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Bored Apes Yacht Club: NFTs and the web3 communities
💡JC's Newsletter #100
In JC’s Newsletter, I share the articles, documentaries, and books that I enjoyed the most in the last week, with some comments on how we relate to them at Alan. I do not endorse all the articles I share, they are up for debate.
I’m doing it because a) I love reading, it is the way that I get most of my ideas, b) I’m already sharing those ideas with my team, and c) I would love to get your perspective on those.
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Your Bored Ape doubles as your Yacht Club membership card, and grants access to members-only benefits.
That all of a sudden these digital assets, these scarce digital assets, become membership cards, like a unique brand of membership card.
BAYC launched to the public on April 23, 2021 with little fanfare. The pre-sale launch announcement in Discord was met with almost zero reactions. By the end of the week, only a few hundred apes had been minted from the BAYC website, each costing 0.08 Ethereum.
➡️ Every project starts small :)
The apes were programmatically generated, each bearing a unique combination of attributes.
Each of the 10,000 Apes is unique, programmatically- generated from randomizing 170+ possible attributes, including expressions, headwear, clothing, fur, and so on.
On October 8, BAYC their plans to launch a “legally compliant” token in Q1 2022 that would provide utility and governance, benefit club members and bring the BAYC ecosystem to a much wider audience. They are partnering with top crypto law firm Fenwick and decentralized blockchain Horizen Labs for the token launch.
➡️ The ecosystem that is being created is incredible.
“Right now, owning a Bored Ape is like owning a Rolex or a Ferrari. It’s a status symbol. But we’re seeing evidence that it could be something much bigger. I’m envisioning a Supreme, SoHo House, Dead Poets Society all in one combination.”
➡️ How do we make it a status to be part of Alan?
Similar to an IPO, the creators "raise” money with new drops. For instance, Yuga Labs earned ~$2mm USD from their first drop of 10,000 BAYC apes in April 2021 (0.08 ETH, or ~$200 USD at the time x 10,000).
To provide a sense of scale of the wild growth of this community, Yuga Labs set a Dutch auction price of 2.5-3 ETH for new members to mint 10,000 Mutant Apes. That generated within the first hour of the drop itself! ○ ~$96MM USD of primary sales Yuga Labs’ recently announced plans to launch a BAYC token in Q1 2022 may likely include a primary sale component.
➡️ Super interesting to see how they financed it.
And what was interesting about it is most of the wealth of the money paid for those mutants went to original owners, and some went to the Bored Ape Yacht Club founders themselves. So there was this economic thing where they delivered to original holders Serum, and that Serum, if you combined it with your ape, would create a new mutant ape, and then you could sell that. But you got that for free. The value of that the day it was dropped in U.S. dollars was between 15 and $60,000. So everyone who owned an ape just got 15 to $60,000. And that came on the heels of us already getting a Bored Ape dog, which we could have sold for probably 15 to 20,000.
And what CyberKongz did was, when you bought one of their NFTs, you started earning tokens for every period of time you held it. So if you held it for a week, you got X amount of tokens. And then after you saved up enough tokens, you could then create the next tier of the membership. And so why that's really interesting is it's incentivizing people to hold for longer periods of time. And then you had this economic value. You knew that if I held it for X amount of weeks, I could collect enough tokens. With those tokens, I could create and NFT and sell it.
➡️ How to keep the community involved.
Royalties on Secondary Sales
Yuga Labs is entitled to perpetual royalties on secondary sales via the NFT smart contract. This seems to be the industry standard for now.
Estimated royalty rate of (unconfirmed) on secondary sales through marketplace platforms such as OpenSea or auction houses such as Sotheby’s. A senior member of the community notes elsewhere that the royalty owed to creators for a private P2P sale is 2.5 %.
➡️ I love the idea to keep sharing the value on secondary transactions.
🏯 Building a company
👉 Thread by Ankith Harathi about EPIC and Unreal (Pingthread)
He was building “engine” of the game. It made everything that the artists, game designers, and developers were building come to life. Tim didn’t just build this engine to work for his games - he built it so it could render *any* game.
Should Epic keep the technology to themselves? They'd have a leg up on the competition, creating more beautiful, immersive games than anyone else. Tim, however, already had other plans.
By licensing his tech, he’d be advancing video game graphics into the next generation, for gamers everywhere.
With the release of Unreal, Epic also released the Unreal Engine. Their secret sauce was now available to all.
The Unreal Engine would become one of the most lucrative parts of Epic’s business, with devs using Tim’s engine for games across consoles and genres.
➡️ I’m a big fan of the Unreal Engine because Epic approached distributing their tech in very innovative ways.
👉 On the Link Between Great Thinking and Obsessive Walking (Lithub)
Why does walking help us think?
Nietzsche, who walked with his notebook every day between 11 am and 1 pm, said, “All truly great thoughts are conceived by walking.”
It turns out, any walk outdoors has the potential to unlock our brains.
➡️ It is why I’m walking for 100% of my 1on1s, even when I’m doing them remotely.
