Pudgy Penguins' plan to onboard 100 million users

Transcript

GM good morning welcome to the milroad show The Daily crypto show that's as energizing as high five from your best friend I'm your host Jay Hamilton and today is a very special day today we've got Luca Nets CEO of pudgy Penguins on the show we're breaking down Luca's blueprint for how pudgy Penguins plans to onboard the next 100 million users on chain which is off to an incredible start after selling over 1 million physical toys to date and why Luca believes paji Penguins will outperform staked eth over the next 5 years so stick around until the end to find out Luca welcome to milk Road Show hey I'm

super excited to be here I've been a huge fan of milk Road for a long time and so I feel like this is a full circle moment for me all right I want to start with Walmart you're one of the few leaders in nfts who seems to understand the basics of profit and loss While most are spending Millions on Building Products which have minimal product Market fit you decided to focus on generating Revenue by selling toys A playbook which you know well as you previously did 500 million in revenue from a past toy business now this Playbook starts with getting your toys in Walmart which pudgy Penguins achieved last year what was the outcome of being in Walmart yeah I think from our perspective we kind of saw the writing

early on in terms of what was needed to build a sustainable and successful nft project uh I think first and foremost it was it was the idea that you couldn't project or forecast Revenue with the existing model and that you in order to succeed just as an entrepreneur and I think hopefully all business owners out there listening you know have a business model that is growable forecastable and projectable and I think that gives you a really good anchor of stability to ultimately grow your business and and a lot of Leverage I think what we saw prior to our acquisition with you know of pudy penguins was this Cadence in which nft projects really generated Revenue by selling more nfts and it actually totally counteracts the most beautiful mechanism apart uh that that

that makes these nfts so special which is scarcity right and so like the more nfts that you issue the more fragmented liquidity becomes the more that demand gets separated outside of the core Collections and ultimately uh you know we've kind of seen this multiple times up until this point that uh you know issuing more nfts outside of the core nfts uh is a is a recipe for disaster and so the one of the first things that we did when we came into this was like how do we build a sustainable growable and forecastable revenue stream uh and toys seem like really low hanging fruit uh it took us about a year to kind of develop the line uh you know 25 individual SKS all licensed from holders meaning every toy that you see on shelf and Walmart and Target is actually an nft that is licensed directly from an

nft holder and every time we sell one of those toys to get a royalty and perpetuity and we've paid out hundreds of thousands of dollars up until this point to nft Holders so I think that's really exciting exciting you know Walmart was a was a huge breakthrough for us obviously I think it was just uh maybe just under a year now that we've been in Walmart uh something that we worked really hard towards getting uh it was actually an incredible Sprint I i' had been trying to procure the Walmart deal for about a couple of months and they kept on saying no they reached out to me just before quarter four and said you have three months to get us you know 2,000 pallets with you know 600 uh or I think like a thousand toys on each pallet uh and and you've got to and you

got to figure it out quickly uh so it was a Monumental Sprint from a logistical and and product development side we were able to pull it off I think that really kind of uh opened the door uh to us being taken super seriously I think prior to that people were really uh you know were really supportive because we bought this business we paid ourselves no money uh we really try to do everything in terms of leading by example and and working by this by the strap of our boot but once we did Walmart you know we've been telling you know everyone that we were going to build the biggest Legacy IP brand crypto's ever seen we wanted to build crypto's mascot and uh you know getting in the world's biggest retailer is no small feat especially in via the campaign that in which we did it with

these pallets in the middle of the store it's not just like a toy on a shelf it's just dead center most important time of the year you know real estate that's really only you know given to teenage mut Ninja Turtles and Star Wars and and here you are you have this crypto native IP uh and Pudgy Penguins that's right there uh with a blockchain integration attached to the toy and so I think that was really the beginning where people are like oh yeah uh this is this is a a top top Contender this isn't a fluke you know they're not just catching a bid and you know whales aren't just buying like these guys are doing what they're they set out to do and and so we're impressed that's amazing and what's the current status of the toy business how much revenue is it making what is it in I

