#56: LK Shelley on NFTs and The Metaverse

LK Shelley is the Managing Partner at Affiniti Ventures or AV(M), which collectively invests in early-stage mobile-first startups.

In this conversation, we discuss:
- History of NFTs
- NFT communities
- The most effective NFT utilities
- The future of the metaverse
- Social tokens
- NFT incubators: the new type of Venture Capital?
- Recruiting artists
- Investing in virtual land

AV(M):
Website: avmcap.info
LinkedIn: Affiniti Ventures | (AV(M)

LK Shelley
LinkedIn: LK Shelley

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Transcript

Matt Zahab: 0:08

Ladies and gentlemen, if you like investing, if you like NFTs then buckle up. Our guests will be dropping gems and knowledge bombs all episode long. Very, very excited for this one. Our guest has over 20 years of international experience in the US, EU and Asian markets. She's participated in and transacted investments from five to 900 million US dollars and exited a couple of ventures of her own, not too shabby. She's been a speaker and given talks at numerous major conferences and events, including TEDx, and topics related to blockchain. She also holds an MBA and Ms degrees from MIT. Present day our guest is the managing partner at affinity ventures also known as AVM, which collectively invest in early stage mobile first startups, including tech platforms, digital media, entertainment and mobile gaming. I'm very pleased to welcome to the crypto news podcast LK Shelley. LK, Welcome to the show.

LK Shelley: 1:08

Well, thank you for having me, Matt.

Matt Zahab: 1:09

Very excited to have you on today. You are one of the NFT goats. Now I know you're very humble. And you would never say that yourself. But you were one of the first ones and you have an incredibly vast knowledge in the space. And as an NFT fanatic myself, I'm incredibly excited for this one. So thank you so much for coming on. I do have one question that I'd like to kick off with. And that is sort of the history and the inception of NFTs which dates back to I believe was 2017 2018 with crypto kitties. Now I read your article and SEO World.biz is great article by the way. I'd love if you could sort of reiterate what you spoke about in that and talk about how crypto kitties started and how that started the whole NFT boom?

LK Shelley: 1:54

Yeah, sure. I mean, sort of to summarize, NFT was literally started out as a pet project by the team at this design lab in Vancouver. And now they are known as dapper labs. They're very big now. And so initially, they were, you know, experimenting with the non fungible tokens. And they created this blockchain version of Tamagotchi, which is a very well known digital electronic toy from Japan. It is very interesting how they start out putting together a set of smart contracts. And then they built in the genetic algorithm to feature like to have the features of bleeding, and also mutation. So it's not like just a static set of like, collectible static images. So it has like gamification involved. And that's what makes it very unique. And a lot of game not exactly like gameplay, but there's also utilities, if you will, within their universe. And I would say they technically pioneered the standard for today's NFT non fungible tokens. So they created the first smart contract caught standard core ERC 721. So it is one of the more successful ones back in 2017. However, similar to the whole crypto markets crashed at the end of 2017. And beginning of 2018, their activities or their overall trends dropped tremendously. And as you all know, it picked up again in the end of 2020, and then blooming an explosive trend, just beginning of this year. It was a different spin right is more tailor for the NFT digital arts, which we can talk a little bit more about. But yeah, that's, I would say for interesting evolution from the beginning to now.

Matt Zahab: 4:29

It's a great story too. And as a Canadian, I'm very proud of Rohan and his team at dapper labs, which, as you said used to be called axiom Zen. Based in Vancouver on the west coast of Canada. For the math folks at home just some crazy numbers here. To date, the crypto kitties project has transacted 64.6000 Ethereum, which a current $ETH price is just that 200 million you USD, like that is absolutely crazy to think that JPEGs are worth 200 million US dollars.

LK Shelley: 5:07

Yeah, well, for sure. I mean, look at that number. But now fast forward, if you look at crypto punks, is even crazier, right? I do really like how crypto punks implement the whole generative art, culture, and in a way more like infrastructure. But in a sense, still more static, you know, crypto kitties a lot more dynamic. So relatively, I think the markets have definitely been exploding a lot more. So the 200 million is a very good number. But if you look at today's number is even bigger.

Matt Zahab: 5:51

Yeah, it's absolute bananas. So okay, you have the crypto punks, which you just spoke about, which are similar to crypto kitties, in some sense. Now, I know you're very tuned into the whole art NFT space, if you want to open sea, which is probably the largest NFT marketplace right now you're seeing all these NFT our projects really pop off, you have coolcat you have lazy lines, you have crypto punks, and a bunch of others as well, the pudgy penguins have been making moves recently. It all seems to be the same sort of blueprint where you make 10,000 of these NFTs. And there are, you know, between five and 10 different properties slash characteristics. And then when you mint them, there's 10,000 of them. They're all randomly generated properties slash characteristics. And there's a couple that, you know, are so one off, they make them rare. And they're all sort of cool looking sort of blocky, pixely and very friendly to look at make you feel warm. Is this the new stencil or blueprint for creating these NFT communities?

