distinct properties that make it different from something else.

Nadya:             

Is a dollar [00:04:00] bill a fungible token?

GI:                   

Is my dollar bill worth the same as your dollar bill?

Nadya:             

Yes.

GI:                   

Then it’s fungible.

Nadya:             

Okay. I’m just trying to, for the listener, figure out fungible means, it means the same thing no matter if it’s mine, yours.

GI:                   

Exactly. Like, diamonds, for example. Diamonds are non-fungible, because they have a certain cut, clarity, all the Cs that I forgot after I bought a ring for my wife about 10, 11 years ago.

Jeff:                 

Believe there’s five of them. And I can’t remember anything but, cut, clarity, and-

Nadya:             

There’s five?

GI:                   

Cut, clarity-

Jeff:                 

There’s a commercial, I think, anyway.

GI:                   

Shape. [00:04:30] That starts with an S. I don’t know. But that’s non-fungible, right? Every diamond that comes to market is theoretically different. Right? And so, that’s what gives the value. When you go and buy a ring or earrings, why is this diamond more expensive than that diamond? It’s not always the size, it’s the clarity or the cut.

Jeff:                 

Mm-hmm (affirmative). So, I think that’s a good baseline. I also think that people think this sprung up out of nowhere, that all of a sudden, I mean, NBA Top [00:05:00] Shots happened, and then the world knew of NFTs. And then, all of a sudden, Sotheby’s starts selling NFT art for millions and millions and millions, but that’s not really the case. At least in your experience, where did NFTs really begin and start to gain traction?

GI:                   

Yeah. It’s an interesting timeline. So I actually have that pulled up right here on my phone, the definitive timeline [00:05:30] of early NFTs and Ethereum, because Nadya, you prepped me with, we’re going to ask some questions around the first things that happened.

Jeff:                 

Thank you, Gary V., and all things Gary V. associated with NFT.

GI:                   

Pretty much. He’s the godfather of the space at this point. But 2015, no one knew what NFTs were. The terminology might not even have been established at that point in time. But 2015 was when someone first put something onto the Ethereum blockchain and published an NFT. There was [00:06:00] no widespread adoption. Just like every new technology, it takes a bit for that bell curve to kind of reach mass adoption, and we’re still not even close to there.

Jeff:                 

Not even… Yeah.

GI:                   

So 2015 was the first time someone put something on the blockchain. You mentioned CryptoPunks. That was actually 2017, 2017, and they didn’t even sell them. Those were given away for free. It was kind of an experiment to test out this technology. Until about 2020, though, that’s when NBA Top Shop, was launched. That’s when it started to have [00:06:30] a commercial application to it, in a unique way where people were buying in and figuring this whole thing out. And then, of course, last year was the year where you look at the curve of transactions attached to this space, it went straight up, right?

Jeff:                 

Yeah. So one of the questions that I get asked a lot is, when did this start to gain steam? And you mentioned NBA Top Shots. Explain what NBA Top Shots is. And if you recall when it kind of rolled [00:07:00] out and why it started to gain momentum.

GI:                   

So NBA Top Shot, singular, not plural.

Jeff:                 

Oh God, that’s right. Thank you.

GI:                   

It’s okay. You’re doing the thing my dad-

Jeff:                 

Hope I’m not-

GI:                   

… does where he says, Chipotles and Paneras. Now worries.

Jeff:                 

I’m writing it down.

GI:                   

So, NBA Top Shot, single shot, it’s… I’ll explain it really simply. It’s kind of like the trading card game, but using digital highlights from the NBA. The cool part about this is it’s built on a blockchain and that provides verification [00:07:30] and authentic ability to say that I own this thing.

Nadya:             

Can we just stop for one second?

GI:                   

Am I getting too deep?

Nadya:             

No, no. Not at all. Just define blockchain.

GI:                   

So blockchain is what cryptocurrency’s built on. So most people now know what Bitcoin is. Maybe they don’t know how it works or what it can do, but Bitcoin was built on blockchain technology. The easiest way to describe blockchain is it is a public ledger of information, and it gets written on, in perpetuity, every time there’s a [00:08:00] transaction that happens. So if I buy Bitcoin and I sell it to you, Jeff, and you then trade it to Nadya, each one of those transaction’s written to the blockchain, which means we can verify where it came from, who it went to and what’s happening with that currency.

