Beezie & Collector Crypt CEOs on Why Onchain Collectibles Are Exploding

Transcript

Nothing said on Empire is a recommendation to buy or sell any investments or products. All right, everyone. Welcome back to Empire. Uh very excited about this one. We have a hotly requested episode, probably most requested episode we have had in a while. I think uh uh many people have seen Gachas and TCGs and Pokemons going crazy and some of that is happening on chain and you've seen the the hopefully you guys have seen the Blockworks data charts going up and to the right. They're probably the most explosive charts in the industry right now. Um, well, I wanted to do an episode uh with two of the best people I know to talk about this topic. Uh, Andrea uh from uh who runs Beey and Tom who runs Collector Crypt. So, uh, Tom and Andrea,

welcome to the show. >> Thanks for having us. >> Yeah, I feel like we need to set the stage early because I don't even know the answer to this. Are you guys like mortal enemies or is this is this like, you know, direct is this long history here? No history, you know each other. What is the Let's set the stage. I think >> I mean, we've we've been talking about this thing for a long time together. Not mortal enemies at all. This is, you know, aside from my team, one of my favorites in the space for sure. It's just solid individuals. >> Yeah. Likewise. It's uh you know with with 25 companies popping up every month trying to do the same thing uh it's really important that the uh I guess the the good actors know each other so we

can help improve the industry and help elevate uh kind of what what people are looking for in a project like this. >> Yeah. >> Yeah. We we've known we've known Bezy for three years. They used to even be called something different when we uh >> when we met them initially. Yeah. And uh >> mom knows >> and it's it's it's been fun. It's good. It's good working with good people. >> Good. Good. Um Tom, maybe we can start with the first question here. I'm I'm gonna ask a bunch of really basic questions here because I don't know this market at all. I don't even really know. I collected, you know, Pokemon cards when I was 13 and then sadly stopped. Um so, you know, I think we should get uh maybe a little bit of the history here.

Tom, I know I know you've been in the in and around the card space for, you know, many decades here. I'm very curious like when these became a market to you like when this went from you know oh this is a nice card game to oh this is a really booming market when did that shift maybe you can walk us through the history of how this market came to be >> sure so about 150 years ago no I'm just kidding um my own personal journey I started uh playing Magic the Gathering in 1993 late 93 I got very lucky to be in the right place at the right time and and that happens to be New York City for for what it's worth. I don't live there anymore though. Um but uh you know I played a lot of early Magic. I opened a

lot of early packs and won a lot of early tournaments and uh then you know I think I started to understand the kind of trading hustle um probably in 9495 like you know I I couldn't go to my parents and be like hey I I need a hundred bucks. I need to go buy this Black Lotus piece of cardboard. My parents would be like, "No, you're not. You're not going to buy that Black Lotus." I'm like, "Come on, let me go buy that Black Lotus." And they're like, "Well, no, you got to go hustle for that yourself." And so, um, you know, I'd trade. I'd do this kind of stuff, win tournaments. Uh, getting a Black Lotus for 100 bucks, right? And and now that card's, you know, probably worth 25 $30,000 that that, you know, I was trying to get for 100 bucks. I keep

going, what if you just gave me $1,000? Everybody could have retired. But um you know, everybody has that kind of story. That's not the way the world works. But uh you know, I I I I won enough and hustled enough that in 1997, I started selling a lot of my Magic the Gathering cards and I actually wound up with enough uh capital to pay for college myself. I did I did get some scholarships, but you know, I was I didn't have to pull any money out from my parents, and that was a big big achievement for me in the in the late 90s. Uh which, uh, you know, unfortunately, looking back at it, was probably the stupidest stupidest thing I could have ever done because those cards are worth, you know, 20 to 50 times what

they were back then. But, um, it is what it is. That's how I got in and, you know, that's why I'm here today and I still love it. >> Yeah. Andrea, why did you you came in I think you came into this world later than to I think you were in the healthcare world and then you know maybe couple years ago came in. So give me the story here. >> Yeah I mean my history with collectibles is a little bit broader and it stems down to behaviors in childhood. I was raised by a dad that I call a speculative collector that was like getting coins, cards, comics, you name it. at some point he was buying it not because he loved the thing but because it was going to 10 20 30x right he I was at the racetrack a lot of weekends I

could read a racing paper really young I'd get like scratch tickets in my birthday card and I thought that that behavior is just normal it's what I grew up with right but you know look back now I see I see the connections so you know started my career in high-tech healthcare got involved in Bitcoin in around 2015 um went down the rabbit hole in blockchain in 2019ish. Saw the NFT bull run come up um and just was fascinated by all the behaviors I was seeing in front of me. Met my co-founder Pritique and looked at it broadly as you know there's there's something really antiquated in the resale of of collectibles and it was before people

had really leaned into the gamification part. It was more hold on we can do this more efficiently with liquidity and all these other pieces. What's the market that needs it most? And inherently with, you know, TCG and sports cards, you're not changing the behavior when someone rips a pack with what we do, right? You're just leaning into it and throwing some gas on the fire. So that made sense as, you know, the right place to find the wedge. Why are um why are collectibles and Pokemon? So obviously every everyone knows that collectibles in 2021 ripped and I think there was a lot of thought that was like look this was a very natural thing because you know Zer and everything is ripping and there's infinite money in the world and these things will you know crash back to you

know zero or you know not much value over time and I think that happened for a little bit and now you know I'm not sure how many people listening to this podcast realize this but Pokemon cards are I think the best one of the best performing assets of the year. They're definitely outperforming both Bitcoin and the S&P along with many, many other assets. Why are Pokemon cards and collectibles having such a resurgence of a moment right now? >> Um, I mean, when I look at Pokemon cards, the most obvious piece is that the IP transcends ages and generations. It's not adult specific, right? So, like my kids love it and then people my age and Tom's age love it as well. Um, you know, I think that that's a big piece of

this storyline, too. It's it's nostalgia. It's interesting. You get this feel something moment whether you're opening a pack or on a site like Collector or Beey. But I think that, you know, that's a big piece of it. >> Yeah. For for me, I you know, I think uh co and everything brought people back a little bit to take a look and they you know, when when when you haven't jumped in the ocean for 10 years and you go back, you're like, man, why haven't I jumped in the ocean for 10 years? Uh but for for me, collectibles, I I I just leaned over to pull pull this guy out.