LK Shelley: 6:54

Well, I, one thing I like to highlight is that crypto punks is fully generative, as programmatic. The others are sort of semi programmatic. And in terms of the, they're all cultural products to me, right. So they amassed this big audience by building very connected, very committed social community, whether it's on Twitter, or specifically on Discord. So I wouldn't say I'm the expert of size, telling you what is the exact formula, but I would definitely be able to say that the underlying growth is really the community. And that, you know, once you amass like, you know, certain number of community members, and they will become your ambassadors. So, crypto punks, apparently, there's this breaking, right, you, you purchase the crypto punk, you use it as avatar image. And it's almost equivalent to some folks in the analog world in the physical world, you would show off your expensive watch, or some expensive collectible that you got could be Pokemon card or something like that. Right.

Matt Zahab: 8:30

And you're bang on Yeah.

LK Shelley: 8:33

Yeah. So basically with this kind of new culture it's like a sub social media. So it's all social network. You know, you build it on top of discord or something. But again, I think that the key components is like, I call it the utilities are how you can continue to engage the community members. So you look at crypto punks. They started a lot of new initiatives, you know, they have now new sneakers. So whoever collected the crypto punks, now, you can claim a physical pair of sneakers. And you cannot buy from the market. Well, there could be, you know, secondary markets, but a suite of benefits for the existing collectors. And I can sort of do a quick analysis of it like a lot of time they have a long term roadmap. You know, it's not just a one off transaction, they Bill 10,000 and sell it off the market and hope for the best in a secondary market. A lot of times they have very thorough and thoughtful plans in the long run. So I think a lot of collectors or fans, they collect them based on that you know, long term longevity. And that's important. And of course, there's like some subjective, you know, aesthetic and some other factors involved. And then, and really, you would have a champion to help you to spread the words. And that's what is really a key components in the NFT. Community. You can't, you know, just jump in, and you know, even like a very big celebrities from Hollywood or whatnot, you can't just jump in and create a bunch of arts and say, Oh, yeah, you know, come buy. You really want to, you need to be able to engage with the NFT communities. And then, for example, work with like, the whale communities, or some of them, and then and stuff from there. So I think it's a kind of a social, like a digital, social, cultural movement. And like, I'm more like a analytical person, I wouldn't be able to tell you, like, if I could have an analytical model to figure out what's the future. But I think, you know, as we go on, I think there will have to be a lot more utilities built into it. That way you can hold on these community members longer. And that will help you to create another success, like to crypto punks.

Matt Zahab: 11:33

If you hear the word utility thrown out all the time in crypto and more specifically, NFTs. Because, you know, if I try to tell my parents, Hey, I just spent five grand on a JPEG, they're gonna be like, you know, did you take acid this morning? Like, you know what I mean, they're gonna be like, what's wrong with you? Now? I would tell them, I'd say, well, one, there's only one, you know, there's only 10,000 bees in the world. And I have one of them. On a planet of a billion people that's very formidable. And secondly, this NFT has x, y, and Z utility. What types of utility do you think are the most useful? There's the utility in the metaverse, there's the utility, where you get special drops, like you just spoke about in crypto punks, where people are getting these actual physical pair of shoes. Like what types of utility do you think are the most admirable and sort of the most efficient moving forward?

LK Shelley: 12:21

I think down the road, it would be more like a bigger picture building into the metaverse, but for the time being, I will say is a lot more lighter, you know, it will be more like exclusive VIP access. So that gives you that sort of try to own a piece of it. And then you will have special access, like you said, you know, airdrops or other, you know, maybe new series, something that others wouldn't have access to. And I think that is how the utilities would be special. And maybe build it on later. It's a bit like social token. I don't think right now, the crypto punks and all that would would have these features, but I think down the road, could be someone could have a little bit of ownership of the whole soul collectibles, you know, if you own a piece you almost on the share of it. And so the higher the value in the future, you get benefits from it. Right? So that would drive the members to be even more engaged and continue to be the ambassador, promoting it and something.

Matt Zahab: 13:47

Can you talk more about social tokens, it's such an interesting aspect. And again, in turn, it's thrown all over the place, but not a lot of people truly understand what it means. I'd love to tell our listeners what exactly a social token is.

