Pudgy Penguins CEO says praise he gets ‘is actually pretty sad’: NFT Creator
Pudgy Penguins minted in July 2021, but quickly saw high drama after its former founder came under suspicion he was going to rug the project.
A few months later Luca Schnetzler stepped in. With an entrepreneurial streak since his early teens he had a history of building internet businesses and bought the project and its intellectual property of 8,888 cute little Pudgys for $2.5 million in April 2022.
“It was an instinct and intuitive decision. I saw this thing that I was hugely invested in before I bought it that I thought had all of the potential. I was complaining and crying on a daily basis to the founders about how they sucked, and how they could do better. Rather than just doing that, I just stepped up to the plate,” Schnetlzer says.
The narrative of quickly shifted from a rug that could trend to zero to one of hope and optimism when Schnetzler set out a vision for the project the community could rally behind.
Schnetzler became one of the standout PFP project leaders during the NFT bear market, and the Penguins bucked the trend of cratering floor prices. Since he took over as CEO, the Pudgy Penguins floor has risen from around the 1 ETH mark to 6.32 ETH. Holders and the wider NFT community believe that Schnetzler has a game plan for success and the ability to execute it.
He says the decision to snap the project up wasn’t as risky as it may have seemed.
“We bought something that netted almost $10 million in six months for $2.5 million. Royalties were making it half a million dollars per month. It was a pretty good business on its face. Intuitively, I think it just comes down to the vision when you close your eyes and you picture Pudgy Penguins, it’s pretty easy to see where this thing can go.”
Constant momentum and growth has been key to Pudgy’s ascent into one of the top PFP projects, with the cute penguin brand spreading across social media outside of traditional crypto channels like X and Discord. Pudgy’s Instagram has just crossed 1 million followers, while its GIF strategy has been highly effective, only days ago crossing the 10 billion views chasm.
Schnetzler thinks it’s a little bit sad that he gets such praise, when it just highlights how little effort other PFP projects put into trying to grow their brands.
“Everyone’s been saying that their NFT project is a brand, they have hundreds of millions of dollars that they raised from the community and venture capital at ridiculous valuations. Yet none of them are actually doing the basics of building a brand,” he says.
“Some people really sing my praises, and it’s actually pretty sad because I do think we do some things really well, don’t get me wrong, but I mean, this should have been the bar all along. The fact that we are doing so many things that so many projects are not doing when they have 10-20 times the resources and 2-3 times the experience is pretty shameful.”
Finding the entrepreneurial spirit
Despite only being 25 years old, Schnetzler actually started his entrepreneurial journey over a decade ago. Growing up poor and bouncing around couch to couch at friends’ places, Schnetzler says he needed to start earning at a young age.
“I’ve really been out of school working for 10 years and it’s pretty crazy to say, but that’s what it’s been,” he says, noting most people don’t even start working until they finish college in their 20s
“Then you do 10 years after you leave college and you’re 33, and then people start to see success in their 30s. That seems to be the time horizon. I think my childhood forced me to start early. I didn’t have the luxury of chilling out or having a childhood where I could just go home and play video games and not worry about anything. I was forced to go work and figure things out.”
Character building versus brand building
To date, most PFP projects are built around a centralized character with a variety of different traits to give each NFT a slightly different look and feel. Take the OG collection CryptoPunks, the Bored Apes, and it is also true for the Pudgys. But it’s not the case for Gary Vee’s VeeFriends, which boasts 270 individual characters.
Schnetzler believes character building around one individual character is the easier of the two options.
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“At the end of the day, I think Gary is trying to tackle a tougher challenge. It’s part of the cards I was dealt and have, and he created his cards. I think he’s doing a great job with VeeFriends. I think ultimately he has to create familiarity. Creating familiarity around a character is a lot easier than creating familiarity around a brand,” says Schnetzler.
“They’re two different things and because his universe isn’t predicated on one character, but a multitude of different characters and different animals in different shapes. He is betting and taking a shot at the brand, and the brand name versus the character.”