So, this is a card I actually opened up myself from an Arabian Knights uh box back in 1994, and it it was one of my favorite cards to play in tournament decks at the time. And there's very little in this world that is free, right? This is I I own it, right? I I bought it for in a pack for five bucks 30 years ago. Whenever I pick up this card, I look at it, it takes my brain back to places that I haven't thought about, right? And that it's it's not it's not a can of booze. It's not a hit of cocaine. It's not all these other things that people do to kind of give them some joy and some happiness. All I have to do is look at this card, and

this is free and it's healthy, right? I pick up this card and I'm like, "Oh man, I should give Ricky a call, my best friend back in high school." I look at this card, I'm like, "Oh, I wonder how Glenn's doing over at Neutral Ground." Or maybe, you know, John Finkele, who's now in the Magic the Gathering Hall of Fame. I wonder if John even remembers me. We played a lot back in the day, right? So, this is something that, you know, I I I know you put a spreadsheet out there, you could say, "Okay, you know, this card doesn't have any intrinsic value. It doesn't do anything. It's just sitting there. You know, why do you even want it?" And and the answer is, well, you never had that experience, right? you never had this experience when you're in high school with this. It

could be a memory like with baseball and sports cards could be a memory of you like spending time with your grandfather at a card show. >> Right. >> Right. And and these are all kind of like I think for people that are in the hobby who collect, being able to go and and instantly feel good picking something like this up and looking at it and just thinking about what that meant for you is is priceless. >> Yeah. What is the I mean it seems like things are working pretty well, right? Because the the asset class is going up a lot. So people would say it's working well. What is broken with the market structure? Because I think you guys are in the almost in the solving I think of collectibles almost maybe like what Bitcoin was like 15 years ago where there's really no market structure

around it. There's you have the ability to buy and sell these things, but other than that there's really and maybe even the buying and selling is a little bit janky. But can you guys walk me through and again who you know whoever wants to take the question or both of you guys but um like what is broken with the market structure of buying and selling cards today or not just cards collectibles let's call it. >> Yeah I'll I'll jump on this one. Uh I I think you know in the like in the 90s and 80s you go to a card show you're sitting across the table from somebody who has a collection. You're doing some trades. You're going to a dealer. you know, you're not getting the best price from the dealer because, hey, I got to make money, too, right? Kind of deal, which is fair. Uh, eBay came along and

eBay said, well, you know, let's let's create this whole system where you can trade with people anywhere on the planet very quickly and easily. And eBay's initial kind of take rate was around 5%. Back in the uh late 90s and over time, what's happened is that, you know, this this was a hobby, right? this was something that people did for fun and enjoyment and because of kind of the financialization of the asset class uh because eBay kind of like abstracted away a lot of the human kind of interactions that were there these have trended more and more towards you know a financial asset over the last 30 years.

Uh, and what that means is that you have a lot of people who come into the space and are like, "Oh, you know, I have a good idea for how to make more money off this, or I I know how I'm going to defraud somebody on the other end of the the deal on eBay. I'm going to go and print some fake cards and do this, right?" So, all of this kind of like fraud comes in because people are are trying to make some money, which, you know, I get it. I'd prefer they do other things with their intelligence than print fake Magic cards or something, but you know, some people choose what they do. Uh, and then eBay has had to go through and say, "Okay, how do we how do we prevent this?

Okay, we need to do all these different anti-fraud measures. We need to set up these systems, and that all costs money, so we're also going to chip on additional fees and bring it up to like 13%." Um, and and just that that kind of friction, you can imagine like the ideas of eBay, the ideas that people had trading back in the '9s have mostly gone away, right? And and it's been replaced with this hyper financialization of these markets. And you have a lot of people like me who still collect because I love it, right? Um, but you know, I I take a look around and I don't want my kids to to kind of not be able to experience collecting and not be able to experience the hobby the way that um,

you know, I want it to to to to experience. And so, you know, I think, you know, BZ and Collector Crypt, we're here to try to like take all of these different points and say, "Okay, you know, extremely high transaction fees, fraud, settlement, uh, you know, allowing people to actually interact on a first-person basis, right? Like being able to set up a Discord where you could go and say, "Hey, man. I I got this. I really want your your gold star Pikachu. I've been, you know, I had one when I was a kid. I really want to trade for it. I don't care if it's not a PSA 10."