LK Shelley: 13:59

Yeah, I think social token just by definition is really like a token or it's like a ticket to be a member of this social community or shadow club. But as he evolves, it is being used as a way to for one encapsulate a value inside his community. For example, I mean, different creators or different community, they would have slightly different applications of it. So for example, for the whale community. It started by whale shark he's so well well known NFT OG early early NFT collectors so he accumulated I don't know that latest number. I know, possibly over 2000 pieces of NFTs. So he put it into this vault, it's like a fine art collectible portfolio. And then he created the social token whale, and that, whale tokens basically reflect the value of the portfolio to NFT portfolios. So this community is very plugged in to the NFT world, and they are always very encouraging, or they work with any any artists, but obviously, you know, the artworks, you know, from the artists they collected, they will be their main ambassador for these artists, and to help them to elevate the values of the artworks. And so this kind of like a positive feedback loop, right. So the better the artists in the portfolio, the better the value in of the social tokens in the long run, and their social token is doing tremendously well. And then just another quick example, for musicians and some of the maybe smaller tokens, they would use it as a way again, almost like a perfect access to their concert, backstage meetup. And so it's kind of like a special VIP pass. So it's very interesting, you know, they, they would like, put all their future albums into the social tokens. And if you collect it, again, there will be future value. And I will see that there's a lot of opportunities for even bigger brands like Coca Cola, and some others to leverage these type of mechanisms to increase their brand value brand equity. However, you know, we have to be careful, you know, all of these should be utility tokens, there wouldn't be any, like, financial security structure involved. So it's very, very important to highlight that because back in the day, when we first started investing in ICO, there's this gray area where the ICO, in order, the ICO tokens were utility tokens versus this security instruments. So that's something we would be a bit we're like, kind of we would be alert, how you regulate to look at this social token evolution.

Matt Zahab: 17:50

Okay, as the managing partner of your venture capital firm. I know you're very bullish on NFT incubators. And I'm very curious if you could tell me exactly how energy incubators are the new type of venture capital?

LK Shelley: 18:04

Yeah, sure. I mean, as we see the explosive growth in NFT. What we see the most important part is the people behind the various artists. And that for us is really the key components in venture investing is really investing in the people. And if you look at, you know, beeple's or some of the more popular NFT artists, they have a very specific way, strategy to go about launching the NFTs. And we like to use it as an opportunity to step back and then invest in NFT in a much bigger picture, rather than just investing in the future. Like, you know, even my larger pieces. And then like accumulating just the assets as portfolio. I wanted to work with selective artists, and then have a long term plan with them. So when we say NFT incubators is maybe for the time being is still like, concept, right? But we started working with some very top notch digital artists who are not active in the social media, and for the time being NFT you know, social media is very important for independent artists to make themselves visible in the NFT world. There's no other way around. However, there are artists who really wants to focus on creation. And then so we thought, you know, if we work together as sort of like a good partner Together with them, then it will help them to launch their, their NFTs, and then they can start growing from there. And then we will provide enough. I call it like infrastructure, you know, tools, helps, assistance, like a bit similar to startup incubators, right usually start incubators, they provide resources, know how, and stuff like that. So, I think that it's important for us to work with a set of artists that we believe would have long term potential, and then start with them from the ground up, and then build the, up. And that's part of the initiative we had. Just on August 6, we did a NFT live event. We prepared it for over six months, and we work with these digital artists from the show a game industry and entertainment industry. They are amazing, but you know, they are not known in the market. So we work together with the whale community with makers place, and a lot of ambassadors in the NFT world to help them to bring them to the world. So that's kind of the first step. And then we will continue have other projects, and then accumulate a bigger portfolio of the artworks and build up their future value.

Matt Zahab: 21:33

So how do you find these artists though? Like, how do you pick these diamonds in the rough like me, personally, I don't have Instagram, I'm not an Instagram guy. I just I think it's like LinkedIn in the sense where it's just all self promoting and nonsensical In my opinion, whereas least on Twitter, you're dropping knowledge bombs, and Twitter's just if you can curate your feed, it's incredible. You got the best news on the planet for free from people 100 times smarter than me like, who wouldn't want to do that. But anyways, story for another day. If I don't see an artist on LinkedIn, or Twitter, or you know, or while I'm on, you know, crypto news insta, or whatever the case may be, I don't know about them, right. Yeah. You know the Van Gogh's and the Louvre and the famous people, but the present day artists, if they're not on social, how does your team find these people?