So blockchain is the technology that provides proof, authentication, it’s secure and it’s decentralized. So the concept of decentralization means Google or Facebook isn’t running that blockchain [00:08:30] and telling you what you can and can’t do with it. Decentralization means thousands and thousands of people around the globe are providing a little bit of computer input and output to help make these transactions happen, which means there’s consensus every time a transaction goes on to a blockchain.

So if I want to send Jeff a Bitcoin, Nadya, you can’t block that. You can’t say, “No, you can’t do that.” Enough people have to be in agreement that says, “Yep, this looks like a valid transaction and we can execute it.” [00:09:00] So that was really the birth of Bitcoin being built on blockchain. And then, that migrated into things like Ethereum, which is the second largest from a market cap standpoint. Cryptocurrency out there in the market today, most people know of Ethereum, but they don’t realize, oh, that’s actually a blockchain that you can transact with NFTs. And we can dive super deep into this topic, because it’s-

Nadya:             

I just wanted to set up the background, and then, I want you to be able to talk more about the Top Shots.

GI:                   

And it helps to [00:09:30] kind of-

Jeff:                 

No, Top Shot. Top Shot.

Nadya:             

How’s the softball?

Jeff:                 

Yeah.

GI:                   

Just laying it up there for us. So NBA Top Shot, going back to that, this was launched, I think, in June of 2020 Interesting time, pandemic, right?

Jeff:                 

Yep.

GI:                   

I think basketball was not on, or maybe they did the bubble thing then. But a company called Dapper Labs formed a partnership with the NBA and they said, “Hey, we want to take all of your video content and bring that onto the blockchain, [00:10:00] package them up as you would trading cards and sell LeBron James’ dunk, Steph Curry three, whatever it may be. We think that there’s opportunity in the space to create a better user experience for integrating NFTs to the mainstream audience.” And basketball has a massively mainstream audience. It’s a global audience. People are big fans. They spend a lot of money on the shoes, the gear, the jerseys, everything in between.

Jeff:                 

And they also have, they have a history of being bleeding edge on [00:10:30] things like this.

GI:                   

Exactly.

Jeff:                 

Which, I think, gave them the credibility to try something out. The other leagues don’t have as much latitude because they don’t take as much risk. They also don’t do as good a job of building brands around their athletes. The NBA has far surpassed everybody else from that perspective. So I think it gave them the latitude to say, “Hey, we’re going to give this a shot.”

GI:                   

The problem with that is you can have the biggest audience in the world, but if you introduce a concept that’s so complicated, how do you buy in? How do you [00:11:00] get user adoption and scale? Because blockchain is public information, you can actually go look at the transactions from the first couple months of NBA Top Shot. It was in the wild success.

Jeff:                 

Oh yeah, it landed with a thud.

GI:                   

Right. Very few people buying, very few people transacting. It wasn’t a massive scale at the time. But then follow that trend and it does go up and to the right very quickly. So, what made it that way was, they built [00:11:30] better user experience to bring people into the NFT ecosystem, meaning you can buy this with a credit card. We’re all comfortable using a credit card or PayPal or any of these sort of alternative payment methods that we’ve been doing for the past 15 years, to transact and buy something. Because prior to that, most of these NFT projects were transacting exclusively with cryptocurrency, which is a complicated process the first time you do it.

Jeff:                 

And some people have an inherent distrust of.

GI:                   

Right.

Jeff:                 

And to gain adoption, [00:12:00] you need a lot of people, and a lot of people had inherent distrust because it was confusing.

GI:                   

And so, NBA Top Shot, with the credit card, okay, natively I understand this, and natively over time, I will actually really understand the blockchain. I will really understand what an NFT is because I’m buying something that I own. Now, to clarify, I don’t own the commercial rights to this LeBron Jame dunk, but I do own the ability to trade it, to sell it, to use it, to grow my collection, to [00:12:30] unlock incentivizations or rewards. So like a loyalty program on steroids, with the NBA. But what that did was, it created this mass adoption wave and I think it’s been critical for the overall NFT community for NBA Top Shot success to grow bigger and faster because of the attention. It got our attention and we converted our business into this model.

Jeff:                 

All in. Push all the chips in.

GI:                   

All in. Yep.