Right? Being able to kind of bring back some of that old feel, old vibe of of trading and collecting, I think, is is what we're both trying to solve. And we're trying to solve it in a fair and transparent way. >> Yeah. >> You know, I think you you you just have a ton of friction that's happened. And it's not eBay's fault, right? eBay is responding to human nature, which is to try to like hustle some edge or hustle some money out of people. >> Yeah. And Andrea, when did um I'm going to botch the terms I think here, but like it's you know, box breaking or uh you know, ripping ripping and shipping or like you know, whatever whatever, you know, I think it's hot with the streamers, but um I remember in COVID it was like I feel like all the streamers started getting into I mean people were

just bored pandemic they started opening the packs and I feel like that was you know half the videos I saw online. When did how has this because that's that's I mean you guys should correct me. kind of my mental model a little bit for how I think about Beey and Collector Crypt is like almost just a more professionalized version of that. Um, but maybe walk me through that. And by the way, you should correct me if I'm wrong on that uh mental model of business. >> Yeah, I mean I think they can go hand inand but they're different models. Um, you know, I remember being on the we were a tech stars company and I remember being on that stage years ago and talking about this idea of shop tamement whatnot wasn't where it is right now obviously and you know Asia's really been a leader in that market and we're

seeing in the last year and a half two years the upand cominging and resurgence or resurgence of that in the US market. I think we're going to see sort of a marriage of the things that, you know, Tam and I have built with this live streaming shopping experience. I think the the broader picture is that consumers are less interested in a static sale and in just clicking the buy button. They want to engage. They want to have fun. There's a dopamine chase. So, I, you know, I really believe that these pieces are going to live together.

>> Yeah. So, you're Okay. So, I want to get into both your guys' business. Um, the way I understand it is you guys are uh buying real graded cards, like oftent times Pokemon, you vault them and then you mint a token that is the card. You buy You can buy a sealed digital pack. It reveals a random card and then you get to I think it's keep it or sell it to another person or you get to do like the instant No, I'm I'm already wrong. I'm already >> So close. You're close. You're so close.

>> Fix it for me. Fix it for me. >> You I'll give high level because it's similar, right? You you come on one of our platforms. You buy into one of our machines. Transparent odds, you know, everything's in front of you. You reveal the asset. When you reveal the asset, we give you an option to allow us to buy it back from from you. So, you know, the ranges are anywhere between 80% and I think some people have like 99 100% um on different price points. you can choose to take that or not. Um, so if you decide to swap it, it's what we call it. Liquidity goes right into your account and we get the asset back.

If you decide to hold it, you can hold it know it's safely vaulted or you can sell it on the marketplace like Tom was talking about. You know, you can make a trade with someone, you can redeem it and you get the physical scent to you. >> Tom, is your collector crypt similar? >> Yeah, it's it's substantially the same. I mean I I think um you know I the the space is very complex right um and people look at our platforms and they say well you've solved this kind of one piece of it and uh you know like a stupid cliche is Rome Rome wasn't built in a day right we we have to create product market fit we have to kind of

build the right foundation and slowly but surely you people are going to onboard assets and people are going to come and start participating in the in the platform and you know that's what we've seen and we you know both of us have a lot of product market fit around our vending machine. Um, one of the things that that is interesting is if you put these NFTts on chain and you put them through this kind of digital repack mechanism, that is a far more efficient way to distribute cards than a physical repack is. So physical repacks have been around for, you know, 30, 40 years where people go and get a a stack of cards and they seal them in these little foil things

and they sell them for a certain price and then they have a list there. They say, "Here's the top three things you can get out of these packs." But nobody knows if those cards have already been pulled, >> right? Nobody knows if those cards are even in those packs, >> right? But it's it's kind of fun for people to engage with because you see, oh, there's that Michael Jordan rookie card in there and I want to win that. Um, and so, you know, I think what we have done at Collector Crypt and Bezy is we've just taken one small fraction of the overall kind of collectibles ecosystem and said, >> where can we use blockchain and where could we use transparency to make this a 10x more fair and more transparent experience?

>> Yeah. And and the thing is that it also feeds into like one of our major goals is to bring as many assets on chain as we can because you need to have that that depth of liquidity for a marketplace to work to build communities and ecosystems, right? So this this vending machine model does that extremely well. >> Can you guys walk me through um like if I spend a hundred bucks on the platform? So like almost walk me through the flow of $100. Um because I know that yeah there's the buybacks and there's uh there's customer deposits, there's your treasury, there's the resale of the cards. Like I'm I'm I'm trying to almost uh trace the flow of a hundred bucks as it goes through the platform.

>> I mean I think our backends are probably similar but have slight variation. So I mean largely you'd deposit $100, you'd hit buy. You can also pay with your Apple Pay, your credit card, your Google Pay. Um, and then you're going to reveal the asset. Uh, this is all baked in on the website. We wanted to abstract the chain as much as much as possible for someone that's not cryptonative. You're going to see the card, the slab, the, you know, we have sealed product. We're going to be expanding categories in the next week as well, which we're excited about. You're going to reveal that asset and then you're going to get an offer to buy it back at a certain percentage of fair market value. If you

choose that, those funds immediately go to your account. >> And what what is I'm not sure. This might be public data. It might not be. Um, but what is the percentage pay like the almost expected return as a you because I'm guessing there's different types of users who are using the platform, Andrea. There's the collectors, there's the maybe flippers, there's the people who want, I don't know, to make 10% a year and they're happy with that. And there's the people who want the the grail and they're just trying to hit 100x every time. Do you guys have um Yeah. numbers, unexpected returns.

>> I mean, it depends on the price point. It depends on how much someone's playing. We just saw, I think it was like Salana Sensei saying that he got $182,000 worth of cards in the last 3 months on the platform. I mean, his returns might look different from someone else, but we're really transparent with our odds. You can see exactly what's in the machine at that point in time. And then as the user, you determine is this is this going to give me the ROI I want in the form of the actual item or in the form of the odds and the average value that you're playing at.