LK Shelley: 22:19

Yes, yes. It's a very good question. Well, a lot of times similar to venture startup investing is really to network, right. So we have been investing in gaming industry or like entertainment type of ventures. So we work with a lot of creators for a long time. And in a way we like to work with, like some high quality artists or creators that we know. And that is kind of the network we build from the past. And then, of course, we will continue to discover new ones. And discovery is kind of our business. You know, if you ask me, if there's any formula or whatnot, there's not a lot, but there are like channels, we will use. And in the past before the pandemic, I attended a lot of conferences, events. And then we usually also get a lot of referral inbounds and yeah, so it takes time to build up that network. And so that's kind of how we got started. And like I mentioned to you before, we started in blockchain in 2017, or, you know, in the crypto investing, and at that time, actually, there were not that many artists in the NFT world there were actually a lot of game developers in the NFT in the blockchain. So, we were connected with a lot of game developer perspective already. And there are a lot of artists in the world and then fast forward and in terms of like, you know, the NFT art world, one of the actually driver, for us to really go deep in this field is also lot of conversations with our investors or within our investor network or circle. You know, think about it. There are lots of like wealthy individuals wealthy collectives. They are like traditional art collectors, right? They would pay a huge amount for one Canvas painting for example, right? So it's kind of their habit, you know, it's partly maybe investment, but primarily is personal appreciation. And so they are very connected to me with a lot of galleries and artists and something like that. So part of the driver for us is like, they also want us to maybe bring the non crypto non digital artists to the NFT world. And, you know, that would be possibly the next steps down the road. I don't know, if you notice, there are still a pretty big divide in the art world network. Traditional artists they, I mean we've spoken to many, literally since February and March. Not that many are interested because in the traditional art world, if you're successful, they have a system that is similar to the Hollywood, right. There's an agency there's a manager, there's a system. Yeah. And it's very opaque. You know, we now talk about transparency, you know, decentralization, actually, some of these successful artists they don't like because that would kind of disrupt their

Matt Zahab: 26:20

Trajectory. Yeah.

LK Shelley: 26:21

So they prefer not to expose. Yeah, we can. That would be a pretty interesting topic, maybe for the next time. But yeah, in general, you know, our network is one of our assets.

Matt Zahab: 26:35

Well that was very well said. Thank you for that. And I do. I'd love to learn more about this. And when I do have you on for round two, the heck that can be the start of the show. One more question directly art related, though. You're seeing again, we talked about crypto kitties, we talked about lazy lions and and crypto punks. Now, there's all of those are strict digital art. Now you have things like lazy lines and pudgy penguins and coolcat, which maybe are a little more fancy, and have some more sort of human aspect to it. Whereas crypto punks Are you know, like almost computer generated kind of thing or so it seems. When are we going to see traditional like beautiful hand drawn or hand painted artworks, get fractionalized and turn into NFTs? Is that something that's gonna happen? I know what's already happening. But when is that going to go mainstream?

LK Shelley: 27:30

I think that would take time because again, it's similar to, you know, bringing in traditional artists to this digital world. There's like a lot of barriers, you know, one, some of them that are not familiar with tak, right? They don't understand watching, they don't want to understand crypto. So it takes a lot more education, if you will. And so I would say it would definitely take maybe like a very influential artists from their world to get started and have decent success, then the snowball will start kind of like the snowballing effect will get started. Right? So it's a lot similar to you know, how actually the digital side evolves, right, you know, people in a sense really open up the market, and then the rest, started getting a lot more familiar with it, and then really dive into it. So even I think at the beginning, there were a lot of doubt among digital artists, you know, to do artists generally a bit more tech savvy, but they're still artists were so usually they wouldn't like to get too technical. And it's amazing to see a lot of artists talk to a lot of artists who would tell you a lot about blockchain than you would ever imagined. Like he was think they're artists. Why would they talk about blockchain, which is like, to a certain extent, pretty technical. But they are very familiar, they will tell you about even DeFi right like, or like uniswap, all kinds of different things that you know, it wouldn't have happened like even six months ago, or maybe nine months ago or so. So yeah, it takes a while to get mainstream, but it will definitely take a very influential, it doesn't have to be like celebrities, but someone who's influential within the field to stop and then becomes the anchor to kick off this. It's like a tipping point where we need to have that perfect storm to get the right market started.

Matt Zahab: 29:54

To get the rest of the dominoes fall. No you're you're totally right there.

LK Shelley: 29:57

I guess. You know, it's kind of a Almost like cliche to say now, but the pandemic, literally, you know, gave rise to the whole digital and lft adoption.

