Dee Goens, COO, Zora 
Lindsay Howard, Head of Brand, Friends with Benefits 
Moderator: Brian O’Keefe, FORTUNE


Brainstorm Tech 2022: Web3 And The New, New Creator Economy

Conferences

Brainstorm Tech 2022: Web3 And The New, New Creator Economy


I'm very excited to be here with two people who are old school on N. F. T. S. And they're gonna explain to us what's really going on. All right, D I'm gonna start with you. Your company zura labs raised $50 million in May lead in a round led by han ventures, valuing the company $600 million. So, first of all, congratulations. Thank you. Thank you. Big congrats. Still money going into the N. F. T. World. There is, there is at least in february there was All right, so, um, I want to get back to that in the second what you're gonna do with that capital. Um but firstly, I'd like to quickly here about your journey. Um, you were a college basketball player and then you started on your corporate career. How did you get into crypto? And then to N. F. T. S. And then to become a, the co founder of a company. Yeah, kind of a jack of all trades in that way. So, I was a basketball player at the College of Holy Cross, which is in uh, worcester massachusetts just outside of boston. Didn't have the most successful basketball career, to be honest, it was very underwhelming. And so was always passionate about the world, outside of the sport, whether that was investing or if that was technology or anything that I could kind of sink my teeth into. Um after college I went to the UK for masters at Imperial College London and I started to sort of hear murmurs of the crypto crypto bug in a way like yo I'm using Bitcoin for this or that. But I was kind of off put by it because it was so early and it was so nascent if you will. But uh I joined KPMG shortly after my masters and that's when I really caught the bug. So in 2015 I was at a workshop at KPMG in the U. K. Um and they were talking about the ethereum Blockchain and I actually had the thought, I was like man, this sounds like the kind of tech that could almost put me out of a job as an auditor. Like this is this is pretty exciting. And um yeah, I haven't let go since so then you go to coin base then you found Zora, yuko found Zora, what was the original vision of Zora when you guys uh kicked it off and 2020. Yes, so founded in March of 2020. Um We actually started off selling physical goods, believe it or not, we weren't even in the N. F. T. Space. We sold things like customized sneakers from artists like Jeff staple, we sold prints, we sold t shirts. Um it was very much like a stock X. Built on crypto or stock X. For web three. However, because it was like that we realized we would have to run basically an entire logistics business. Um and we were also having to deal with like angry sneaker heads screaming at us about like what is a redeemable token like the only more passionate people than sneaker heads might be like the chain link army for those who are familiar with the five. But yeah it was, it was pretty intense and so we realized that that wasn't exactly the type of business that we wanted to go into. Um and we also had a ton of artists who were onboarding into Zora who were saying, hey like I did this physical print, uh it's cool but it's way easier to do these things called N. F. T. S. Like can I sell my N. F. T. S on Zora? And so demand was slowly but surely growing and it was in december of 2020 actually um this is The meeting of many hats, the meeting of many hats. Um so the core founding team actually got on a call in December of 2020 about a two hour call where we all wore like seven different hats, which is ridiculous, but it was like a meeting of many hats to decide if we were going to pivot the entire business out of physical goods and into N. F. T. Um By the way, the physical goods business was super successful, like it had done millions of dollars in volume, We were onboarding some of the world's most iconic artists, it was going to be what I was saying to Jacob at the time, my co signer, I'm like man, this is a cash cow, like we would be foolish to completely pivot the business, but that is exactly what we did in december on the meeting of many hats, um we decided to fully pivot the business, shut down the physical goods store and go all in on N. F. T. S. With R. N. F. T. Protocol launch in january of 2021. Okay, now explain the N. F. T. Protocol, what what you're doing now, you've created a protocol that anybody can use to create N. F. T. S and T. S. Yes. So for those who don't know, protocols are actually like if we rewind a bit to Web one, um there's a bedrock of the internet in many ways. And so http for web sites SmtP for email, TCP I. P. For identification and communications a lot of P. S. Um but all of these protocols were collectively created, they're almost like public goods or pieces of public infrastructure. What happened in Web two Was those protocols had platforms built on top of them. And so we kind of traded away the sort of public infrastructure for the convenience and user experience of the social media giants that we know today are like the Ubers et cetera of the world for the convenience. What we're seeing in Web three is a return to uh the protocol based approach because there's now a mechanism for people to collectively own these public goods. Um and why it's important is that it mitigates platform risk. And so if you're a social media creator, if you're an artist and you create a massive following on a platform like twitter or tiktok, all of your audience, as well as your media, is sort of locked into that platform, what protocols do is they make it to where that audience media and the value creation opportunities there actually A level lower than the platform, meaning they can be 100% owned by the artist, the brand or the creator, and they're portable from one platform to the other. And so we launched this protocol in order to mitigate platform lock in or platform risk for artists who may wind up locked into the Tiktok of Web three or the social media platform of the