“I’m going after the character first and then worrying about the brand because I believe there’s enough people that love penguins and few enough penguin brands out there.”
A brave new world – Walmart pallet program
In September this year, Pudgys announced a groundbreaking deal with retail giant Walmart that saw Pudgy Penguin physical toys available for sale and in prominent locations in over 2,000 stores throughout the U.S.
“The pallet program is one of the most prestigious places you can get because it gives prime real estate to people walking the floor. It signals Walmart’s belief in the brand and their belief in NFTs and Web3 being a vertical for their retail locations,” says Schnetzler.
“If that can become a general norm in the world’s biggest retailer it gives us a real shot to succeed. It’s one thing to be in the crevices of the toy shelf, it’s another thing to be front and center for everyone to see. That program doesn’t happen for brand-new brands. It’s normally a program for Barbie, Teenage Mutant Ninja Turtles or people that have movies and TV shows off the backs of their releases.”
Building a legacy brand with no playbook
One of the most common questions consistently thrown at a PFP project is “how do you drive value back to holders?”
In response to criticism about its toy product extension, Schnetzler laid out his plan on how Pudgy Penguins are thinking about value accrual to holders using a classic funnel diagram.
“The funnel is not something that I’ve really invented. I mean, you can throw Star Wars and any other big legacy IP onto that funnel, and that’s the strategy. The idea, though, with NFTs is the value of the first edition collectible is a huge anchor to the business. If you put any first edition collectible at any legacy brand on the bottom of that funnel, it still makes the most sense,” he says.
“I want to build a legacy brand, the likes of a Hello Kitty, a Star Wars and a Pokemon.
That’s easier said than done, he admits, saying there’s no roadmap to follow for a PFP project.
“Hello Kitty took 60 years to build. My holders don’t have 60 years for me to go build something. If I lose momentum and traction within the holder base, then I ultimately lose everything because I don’t believe you can build a successful Web2 business while your Web3 business fails.”
Rapid-fire Q&A
Your entrepreneurial inspiration
“I love everything that I think Steve Jobs represents. For me personally, I’ve tried to be my own man, but the one person that I found huge inspiration from, you can kind of tell it in my leadership style, is really Steve Jobs.”
The intense pressure of a founder
“It’s not easy, but it’s also not the worst thing. One of the reasons why we got here is because of the community. I think I’m in a great situation because I bought the project and I didn’t take any money from them. The nature of people who hold Pudgy Penguin PFPs, they’re good people.”
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“You can’t really be an angry, miserable person and then go click buy on a Pudgy Penguin. The art kind of creates a culture that already filters a lot of that nonsense out. Now, I empathize with a lot of other people who I see go through the chaos.”
What you would tell a Mom about Pudgys
“What I would tell a Mom is, ‘hey, this is a great value proposition for your son or daughter. This is way more fun than any other $10 toy.’”
“Why? Because they unlock a bunch of things in the digital world that not only entertain them when they go to bed or when they’re at recess or on the playground. But also entertains them when they are at home on their iPad and computer. It’s a 2-for-1 bang for buck special.”
Were the Pudgy gifs planned?
“The gifs were totally random. But the second we saw it, we quadrupled down, but it was totally random in the beginning. It was a sheer accident but a happy accident.”
“I don’t need people to know about Pudgy Penguins now, but you want to know something when NFTs are the talk of the town again, and all those people have been using Pudgy gifs the whole time, that’s going be a really good source of credibility for them once everyone starts to want to buy NFTs.”
What’s your position on royalties?
“It shouldn’t be 0% and it shouldn’t be 5%. I think it’s somewhere in the middle. I think the number is between 1% and 1.5% is where I think the enforceable royalty should stand. The reason being is because you just have to incentivize the creator. [That’s] what made YouTube great, what made TikTok great.”
Are you a Wim Hof fanboy?