>> Yeah, I could I could be a little specific with respect to our platform. So on on each of our packs, we have a different, you know, kind of premium to uh market price expected value and and you know, there's a there's a lot baked in here. I'm going to do my best to to to make it simple and summarize, but um you know, we we price all of our cards out and we have some pretty sophisticated algorithms on our side to do that. And also every single card is priced by a human and we price the cards our best attempt at what you know the card would be at eBay auction value. So, if a card has recently sold on eBay three times in the last week between $100 and $110,

we might price that card at $105. And then when those cards all get added to the machine, let's say you have a thousand cards in the machine, we multiply that into our tier matrix um and figure out well what is the expected value of the cards based on a probability probability weighted kind of uh matrix. What are you going to pull out of the machine? And for example, for a $50 machine, if you put $1,000 into it, on average, you're going to take out $1,100 worth of cards. And this is by eBay auction price. Um, so if you if you're saying, well, hey, I want to go

and and buy a bunch of cards on eBay, you're you're willing to pay that price. If you bought those same cards and won them through our machine, you'd pay 10% less. So that's kind of one piece of it. the and and then the question is well how do how do how do you guys make money? Um one answer is we buy these cards at a 10 to 15% discount to market price. So if people just use it and keep the cards, they're able to get that distri they're able to get that liquidity without having to spend all the time on eBay. And we actually have a a few users and I'm not super thrilled about this, but you know, it is what it is. We have we have like live streamers in Canada and Australia, other places around the world that actually use us

for their single source of liquidity. So we have guys in Australia putting, you know, $20,000 into our machine, never selling cards back, and they're shipping hundreds of cards per week to Australia because it's cheaper for them to open up packs on our machine than it is for them to source inventory domestically. >> And why how are you able to get them 10 to 15% cheaper, Tom? Uh well over the past four or five years we've built one of the best buying networks uh that exists in the space. You know we we go to 40 plus card shows per year. You know five different people usually. Um in addition to that I mentioned we have our pricing algorithm and we also are essentially a floor bid on eBay. So

every single auction >> that happens every single day on eBay, we're bidding 80% market price on every single one of those auctions. is the harder part of your guys' I'm uh I'm trying to just understand this from the founders point of view of like what it's like to build your guys' business. So, I'm you know that's why I'm asking weirdly detailed questions about like you know how do you make a pack profitable and these kind of things but uh is the supply side harder like getting the cards at good rates or the demand side? I'm guessing the demand side is much harder. >> It it's it's a little bit of both. I mean, you've seen, as I mentioned, 25 kind of copycat platforms show up and they each vibe code a front end and they're able to get some users if they go and promise like, oh, hey, we're

going to do this, you know, 100% buyback or hey, we're launching a token or hey this or hey that, right? Like they kind of solve that that UI part, but then >> they go on a camera or something and they're like showing off product like me, like blah blah blah, and they're they're like, "Look at all this stuff we And it's like, dude, th you're selling that stuff in your platform. That's in your closet. You're shipping it out of your like grandma's closet at home, >> right? That's not a vault. That's not a secure facility. That's not authentication. That's not a pro a platform that has deep liquidity. If anything goes wrong, they'll take care of you. Like, what happens if your house burns down? Do you have insurance?

Right? like there's a bunch of people that are, you know, even if they are honest and transparent, they're still not doing it the right way because if they if they think about a little bit, there's just a tremendous risk surface there. >> Yeah. >> Um getting back to the the financial side of it, what what the way that we make money is that if you are opening up the $50 machine, yes, there's cards worth $4,000, $5,000 in there. um you're not going to hit that card every time, right? You're if you if you keep all the cards, you're going to wind up with a bunch of $30 slabs, right? You're going to get one wind up with a bunch of cards that are worth under 50 bucks. And that's going to be the majority of them,

80%. And the question you ask somebody is like me, I'm I'm I'm saying I love collecting. This is the card I want, right? And you take a look at other collectors, you know, they're not saying, "Oh, here's a stack of $30 cards. It just makes me so happy to have a stack of $30 cards. They don't want that. They want to go and filter through to get the big hit in the machine. >> And so there isn't much utility for people unless they are a second are distributing the that product in a secondary way.

>> There's not much utility for somebody to go and collect 30 slabs and ship it to them because if they go to a card show, >> if they go anywhere, they're not able to sell that for full market price. If they sell it on eBay for 30 bucks, they're going to pay extra shipping and handling and they're paying eBay a 13% transaction fee. >> Got. >> So, you're not really making money if you go and collect a bunch of $30 slabs. And so, what you do with our product, >> the way we've designed it is if you sell back all of those common cards and you keep the uncommon, rare, and epic cards, you're actually buying those three tiers at 1% under market price. And the way we make our money is because we're buying

those cards at a 10 to 15% discount, >> we're selling them to users if they follow this strategy at a 1% discount to market price. >> So, it's kind of like a pick your own adventure. You could go as value positive as you want or you could go as Den as you want. If you go as DJ as you want, you're only keeping the best cards that you pull. >> Welcome to Token 2049. Token 2049 is back October 7th and 8th, bringing together 25,000 attendees, 300 speakers, and 500 exhibitors for the world's largest crypto event. Token 2049 is happening alongside and in partnership with our own digital asset summit Asia.