know you guys are continuing to expand where are you where are you now Beyond Walmart yeah I think today it's about 13 or 14 million in retail sales uh sold uh over I think .2 million individual units uh with a median price of about you know 10 to 12 bucks the business is scaling well we just launched in Target so uh if you go to your local TCG and collectible section within Target you'll see some clip on pudgy Penguins right there highly encourage you guys to get a couple it's something that we're really proud about it's something that's sustaining the company and kind of covering our bottom line it puts us in a position of strength we are not you know desperate to go you know do things that I think will ultimately compromise the long-term Integrity of the business and more importantly uh Assets in which our

community holds and we're really just in a position now of of just scale I think Asia is huge for us obviously we just tacked off uh Target so Target is kind of the the the two giants in America have now stocked pudy penguins in a meaningful way and so I think for us it's really how do we expand in the East and uh you know just continue to uh you know put the py penguin footprint all over the world amazing okay I want to go to the news of the week which was last week you guys announced that you acquired frame and that you are building your own L2 why did you acquire frame and why are you building an L2 yeah I think we we acquired frame because we understand what we're good at and we understand what we're not good at you know the

elephant in the room is we don't build blockchains and I think I'd be pretty concerned if you found out that lucet was going to go build a blockchain uh but thankfully Saar and team are some of the best developers in the space uh they have amazing reputations and have built some of the best products that power some of your you know most favorite protocols and and and things uh over the last couple of years and uh they build blockchains and Technical Innovations with the best of them and so I think from our perspective you know we're a firm believer that uh the consumer crypto Revolution needs to be powered by one uh one chain we think that chain is going to be abstract we believe that the L2 race is going to be won by succeeding at the three pillars the three pillars I refer to as as culture community and

distribution I think if you look under the hood of a majority of l2s the tech is not that nominal different the next persons uh but who is going to build the biggest Community who is going to have the most relevant cultural products and who's going to distribute outside of our small bubble that is the crypto uh ecosystem uh are going to be the three main factors as to why the l why and how uh each L2 is going to succeed or fail and we think we can do those three things the best uh frame I think supplements for a lot of our Technical wos and which you know kind of stopped us from embarking on this journey prior uh and I think to together we've built a super team uh so we haven't really shown the rest of the world uh exactly who is a part of this but we will over the next

couple of weeks uh but it's not just frame and it's not just pudgy we've kind of assembled what we call the Avengers uh of l2s and and the goal is not to just build another L2 the goal is to build the biggest L2 I actually am a firm believer that the L2 race has yet to be won there's a common uh conception right now that is uh you know there's too many l2s and there's going to be thousands of l2s and and that will be the case uh but we have no intention to be one of the thousands of l2s we have every intention to be the L2 the one that sets the bar the one that everybody follows and we think we have a great first step with our you know pudy penguin community and and current distribution rails but uh the goal is

really how do you bring the most amount of users on chain and how do you build the most high integrity products uh via the builders that we kind of procure and Galvanize to kind of build on this uh ecosystem so I think we're really well positioned to succeed here and only time will tell but uh it's going to be an exciting Journey that is H kicked off as of a couple days ago everybody likes to put on rosecolor grasses in crypto like we all love to pump our own bags and get really excited and act like it's a guarantee that we're going to achieve the whole world on chain but you seem to be more realistic about it that it might not be a guarantee and that it's possible that we don't break through to Consumer what what happens if crypto

doesn't break through to Consumer well I appreciate you paying homage to my pragmaticism because uh most uh it actually has hurt our valuations probably a couple times I've had investors tell me I'm too pragmatic and I should be a little more uh uh optimistic but but I but I think it's really simple right the the crypto is going to continue on its growth path and I think there's there's two ceilings that are going to be set one is if if crypto continues to be a casino uh where people come and participate within the industry to Achieve Financial Freedom uh the total ceiling I think to that is probably 10 to 15 trillion which is a lot further than where it is today uh but ultimately is a ceiling that I think