Matt Zahab: 30:10

You know, a lot of the digital art is very indie and niche. And people I feel like when people are out and about and maybe partying or just doing the classic and traditional regular human things, there wasn't as much time to spend on the computer and explore all these niches and, you know, weird areas that you wouldn't normally spend time on. And then the pandemic comes in, it's like, what are you doing all day? You're looking up crypto projects and spending eight hours a day on opensea? Then you find these amazing projects

LK Shelley: 30:41

To be honest, during the Potomac, I think many of us are kind of lost, right? What's the world gonna be right? So there are people are trying to find meaning, right? Meaning, when they're sitting at home, remotely connected to some people who they might not have met in the social media or whatnot. Right. And so I wouldn't say I have like a very full fledged scientific formula. But I do see that a lot of

Matt Zahab: 31:11

100 percent. Speaking of watching Netflix and successful NFT artists currently are those who are maybe coming from advertising commercial, some sort of commercial art industry who are very good at storytelling, and they are able to communicate that meaning with their fans or audience. And then because of that, they're collected or the fans will collect their piece, their art works. And then you know, either Of course, they will put it in their storage in the portfoli. And also, they will show it off. So visual is sometimes asy way to communicate, or expr ss what is there in our mind, r ght? And almost like a book, ight, but it's a very short fo mat, very condensed. And yeah, so I think right now we are, we re in that world where we can't really have a personal face to f ce communications with eople now. So we're finding a n w way to do that. And I think th t's a healthy, healthy, so if evolvement rather th n just sitting watching Net lix all day long. finding ways to maybe not kill time, but just to amuse yourselves at home. You should definitely check out coin poker. These guys are absolutely incredible. Our friends at coin poker LK, I don't know if you like poker at all or if you'd like sports, gambling, sports betting rather. But if you like either of those, I highly recommend checking out coin poker, the revolutionary blockchain technology based platform that was developed by an incredible team of poker lovers and sports bettors. Coin poker uses tether as the main in game currency and CHP as in game fuel. CHP is the very own token which has done extremely well over the crash to three months ago and is going right back up as it should be right now. Coin poker also features instant and secure transactions using tether Ethereum Bitcoin and CHP tokens. If you'd like to fly under the radar, it's a great app for you. There's no KYC it takes two minutes and you are up and you are buzzing. Coin poker users also get huge promotions as the giveaway 1000s and fiat value every single week. And one of the best parts is the mobile app. Personally, whenever I'm on the go, I have about the app play a couple hands of Texas or bet on some sports. I know it's not the best time for sports right now. It's a little slow in the summer. Thankfully you have European football starting up again, British Premier League, everything like that. It's all goodness. And in a couple of weeks you have the NFL National Football League regular season starting so always a good time. If you're in sports betting or poker, go check out coin poker.com and download the app. Now back to the show with LK. LK. I'm also very curious about virtual land virtual real estate now. I had Maddie I had dcl blogger on the podcast. He was my second ever yes back when I started about four or five months ago. And he dropped a lot of knowledge bombs in regards to decentraland. Now you have games like decentraland you have somnium space, you have the sandbox by animoca brands. People are spending millions of dollars on a chunk of virtual land and all of this comes 360 and relates back to the universe. I'd love to know your two cents in regards to investing in virtual real estate.

LK Shelley: 34:39

Yeah, I think metaverse virtual lands are very interesting. You know, you start out almost just like a game environment now is a lot more mainstream whereby you can build galleries properties on top in this metaverse. And to me I think, is still very early. You know, there's no like a one clear killer app, you know, we know that like, they all have like a lot of art galleries building on their in the platform. But I will see that like, it would be the next web 3.0. It's like a foundation for that. And then I think the mainstream adoption comes with e commerce. Because right now, all the e commerce are in 2Ds You know, you scroll up and down this kind of you can do with it. You can't really like

Matt Zahab: 35:57

Oh, so yeah, so you're talking in the metaverse, for example, if you're trying to buy a new pair of shoes, you will see that pair of shoes on an avatar within the metaverse that you may have. Okay, got it. I

LK Shelley: 36:12

You want to buy a pair of shoes shipped to your house and then you know, fulfill your daily live. But you might also want to show your off to your friends in the metaverse. Right. So I think that integration right together will bring the online offline commerce together. And that has been, you know, discussed, planned, or many, many years, and it hasn't been in realisation. And now I think as more people are more attuned to the, you know, digital identity, digital life, per se, right, there's like, you know, huge financial value right now being generated in this market. And I'm pretty sure the next step would be, you know, the online offline integration. And that would be amazing. Very fascinating. And is, would be, I don't know, it would be it would be led by the current big guys, you know, Amazon's or whatnot, I will say what we buy smaller, small companies. And then the bigger guys will jump in, maybe acquire some of the startups who build this initial adoption, and then things will kick off.