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Gotcha. Okay. Um Andrea, there's a there's an investor who I think is an investor in both of you guys. I don't know if it was, you know, p private investor or public uh you know, but anyways, there's an investor in both you guys. I I asked him for some uh questions and yeah, I was scrolling through his uh Twitter feed and he he um at one point tweeted at the take rate table, which I think both of you are um like a sub 10% take rate. There's a couple other companies that are, you know, 20 to 25% take rate. Um, and uh, I'm curious how you guys think about the take right now as you guys think this there's a big, you know, conversation I think in a lot of markets right now about fees and like is it better to keep fees low, grow the pie or, you know,

scale the business or do you want to actually start monetizing as this market is getting really really crazy? I'm curious how you Andrea think about like leaving margin on the table or Yeah. How how do you think about like what is the right take rate for this type of business? Yeah, I mean we're at a very different stage in our life cycle as a company than some of the other platforms. And you know, I think we're referencing some of the others that have much larger take rates. So when I look at it, how does Bezy compare with a platform that's raised $45$50 million and has a war chest that's essentially endless? It's by making people feel like they're winning more, right? And we've been pretty successful with that. we've gotten to where we are, which is over,

you know, 200 million in volume with very, very little. And it's, you know, for us at the end of the day, it's about listening to feedback, building for the community, and then not feeling like we're extracting from them. And, you know, I think that Tuam probably has a really similar view, like >> you don't want people to show up, use the platform, and feel like they're getting rinsed every time they're there. And you're clearly seeing that. um on other platforms. So with us, it was a br a business strategy. Uh you know, fun fact, we actually got turned down by a lead in the past because our margins were too low. And uh this this particular fund actually invested in one

of the other platforms. And I'm like, listen, it's a user acquisition strategy and at the end of at the end of the day, it's how we compete. >> Yeah, 100%. How do you think about uh are again okay again this might be a really dumb question but are are are instant buybacks a good or a bad thing on the platform and I maybe my mental model is off because I'm thinking about crypto exchanges I'm thinking about like wash trading where if I'm looking at some someone you have you know 10 million pulls but then you know 9.9 million instant buybacks on a crypto exchange you you could almost call that wash trading in a sense um but I think it's different here, but I'm trying to wrap my head around why. So, but yeah, >> no, as a business model, of course, it

makes sense, right? Like our lower tier assets typically turn over 55 times before they're ever held. Our higher tiers, it's a completely different number. But, you know, that's how for me, when I'm talking with bigger brand partners, it's a brand new revenue model for them, right? Instead of a reseller coming to work with us and they lose that asset after the single sale, those assets work for them now much much harder. >> Can you explain that, Andre? Wait, so you go to brand how does Yeah. How what are you what are you doing on the brand partner side? I This is for >> So we're launching We're launching a new category next week with a a big um web two reseller. And one of, you know, the ways that you work into the pitch early on is that right now that asset leaves

your site, as soon as that sale happens, it's gone, right? Whether it's your inventory, one of your users inventories. Um, imagine if you know it sold 55 times before it ever left. and you've kind of worked them through the math model, but I think that's the unlock around taking what we've both done here, leaning into, you know, our crypto roots and finding this wedge and product market fit in this space and then applying it much more broadly to just commerce as a whole. How do you think about pricing assets though when you So if you expand into I don't know what are hot collectible like sneakers and watches and things like that the um the pricing gets a little trickier I would guess. Um,

>> yeah, much I mean it's much harder, right? You don't have the same tools that you have with cards in general, but there's typically always last sales or variations of what's happening. And, you know, we're doing this with a partner that has 15 million annual users across 80 different countries. And it's >> have a ton of data. Ton of data. >> Tons of data. >> Yeah. Okay. >> Yeah. I might I might just uh give a slightly harder take than than Andrea on some of that. I know she's she's very polite. Um, >> Tom, Tom, you try, you're polite, too.

Don't uh don't >> No, I I I I could be a real jerk sometimes. The um one of the things if you take a look at the the data with some of the and you know, I'm I'm thinking more like non-crypto competitors. I think thankfully in the crypto space, a lot of uh companies and entrance are essentially forced to to follow the model that Bez and Collector Crypt have have developed, right? Um but if you take a look at the non-crypto space uh it the dynam dynamic's a little bit different right um and and we know this because a lot of users on our platform are actually former users of these other platforms so we know >> exactly kind of their mental model and

why they made the transition and why they've stayed >> uh Tom just to sorry to interrupt uh you former users of what types of other platforms who are you >> uh non noncrypto digital repack companies. >> Understood. Okay. >> Like the, you know, I'll say the big ones like, you know, GameStop, Power Packs, and Arena Club and Courtyard, right? They all those those platforms all have this more, you know, uh, no no positive expected value. They have a pretty, you know, significant haircut on buyback. And you know what we see in the data is that the the the users who are genuine collectors, they don't really feel that they're getting much value out of that, right?

And so they they go and they might participate on that platform for a little bit and they say, "Wow, you know, I I I should just buy cards at the card show. You know, this isn't the best way for me to collect." Um, but they do enjoy the thrill of opening packs, right? And then that's where these users come and start exploring platforms like ours because they can have their cake and eat it too, right? They can come in, they can sell back a bunch of cards and they can then finally filter through the card they want to keep and then they say, "Wow, you know, I I had a great time. I opened up 10 packs and I got this one card and I'm actually not down that much. You know, I'm I'm basically buying these cards for a little bit over over market price uh in that sense." Um,

and so, you know, I I think if you take a look at how this turns into actual numbers, uh, you know, our our average lifetime user on our platform has spent somewhere between 15 and $17,000 on the platform. And a lot of our users have shipped out cards. They built massive onchain, you know, collections. They're participating in our Discord all the time, right? And if you take a look at the platforms in the in the non-crypto side, uh you know, you you don't really have an ecosystem of collectors that has been built. You don't have much customer retention. You don't have such high total lifetime value of these users. And essentially,

you know what I call it? I call it a turn style, right? So people come in, they see some great marketing, they come in, they open up some packs, they're like, "Oh, that was fun. Let's do the next thing." Right. And and so I I think it's it's important if we are try like our goal is to build the largest liquidity layer for collectibles on chain. Uh which means that we are very focused on collectors, not not people who are just trying to open packs and be a little more deen about it. M >> you know focusing on collectors, people that actually enjoy the intellectual property, people who will show up every day in the Discord and talk about it, people who will be excited for new sets coming around. Um essentially creating

an ecosystem of people who are going to be there that you don't have to continuously market to to get them to come and open packs. And we feel that this is more healthy for the ecosystem and it's also more healthy for for the hobby. And there's a lot of talk about like you know this Pokemon gambling phenomenon and I and I think you know there is some truth to that and I think um you know we we are trying to state clearly on the side of collector behavior collector attitude and building a collectibles ecosystem.