is inappropriate for the potential that blockchain I think brings to the world however if you can make blockchain the back end and not the front end and not the core value proposition but a better way in which people and Builders build products applications and companies uh and actually you know crypto and blockchain becomes the future of global economies and how people interact uh it almost look at as the distribution rails uh that the internet provided and this one I think for financial instruments uh as well as you know applications just in general I think the Tam becomes 100 to 150 trillion in which we are really M very much in in the early beginnings of this thing and so I very much want to see a higher Tam I think that helps

everyone who's building in the space and everybody who's participating in the space uh but it's it's really important that we go and get real users and real products that are not not predicated on the hyperf financialization of price going up or Price going down because you have to understand that PVP Behavior ultimately leaves for every million adopters 900 to 950,000 of them end up being burned while 100 to 150,000 of them understand the technology win succeed or break even and continue to participate and that growth curve is not healthy for the growth that we want to see right you're not going to get to a 100 trillion an addressable Market going that direction versus you know me building a consumer product where people are not familiar with you know uh you

know blockchain as like the core value proposition they are participating they are interacting they're putting liquidity on these mechanisms uh but ultimately they are not leaving because they lost some significant amount of money uh they are staying and so for every million people that get you know get onboard to a real you know tangible consumer product that is powered by blockchain rails you know maybe 950,000 of them stay and then 50,000 of them leave and then ultimately that is the path towards you know mainstream consumer adoption not price going up and price going down because ultimately too many people uh don't have the edge necessary for that to be sustainable so uh hopefully that that that is that is the whole purpose of I think the igloo company which holds puu penguins which

you know contributes to abstract which you know helps build overpass you know these are the things that we ultimately want to accomplish and and that's what I mean by the consumer crypto Revolution is is how are you going to bring people on chain uh in a way that is not predicated on price going up or Price going down and in a way that is really sustainable growable forecastable and projectable you've talked about Community culture and distribution uh I've heard you mentioned that many times recently break down for us what these three mean and how you plan to be leaders in community culture and distribution I mean you already are leaders in that in that way yeah I know I love that you asked the question I think uh you have to understand I I think crypto has has has shifted a page

and I'm really thankful this page has been shifted which is like we've kind of understand that these technological promises and Innovations as amazing as they are they mean nothing if you don't have users and people are not using them and I think we've seen enough case studies up until this point that everyone promises the next breakthrough Tech and if it works right half of the time they don't even work but if they work what what ends up happening is they don't have any any any users and I think how you attract users is really through those three mechanisms right culture community and distribution and in web 2 Tech that really is the Moe I I referenced an antidote as of recent but you know Zuck there was some old emails of Zuck talking about his acquisition of Instagram it wasn't that they couldn't

build Instagram they needed you know three to four to five to six months to build it it was the fact that by the time they were going to build those features and those Integrations that Instagram would have controlled that you know photographic you know social behavior and they would have had all the users culture and Community right and so it's it's not a matter of you know that and especially today with AI I think the mode of tech is just shrinking and shrinking day by day this idea that this next breakthrough technology is going to be the Difference Maker I think is fundamentally mistaken I I think the moat in web two and and now in web three finally is culture community and distribution which is ult ultimately ties into one thing which is users right you know why are users coming and participating on a platform or on an

ecosystem because the culture speaks to them uh the community resonates with them and the distribution is growing that high so that you know there's more things to do and more ways for people to interact I think what we've been able to really do at pudgy and I actually think the nft meta is going to get reinvented because of it which is like if you're going to build a protocol or an application or a chain or an ecosystem maybe you start with an nft first because maybe you build that camaraderie you build that Community you build that nucleus that is then going to be your first 5,000 or 10,000 Champions and then maybe you translate into the tech and Innovation right because what what you really need is is you really need that first base of Champions and users in that feedback loop uh to make sure that

