The Risks of Launching An NFT Collection (And How To Avoid Them) ⚠️ 💎 🦍
Want to launch a successful NFT project? Here’s a few guidelines to help.
Want to launch a successful NFT project? Here’s a few guidelines to help.
Major moves from the likes of Nike, Clinique, Sotheby’s, & even Behr (yes, the paint company) — have made it abundantly clear that Web3 is more than a buzz term devouring your LinkedIn feed as neophytes try to establish themselves as “experts” & “consultants”.
Sure, those of us working & building in the space full-time may feel like NFTs & blockchain powered apps are everywhere, but truth is — most people still don’t understand any of it. Education is improving, but we’ve got a long way to go — from the billion dollar conglomerates down to the end user.
With such a chasm in comprehension & a trough of talent — launching a successful NFT or Web3 initiative can be a challenge with significant risk — but fret not!
This article outlines the major risks of adopting an NFT or web3 strategy, along with several solutions for mitigating those potential risks.To be clear, these observations come from spending hundreds of hours consulting with some of the largest brands, companies, artists & agencies in the world about their Web3 strategies.
For that reason, this list is mainly intended for well funded organizations with a global audience committed to moving forward — not for anyone looking for convincing. Nevertheless, many of these suggestions will apply to smaller businesses & entrepreneurs as well.
Let’s get into it.
THE RISKS
1. BAD PR
In general, there’s a persistent negative sentiment surrounding NFTs, Web3 + the broader digital asset industry. Often the issue relates to unfounded narratives about environmental damage or scams. Either way, your brand’s public reputation may find itself sullied by association.
Solution: First, its key to recognize that being early to anything carries the burden of misunderstanding & skepticism- this is especially true of technology. The path forward is education & communication, within the organization first, & then to the outside world.
Acknowledge raised concerns
Identify the most pressing ones (if any)
Investigate their validity
Assess viable solutions
Present your findings & communicate why you feel comfortable moving forward & steps being taken to mitigate or eliminate core concerns.
For instance, if there’s concern about environmental impact — choosing to mint on an alternative like the Palm network makes more sense than ETH main net.
If there’s confusion or doubt around the motivation of the collection or activation — transparent comms about the intent & vision can go a long way.
2. Its A Cash Grab
Well intentioned as your initiative may be, somebody’s going to view it as another quick cash grab powered by the latest market trend. With so many rushed, ill conceived projects out there, can you blame them for being weary?
Solution: Don’t think about the money. At least not out the gate. Instead of constricting your creativity through the tunnel vision of cost, revenues & margins — think about the reason an NFT is needed at all, its unique advantages and how it’ll provide more value over time than the cost of admission. If you use the early excitement & energy to ideate & dream free from worries about the accounting, you’re much more likely to discover an angle that is both invigorating, innovative, & genuinely suited for the NFT or Web3 form factor. Once you’ve landed on your best ideas, it becomes much easier to strategize & develop the rollout in a way that doesn’t lead to over OR under committing.
3. It’s Too Exclusive
Given the technical hurdles typically associated with NFT projects & the border Web3 ecosystem, some users may feel alienated by the vary premise of your project. If you then build in features or benefits that can only be accessed by “Holders” of your NFT — even more people may start to feel a bit marginalized.
The Solution: You can all but eliminate the technical complexity with the right tools and partners. For instance, you can launch your collection through a dedicated site that removes the need for using self-custody wallets like MetaMask or even the need for using crypto for payments. A great example of this is the Batman “Cowl” collection PNFTS built out in collaboration with DC. Users were able to create an account using their email address & could purchase their Cowls with fiat via credit cards.
Regarding “members only” perks & benefits — just look at it as a modern iteration of a subscription. Sure, if you’ve never offered a subscription tier to your audience, some may not love it. But alas, it seems to be the way most business models are heading — that’s not an NFT or Web3 specific problem. So long as you aren’t barring access to core features or utility behind an egregious price tag — this shouldn’t be an issue.
4. It’s Too Expensive
This is pretty straight forward — so lets jump straight to the solution
Solution: When it comes to pricing NFTs, it’s important that you approach this with an open mind, well informed perspective & managed expectations. For many the idea of spending money on a digital item that’s not a commonly used software or app is a bit foreign. As such, it is crucial that you consider the value on offer relative to price.