future in crypto. Great. Uh if you have questions for Lindsay or d you know, get your hands up and we'll get um like Lindsay, I want to turn to you for a second last summer, when the N. F. T hype wave was surging up, and uh Web three was, you know, becoming prominent, becoming something that people have actually heard of outside of the those in the know, we, at fortune did a big crypto package and we did a big package on N. F. T. S and you earned a spot on our list of the 50 most influential people in amputees, deservedly the nifty 50 so, congrats Lindsay, um and at the time, you were the head of community at N. F. T. Marketplace of foundation, but I want to go back with you and your history a little bit too, because you curated the first ever digital art auction in 2013. So that's that's really O G. That's really way back before people were talking about this. How did that happen? How did you get into that uh space and then, you know, follow your path there. I've always been an internet nerd since the beginning, that's where I met all my best friends. And then gradually I started to see artists doing really interesting experimental project, um Net art projects in the late nineties, early 2000. And then once we saw these social media platforms emerge. The most interesting material that I found on there was being created by artists. So I became really interested in how you could translate the digital work into a physical space and kind of leverage that white the credibility of that white cube Gallery as a kind of mirror for the digital to give it more value. So this partnership that I did with Phillips auction house in 2013, and then in 2014 was about kind of taking that to the next level and creating sales records for things like animated gifs or art websites or online performances. And once we had those sales records at a major auction house in new york and in London that created a basis then that other galleries could start to sell that work and have something to stack it again. So that was the first kind of major digital art auction that took place. And then the N. S. T. Boom happening 67 years later, it was just um really about focusing not even on moving the digital into the physical space, but looking at it in its native form and giving it value. Which was incredibly exciting and gratifying for someone who um thought, you know, maybe we have to print this animated gif and then put it on the wall or we have to decorate a U. S. B. Drive and then sell that to the collector. These are all real examples of what we were doing at the time to try to create a market around digital art. But now it's incredible because these digital artists who have been really pushing the medium forward for decades um can actually make a living from their work and find the real collector base. Yeah. How much did the the explosion of interest and and capital take you by surprise? I mean, you've been working on this, working with people on this for a long time. And then all of a sudden the entire world was kind of focused on what your your community have been doing. So when we did the phillips sale, we sold around 100 and $20,000 worth of digital art. And we went out every publication and bragged about it because that was huge, 100 and $20,000 for animated GIFs and art websites. And then last year, um I personally sold around $20 million worth of digital art. So I'm not surprised because I've been into this for a very long time. I've always known that it had value, always believed in. It. Always saw the innovation that these artists were bringing both of these platforms and beyond in the digital art space. Um but maybe it was a little bit just like I knew. Yeah. Alright, so now you recently became the head of brand and Friends with benefits, as Mccall noted, awesome organizational name. Uh it's a DAO decentralized autonomous organization probably in this crowd. People know what that is. Um it's been compared to a decentralized soho house. Uh you earn some new york times notoriety recently, a big story uh posed the question is, is Friends with benefits empty hype or the future of friendship. And the article didn't really conclude but explain to us what Friends with benefits is for sure. I got really interested in the idea of a dow especially kind of moving from a marketplace into the dow space because I wanted to see if decentralization could actually work. We talked about it a lot in the web street space, but I wanted to see it in practice and I wanted to contribute to it. So Friends with benefits is a social tao focused on merging culture and crypto we have over 3500 members all around the world and it's really created a model to show how a DAO can um produce a wide range of products and collaborations um events and programs that both you know serve the community's needs push culture forward and then also drive value back to the F. W. B token, which is a really important part of the tokens. People buy tokens to join the community, right? And then they're part of this community, there's there's communication, there's collaboration potentially. But what are examples of how you drive creation where you know like is that still in the beginning or are you figuring that out? You know, those are totally in the experimental stage right now, which is what makes them so exciting to participate in. Yeah. Anyone can buy the F W B token um and participate in that way. And then there's an application process, there's actually a network within our community who reviews applications so it is um kind of invite only but anyone can participate in the kind of governance aspect of it, Which is really what sets a house apart from any other kind of space I've ever been involved, in which is that there is this kind of governance process where any member in the community, any one of these 3500 people can spin up a proposal for a new way for the Dow to be structured or for a new collaboration. They want to pursue a new partnership, a new event and then the community will rally around that vote yes or no with their tokens and then