Original author: Mika, original content compiled by: zhouzhou, BlockBeats.

Editor's Note: This conversation mainly discusses how LucaNetz and his team faced tough challenges in the early stages of Pudgy Penguins, including financial difficulties, investor rejections, and community distrust, and discusses the Pudgy Penguins ecosystem, tokens, and future development. It also touches on why Pudgy Penguins chose Solana over other chains and expresses the intention to change the Solana ecosystem by driving cultural phenomena.

The following is the original content (for ease of reading, the original content has been reorganized):

Host: LucaNetz is like Kobe in the Web3 crypto space. Everyone is asking, how can I be like LucaNetz? How can I become world-class? How can I become a legend?

LucaNetz: To be honest, I just took the credit. A few days ago, before we announced PENGU and other projects, I talked with the team. I said I have the best people around me; this is not my credit.

I excel at communication, being a good community leader, and so on. But all the behind-the-scenes work you see is the result of Peter, Lorenzo, Vadon, Jennifer, and other team members. There are a total of 60 people on the Pudgy team, and all of this is their credit; I just take a bit of the honor.

Host: Luca, I knew you before your team had 60 people. How did you manage everything? This industry feels stressful and really hard. Can you give some advice on how you stay focused? After all, you managed to become the 'Kobe' and 'LeBron' of this industry, so there must be a reason.

LucaNetz: We are very motivated, just like you said with the 'Kobe' and 'LeBron' analogy. This is our greatest advantage, and some see it as a weakness, which I can understand. We have a strong competitive spirit and want to be the biggest and the best. We feel we deserve such achievements, and our community deserves it too. Over the past few years, we've worked hard to prove ourselves; now it's time to stand out.

Years ago, when we entered this industry, we did so with the mindset of proving ourselves. We invested millions of dollars, betting our reputation, putting in blood, sweat, and even tears. Friends have betrayed us, we have experienced all sorts of traps and deception. We gritted our teeth and weathered those storms, going through every possible trial.

We are so eager for success, not just for ourselves and the company but also for the community. I really want to bring better things to the community; this is what I want the most.

You know, the story of penguins, if you're not familiar, is that they were actually laughed at and oppressed at first. Many stories about penguins are somewhat similar to my experience. We were underestimated, ignored, and even laughed at—becoming a joke—at least that's how I feel. Maybe reality isn't that exaggerated, as I had a decent life growing up, but deep down I always felt we weren't taken seriously, carrying a sense of pressure on our shoulders.

I think Pudgy's story is also like this; it has just been amplified through these penguin NFTs. So I hope these penguins can feel the same feeling I had when I succeeded: I made the right decision, I am the smartest, I have faith. Even when everyone is questioning and taking sides, the penguins chose the right team. This kind of recognition is more important to me than anything else; I know this value will be reciprocated.

This mentality largely stems from our competitive nature. We all loved sports and competition when we were kids. I hate failure and love victory, and our executive team has the same spirit.

Our time is now; we have all the elements of success, and it's time to take a leap and prove it to the world. This is the cultural phenomenon of this cycle. We respect and appreciate those who paved the way, but now is not their time; it is ours.

What are Pudgy Penguins?

Host: This is the Luca I know! You do mention the team's effort, but that's why we call you the 'LeBron' or 'Kobe' of the crypto Web3 industry. I hope people can send this statement to their grandmothers, friends, cousins. Everyone is asking about meme coins; they see them on TikTok, Instagram, and social media. So if you were to explain Pudgy Penguins and the entire ecosystem to your grandmother, how would you say it?

LucaNetz: First, you have to understand the mission of Pudgy Penguins. We have two missions: first, to become synonymous with penguins globally. When people think of penguins, I hope they immediately think of Pudgy Penguins; second, to become the mascot and representative of cryptocurrency.

Our method to achieve these two goals is to build a positive, people-centric brand, produce products that people love, and create memories and emotional connections around the characters that can impact people's lives. This is a brand that can make people feel positive energy. Through this brand value, we aim to become synonymous with penguins globally and a representative in the cryptocurrency field.

If we achieve these two points, it will undoubtedly be a great thing for the entire industry. Especially for the IP (Intellectual Property) industry, which desperately needs fresh and creative things, and Pudgy Penguins is that presence. At the same time, more importantly, the cryptocurrency space needs breakthroughs like this even more. Cryptocurrency still has taboo colors, making it feel unapproachable, while Penguins is the only IP that everyone can accept and resonate with, no matter if you are 5 years old or 60 years old, regardless of race, gender, occupation, or background; everyone loves penguins. It's universally appealing, with no weird or picky characteristics—it's just the cutest penguin, and everyone loves penguins.

