GM DOers!
We have some penguin-sized news for you today! 🐧
We’re in the middle of VeeCon (held in Indianapolis) and a big, anticipated story has already emerged from Pudgy Penguins. 🎉
Context: Pudgy Penguins is an NFT collection that launched in the midst of the NFT hype cycle in July 2021.
It was quick to gain popularity, and even saw a sale of 225 ETH 💰 (worth $1M at the time).
However, the hype quickly died down when the community found out that the founders of Pudgy Penguins slowly emptied the project’s funds in what seemed to be a rug pull.
Long-story short, the community took over the project and fast forward to April 2022, the Pudgy Penguins team closed a sale and handed off leadership of the project to Luca Schnetzler (aka Luca Netz) for a cool 750 ETH ($2.5M). 🤝
It’s been a little over a year since the new leadership took over, and boy did they deliver. 👑
Today, we’re telling you all about it. Why? Because we believe this is a story that can set a blueprint for other projects (web3 or web2) who are looking to build a sustainable business model in this space. 🌐
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The News 📰
Pudgy Penguins has launched Pudgy Toys 🐧, their mass-market, community-licensed IP products on Amazon. 🛍️
We expected this announcement to arrive hand-in-hand with Amazon’s launch of their NFT marketplace but nope… That’s delayed (again). 🫤
But back to toys… Why is this important?
To explain it, we decided to break it down for you by using the “NFT Value Accrual Funnel”, introduced by Pudgy’s CEO, Luca Netz:
We believe that this funnel sets a clear ‘one-size fits all’ blueprint for any web2 or web3 brand building in the space. 🗺️
By reading this article, we hope you take away some valuable and actionable insights about building and investing in web3 (after all, that’s what we’re here for).
Brand Awareness 📣
The first step of the funnel is brand awareness. And Pudgy Penguins are masters of drawing attention. Here’s their strategy:
Creating GIFs 🖼️
An unusual tactic that apparently works wonders: Creating Pudgy GIFs.
A big focus of the Pudgy team is going towards creating GIFs. To date, they’ve created 2,700 unique GIFs and accrued a whopping 3.3 billion (with a B) views on Giphy. 👀
That’s why, whenever there’s an announcement, their comments section is flooded by Pudgy GIFs. Cute, wholesome and freaking funny. 😄
Storytelling on Instagram 🗣️
We all know that Instagram hates NFTs & crypto. Yet, that’s the main platform for Pudgy Penguins to raise awareness.
They’ve gathered 500k+ followers and received millions of views on their reels. 📽️
How did they succeed? By NEVER mentioning the word NFT. Instead, they’re focusing on spreading good vibes & positivity along with daily mental health reminders. 🧠
Btw… Their IG content is top notch. One of the best pages to follow.
Presence in Catchy Headline Articles 📚
If you’re following the crypto & web3 news, there’s no way you haven’t seen Pudgy Penguins on CoinDesk, Cointelegraph, Decrypt or Blockworks. 🗞️
They’re frequently featured on these platforms. And often next to big names.
In early April, they were mentioned in the Amazon NFT marketplace announcement, with rumors suggesting that they’ll be a big part of that launch.
This week, in an appearance on Rug Radio, Luca Netz confirmed that he’s working with Amazon’s web3 business in the back-end but mentioned that we should expect further delays.
And just about 10 days ago, Pudgy Penguins announced the completion of its $9M seed funding round led by 1kx. 💰
For context, Luca Netz bought Pudgys for $2.5M and just a year later (in a bear market) managed to raise 3.6x that. 🤯
The company plans to use the new capital towards the next step of the funnel: Consumers 👇
Consumers 🛒
Toys, guys! It’s all about toys! 🧸
There’s only so many people you can reach by having an 8888 piece NFT collection. Want to reach the masses? You gotta think bigger.
Meet Pudgy Toys 🤝 Now available on Amazon.
Why Amazon?
Luca Netz mentioned that he wants to leverage their web3 community to hack the Amazon algorithm. How?
By selling the toys to hardcore community members who leave positive reviews & boost the presence of Pudgy Toys on the world’s biggest retail online store.
In his appearance on Rug Radio, Luca revealed that the Amazon strategy will be the team’s 100% focus for the first 2 weeks, before launching the toys in retail stores across the globe.
I won’t go into what the toys are and how they look like. You can simply check them out here.
But they might run out soon 😅
Would you buy these toys! Reply to this email with a Yes/No. An explanation of why you’d buy these is a bonus. 🚀
And for the collectors out there, Pudgy Penguins are releasing a high-end collectible line at the end of this month. The toys will sell for $249 and will be sold on NTWKR.
So… You may be wondering… Why toys? Well, that’s the physical product they chose to reach consumers worldwide, before heading into the next step of the funnel.
Turning your consumers into fans 👇
Fans 🎤
Each toy box comes with a birth certificate containing a QR code. 📜
When scanned, that code’ll take you to Pudgy World, a page where you can create an account (with email and password) to redeem free digital collectibles for your toy. ✨
Once you create your account, a wallet will be created for you (think Reddit UX) and you’ll receive your Forever Pudgy Penguin (a digital version of your toy).
From there, you can open boxes (think NBA trading cards) where you’ll find different traits that can be used to personalize your Pudgy.