Jeff:                 

But I think, one of the reasons that this gained, also gained so much steam is, because [00:13:00] you could see other leagues, you could see other organizations that were huge content creators, that were inherently content creators, and that’s when a light bulb that went off that said, “Oh, wait, maybe we… All this that we’re collecting regardless, we can monetize. Maybe this is something that can add to the valuation of our business.” And the momentum started to create itself at that point. It also got adoption from some people who are very popular with major audiences. [00:13:30] So one of the questions that I get a lot, maybe the first question that I get from most people after, “Isn’t this a bubble?” Which we can discuss in-

GI:                   

I hope not.

Jeff:                 

I hope not, too, for you. Well, actually, I do feel it’s a bubble, but I think it is inherently here to stay. So the question I get is, “How do you create an NFT?” Is it just a picture? What is that experience that you use to create an [00:14:00] NFT?

GI:                   

It’s becoming less clunky, so that’s good for people who want to get new to the space. Nadya, I’ll use you for example, right? You’re an artist, you’ve created artwork before. You either digitally create something or you draw something that you want to transfer that into a digital asset. Today, there’s a couple ways that you could do that independently. There’s sites like OpenSea, S-E-A, dot io, opensea.io., where you can go to and you can upload your own content, you can, essentially, mint [00:14:30] that to the blockchain.

And what that means, minting to the blockchain, it’s the first time an asset is born under the blockchain. So now, it’s actually a published record on that ledger that’s the blockchain. So you could take your art, you could go to OpenSea, upload it. You could name it, you could give it some properties, like what do you want to describe about your art? All that data, an image file, and then, metadata, the information that you said about it, gets merged together, [00:15:00] written to the blockchain and now it can be publicly accessible from other people.

So now what can you do with it? It’s on a blockchain. It’s attached to you. And I’ll describe wallets and stuff in a little bit. But you now have this asset that’s owned by you. You can list it for sale, you can transfer it and send it to somebody. So you have a couple of options, or you can build a bigger collection and start to create demand around you, the artist. And then, at some point in time, you can to begin to sell an auction off your assets to consumers. [00:15:30] So that’s a user perspective of how I can get something up under the blockchain.

Businesses or bigger commercial rights properties, a lot of times there’s the ability to create a custom website, essentially an NFT storefront, right? Everyone today’s familiar with Shopify. Take that concept now to NFTs. What of my assets can be digitally monetized? Beyond highlights, is it art? Is it [00:16:00] access? Is it a membership card that ends up being an image file of something, but based on the metadata attached to it on the blockchain, can grant me access, gated access to things, right?

So a lot of companies, what they’ll do is they’ll build their own sort of marketplace. They’ll build their own sort of Shopify storefront for NFTs, and that’s where sales can originate from. And then, beyond that, there’s hundreds of places where secondary transactions can happen. And [00:16:30] I’ll hit this topic real quick, and then, I’m sure we can dive deeper into it. One of the biggest value propositions of NFTs for rights holders are secondary marketplace transactions, because you can embed a royalty into the sale of NFTs.

Kind of go back to why NFTs were even formed and created from the beginning, think about it from an artist and a musician standpoint. If you’re an artist and you’ve create a physical piece of work and you sell that to a gallery or a museum, there’s a transaction that happens one time and then it’s gone. [00:17:00] You don’t see it ever again. In the digital ecosystem, with NFTs, you can sell that asset to a friend or a random stranger who thinks it’s great. They buy it, they sell it again in five years for a hundred X return on what they purchased it for. The originator, the artist, gets a cut of that. You can embed an actual percentage royalty for every time this transacts on a secondary market, the originator of that asset gets a cut.

Jeff:                 

So let me-

Nadya:             

So-

Jeff:                 

Oh, go ahead. Yeah.

Nadya:             

I was going to say, in [00:17:30] some ways, I mean, one of the questions I think Jeff, that you and I have heard over and over is, “Are NFTs art or are they currency?” And it sounds like, this example, you’ve just given, they’re both.

GI:                   

So I read that question earlier. My answer to you is they’re both. They’re independently their own thing, and they’re none of the things, right? So I know I’m confusing you, but think about… So, let me describe how you buy an NFT. So that was how you list NFT, how you can [00:18:00] sell one. When you buy an NFT, traditionally, you need to use cryptocurrency to purchase that. I know, I know I gave the example of NBA Top Shot where you can use credit card. But, really, in the back end, all they’re doing is transferring that from a credit card to a cryptocurrency to power that transaction on the blockchain.