you have a high integrity product that's going to stand on the test of time and ultimately give users uh you know the product uh and and the look and feel that they want and so I think from our perspective you know we've we we have this nucleus of community we know how to Broad in the horizons there I think from a cultural perspective you'd be hard pressed to find a a a team and a group that understands culture the way that we do uh we you know what culture means to you and what means to an IND individual I think is uh is uh you know predicated on a lot of things I think culture to us is you know relevancy to products and applications that impact uh you know thought and Behavior Uh and and then last but not least is distribution right

like once we with this nucleus that we have can we grow it to be 20 30 40 50 times uh the size that it is today and I'm confident that we can speaking about the community I need to ask the direct question how do pudgy holders win so the path to me is very clear for pudgy Penguins the business and for Igloo Inc I think where everybody's a little bit unsure is okay what about the holders what about the investors here that path is still being figured out and I think a bit scary because every pfp project is down so bad right now and you're the only one that seems to be on the up and absolutely crushing it so kudos to you but how do pudgy holders win yeah and if I was a pudgy holder there's nothing to

be scared about because the Pudgies the nucleus to everything here the one thing that is really important as a holder that you should know is that I'm conscious right I'm conscious on how this game has won and I'm only here because of those holders and so it's my responsibility to take care of them above all else this is really important and I will never lose sight of that and so I think like at the Forefront of it you know let's not issue new nfts and let's make that the origin story of this entire business and the entire company and all the history and and and barriers and boundaries that we're going to break all stems from from this collection of 8,888 nfts I think when you look at it also from like a unit basis it's really important to note there's only 8,888 of these first edition tokens these first

edition tokens give you access to a family around the world where you can go to any city and state or country uh and have friends that will take care of you that will house you that will feed you uh there is a group uh that also is opened to licensing and so if you believe that we'll build a billion- dooll penguin brand I will need a lot of products I will need a lot of content uh and we are we are of a firm belief that we need to share that value and share that success with our early holders uh and then I think when you just look at like historical value uh I think when it's all said and done a pudgy penguin will be the most important nft to ever exist I I believe that because if we actually achieve in creating a legacy IP

that hundreds of millions of people know and love nothing like that in crypto has ever been seen before and very few things like that have ever been seen in the real world and think that just creates a story uh that is unparallel to anything that we've ever seen before uh and one that I think is going to hold some serious uh historical weight within the crypto sphere I also think from you know friendships and interactions you know what it means to be a builder within the pudgy penguin ecosystem and an entrepreneur you'd be surprised how many doors it opens for you know I I can speak that speak from my perspective you know holding a py penguin pfp has you know allowed me to you know reach out to people that I otherwise would have never reached out to long before I acquired uh you know pudgy Penguins you know guys

that are worth billions of dollars building some of the biggest protocols uh you know that share that there's something about you know being able to interact with people that you know are part of the same tribe uh and I think the tribe that we're building here is unparalleled I I I I don't see anything you know within my peripherals that you know is building the same type of culture and community that we've been able to build uh and I think it also just comes down to just this this first edition mechanism right like when you look at you know what is a pudgy penguin within the greater crypto culture and what are we doing for crypto and its entirety it's the only product that I can think of that the family can get together uh around that the family can rally behind right like that's important

if we want crypto to win products like this have to win uh whether you like it or not and whether you agree with you know some of the things I've said you know prior to this podcast or during this podcast I think we can all agree that for us to hit that1 to150 trillion dollar Tam everyone has to be involved whether you're a man or a woman or a child or an elderly person I think these things really matter and Pudgy Penguins I think is doing that better than anyone else and so I think if you just understand you know our Cadence and how we're building this and and how we understand that everything has to come back to the pudgy penguin and the pudgey Penguin has to be the nucleus of it if you understand the history if you understand the universal demand if you