You mentioned GameStop tome. Uh GameStop now offers this, you know, I I think it's randomized, you know, PSA graded cards, instant buybacks, physical redemption. Obviously, I you know, I don't think GameStop has a blockchain anywhere there. What does putting the asset on chain actually add to the whole process here? Um, it it adds a much larger universe because if you buy if you pick up a card on GameStop, you could choose to sell it back to GameStop or you could have it vaulted at PSA, right? And then once it's in PSA, you can choose to ship it or you could choose to list it on eBay. So, you're kind of going through a string of very uh intentional steps where each step

along the way is going to be monetized in one way or the other. Um, with blockchain, you know, you get a a card on collector crypt, that is your card, right? And and you can go and trade that card on Magic Eden. You could trade it on Collector Crypt to to whoever you want. You can go and do a swap with your buddy. can send it to your uncle for a Christmas present, right? You have this whole universe of things you can do. And we're not limiting the user. And in fact, you know, we Collector one of the big efforts that we made over the last 12 months is to open up a lot of our infrastructure to essentially allow anybody to build on our platform. So, we we have a a zero fee uh marketplace that anybody could just pick up and and start

to build their own marketplace. If they let's say if somebody's really into Yu-Gi-Oh and wants to build a Yu-Gi-Oh focused marketplace in the Japanese language for Yu-Gi-Oh collectors, you can do that and we won't charge you anything for it, right? And and so like that's a very different kind of mechanism to this very this deliberate serial process that each step you you have two choices. One is to ship the card. Another one is to pay 10% in transaction fees. Right. We we we want to break that process. >> Got it. Okay. I think I follow. Um all right. Let's flip over and talk about customer acquisition because um there are probably a couple charts. Well, you know, now the charts are starting to look better in August. But, you know,

for the last year and a half, charts were not looking very good across the board in crypto. There are a few that look good. It's probably the stable coin charts, um prediction market charts, and the collector charts. And uh you know I see these because you know Blockworks has you know a bunch of data on all this stuff. And uh Andrea I remember right after you guys launched I think it was like two million in volume in the uh you know within two two or three days of launch and uh yeah you know both of your charts just continue to look very very good. Um how like what where is this growth coming from? Is this people moving over from GameStop and Courtyard?

Is this people net new net new collectors finding out about this? is are these crypto people who are speculators coming over to like what is what is this c you know who are these customers and how do you guys think about marketing >> so I mean I think I don't want to speak for you Tom but both of us are cryptonative teams we've been building in this space for a really long time you've seen obviously this type of platform take off and really find product market fit and I think you know a lot of the growth comes from the core crypto community that gets exposed to something that is maybe more fun um and brings them back to a different point in their life. I think we both have really strong communities that do an amazing

job at at talking about both of our brands and bringing new people in their lives in. So that's a big deal. I think we both have different strategies on future distribution and user acquisition. Um you know that that differs very much from our biggest web 2 competitors. Again, I don't want to talk to talk for Twam about this, but you know, I I give so much credit to our growth to the cryptonative participants that have been with us since the blast days when we were the colony and have seen the come up and, you know, this model really find itself when a lot of people in this space didn't believe any of us when we said it's going to work.

>> Yeah, I I'll add to that a little bit. Um, you know, we we deliberately chose Salana uh back in the day and and yeah, there were lots of reasons to do it from a technology perspective, but also a lot from a community perspective. you know, the it seemed to me in in 2021 the the culture of NFTTS, the excitement around building communities, all of this kind of stuff. We're moving to blockchain and you know, I people um you know, I I I wear two hats. I have a undoceded identity. So, I'm kind of inverse doxed, right? Like people know who I am. They don't they don't know my undoceded

identity. you know, I was minting board apes on on Ethereum. I was minting some of the early NFT projects on Salana. Um, and you know, just being able to enjoy those ecosystems. And I and I knew that a lot of the people who were into NFTts from a culture perspective, not a financial perspective, the culture was also very highly aligned with the uh Pokemon IP. So, just as an example, some of the top people at Galactic Geckos, some of the top people at DJ Ape Academy, they were all users of our platform before our platform like even had a public launch. And, you know, that was

just very, you know, exciting for me because, uh, we we knew that there was product market fit. We knew that the leaders of all of these communities and this culture on Salana would would help us to succeed. The other thing that's interesting, and this is just an anecdote, um you see on chain, most of the excitement in product market fit are around trading card games like uh you know um Pokemon and One Piece and not so much Magic because Magic people usually don't grade their cards. I'm a little weird that way. Uh a lot of people don't collect sports cards on chain, right?