So when you buy an NFT today, you will create what’s called a digital wallet. And a digital wallet, I’ll give an example, like MetaMask is the more common one on the Ethereum blockchain, [00:18:30] you will create that wallet, which is a weird process, by the way. If you go to metamask.io, I think, it makes you, you have to save this 10-word passphrase and never forget it. If you forget it, you can’t access stuff in your wallet. It’s there for a reason, because there’s no bank that gives you a, “Oh, forgot password.”

You own your wallet, you own your custody over your assets in there. But then you need to get cryptocurrency. So you’ve got this wallet, now I got to get crypto. And if I’m buying something on the Ethereum network, [00:19:00] I’m going to use Ethereum as the currency. So, the way I do it, I go to Coinbase. I use Coinbase all the time. I buy crypto in there. Once I have Ethereum, I can then transfer it from my Coinbase account to my MetaMask wallet, and it’s actually a really simple process-

Jeff:                 

That is easy. Yeah, they’ve-

GI:                   

They-

Jeff:                 

… done a nice job there.

GI:                   

It’s really easy. The first time you do it, you’re like, wait-

Jeff:                 

Did it just happen?

GI:                   

… what’s this [crosstalk 00:19:23], right? What’s this extra transaction? We’ll talk about that in a bit. But now I have crypto in [00:19:30] my digital wallet, my MetaMask wallet, and I want to purchase an NFT. And it could be an NFT of your art, Nadya, and you charge me a thousand dollars because you’re that good, and I want to pay a thousand dollars for your art. I now buy this for a thousand dollars of Ethereum. That Ethereum gets transferred directly to you. I now own this NFT that lives and is stored in my digital wallet. To me, that’s art that I just purchased. It’s also where I just theoretically stored my currency.

Nadya:             

[00:20:00] So it’s an investment.

GI:

It’s an investment, right? And that’s not always the case with NFTs, but in this case, it is, because it’s art. Because the art can’t do anything, right? It doesn’t give me access to stuff in real life. It’s just something that you created, and you’re a great artist that I now have of yours that has perceived market value. So what do really rich people do with their money? They buy art. They buy really expensive art, because it’s a storage vehicle for their money. It can appreciate over time, depending on the art. It doesn’t typically depreciate, so it’s a [00:20:30] safe place to put your money.

And you all also have the volatility of the cryptocurrency market riding. So if I buy this thing for a thousand dollars and the crypto market dips by 20% the next week, which it does a lot, well, I still got this thing that might still be worth a thousand dollars. And as the cryptocurrency market gets improved, and then you become a bigger named artist, well, now, I’ve got something that can appreciate even more and I could sell it for more down the road.

Jeff:                 

So let me, I want to take one step back from that, [00:21:00] because here’s the second question that I think gets followed up on all the time after the first is, if I’m purchasing an NFT, what do I do with it? Do I just have the image of it? What do I do? What are people doing with it that creates value? That creates value for them? So, there’s the monetary perceived to be, or not even perceived, the actual what somebody will pay to transact it from you. But with a lot of art, that’s not just storage of [00:21:30] wealth for somebody in the top 1% of the 1%. If I’m buying an NFT, what am I doing with it? Can I use it places? Can I put it up on a billboard? Can I… What do I do?

Nadya:             

Do I print it out and frame it?

Jeff:

Could I just have gotten the piece of… But that’s the hurdle. People who have discomfort not owning a physical asset, that’s the “Oh shit,” okay, I got it. It’s a storage of value, but other than [00:22:00] that, what is it? Is it good for an avatar for my Twitter profile?

Nadya:             

And it can depreciate, I assume.

Jeff:                 

Absolutely.

Nadya:             

Right?

GI:                   

Sure, sure. There’s volatility on it, right?

Nadya:             

Mm-hmm (affirmative).

GI:                   

It’s a great question. I like to… Look, I talk to a lot of people that have been in traditional finance for a long time, and when you tell them you’re into NFTs and crypto, they attack you, right? It’s fine.

Jeff:                 

Quickly, too. Yes.

GI:                   

But it’s a game. I have fun with it. I ask them, “Oh, you invest in gold, right?” “Yeah, totally. Gold’s great. We always tell our… When the market dips, we tell our clients invest in gold.” Have you ever held a gold bar?

Jeff:                 

[00:22:30] It’s real heavy.

GI:                   

Yeah. Where have you played with the gold that you own? You don’t-

Jeff:                 

That’s a… Yeah.

