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.
“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.”
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.”
“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.”
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Budget 2024: Rishi Sunak hints at further national insurance tax cut – citing boost for union
A reduction in national insurance would be a “union tax cut”, the prime minister has said ahead of the budget next week.
Rishi Sunak told journalists at the Scottish Conservative conference in Aberdeen on Friday that while he could not comment on what the chancellor Jeremy Hunt will announce on 6 March, he could see the case for trimming the levy – which is paid by workers across the UK – over income tax.
When asked about the fact a cut in the headline rate of income tax may not benefit voters in Scotland if the SNP government chooses not to pass it on, he said national insurance had been cut in January because it is a “tax on work” and benefits all parts of the nation.
“I’m sure people will appreciate that I can’t comment on any fiscal policy in advance of the budget,” he said.
“But to your broader point, the chancellor and UK government chose to cut national insurance, for lots of reasons but first and foremost because it’s a tax on work and I believe in a country and society where hard work is rewarded.”
He added: “It’s also important to us to be a government that delivers for people in every part of the United Kingdom.
“It’s a union tax cut and a tax cut for everyone in work and the contrast between what we’re doing and what the SNP are doing couldn’t be starker.
“I want to make life easier for people, I want to give them the peace of mind there’s a brighter future for them and their families.”
Some Conservative MPs have been pushing for a pre-election cut to income tax in the hope of boosting the Conservatives’ flagging popularity.
It was also one of the promises of Mr Sunak’s leadership campaign.
In Scotland, where the Conservatives are up against the SNP in all of the seats they hold and are targeting, the prime minister has dubbed the SNP the “high tax capital of the United Kingdom”, with Scots earning around £28,000 a year already paying more income tax than those who live in England due to policy decisions at Holyrood.
MSPs passed the final budget for the next financial year this week, including a new income tax band being created, which will see those on a salary between £75,000 and £125,140 paying 45%; while a 1% increase to the highest rate of tax – for those earning more than £125,140 – will take it to 48p in the pound.
In passing the budget, deputy first minister Shona Robison insisted Scotland’s tax system was “progressive” and will provide £500m in funding for the NHS.
Scotland Secretary Alister Jack confirmed he had been lobbying the chancellor for a cut in national insurance – rather than income tax.
Mr Sunak would not comment on reports the government is considering raising revenue by increasing the windfall tax on oil and gas companies, or may force “non-doms” to pay UK tax on foreign income – both ideas Labour has put forward.
PM rails against ‘extremist forces trying to tear us apart’ in Downing Street address
Rishi Sunak has railed against “extremist forces trying to tear us apart” during a Downing Street address to the nation.
The prime minister said there has been a “shocking increase in extremist disruption and criminality” and added that “now our democracy itself is a target”.
He also described the Rochdale by-election result on Thursday night as “beyond alarming”, and claimed “our streets have been hijacked by small groups who are hostile to our values” as he urged the need to “beat this poison”.
His surprise speech came after the victory of maverick politician George Galloway in the Greater Manchester seat, following a campaign dominated by the highly-emotive issue of Gaza and dogged by accusations of abuse and intimidation.
In response, Mr Galloway told Sky News he “despised” the prime minister and did not care what he thought as he had won “a free and fair election”.
Community tensions in the UK have heightened against the backdrop of the Israel-Hamas conflict, triggered by the militant attack on 7 October.
In the face of ongoing pro-Palestinian protests, MPs have spoken of their experiences of receiving death threats and their concerns for the safety of their families, prompting the government to announce an extra £31m to protect elected representatives.
It followed chaotic scenes in Westminster over the vote on a ceasefire in Gaza, when Commons Speaker Sir Lindsay Hoyle broke with precedent in his handling of proceedings because he had concerns about the intimidation suffered by some parliamentarians, sparking a backlash.
But critics argue members of the ruling party have stoked divisions, highlighting former deputy Tory chairman Lee Anderson being stripped of the party whip after he accused London mayor Sadiq Khan of being controlled by Islamists, and former home secretary Suella Braverman referring to protests as “hate marches”.
Mr Sunak said: “In recent weeks and months, we have seen a shocking increase in extremist disruption and criminality.
“What started as protests on our streets have descended into intimidation, threats and planned acts of violence.
“Jewish children fearful to wear their school uniform lest it reveals their identity. Muslim women abused in the street for the actions of a terrorist group they have no connection with.
“Now our democracy itself is a target. Council meetings and local events have been stormed. MPs do not feel safe in their homes. Long-standing parliamentary conventions have been upended because of safety concerns.
“And it’s beyond alarming that last night, the Rochdale by-election returned a candidate that dismisses the horror of what happened on 7 October, who glorifies Hezbollah and is endorsed by Nick Griffin, the racist former leader of the BNP.”
He added: “We are a country where we love our neighbours and we are building Britain together.
“But I fear that our great achievement in building the world’s most successful multi-ethnic, multi-faith democracy is being deliberately undermined.
“There are forces here at home trying to tear us apart.”
He went on: “Islamist extremists and far rights groups are spreading a poison, that poison is extremism.”