And if you take a look at non-crypto, like 60 70% of cards that are graded are sports cards. >> Is that just because it's an older market? >> It's an older market. It's a non-crypto market. People are more interested in sports. >> And for better, for worse, you know, people on crypto are are nerds. They're a little bit earlier on the adoption curve. They like watching anime. They like playing video games. So, it's a different kind of um thing. So what I would say is that the fact that you have this difference in product mix on chain is a really strong indicator to me that the people are genuinely interested in collectibles, right? And that's how it got started. And then of course people

see all the, you know, difficulty in blockchain over the past 12 months and they say, well, hey, uh, you know, I haven't been in in trading cards for a long time, but I used to play Pokemon, so I kind of get it and I'm going to jump in. I'm going to reestablish this hobby. I'm going to get connected with it again. And maybe I'll even make some money because Pokemon's doing well. And so we saw a lot of that, too. So, you have true collectors. >> You have people that understand collecting and are getting back into it after, you know, a one, two decade hiatus. >> Yeah. How how do you both see the collectibles market evolving as Gen Z starts to uh I mean, yeah. Come into more and more money and start to, you know, be a bigger and bigger user base.

I mean, I'm I'm super excited about it. I think it's only going to grow. Um, you look at this next generation of earners and what they grew up with and the dopamine chase and the instant gratification. You know, we've built a really efficient form of opening packs and engaging shoppers. And I think that, you know, when I look back when we started building Beey, it was for this moment in time in this space, but the, you know, the forethought was really it's this next generation that's really going to embrace this type of commerce in general. And again, I keep going back to it, but it's not just collectibles, right? It is commerce much more broadly.

And I think we are just scratching the surface on the next generation of earners. were just scratching the surface, you know, engaging female shoppers, which the research shows that gamified commerce has been particularly successful with women. So, >> yeah. Yeah. >> It's it's so early in the conversation. >> Yeah. Uh commerce would be things like sneakers and and watches that are traditionally collectibles or just all like Yeah. All >> commerce and I mean, you're seeing StockX do blind boxes, right? you know, it it is going to continue to evolve beyond just the thing that someone wants to collect.

>> Do you have any preview of what you're launching? >> Um, well, there are assets that haven't been tokenized before. Um, and the activation is, you know, not designed just for our current user base. And it's a big deal that, you know, it's a big reason I should say that we took this partnership on because I don't want to sell, you know, it's luxury, right? And I don't want to sell luxury assets to our community that's here buying our Pokemon cards, right? You have to bring in those new users. The goal is that we take a big chunk of that brand's current user base and bring them on chain, you know, really without them knowing it.

>> Yeah. How much of this story is about being able to do more things with the asset um once you once you to you know financially right if you have a a Rolex or a nice watch or a Pokemon card um often times they sit in your basement but you know you might if you need to you know take a loan out against it you can't really do that. How much of this story ends up being about that? >> I think it's different on the assets right like some people collect watches to not wear to pass down to the next generation. And I think that there's a huge component in what we both do with with that type of asset. Obviously, you know, with cards, it's the same way with slabs. A lot of people are buying because they held some value for them around nostalgia or, you know, they're

bringing their next generation, their kids in as users. Um, and then I think that, you know, there's it's wildly appealing to me someday when I see UGC around. I just pulled this Birkin for $500 or I just unlocked this Chanel bag for$ 250. There's there's many different facets to this. >> Yeah, the Birkin idea. Yeah, the Birkin idea makes it come to life. Um, >> right. I mean, can you not see >> I can influencers.

>> Yeah, I think that would rip. Yeah. >> Well, stay tuned. Get me back next week. >> All right, I will. That sounds great. Um, Tom, on the um on the token side, I think this is probably less relevant for um Andrea um but what what is the what does having a token allow you to do or why you know you like why have a token at this point in the business? Yeah, I mean I I think a lot of people have asked that question and my my best answer is that I'm uh you know I got into Bitcoin in 2013, got into Ethereum in 2016, been through my fair share of rugps. Um I've also uh interacted in the the financial space. You know, I I I did a

bunch of risk management consulting for hedge funds in the 2000s. I got into uh you know launching a couple funds. I've been a biotech executive entrepreneur for a while. Uh helped companies go public so I understand that kind of side of it too. Uh I think just the ability to allow your community to participate in your platform and participate in the growth of what you are building at a very early stage in a very efficient way. um is unparalleled outside of crypto. And as I was I'm always hounding on is one of our every every single decision we make at

Collector Crypt is about how do we build the community and how do we make this a better product for our users? How do we make it a better user experience? like how do we turn off the turn style that I was telling you about before and build something where people actually want to show up every day and participate and the token's part of it, right? And it's it's not a well, hey, we're going to give you all of this token for doing this kind of stuff so we could pump up numbers to sell more token. You know, we haven't sold a single token since we launched last year. Um what's important to us is for people who are truly believing in our platform uh truly

believing in the idea of RWA collectibles and tokenized collectibles to have a way to enter into this space when it is still so early right if we did not have a token if we were just purely equity if we had you know insert top five VCs here on our cap table like some of our web two competitors do uh you know their communities aren't partic aren't benefiting and participating in the growth which kind of also sets those platforms up for a different dynamic on how they actually interact with their community. So you know I I really want the token to be a pure um manifestation of growing this

together with people that believe in you and people in your community. And that that's why we launched the token. Sure. I I would probably be able to sell the company to insert, you know, one of the big guys there for, you know, a billion dollars at this point. Like that's not my goal. My my goal is to do something that, you know, and and I'm sure my kids would respect the money, too. But I I have a little more than that. I I want to I want to reimagine the collectibles ecosystem and I want to put more power back in the hands of the actual collectors.

>> Andrew, when you see, you know, I think the thing about that um token, a token is a double-edged sword, right? Because it's a I mean, it's a whole I mean, it's a it's a nightmare to deal with many times, but when it when it works right, it uh it gets it gets the people going, right? It it you know, it gets the narrative going on Twitter. it, you know, it can almost be a really nice customer acquisition machine, especially when the market's going up. Um, and people are making money and people are happy with the token. Have you thought about if this if that if that model could be right for for Beey?