understand the unit basis if you know if if we don't break our promise and issue more nfts at the wazo I think it's just a complete recipe for success and I think up until this point point you've you've seen that we'll get into it in a sec but it probably will assume it's your next question but you know you know year-over-year pudgy Penguins has significantly outperformed staked eth I don't think that is uh I don't think that is by accident I think there there's a reason behind that and I think that reason is exactly what I just explained uh the formula is there the ingredients are obvious all you have to do is make sure you cook a good meal when it's all said and done and uh so far it's looking like a five star course you're right that is that is my next

question and my my last question uh which is you almost made a $100,000 bet that pudgy Penguins would be worth 100,000 USD one year from now what makes you so confident when every other nft project is struggling so much I guess is there something that you think is going to happen with nfts that's going to bring nfts back and all projects or do you just think that pudgey Penguins is basically on its own path now and in a different category than everybody else well just to be clear I was ready to make the bet I just had to advise you know our chief legal officer and she was like look the risk reward of you making this bet from a legal perspective is just not advantageous and like you

you've been really clean up until this point like do you really want to be this guy uh and and I actually had a little bit of a reflection moment I probably shouldn't even have done that interaction I'm I'm more mature than that and I think it was just one of those days where I I shouldn't have interacted with something that uh that somebody said so it is what it is but uh again I I think when it comes to putting our money where our am is I'm I'm pretty sure I believe in pudy fig when we bought it for two and a half million bucks uh where I see nfts today I think nfts have bottomed I mean it didn't it couldn't have gotten as worse as it did I mean from incentivized you know from from incentives you know trying to bid the you know trying to you know create

behavior that is not predicated on collecting to just you know alltime bare markets and you know the space imploding in a multitude of different ways uh and I actually think if you look at the nft space today the top project are executing at a at a pace uh that nfts have never seen before and the mechanism is still sticky pfps are still the best self- proliferating mechanism in crypto to Market I think you would agree with that as a mark marketer extraordinary yourself uh the teams are executing at an amazing rate uh a lot of the BS has been washed out the blur farmers are gone the incentives make no sense anymore so there's no reason to just you know sell things into bids uh for for just because uh and and I think uh when you're looking at the greater landscape

there there's never been something in crypto the most bullish take on this is look at this holistically there's never been something in crypto that has made users and Builders so much money the way that nfts have that just simply happens one day and then disappears uh right now crypto is a financially driven market and anything that yields huge rewards from a financial perspective has their ups and downs and trust me it goes through its roller coaster but it does not disappear and so nfts will be back I think if you understand digitally collecting and the pros of digitally collecting versus physical collecting another bull case is the the collectible market cap today is about $450 billion do the nft market cap I.E digital

Collectibles take about one% of that and so uh the the ratio is 99 to1 in terms of physical to digital yet digital has a slew of Pros that physical Collectibles do not there's no spoofing issues there's no inauthenticity issues there's no friction when buying or selling there's no insurance issues uh there's no storage issues and so though we're not going to debate what is better digital or physical collecting I personally would argue digital but I think we would all agree that those pros and those cons when you weigh them out do not mean a 99 to1 market cap I think it's somewhere between 5050 in which digital Collectibles have a lot of room to grow you know based on that statistic and that statistic alone that's assuming that collectibles don't grow at all which right now Collectibles have never been hotter around the world especially

if you go to Asia and China specifically I mean Collectibles are the hottest thing in the world right now now uh from a consumer product perspective so I think you're just looking at all the statistics we've been through the pain uh we're on the other side of it uh and and probably the last bull case that I'll give you is is the unlock of Leverage in nfts this was not available in 2020 and 20121 if you understand traditional finance and also crypto the whole all all financial markets are driven on margin and leverage uh and nfts never had that mechanism and so I think moves will be really violent I think when liquidity starts coming in the direction of nfts you'll have a really interesting uh you know moment in in which you know this leverage will also be you know pretty awesome on days