For instance, let’s say NETFLIX decided to issue 2M NFTs to serve as lifetime subscriptions to the service. Well, what should they charge? If we assume its normally $10 a month — that’s $120/year. Let’s guess that the average person sticks around for 6 years — that’s $660 over that timeframe. With those numbers in mind — it stands to reason that charging $600 for the NFT would be a solid deal deal & $500 would be even better. With those figures — they’d net between $1B & $1.2B in cash. For perspective — they’ve got around 220M active subscribers, so this assumes they only reach ~1% of their customers. Oh, this also doesn’t factor in any secondary sales royalties.
Only you know what your customers & clients are used to paying — thus — you should be able to gauge their price sensitivity. As an exercise, you could comb through sales data and determine the average order or spend per transaction for your average customer. If you plan to target specific cohorts within that audience, then do the same thing, but filter the data to assess that same cohort.
If you’re still unable to arrive at a confident pricing strategy — let the collectors decide. There are a number of tools that allow you to have dynamic pricing that reacts to demand to determine optimal pricing in real time, like Dutch Auctions or other price decay models. Bear in mind this is likely to cause more confusion than setting a fixed price.
Lastly — I’d suggest you price things in fiat, NOT in crypto. This tweak alone at least ensures the cost doesn’t fluctuate with the market volatility.
5. Internal Conflict & Opposition
Don’t be surprised if you find push back & resistance arise from inside the ranks. Given the nascency of the sector, many people hold deep ideological opposition to NFTs, crypto & Web3. The extent of aversion will certainly depend on your industry (For instance, the gaming industry seems particularly anti-NFTs, while the fashion & luxury sectors seem increasingly supportive). So how do you handle this?
Solution: For starters, be sure to double down, hell, quadruple down on education. Videos & content like this are great sources of theoretical education, but be sure to incorporate practical & experiential learning too. Has your team ever purchased an NFT? Self custody in their own wallet? Ever use an NFT for its utility? It’s pretty strange to be a critic of something you’ve never participated in.
Aside from education, encourage & facilitate a forum for discussion to Address feelings with facts. Mind you — this is not an exercise to convince anybody, but rather one to gauge your team’s own sentiment & comprehension. This will reveal existing biases, knowledge gaps, capability gaps, as well as who shouldn’t work on the initiative. Ultimately, it is the responsibility of leadership to move the project forward.
6. Lack of expertise, skill, knowledge, or ability to execute
You’ve decided to move in this direction & want to make a meaningful splash — but do know how to do it? If you know you should be thinking about your Web3 strategy, but are lost about how to do it — You’re not alone. Here’s what you can do about it.
Solution: There’re are two main fixes here. The fastest path forward is to hire experts & consultants to get a better understanding of the landscape. To make the most of this, consider what you’re hoping to achieve & work backwards to identify current gaps — these could be knowledge gaps, a lack of context about the broader web3 & NFT market, or more technical considerations related to how you want to execute & deliver your initiative. Just remember like with most things, you’ll want to be specific about who you hire & realistic about what they can offer. If you’re looking to learn, that can likely be achieved by hiring 1 or 2 consultants to educate your team. If you’re looking for someone to provide a full creative proposal & roadmap, expect a larger team & higher costs. If you want a platform to be built out, even more so.
The other option you have is to spin up a fresh innovation unit dedicated to the segment. This route can still benefit from hiring outside support & collaborators, but positions your organization to flourish in the long run. As team members develop deeper expertise, they’ll also establish enduring processes to support a growing commitment & investment into the org’s web3 & NFTs vertical.
Since you read all the way to the end, let’s throw in a 7th tip as a bonus!
7. Web3 IS NOT web2.
Obvious as this may seem, you’d be amazed and how many people don’t seem to grasp this. This single misunderstanding is the likely culprit for any failed web3 initiative led by a web2 company. Instead of assuming that all the tried & true practices of web2 naturally translate over to web3 — spend some time unlearning those reflexes & spend even more time learning, using, & contributing to the web3 ecosystem. When you do, I promise you’ll begin to understand why the single most powerful element of this entire sector, the single biggest indication of whether your initiative will thrive or perish — is COMMUNITY.
Own the future, today.
Talk to you soon, tribe.
Peace + blessings. ✌🏾🙏🏾
Ready to grow?
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