GI:                   

… see it, you don’t touch it. Same with your stocks. What do you do with your stocks? You can sell them and trade them and stuff, but you’re not, you’re really printing out the certificate of stock ownership and framing it? Right? So there’s a lot of things that we transact in today already, prior to NFTs, that you’re not doing anything with, right? What do you do with your Costco membership card? I mean, you go to Costco and shop, but it’s just a card the end of the day, right?

Jeff:                 

Mm-hmm (affirmative).

GI:                   

It’s an access into [00:23:00] something. So NFTs can operate in a ton of different ways. So, you said the Twitter profile thing, that is the flex.

Jeff:                 

Oh, is it ever.

GI:                   

It is the digital flex.

Jeff:                 

Yes it is.

GI:                   

Why does someone buy a Rolex watch today, when you can buy-

Jeff:                 

Nadya, I can’t… Nadya’s looking with this befuddled face.

Nadya:             

Like, what is Twitter?

GI:                   

What is a PFP? Stands for profile picture. Why do people buy Rolexes when you could just get a really good standard, I don’t know. [00:23:30] What kind of… You have an Apple watch, right?

Jeff:                 

Yeah.

GI:                   

Get an Apple watch.

Jeff:                 

Get a Seiko.

GI:                   

Yeah, a Seiko. I don’t know watches. I don’t wear them. But why do you get a Rolex? So you can flex, so you can show people that you have a Rolex and people now, you present differently, you carry yourself differently. People do the same thing with shoes. People buy shoes they don’t wear, which that’s not my game, but it’s great for other people.

Jeff:                 

[crosstalk 00:23:51] Nadya.

GI:                   

Yeah. Are you buying Jordan’s? Or are you-

Jeff:                  …

GI:                   

There you go.

Jeff:                 

J’s on right now.

GI:                   

I love it. But you probably have shoes that you don’t [00:24:00] wear. What do you do with it? Look at them? Show people?

Nadya:             

I just wear them on occasion.

GI:                   

Occasion. But there are a lot of people that-

Jeff:                 

To make you feel good.

GI:                   

Right.

Nadya:             

Yeah.

GI:                   

Right. There’s companies like StockX, where you can buy your awesome shoes and then never actually touch them or see them, you just basically have ownership rights to them. That’s what we’re talking about here. With NFTs, the number one thing that’s the trend right now is the PFP collection. So these are NFTs that replace your picture on Twitter of your face, with [00:24:30] that image. And you can now showcase the world that, “Hey, I’m one of these people that bought, that got a CryptoPunk, or got a Bored Ape Yacht Club.”

And what Twitter’s even done on top of that, because what’s stopping me from copying a picture of your CryptoPunk and saying that I have it, too. Well, one, I don’t have it, because the blockchain tells me I don’t. But people on Twitter don’t know. Twitter did this little thing where they have this hexagon. Now, if you have an NFT and you want to make it your PFP, you connect your digital wallet, that same [00:25:00] wallet that we talked about, and then say, yep, this is my PFP.

Jeff:                 

Genius. Genius, genius.

Nadya:             

Verify it, upon verify.

Jeff:                 

People talk about it all the time. Do you want a blue check mark next to your profile?

Nadya:             

Exactly.

Jeff:                 

Hundred percent. What value does it have? Makes me feel good inside, makes people know I have clout, makes people know I have a big network. The perception thing-

GI:                   

It’s a big deal.

Jeff:                 

… is a gigantic deal. And it always cracks me up, because I think your gold bar example is really fantastic, is people act like this isn’t [00:25:30] happening in X number of different pieces of our life already. It’s because people are inherently uncomfortable with not knowing what it is, it being early-adopter, bleeding-edge stuff, and not being physical, they attack. They come at it as a, “Well, this can’t be valid because it’s…” Well, in all reality, every time you use your credit card, that is, in many ways, the exact same thing. We are very [00:26:00] comfortable transacting in things that are not physical. It’s just this is a real wave. And this wave is, I mentioned before, a bubble.

And for your business, I think the getting in at a time like this, there’s two pieces of what you got to look at. Is there going to be Bored Ape Yacht Club? Is there going…?  Yeah, I mean, those things are going to exist. However, things that are just going [00:26:30] to sell at these massive valuations because they’re new and original, that’s going to recess. I mean dotcom bubble stuff, everything’s going to be a dotcom and then, bubble’s going to… But the stuff that’s valid, the processes that are valid, will stick and will persist. And I always point at, in our business and your business, we’re responsible for knowing where attention is. Where do I put your money? Where attention is. Is it the right kind of attention?