>> I mean, every day, every day we're working really hard on it. Um, you know, Twam and the guys have done a really good job leading the charge and and doing things the right way and looking out for the community and, you know, has one of the most successful um longer term, I should say, longer term successful tokens, right? You guys are coming up on a year or maybe you just hit a year and to see the numbers that they continue to put up is something to be really proud of. I think for all of us as an industry, we, you know, when I look at token and relate it to bey, I think of how can we double down and kind of force this market to grow up as well.

I think a big component around that is ownership. Obviously, there's a ton of legal and regulatory that goes with that, particularly when you're a company that's not pre-product and you already have a cap table. So, one of the big pieces we're working through is that and we're, you know, there's a lot of great people working on this, um, I think when you do it right, as Tam said, you really give your core community, the people that are showing up every day, um, you know, a piece of building this thing together.

>> Tom, how do you think about value acrruel for the token? And, uh, you know, there's a lot of conversations about buybacks. um you know re revenue value acral. How yeah how do you think about that for the token? >> Yeah, good good questions. And I I'll give you my canned answer and I'll I'll also say that there's going to be more information next. >> You don't seem like you don't seem like a canned answer kind of guy at home. So uh >> yeah, I didn't even read the uh the questions you sent out beforehand. I'm just kind of winging it. Sorry. Sorry about that. >> I actually didn't realize that I that we sent questions ahead of time. So that makes two of us. the uh so so what I'll say first is there's there's been a mysterious wallet that some people have found that for whatever

reason is getting some some money every four hours or something from our protocol and all it does is sit there and buy back the tokens. So um I have no comment really on that but it exists. It's out there. Uh you know maybe we got hacked or something and you know there's a weird wallet buying back the tokens. uh we've also done uh what I would call idiosyncratic like you know non-programmatic buybacks. So when there are periods where there's a where we know there's going to be a lot of sell pressure or when there's certain things happening in the ecosystem uh like for example uh you know there was a big dump in in December or something you know we'll come in and add additional liquidity and and buy back

the tokens there and then also some of our VCs and stuff they they want to you know exit and they they come and say well you know hey we we really want to sell these tokens but we don't want to dump on the token price, you know, will you will you buy some back? And we'll say, "Sure, we'll buy them back." So, you know, through that, we've accumulated a lot of tokens uh in various wallets. Um some people, I'm sure you could dig them up. Uh the the thing that's funny is the number of people on on Twitter that say, "Oh, we are research experts. We research blockchain stuff." And they come out and say all, "Oh, Collector Crypt does no buybacks." And if you spent like three minutes, you'd be able to see it pretty clearly. Uh so, you know, I'm I'm I'm

really looking forward to next week when we can talk about it a little bit more. Uh because then people will have something to point to. And you know, the thing I think will surprise people >> is it's been happening all along >> like and and you know what we've been doing has been happening for 12 months and you know at some point people are just have to deal with the truth. >> Yeah. Nice. >> TLDDR is people need to pay attention. >> Yeah. Yeah. Yeah, people need to pay attention. They need to come into our Discord. They need to listen to the podcast because here we are at minute, you know, 60 on this and and most people would wouldn't make it past five minutes and then jump on Twitter to say, "Oh, no utility." You know, they didn't announce

it right up front. Uh so that that's why I usually say these things right at the end of the podcast. >> Tom, we can do a nice we can do a nice clip for you. We can be like, you know, CC has buybacks and uh you know, there you go. >> No, you got to leave it in as a secret. >> Yeah. Yeah. Yeah. Exactly. guys, what um what have we not talked about that you think is um important or that you think others maybe are missing? You know, obviously Tom, you mentioned this. This is that, you know, minute 55, but yeah, what do you guys think that others are missing that we haven't talked about yet? >> I think one question is where does it go from here, right? Like we we kind of touched on it. We touched about category expansion.

Um we touched on some of the ideas around getting into uh non-crypto kind of user bases. But like what what do we what do we see this hap what you know what is this going to look like in five years you know is this going to disrupt Amazon is this going to disrupt any type of traditional retail >> so so tell me I'm while you do that I'm pulling up your uh your volume your monthly volume chart which is uh you know just up and to the right here uh let's maybe we can get quantitative with it to so your your monthly volume at least from block works is uh you know June was 400 million uh July is 300 million. By the way, for context, that's up from uh last July was only 20 million. So, it's about a 20x in the

last year. Um where do you think this is a year from now? >> Well, uh what I'll say is we've bought a we've bought a 94,000 square foot building um which is more than 10 times the size of our current vaulting facility. And we are building robotics. We're building, you know, ability to handle multiple different kind of, you know, assets. It has loading docks, so you could pull up with a trailer truck. Um, I think we are we are building for a 10x future from here.

>> And are you bu are you building this stuff with the profits that the business is kicking off or from uh, you know, fundraising or from you know the to you mentioned you haven't sold the token, but from where how are you uh yeah, how are you funding this? uh we're funding this from uh uh profits from the the platform or net net we're funding it from net operating profits and then we're investing that into capex and growth. >> H >> Andrew, where do you think this whole category goes? >> I think it continues to expand beyond, you know, the current wedge. I think we see bigger brands leaning into it. I think we see the eBays of the world trying to do it. Um, I think we just, you know, the gamification of commerce

is just getting started and that expands beyond collectibles. >> Yeah, 100%. Tom, Andrea, thank you guys. This was great and uh, congrats on I I do feel like it is, you know, having this conversation with you guys. I feel like it is very early days um, for both BZ and Collector Crypt. So, congrats to both you guys. >> Thanks for having us. >> Yeah, thank you both. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only. And the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in

the companies, funds, or projects discussed.