Matt Zahab: 37:31

That's crazy. You just blew my mind with that ecommerce point. I have heard that before. But it didn't really resonate with me. I think that was a couple months ago when I wasn't as up to speed as I am now within the metaverse and NFTs. But that is just like, I used to work for an e commerce company that is 100% the future and people will be doing that all the time. You're bang on there.

LK Shelley: 37:54

Precisely. I think will take a while because you know, in order to really scalable, like you said while you worked in e commerce, you know, there's a lot of logistics involved, you know your payment system. There's a lot of behind the scenes implementation needed to make it a real business. But I think you will get there definitely for sure.

Matt Zahab: 38:16

There's no question about so. Building on the metaverse. an article came out I think it was last week it was last week. And Facebook said that they are now a metaverse company and no longer a social network company like that. That's a pretty bold statement. Mark Zuckerberg Of course one of the smartest guys on the planet absolute genius. Do you think crypto companies will have the upper hand couple years down the road when the metaverse is truly such a powerful thing in humanity? Or will Fang like the Facebook's the apples, the Amazons? The Netflix the Googles? Will they find ways to just eat everyone up and dominate the metaverse similar to how they're dominating the internet economy right now? What's that going to look like?

LK Shelley: 39:00

If you ask me, I would say, you know, no question. Facebook, or even Google or the big guys, right? They have the tremendous resources to get started in this path. But I don't think they will be the one leading at first, you know, because they are the big elephant. You know, it takes a lot to even move one step. And they have a lot to WORRY because they have millions of users, right? So they cannot make dramatic steps and comparing to a smaller, like even just a startup. They have a lot of room to innovate. So I would say the crypto sort of oriented companies would be able to kick off the initial infrastructure. And then there will be a lot of m&a, and then a lot of acquisition going to enable these big guys to capture part of the markets. But rather, you know, these components will dominate the market. I don't think not all of them, maybe one or two of them would, but I don't think all of them would be able to either move fast enough or, you know, with their own internal culture will be able to adapt to it. So, who knows, I think 20 years from now, maybe, or even 30 years from now, maybe these the Fang companies would not be the dominant companies, there will be new companies, outperforming them in the future.

Matt Zahab: 40:53

That'd be great to see. That'd be great to see. I always love seeing new innovative companies really trailblaze their path. I My apologies, I totally forgot to ask a question in regards to virtual land that i had on my mind as a vet in space. Now, I've tried explaining this to, you know, parents, grandparents, parents, friends, grandparents, people within the network, you know, I'm 26. But the boomers who are older and aren't really too attuned with this, what's your value prop? What's your pitch to try to get a boomer to buy virtual land. Like if you had two minutes with me, and I was 60 years old, sitting on a bunch of money about to retire and you're like, hey, Matt, you gotta buy some virtual land. And I was like, LK, you were off your rocker. Like, why the heck would I buy virtual land? What's your pitch there. How do you get that point across?

LK Shelley: 41:43

I mean, obviously, it wouldn't be simple. But if I would like to just sort of use examples, or, you know, the sort of the best and well known investors, Warren Buffet, he has always been pretty resistance to investing in technologies. You know, he skipped Google, he skipped a bunch of like, high potential technologies companies at the early stage. But finally, you know, he accumulated a huge amount of investment in Apple in the much later stage, right, just in recent years. So what I would suggest all this formula is to be open minded, you know, allocate a small percentage of the wealth in the metaverse and don't look at it too closely, but just kind of look at it as like an art piece. And then down the road, maybe five years, 10 years in the future, then they will see the value whether they have to understand entirely or not, you know, just look at Warren Buffett, he doesn't know how to use the iPhone, right? You he's kind of famous, you know, he had an interview on a lot of financial media, he will tell you that Tim Cook would have to sit him down and then teach him each buttons and all that stuff. He would be able to invest amazing, tremendous, huge amount of money into Apple, right? So if you were poor, you just kind of observing on the sideline. Why not start in small amounts? I think the first step is the most important even like the smallest amount 1000 or something correct. You know, buy one $ETH, and then start buying one small parcel in Crypto fossils, that will get you started, get you curious. And then the next step is like, they might be very into it, and then things will get get expensive from there. So I think get started small.

Matt Zahab: 44:07

You're right? I mean, it's like anything else in life, you got to get started, right? You can't make your plan before jumping off the cliff, you just got to jump off the cliff and then make the plan.