Well, that’s my responsibility. [00:27:00] I need to know that. As a marketer and as somebody who is responsible for helping to lead people’s brands forward, where is that market going? And I always, I have to look no further than my son and his Nintendo Switch. My son is six years old. He would tell you, he’ll be, he’s almost seven, very close. But his Nintendo Switch, he will hand to me, and when he gets his allowance, he’ll look in and say, “I want to buy a new guy for Super Smash Brothers.” And he will transact $5.99 to get a new guy that he can take down the street to his best friend [00:27:30] and say, “Look what I got.”

Nadya:             

I know.

Jeff:                 

They are so deeply comfortable with owning digital assets.

Nadya:             

Right. My nine-year-old and Roblox.

GI:                   

Yep.

Jeff:                 

There is no barrier to them between that being actual, tangible ownership, regardless of the physicality of it. And that is all you need to know. Are we in a hype phase right now? Yeah, absolutely. We’re in a hype phase on it. However, is it a way that the next generation feels comfortable transacting? Without a shadow of a doubt.

GI:                   

[00:28:00] And what you just described. I mean, that’s really the 25-and-under crowd, the kids that grew up on Fortnite and skins, video games skins are so important. We talk about the digital flex on Twitter, that’s the digital flex on a video game, right? Look at the stuff that I either earned or I convinced my parents to let me buy.

Jeff:                 

Yeah.

Nadya:             

So do you think the demographic, if you had to, that is people buying NFTs are 25 and under, or are you just [00:28:30] saying that’s the demographic of those who are most comfortable?

GI:                   

Those are the people that are most comfortable that conceptually just understand it. Whereas, so, really the demographic, I mean, for NFT transacactors, it’s 18 to 35 is the big sweet spot. And that’s a broad age group. And you’ve got a weird mix of Millennial with Gen Z, so there’s a goofy overlap there. But the older end of that spectrum are people with more discretionary spend, right? And they can take the bets on, “Hey, I’ll throw $5,000 into [00:29:00] crypto and see what happens,” and test out the NFT game. And then you’ve got people that natively just kind of grew up on, oh, I get it. I played for… I grew up on Nintendo, like regular. You could create a character eventually in 64-

Jeff:                 

64. Yep.

GI:                   

There was no skins, there was no monetization there, right? Kids that have grown up with a Fortnite or a Roblox or Minecraft, they get it. They get that you can build, you can construct, you can own. Even though [00:29:30] you’re not really owning, because guess what? You just paid for all these skins and if Epic Games decides to cancel that, you just lost all your money and all your assets. Whereas, okay, insert the blockchain and now NFTs, boom, you got ownership of this thing. So you’re actually paying for something that you own, which is a great twist in the concept of paying for skins and in-game assets.

Jeff:                 

So I’m going to pause us here, because I think this is a really, this has been a neat dive into the building blocks. I almost said [00:30:00] the Roblox, the building blocks of what this is. So, we’re going to cover in this series four pieces, A, what we just talked about, setting the stage, the very transactional pieces of what this is. The next piece of it, which I’m excited to get into is applications. Let’s talk about places where this is really being used. We’ve touched on a couple of them already, Bored Ape and Top Shot. See what I did?

Nadya:             

Mm-hmm (affirmative).

Jeff:                 

And then, we’ll [00:30:30] get into a concept that is even more dense and undefined than this, which is the metaverse-

Nadya:             

But which we’ve alluded to when these kids are playing these games. They’re living in a metaverse.

Jeff:                 

A hundred percent. And then, we’ll take it even one step further with Nadya. Nadya, as GI mentioned, is an artist. And we’ll actually go through the process of creating some NFT art, based off of things that Nadya has already created and, hopefully, [00:31:00] mint a multi, multi-millionaire in the process. Which I said, if that does work out, I do want an original piece. But I’d like it physical.

Nadya:             

Mm-hmm (affirmative), yeah.

GI:                   

The physical copy.

Jeff:                 

The physical copy as well.

GI:                   

And a cut of the royalties, too.

Jeff:                 

The cut of the royalties. So I’m going to put a wrap on episode one here. Nadya Scheiner, GI Zaratsian, CEO and founder of Fandem, with me. And thanks everybody for joining and look forward to episode two, where we get deeper [00:31:30] into NFT applications.

For more information, please contact Jeff Culliton jculliton@engageadcom.com