“Every day I do his breathing technique and I get high doing it. I recommend it because it’s the quickest way you can get high for free. I’m also setting up my cold plunge now.”
Where are Pudgys three years from now?
“We’re the face of NFTs, we’re the face of Web3. We have brought the most value to holders emotionally and fiscally. Three years from now we’re probably launching a movie. The movie is close.”
Links:
Website: http://www.pudgypenguins.com
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Kemi Badenoch has called for a national inquiry into the grooming scandal that took place across UK towns and cities, arguing one was “long overdue”.
The Tory leader said 2025 “must be the year that victims get justice” after it emerged that Jess Phillips, the safeguarding minister, had rejected calls from Oldham council for a public inquiry into child exploitation in the town.
In a post on X, the Tory leader wrote: “The time is long overdue for a full national inquiry into the rape gangs scandal.
“Trials have taken place all over the country in recent years but no one in authority has joined the dots. 2025 must be the year that the victims start to get justice.”
Ms Badenoch was joined in her calls by shadow safeguarding minister Alicia Kearns, who has written to Ms Phillips asking her to reverse the government’s decision regarding Oldham.
“We have asked for planned Conservative measures to be enacted, to reverse the Oldham refusal, and for a statutory inquiry into grooming and rape gangs,” she wrote.
Girls as young as 11 were groomed and raped across a number of towns in England – including Oldham, Rochdale, Rotherham and Telford – over a decade ago in a national scandal that was exposed in 2013.
The following year a report by Prof Alexis Jay revealed the scale of exploitation in Rotherham between 1997 and 2013 – where around 1,400 girls were abused – and the failure of police and social services to intervene.
It was followed by the statutory Independent Inquiry into Child Sexual Abuse (IICSA), also chaired by Prof Jay, who found in her final report published in 2022 that children were still being sexually exploited by networks in all parts of England and Wales in the “most degrading and destructive ways”.
The final report recommended that institutions that work with children should be required by law to report suspicions of child sexual abuse.
In a letter to Oldham Council dated October last year, Ms Phillips, the Labour MP for Birmingham Yardley, said that while she recognised the “strength of feeling” over the matter, she believed it was for “Oldham Council alone to decide to commission an inquiry into child sexual exploitation locally, rather than for the government to intervene”.
She added: “I welcome the council’s resolution to do so, as set out in your letter, and to continue its important work with victims and survivors.
“Should the council choose to proceed, I would look forward to the inquiry’s findings and ensuring that any lessons that can be learnt to improve the frontline response are adopted at a local and, where applicable, at a national level.”
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Children ‘still at risk’ of abuse in Rochdale
Ms Phillips has been criticised for her response by Conservative politicians, including former home secretary Suella Braverman, who accused the minister of “letting down victims”.
However, Ms Badenoch faced criticism on social media by Sammy Woodhouse, a survivor of sexual abuse in Rotherham, who said: “I’ve met with your party for 12 years about this when you were in power. I asked for an inquiry into every town and city, none of you cared. Now you need the vote you want to speak on it?”
Read more:
AI-generated child abuse images increasing at ‘chilling’ rate
Met Police ‘failing to deal with child sexual exploitation’, report says
And Reform UK leader Nigel Farage said: “Talk is cheap. The Conservatives had 14 years in government to launch an inquiry.
“The establishment has failed the victims of grooming gangs on every level.”
An Oldham Council spokesman said: “Survivors sit at the heart of our work to end child sexual exploitation.
“Whatever happens in terms of future inquiries, we have promised them that their wishes will be paramount, and we will not renege on that pledge.”
A Labour spokesperson said: “Child sexual abuse and exploitation are the most horrendous crimes and the Home Office supports police investigations and independent inquiries to get truth and justice for victims.
“We have supported both the national overarching inquiry into child abuse which reported in 2022, and local independent inquiries and reviews including in Telford, Rotherham and Greater Manchester.
“This government is working urgently to strengthen the law so that these crimes are properly reported and investigated.”
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