What's the least plausible, yet most convincing pitch for an NFT project?
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
Hint: it's so common that you've no doubt seen it many times.
It's vanishingly unlikely to work out. Yet it always works: it gets people excited.
You're probably vulnerable to it. And shouldn't be.
👇
The pitch can be summarised as: "We're going to become a cultural phenomenon".
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
Usually, it takes the form of an implicit promise that "this could be the next BAYC/Cryptopunks".
First, let's look at why this pitch works, over and over again, despite its issues (later).
There's two reasons it works.
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
The first one, is it's got a strong emotional appeal. It touches all the cornerstones to grab people: greed, FOMO, excitement, fantasy...
Emotions are good stuff when trying to pitch people. A pitch that lacks emotion usually fails.
Once upon a time, everyone wished they bought Apple stock in the 1980s. Then it was BTC in 2010. Now it's BAYC in May 2021. Can you imagine if you minted 50 of those back then? It'd change most people's lives!
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
Everyone likes to think about that winning lottery ticket.
The second reason it works is it's literally just happened. We're not talking about Bitcoin in 2010. This was just earlier this year! It's very fresh! How can you say it won't happen to *this* project when it just happened to *that* project?
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
The first reason gets people's emotions going, and the second reason disables their rational mind with a relatively weak, but still effective argument: "you can't prove it won't happen to this new project too."
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
So why is it an implausible pitch?
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
There are many reasons. Let's start with just how vanishingly rare it is statistically.
There are bajillions of NFT projects by now. By definition, most of them won't become cultural phenomena. The odds are against you with this pitch.
Another way to see how silly this pitch is is to transfer it to another industry.
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
X says: this is going to be the next Bitcoin.
You'd probably smile politely and maybe keep an eye on their project, but unless you have *a lot* of other reasons to back the project you wouldn't.
Or: I'm building this company. It's going to be the next Apple.
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
It'd be hard not to cringe.
Really? The next Apple? And how exactly? Huh?
(* actually a lot of startups try for that pitch anyway, but startup investors have generally wised up to it)
Most NFT projects won't outright say "We're going to be the next BAYC"... but some actually do. Maybe not in these exact words.
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
What they might say is: "This project is going to be a global brand."
Oh really?
Cryptopunks became a cultural phenomenon because they were the first to market with an incredible innovation (the 10k pfp project) that might transform fund-raising and business creation for ages to come.
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
BAYC became a cultural phenomenon because they executed insanely well on another innovative model (the NFT project as a club) and had divine-level luck in timing their endeavour to coincide with the first big NFT bull market.
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
Now this new project says they're going to be a global brand (hint hint: maybe as big as BAYC some day!)... well, what are they doing to do that?
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
Spoiler: there is nothing they can put on the roadmap that can make that outcome likely or even plausible.
Building a global brand is fracking hard. People's attention is extremely fickle. Yes, every single one of those project has a small chance of being that next cultural phenomenon. But if you're pragmatic for 2s, the chance is negligible. Even if they're super hot in every way.
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
This doesn't mean such projects won't trade well. They might have a wonderful mint and great pumps and offer plenty of trading opportunities.
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
But when you put your investor hat on, take that "next BAYC/punks" vibe and put it straight where it belongs: in the trash.
TL;DR: when you sense that the main reason to be excited about a project is it might be the next big thing... take that emotional pitch, set it aside, ignore it, and make a level headed, pragmatic investment decision instead.
— Daniel Tenner (swombat.eth) (@swombat) December 29, 2021
gm & gl