Mr Sunak announced a “new robust framework” would be introduced to “ensure we are dealing with the root cause of this problem”.
The prime minister said ministers would redouble their support for the anti-terrorism Prevent programme, demand universities stop extremist activity on campus and act to prevent people from entering the country whose “aim is to undermine its values”.
In an appeal to those taking part in pro-Palestinian protests, Mr Sunak said: “Don’t let the extremists hijack your marches. You have a chance in the coming weeks to show that you can protest decently, peacefully and with empathy for your fellow citizens.
“Let’s prove these extremists wrong and show that even when we disagree we will never be disunited from our common values of decency and respect.
“I love this country, my family and I owe it so much. The time has now come for us all to stand together to combat the forces of division and beat this poison.”
Labour leader Sir Keir Starmer backed Mr Sunak’s call.
In a statement, he said: “The prime minister is right to advocate unity and to condemn the unacceptable and intimidatory behaviour that we have seen recently.
“It is an important task of leadership to defend our values and the common bonds that hold us together.
“Citizens have a right to go about their business without intimidation and elected representatives should be able to do their jobs and cast their votes without fear or favour.
“This is something agreed across the parties and which we should all defend.”
Electoral Dysfunction: How big a threat is Galloway and Gaza to Starmer’s Labour?
George Galloway will be back in parliament on Monday with his megaphone and a new platform to rail against Labour.
His theme is Gaza and his menace is clear.
As he accepted victory in the Rochdale by-election at around 3.30am (at a rally in a Subaru car showroom of all places), the veteran left-wing agitator warned Sir Keir Starmer “[his] problems just got 100 times more serious than they were before today”.
In Mr Galloway’s world, his win was the beginning of an earthquake that would flatten Sir Keir’s Labour.
“This is going to spark a movement, a landslide, a shifting of the tectonic plates in scores of parliamentary constituencies,” he said.
Labour, he said, was “on notice that they have lost the confidence of millions of their voters who loyally and traditionally voted for them”.
It is something that Ms Phillips, who has a large Muslim community in her Birmingham Yardley constituency, feels very strongly about.
She resigned from the Labour frontbench last year after deciding she couldn’t support the party over the Israel-Hamas war.
And she is fuming over what she sees as Mr Galloway’s sanctimony as he purports to be fighting for the people of Gaza when all he really wants to do is to sock it to Labour, as he has been trying to do in various seats for various political parties since he was kicked out of the party more than 20 years ago.
Ms Phillips said: “He is not a legitimate voice for the people of Gaza.
“He’s just trying to attack Keir Starmer.
“Knock yourself out. Attack Keir Starmer. That’s politics. I’m here for that. But don’t pretend to people who care about something that you’re going to change something.”
Mr Galloway would reject the suggestion he is not a “legitimate voice” for the people of Gaza, having campaigned on behalf of the Palestinian cause for decades. Speaking to Sky News in the wake of his victory last night, he said his views on the issue were “quite well known”.
As for whether Labour would have lost this seat to Mr Galloway regardless of whether its suspended candidate Azhar Ali had stood for Labour or not – a view of some in the party – Ms Phillips says she doesn’t know.
But what she does acknowledge is Mr Galloway’s near 6,000 majority is “testament to a broader problem” for the party.
She said: “There is a clear problem with Muslim communities feeling represented currently by the Labour movement.
“Muslim people do not want to be represented by total charlatans.
“They also want to come to you for help and need decent representation and good, good people, both from within and without their community.
“They have been saying for some time, we are losing faith, if only we noticed it.”
I don’t buy Mr Galloway’s assertion that he is triggering a “movement” across “scores” of Labour seats – not least because these divisions have been in plain sight for months, with councillors and activists quitting Labour because of the tensions over Gaza.
In some Labour seats it is undoubtedly a real problem, but what doesn’t follow is that these difficulties lead to electoral failure in a general election across a number of seats.
The by-election swings in all other races tell a very different story, with over half of Labour’s biggest by-election swings ever happening in the last couple of years.
“Rochdale was the anomaly and not any kind of indication of where we are,” says one senior Labour figure.
“At the beginning of the [Rochdale] campaign it was clear that some previous Labour voters had moved away from us on the issue of Gaza but at the same time we were picking up a lot of previous Tory voters.”
While Ms Phillips is clearly frustrated with her party leadership over Gaza, Ms Davidson says she feels “a little bit sorry” for Sir Keir, who she thinks had no option but to be fulsome in support of Israel against the backdrop of a Labour party that had been so badly tarnished by the rows over antisemitism in its ranks during the Jeremy Corbyn years.
“I think what the Gaza situation thing has exploded about is the fact that Keir Starmer had so much work to do off of Jeremy Corbyn to try and rebuild trust with Jewish communities across this country,” says Ms Davidson.
“He had to do that if he was going to be a credible candidate for the prime minister of this country; he had to make that reparation.
“And that is now being used against him. The bit [from Galloway’s election flyers], which was about Starmer being this great friend of Israel, is being used as a stick to beat him with.”
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