Don’t want to use those traits? You can sell them and buy new ones (costs a few dollars) on a secondary marketplace (powered by Origin Protocol) on the Polygon blockchain, through a gasless and frictionless experience. 🔥
What Pudgy Penguins is doing here is nothing short of revolutionary. They’re allowing mainstream people to interact with NFTs & the blockchain without them even knowing it.
Think about it:
- You’re creating AMAZING brand awareness
- You’re putting your products in front of millions of people on Amazon
- You then give each toy owner a digital experience using the blockchain
If this ain’t the new trojan horse of web3, I don’t know what is…
Collectors & NFT Buyers 🧑🎨
“We want to position ourselves in a way that once the NFT hype returns, we’re the go-to collection that every newcomer wants to own” - Luca Netz
The last steps of the funnel are all about education. It’s all about engaging your fans to position yourself as the primary player in the space. 🥇
As all hype cycles work, they always die out, just to come back again. Think baggy jeans. They were cool in the early 2000s, hated for about 10 years between 2010-2020 and now they’re the new big thing. 👖
What does this tell us? That the NFT hype will be back at some point. And Pudgy Penguins will surely be the collection that’s very well positioned.
Did you like this article so far? Make sure you let us know by leaving a like on this 💜 and leave a comment with your feedback.
But what about the bottom of the funnel? The 8888 Pudgy Penguin NFT collection? Is that what this whole thing is about?
The 888 NFT Collection 🖼️
The simple answer: YES!
As we always emphasize: an NFT collection is the (probably most important) tool to build your community. It’s not your business.
However, whatever you’re building, you should build with the community (NFT holders) in mind. Otherwise, they’ll move against you, like Doodles experienced.
How’s Pudgy Penguins doing that?
It’s simple: IP. To use any Pudgy Penguin NFT in say an ad, movie or as a toy, you must license it and pay for it. 💲
That’s the utility & value proposition of a Pudgy NFT. If you’re a holder, you have the right to license your Pudgy for a sum of money.
But there’s more to the story than just IP. Everything that’s built in the Pudgy ecosystem revolves around the NFT collection.
The branding, the story, the GIFs, everything is bringing more popularity to the core 8888 NFT collection.
What does this lead to? Supply shock. Aka, there’s too much demand for too little NFTs and guess what… Price go up ⏫
If we 👀🔛⛓️, we can see that ~3000 holders haven’t sold in the past year. So it’s safe to assume that most of them are holding for a long, long time.
And when you have brand awareness + loyal holders + increased demand + low supply. You know what’ll happen. 🚀
But what about Pudgy’s business model? Keep scrolling 👇
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Wrapping Up: The Business Side of Things 💰
All of the above will perhaps make you bullish on Pudgy Penguins. And it should.
However, please keep in mind that whatever they are building, they’re doing it in a web2 way.
Launching toys: web2
Fundraising: web2
Is that bad? NO! I’ll say it again: An NFT collection isn’t the business, it’s a tool. ⚒️
What Luca & the Pudgy team are doing here is build a sustainable business. Without it, they’d have to squeeze liquidity out of current collectors, by launching additional NFT collections.
The only way to build a sustainable business is by providing value & by selling products that people want to buy. That’s the playbook to succeed.
And it appears as if Pudgys are nailing it so far, with more plans on the horizon.
We’ll leave it here for now, friends! I truly hope that this article gave you a good understanding of what Pudgy Penguins are and how they’re building an awesome business and ecosystem.
Because it’s Friday, and because these penguin vibes are so freaking friendly, we decided to provide our usual PRO-only Advice section to everyone!
Enjoy 👇
PRO Advice For Builders and Investors
Community is King!
It doesn’t matter what type of business you are building, you need to focus on the community.
We say it all the time, but I feel like it’s never enough.
Pudgy Penguins would not be here if it wasn’t for a strong community, one of the really cool stories of web3 communities thus far.
Community doesn’t just mean having a Discord of thousands of people either, it means creating real connections and building real relationships.
This is not an easy thing to do, especially at scale. But its effectiveness is worth all the effort.
From a builders standpoint, start this from day one.
Don’t wait, because building a community will help you learn about your ideal customers and their needs, build long term customers and gain important feedback.
As a serial entrepreneur who has built businesses without community and built some with, I believe building community is the single most important thing to focus on for a business.
From an investor standpoint, if you plan to invest in any business or token, I highly recommend you join their Discord first and interact with their community.
Don’t look at numbers inside, look at the vibes, look at the knowledge of the members and look at how they interact with each other.
Look through the “hype” of the community talking about the project going to the moon and instead you want them to be talking about the products, the businesses and building something of value.
If their community is focused on that rather than price predictions, you know they have a legit community.
That’s a great starting point for building conviction in a specific investment. What’s cool about web3 is that you can join just about any project’s Discord with ease.
That’s all for today, frens. If you want to level up in web3 & understand how to build and invest successfully by looking onchain, we recommend you upgrade your subscription to PRO!
You’ll gain access to the Advice section 3x/week 👀
Furthermore, by going PRO today, you get the chance of booking a 1-on-1 call with Kyle about investing and building in web3.
If you’re a PRO, you can already book your call here by connecting your PRO/FOUNDERS Pass!
Our current PROs are already hyped up:
Not a PRO yet? Take action, and we’ll see you on the other side ✌️
Thanks for reading today’s newsletter. We’ll see you all Monday ❤️
Disclaimer: This article is for informational purposes only and not financial advice. Conduct your own research and consult a financial advisor before making investment decisions or taking any action based on the content.