LK Shelley: 44:20

Don't jump on the bandwagon. I think there are people like even the boomer right, they don't know what is crypto what is like, they possibly don't understand what it is bitcoin. Some of them are very resistant to that right. But then there's like another extreme spectrum. Some of them don't understand but they will jump in and then put a lot of like savings into it. And that is a wrong direction as well. I don't expect that is a good healthy market growth. I think this would tip the market. So I prefer like a lot of like, you know, non techie even just a younger ones. If they don't understand, don't just go and reddit and read about it and then pump it and then crash and burn. Right? Just get started small. And then do your research. Yeah, I think that's the most important.

Matt Zahab: 45:16

Yeah, no, I completely agree there. LK, this has been awesome. couple more questions than we are going to

LK Shelley: 45:20

How long do I have? wrap up here. I want to hear some LK hot takes here. We talked about punls coolcat of this sort of top 10 NFTs, you know, maybe even NBA top shot, So rare. I'm very bullish on both those but the top 10 sort of just art related NFTs with n actual big time utility, w ich ones are here to stay, and w ich ones are duds. Do you have a y hot takes for me?

Matt Zahab: 45:49

Whatever you want, if you have any big thoughts on any of those? Just let me know.

LK Shelley: 45:56

Yeah. So this is, again, very subjective, personal, of course, I would definitely highly recommend some of the artists that we work with not because we work with them, you know. But literally, they have amazing quality, but on the side, So we discover one artists just on makers place, he goes by the ID or username, fakeup. And he is a very experienced advertising and commercial artists as well. But he's not, as you know, active on all the social media and whatnot. But by just looking at his art pieces. It's very creative, very high quality. And then he works for clients like Porsche, or many other brands. But on the side, he created his own collection of NFT works. That's one that that we are very interested in and very, you know, passionate, collecting from him maybe also helping him to spread his works and stuff like that. Other than that, if you ask me for the 10,000 generative collectibles type, I actually like the ones from lava lamp. That one is generative, and is on the chain. So nowaday, right, all these NFT arts, they have the permanent workers on the blockchain, but actually all the assets are on another file system. Right? Not all of them are encoded or secure. And then a lot of these artworks are not actually on the blockchain, right. So but I've seen like the new projects, like you know, sort of like ASCII artworks, they are able to put block by block on the chain so yeah, and then they can render it in real time from the blockchain. Those are very interesting to me because I feel like there's the truly blockchain art rather than just like, you know, using blockchain for ownership or authenticity. And I don't know where things can evolve from from there. But hopefully down the road we can build something more scalable can enable the blockchain to store bigger files or bigger asset, then I think we'll see even more on chain type of artworks. But to get started, I think right now is asking what type of works

Matt Zahab: 48:56

No I completely got you there. I was hoping for some crazy off the board hot takes, but that will do. And yourself, I've read up on you. I know why you fell in love with NFTs but for the average Joe or Josephine out there who is trying to research and find the best resources to learn about NFTs besides the traditional ones like discord, telegram and Twitter, do you have any other gold mines to recommend for where people can really learn about NFTs?

LK Shelley: 49:25

Um, I would say there are few crypto media hours they do have a lot of good information. For example, the non fungible.com that one has lots of interesting articles. And and it's not too technical, so it's a lot more easy to absord. And yeah, so I think that will, I would suggest and then also give you a lot of statistic trending data. And I believe I think that would give a good perspective for new or like sort of NFT careers to learn about it. You know, a lot of time if you read on the wall street journal is a very small snapshot of what NFT is about. Right? But it's about it's a bit like like a Hollywood, you know, articles talking about specific artists, but I prefer something a bit more. Take a picture, give you rankings and give you a lot more objective data so that it encrypt you to analyze what exactly the market is.

Matt Zahab: 50:54

You can see for yourself instead of you know, having that bias right in front of you. LK, this has been incredible before we let you go any questions for me?

LK Shelley: 51:02

What's your hot take?

Matt Zahab: 51:03

My hot takes? Oh, boy. I don't have any of the you know, the crypto punks or the bored Ape Yacht Club with a cool cat. I've been watching Cool Cats for about three weeks now. And again, if I would have bought three weeks ago, I'd be up about four or 5x now but who doesn't have a woulda, coulda shoulda moment, we all have 1000s of those. I think cool cats have a lot of room to grow just the simplicity of them. One of the things with the art NFTs that I am very bullish on and I think sort of separate the gold mines from the duds are how they can be incorporated with kids. I think Gary Vee said this not too long ago as well. Like I think kids would love the coolcat the bored Ape Yacht clubs, those are cool as well, the crypto punks, I just I know they're cool because of the scarcity of them, because they're one of the first ones but I don't think they look that cool. Like they don't they're not cute. They're not. I'm just not a bit you know, I understand them. sure they're cool, but they're not really too pleasant to look at. Whereas like the apes are really cool. The cool cats are super cool. Lazy lions. Super cool. So I think the ones that differentiate on top of the legacy and then first the market ones are going to be number one, how cool they are. And number two is going to be how can they tie in with kids? Because like I think kids are really going to fall in love with all these NFTs and all these projects. And if you have NFTs that have blood on them, or the sentiment is angry, I don't think that's going to move the needle. So I think things that are happy and cool. I'm very bullish on all of those art related. And then anything gaming related the gaming NFTs. That's the next step.