👉 Niantic’s CEO believes the metaverse could be a ‘dystopian nightmare’ (FastCompany)
Over the past few years of working on AR at Niantic, I’ve gotten pretty deep into the science around walking and the brain. [Walking] is so wired into our neural pathways from evolution. Our brain comes alive in a number of ways when we’re out moving through the world in a three-dimensional environment. That’s real, and it’s more than just a visual perception thing. There’s this whole debate over whether your mind is just in your brain or is it in your whole body. And there’s a very strong argument to be made that really your neural sensing and cognition happens throughout your entire body.
➡️ Another very interesting article about the importance of walking! Please all do it for your 1on1s it will make a difference :)
🗞In the news
👉Netflix and Video Games (MatthewBall.vc)
Every generation plays games more than the one that preceded it.
Simply put, the entertainment industry has never seen a content category that generates greater “time leverage” than a hit video game.
Among Us was made by four developers and hit 500MM MAUs in November 2020.
Fortnite launched with fewer than two dozen developers.
➡️ The scale you can reach is just incredible.
The most popular and lucrative games in the world are online and multiplayer.
Netflix could outsource parts of this stack to Amazon Game Tech, Microsoft, Discord or Valve or Epic Games, but this is an even larger strategic, technological, and cultural shift.
Alternatively, the Netflix app could launch users into HTML5-based games via an in-app browser. However, these games are highly limited in functionality as they can’t access device drives using native APIs, and Apple cuts many off altogether.
➡️ Interesting to keep looking at the different HTML5 technologies and how they evolve.
The most popular single-player games will sell at best 25MM copies in their lifetime, while the top social/multiplayer titles will have 20-165MM players daily).
➡️ The power of social and communities
Netflix’s gaming strategy seems to be focused on casual, single-player, and mobile-focused titles. In addition, these titles are available at no additional fee for Netflix subscribers
The game runs as a standalone app. Notably, this means that the App Store has unilateral approval rights over the title
From an offering perspective, this seems a lot like Apple Arcade, a $5 per month service from Apple that offers users access to a bundle of nearly 200 mobile games. None of these titles have micro-transactions, though some are multiplayer. Because Arcade is iOS-focused, it is limited to devices that run iOS apps. Based on third-party data services (e.g. SensorTower, which tracks downloads), Apple Arcade does not seem to be very popular. Most estimates suggest 5MM or fewer subscribers, which means the service is used by less than 0.5% of Apple’s 1.1B active iOS users.
In this context, Netflix’s current strategy is probably right. The focus on lightly casual, single-player mobile games minimizes the cost and size of individual games, as well as the backend technology needed (e.g. social accounts system, live services).
By bundling titles inside the Netflix app, the creative/quality hurdle is probably lowered, too.
➡️ Interesting learnings about bundling & strategy: Netflix decides to bundle more and more in their offer (adding games), and find a way to test how to do it cheaply.
👉 Calm: The Sleeping Giant (Colossus)
Calm has over 4 million subscribers and it has had over a hundred million downloads in its history.
It has been generating cash flow since its inception.
The vast majority of people opt for annual subscription.
The vast majority of people use Calm around bedtime.
When they started productizing around sleep, that's when it opened up from being just a meditation focus thing to what they are today, which is mental fitness. That's why you see meditation, Sleep Stories, sleep meditation, even body wellness, soundscapes, landscapes, et cetera,
7% of people are paying subscribers.
It is just slowly putting more and more content behind the paywall. It used to be that you could use 95% of the app for free. Now, you can use maybe 10%, 20% of the app for free.
➡️ Super interesting benchmark.
They're producing with tremendous amounts of data really consistently high quality content. Now, you can imagine that getting LeBron or getting Matthew McConaughey might cost a little bit more than a not yet famous.
They were earlier than most people to realize that the power of celebrity in a space like this and making it extremely bite-size and accessible, and they leaned it.
➡️ How would you compute the economics of having super stars?
Headspace created a linear educational experience. What that means is people would go there and learn how to meditate, where they very rigorously tied together meditation course for beginners. The problem with that is when you finish a course, you churn off of it. Calm, the vision of the founders was more around creating a set of resources and not telling you what to do.
Content's always been a good business, but content as a utility, is a core innovation that they had. In Sleep, for example, you're not looking at a screen, you're just listening to a voice and you can drift off.
The second thing they did was get a ton of PR.
They actually started hiring people that could make sure they were getting in the news, because this is actually really interesting data that the news loves.
Oh, you know what? 70 million Americans can't fall asleep at night, and we're working with a million of them, 2 million of them, 4 million of them to help them fall asleep at night. It's really interesting data.
➡️ We should study their PR strategy.
They start selling from their business to other businesses directly. And that's been a large and fast-growing channel for Calm.
Their vision is very Disney-like. They really see a future where you're going to Calm Island, just to experience mindfulness at its best.
They've done interesting partnerships with bed companies, they partner with American airlines. I actually find that when I get in the air, my favorite thing to do now is to do a Calm meditation as we're taking off. Finding all these different, interesting entry points is key for them becoming ubiquitous, and it'll perpetuate itself.
➡️ What smart partnership strategy could we have?
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