and pretty awful on others uh but uh I think if you take all the things I just said and kind of pile it all in together you know nfts are here to stay uh the world is moving to a digitized future and and and you digital ownership is obvious uh for anybody that I think understands the internet and where our society is going so uh nfts are the anchor and the backbone to all of that people want to collect want Vin Goods people want status symbols uh and I think the worst of it is behind us I completely agree with everything you just said just gonna ask one more question before we end here I've heard you talk about the importance of community and more particularly the importance of being part of a community

that shares Alpha and how that is a necessary Edge for those in crypto not the you know not the normies that are outside of crypto but everybody that's encrypted everybody that's listening to this podcast it's so important to have that why do you believe that that's so important yeah I think just being honest with with the audience here today I uh I I've been able to really kind of go under the veil of of of a lot of these cabals and the truth of the matter is there's just a systematic Edge uh for a certain Subs segment of people and uh you know over the course of this podcast I've been a pudgy penguin bull but I was a pudgy penguin bull long before I was was a CEO I was you know a top holder of

the collection and one of the reasons that I think why we're here today is obviously I think we've played some part in it but I think a huge part of it has been the community you know holding a pudgy penguin gives me access to people who have those edges and if I you know understand how how the world Works which I'm a firm believer that the world is built on relationships and that's 95% of the income that I made over my life has been because of relationships that you know if I have this pudgy penguin pfp and I inter you know interject myself into the right groups within the pudgy penguin Community uh and really Garner and try to build those relationships I can then get access to that edge the truth of the matter is is there's a group who understands how how this stuff

is working who is manufacturing the working of these things whether you like it or not that's the name of the game and one of the Beauties and probably one of the cons of it's kind of like a paradox in tokenization uh but if you want to succeed and Achieve what I think most people in today in crypto want to achieve which is Financial Freedom you're going to have to do that with an edge uh and you're not going to do that you know playing uh you know on your solo horse you might find success and obviously there's anomalies but uh the the data will tell you that a majority of people playing uh without an edge are ultimately going to lose and uh nfts you know and just saying this in general but the right pfp can can give you that edge it can be a pudgy penguin you know give

credit where credit is due it could be a crypto Punk it could be a my lady you know these are probably three collections that I think right right now are probably leading the charge in terms of you know Edge uh crypto Edge by being a part of that community and and these are the these assets I think are just bigger than like hey you know a friend that I can go see in China and can maybe house me you know maybe a friend that you know tells you something good to buy and then it changes your whole life is is is super meaningful and impactful and I think this is these are where these pfps do do community better than anything else because it's really easy to identify who is a part of this and who isn't and if I have a pudgy penguin pfp and I reach out to another person

who has one who I see is crushing it on the timeline the likelihood of him responding and engaging with me is 10x if I had some you know booger pfp or some thumb some yellow thumb right so uh I I I think this is uh this is one of the biggest if not the biggest value proposition that I give that that I think nfts give you know I spent over $100,000 on a mastermind and it was one of the best $100,000 I ever spent like this is virtual masterminds through the guys of digital identity uh it's really what it is so uh excited to see what the what the markets have for us here shortly looka thank you so much for joining us thanks for being the fearless leader that you are in the space and for taking on this forward looking of

building crypto towards the next 100 million consumers deep bow for all you do in your team thank you boss thank you for having me awesome thanks so much for listening everybody have a wicked awesome day thank you for listening to milk Road radio the easiest path to get smarter about crypto if you like this episode share it and hit subscribe or follow so you don't miss out on the next one there's also a link in the description to our free 5minute daily newsletter where we simplify crypto for you well making you laugh and if you're willing to step up your crypto investing game then we'll leave a link to milk Road Pro as well your number one resource to help you invest successfully in crypto one final note this podcast is for educational purposes only and

nothing we say is financial advice crypto is risky so you should never invest more than you're willing to lose thank you friends and we'll see you in the next one