LK Shelley: 52:44

That's true. Because with the gaming, there's, again, utilities involved, not exactly static. But let me ask you, you actually did mention about the penguin, right. But the penguins, what do you think of it? It's just kind of like the latest greatest in that.

Matt Zahab: 53:03

And that's why I think my second question to you was, what is the blueprint because again, you go on open sea and folks we're recording, you know, just mid to late August right now, it will drop a couple weeks after that. But if you go on open sea and you look at the top 50 projects, I'd say, you know, 33% of them literally have the exact same blueprint of there's 10,000 of them. And there of those 10,000 NFTs within the collection, there are five to 10 randomly generated properties. And the most rare NFTs have the properties where it's like one of one or one or two or one to five, whereas the others you know 20% or maybe 50% or 75% of every NFT in this 10,000 NFT collection will have said properties so, and that's what it's all about. It's like you know, you make 10,000 Matt's. One Matt has a hat on one Matt has a golf club, the other has a hockey stick, like it's just stuff like that, and then the different colors of those golf clubs and hockey sticks and hats. That's what it's all about. So I don't know, the pudgy penguins, I'm pretty sure crypto Coby is paid I saw him on Twitter writing that I'm pretty sure he takes about 100 grand per ad so the community had the money to put into it, but I have no clue LK, I think it's all nonsense. But then again, if I was an artist, and I knew blockchain, I would be making my own project. Like I'd love if there was a video that explained how to use whatever software people are using to randomly generate these five to 10 properties and then mint it on the Ethereum blockchain and like they're selling these for, you know, point five $ETH off the get go just the mint them like you could be a millionaire overnight. It's crazy.

LK Shelley: 54:42

Yeah, I think it does have this very enticing, you know, to jump in. I always kind of give an analogy like the NFT is like 10 times 100 times faster to produce than games, right? So, you know, there were people kept saying like there is the gaming space, we're very saturated because they're literally like 1000s of Candy Crush derivatives in the, like ioS Store or Google Play, right? Yeah. But now if you fast forward looking at the NFT space is like, because it doesn't require any app development or software developments. The speed, the pace is even faster. But I guess the underlying thing is like, it's really like, you know, you have an idea, good idea. And then whether you can connect with one or two influencer to get the viral effect. Exactly. Yes. It's like, I know, for example, the penguin, the early founder started, he changed the his profile picture to the penguin, then that's one trigger points, right. And then yeah, the rest, I don't know. But one barrier of entry would be maybe the gas fees is so expensive now, I mean, if they can manage the price it for 0.5 $ETH they will get a covered but otherwise the guest fees to mint one piece now still fairly expensive.

Matt Zahab: 56:24

I tried to buy two NFTs last night before bed and did not buy either them because it was $220 USD to mint them. I was like, You know what it's not even worth it like no point. So anyways, yeah, this has been lovely. LK I'd love to have you on again. You and I could shoot the shit forever, it seems. before we let you go, can you please let our guests know where they can find you and affinity on socials?

LK Shelley: 56:53

Well, I am on LinkedIn more. I'm not as active on the Twitter or Instagram. However, our projects that we fund, they're all on Twitter. So you can find me again, LK Shelley on LinkedIn. And then if you want to learn a bit more about our initiatives and NFT projects, they can go to Twitter at Maven Art on Instagram, and also Twitter.

Matt Zahab: 57:27

Lovely. LK, thanks so much for coming on. Really appreciate it and learned a ton had a blast. And you are truly an NFT goat and I'd love to speak more about this. So we'll definitely have you on for round two in the near future. Thanks again and hope you had a blast. Appreciate it.

LK Shelley: 57:42

Thank you so much. This is super fun. Thank you.

Matt Zahab: 57:44

Folks. This was LK Shelly from affinity ventures also known as AVM. What a treat of an episode, one of the goats in the NFT space. As always, we are dropping episodes on Mondays and Thursdays in the summer and we will soon be going to Mondays Wednesdays and Fridays back in September back in the grind. I'm very excited for that. As always with me in the world if you could subscribe. We hope you enjoyed this episode. I certainly did. Love you all appreciate you all listening. Stay safe and we will keep in touch bye for now.