After the initial drop, NFT projects need other revenue streams to create a sustainable business model. In this Twitter Space, we learn from two guests who’ve managed to do just that: Overpriced JPEGs host, Carly Reilly and Angel Labs managing director and Stealth cofounder, Cheryl Kellond.
Ahead, we spoke to our guests about the relationship between NFTs and marketing. We gained some alpha on how to manage a digital asset treasury when using NFTs to raise capital, then we discussed how project founders can shift their thinking to better serve the needs of their companies and communities.
Edited excerpts:
During thefirst wave of NFTS we saw a lot of [the projects were] extractive. You had people asking for money before they delivered you anything. But over time that can't persist. NFTS are very much a two-way street where you as a brand or a creator are creating value for somebody and then and that's why you're able to extract value. It's using the NFT as a way to engage, be closer to and identify your biggest fans and curate experiences for those fans.
I think now we're at the very beginning of what we'll see in terms of curating unique experiences. Maybe, yes, you're monetizing the NFT and you're making money off of that, but maybe [the business model is] selling lattes or sweatshirts or whatever else fits and will help make it more sustainable.
I think there's some interesting things happening, things you can play around with. One idea is almost as if NFTs were a type of voucher that can be redeemed for things on the back end. I think that's an interesting model — it's almost like getting demand before you have to fulfill supply by using an NFT as something you sell upfront and then folks can redeem that for something else, but [the business owner has] gotten a sense of demand out the gate.
It's so great that [the NFT space] is not as speculative [as the 2021 bull run]. So much of it is not speculative anymore, and ranking on OpenSea isn't the thing it used to be. What I saw this spring was people leading their communities were just getting beat up about [the latest] token, [worrying about] what's the floor price — all of that stuff. And they couldn't focus on building what they really wanted to build because the speculators were so overwhelming. They were actually distracting from what the founders had originally wanted to do in a lot of projects.
Just two weeks ago, I did a Twitter space with Roo Troop. And it was so interesting because they did a drop. I'm not super familiar with that community, but they're building a software tool, and it just felt like a night and day difference the way [the founder] talked about his community because they weren't in it for speculative reasons. They were interested in the tools. They were interested in early access. They were interested in being beta testers. And so they were this giant resource to him and the team of product feedback and continual encouragement. And it was such a stark contrast. So I think since everyone is not out there trying to create the next Marvel or the next Disney, I think the change has actually been super productive from a founder perspective.
Since so many initial NFT crowdfunding projects are funded in ETH, we spend a lot of time at Angel Labs drilling it into folks head to be responsible financial managers of the money that they raised.
I am part of some projects that keep their Treasury and ETH — I'm a proud little Nouner and NounsDAO keeps their treasury in ETH. Nouns do things to manage that ETH and get yield, and they're always doing new proposals on how to more efficiently turn that ETH into stablecoins when they fund projects. With the volatility of ETH and with the bear market, everyone's like 'OK, stablecoins aren't so bad. Stables pay my rent. That's a pretty good thing.'
With our founders that we had in the program, we spent hours with them on what the tax implications were. At the highest level, the advice is turn your ETH into stablecoins to cover your taxes right away because that's what the tax basis is figured upon. When you get the ETH in your possession, convert it for taxes right away and manage it how you see fit.
I have to wonder though, for some projects, if this going to be less of a discussion now that people are selling digital collectives or minting NFTs with credit cards. I think probably half the projects in Angel Labs will take in more money in the form of fiat [currency] and stablecoins than they will in ETH, and I wouldn't have said that back in May.
For more insights, listen to the full conversation with Carly and Cheryl here
This is not financial advice. If you don't want to spend money investing in crypto or Web3 — you don’t have to. The intent of this article is to help others educate themselves and learn.