whoever proposed it is responsible for them producing whatever that is. Um And there are checks and balances um you know, the community can keep track and give us that kind of feedback loop on things, so they never go too wild and crazy. Um but it's definitely not perfect and it's not smooth and it can be chaotic at times. So if anyone here has ever been involved in a co op or any kind of like collective body where there's that sort of decision like collective decision making, it's imperfect because it's human, which I think is what makes it so compelling and so interesting. I was the president of my co op board in new york city for a while and leaving that job was the best thing that ever happened to me. Uh All right, so, if you have a question, get your hand up, but I want to ask you sort of big picture here. Um as we look back, I mean, you guys are both, you've been in this and at it for a while, but you know, it seems like there was the longest period of experimentation, really stuff, cool stuff happening beneath the surface, then there was kind of like the people, you know shot heard around the world and you know, we saw last year, N. F. T. Mania so much money flowing in huge deal volume offerings and then that's kind of subsided, crypto has corrected. So now we're in the post hype phase, it seems like where, where is it going from here? You know, I'd love to hear from both of you. You're obviously both. You know, your organization got funding last october, your organization's got new funding. Um, you're in the thick of it you're creating. But like what do you see in that, in that context? What's, what's, where's it gonna go from here? Yeah, I mean, so Zora is infrastructure for anyone, an artist, a brand or developer to build and create with N. F. T. S. And so I think the space is gonna start to onboard more types of participants. And so what we've seen is it's not just the visual artists anymore, it's actually writers. So we're seeing essays like Matthew balls, metaverse essay. Matthew ball for those who don't know is a VC and investor who actually coined the term metaverse. Um, but he never had an opportunity to really capture any value or have any real provenance from that. He minted that metaverse essay and sold it for $290,000 on Zora. And so we're now seeing new types of creators and writers etcetera participate. Similarly, we saw photography in ft by Justyna verso no cell for $2.5 million. So now photography, N. F. T. S are taking off. We're seeing a similar form factor with music as well where musicians are starting to adopt Web three and N. F. T. S. As a way for them to capture more value from their work. If you're a musician now and you're on a platform like Spotify, it takes you tens of millions of streams in order to make just a few $1000. You can sell an N. F. T. For a couple of seats and have the same value capture as if you had 10 million streams by the way, getting to 10 million streams is extremely difficult. Um It's the grid on Spotify is almost owned in many ways by the platform and the labels. And so what I think we're seeing are now that more tools are available, more media types are available. Is that more types of creators are starting to experiment with this medium as a way to capture more value. And so we're moving from and uh we're moving from sort of an earned media value capture or value model to like a captured uh a value capture opportunity instead of just the media earning opportunity. Even advertising models I think are starting to shift just a couple weeks ago at Zora. We actually put up two murals, one in new york, one in L. A. We minted those murals as an open edition N. F. T. And did over $100,000 worth of sales making the entire marketing initiative net positive and profitable for us. And so I think you're gonna start to see people use N. F. T. S. And use this technology as a way to not just earned media value, but to start capturing media value, if companies could all cover their marketing costs with sales, I think that people would be all in on that. Yeah, it's pretty, it's pretty cool when the ad itself is the product, it's not like that sold more products downstream, like like an ad that sold more iphones or a Nike ad that sold more sneakers. In fact, the ad itself was the product that we sold. You can imagine a Nike commercial or an apple commercial being an iconic piece of art to uh to the modern participants. So I think we're going to see a lot more of that sort of experimentation, dare I say kind of meta, just a little lindsey. What do you, what do you see happening? You know what you see like this continuing to grow in a more, you know sort of measured way, but continuing to expand and bring in new people. Yeah, we actually just created a large census for our community to find out where people want to go next because it's not really on us as a core team to be able to decide that it's like why, why are you interested in taos, what do you want to see happen here? What would make you proud to be an F. B. B member in five years? And we're just kind of getting those results back. But what is immediately clear is that people are here because we're on a mission. Um crypto has always had a diversity problem and by bringing in more artists and creators, it kind of changes the dialogue for a really, really productive way. And so a lot of the people who are attracted to F. W. B are here because they don't want Web three to look like Web two or to act like web to um to have the same behaviors as Web two in five years. So we're here to experiment as much as possible and see what we can learn through this process and share. Like we take our um you know, responsibility really seriously as one of the first major 1000 space. And so we try to be very transparent about all of our learnings and kind of share. Um so we can ensure that this space continues to grow in a really healthy um and inclusive kind of way. Great, well we will be watching to see what friends with benefits does. And of course Dora thanks so much. D and Lindsay for joining us today