The story of penguins is also a microcosm of the classic 'comeback story' in cryptocurrency. All these factors combined make it a real cultural phenomenon. People might ask, is this token an ecosystem token? Or...

Host: Don't rush; let's not talk about tokens yet! Penguins are already special enough. Let's start from the basics, like NFTs. How did you connect NFTs with IP? Your ecosystem includes not only NFTs but also games and upcoming tokens. Let's break it down step by step; what are these layers?

LucaNetz: Okay, let's look at this issue from the funnel perspective; I've been considering this idea from the start. The top of the funnel is demand, right? So what creates that demand? Is it millions of followers on Instagram? Is it billions of views on TikTok every month? Is it the coverage of toys and millions of households? In short, the creation of demand and emotional connections begins at the top of the funnel.

Then, as you gradually move down, initially, the middle part of our funnel is 'Pudgy World'—from toy buyers or Instagram followers to toy buyers, you will transition to this blockchain-based experience, which has a kind of backend blockchain technology support, along with some form of gamified frontend.

Host: You mentioned this blockchain experience; can you elaborate on that?

LucaNetz: Soon, you'll see the final version. Basically, with every toy sold, there will be a QR code attached. You scan the QR code and receive three to five digital wearable NFTs. You enter your email and password, access 'Pudgy World,' and the system will give you a custodial wallet. Then, you can redeem these NFTs by paying a certain fee. Ultimately, for example, if you spend $5 at Walmart to buy a toy, following the instructions, after about 3 to 4 minutes, you can start collecting these digital assets on the blockchain.

How Pudgy's CTO is changing the game.

Host: Why is this important? Why does owning these assets on the blockchain interest people? What makes it worth putting it on the blockchain, especially in terms of what is called the 'capture mechanism' in the traditional toy industry?

LucaNetz: Because you can access global liquidity through this, and that can only be achieved on the blockchain. So the importance of this matter is that if Pudgy World can really succeed, I am genuinely looking forward to the developments in the coming months. Because we can finally see if this mechanism can truly work, even though it has faced a year's delay. And I think now is the best time because I believe the popularity of penguins has never been higher.

But the key is that I can spend $5 to buy a toy and unlock three to five digital traits worth $2 each. Then I can sell those digital traits while keeping my physical toy. In other words, I spend $5 to buy the toy, and the digital traits I unlock are worth $10. I sell them, recoup my $5, and still keep the physical item. This model could fundamentally disrupt the entire consumer goods industry, especially fast-moving consumer goods (CPG) and loyalty reward systems.

If we can create a successful example here, it will change the landscape of the entire industry, altering everyone's business models. This is the biggest catalyst I believe can drive major brands to come in. Retailers, especially Walmart, focus on 'value for money.' For example, Walmart's goal is to provide value to customers. If I can go to Walmart with data (millions of dollars worth of data supporting this theory), I can undoubtedly become the most cost-effective product on their shelves.

Because I can basically explain to Walmart that every customer purchasing this product has a reasonable chance of recouping costs or making a profit. So they buy this toy, and they almost won't lose money. If this mindset can truly resonate with consumers, the product will surely sell out quickly, possibly within an hour.

Of course, there are many variables here, like economic conditions and demand levels. These factors have a higher probability of success in a bull market, and we are indeed in a bull market right now. So I think the chances of success are higher, which is pretty cool. Obviously, there are also a series of different variables in a bear market, but I don’t want to dwell too much on those situations.

Host: Let’s go back to those features you mentioned. You said these NFTs are used as features; can you give everyone a more intuitive understanding? Is it like Fortnite skins, or is it like other similar trading and profit models?

LucaNetz: I think it’s more like digital collectibles, just like buying Michael Jordan basketball cards. I think it's more appropriate to compare it to baseball cards or basketball cards. This is a better analogy because you know the difference between basketball cards and Pudgy Penguins NFTs, obviously, lies in brand recognition and emotional connections, etc. But essentially, digital collectibles have advantages over physical collectibles. Why? Because digital collectibles have no insurance issues, no forgery problems, no friction in transactions, and no transportation and storage issues because the nature of NFTs inherently provides these advantages.

For example, Pudgy Penguins' NFTs and Michael Jordan's basketball cards are essentially the same; they are both collectibles. One is digital, and the other is physical. But digital collectibles have many characteristics that physical collectibles lack; for instance, they are digitized.

For example, I collect art, but now I have no place to hang more paintings, so the art I can buy is limited. But I can buy NFTs in unlimited quantities because my wallet can hold an unlimited amount of art. And my gallery can also be infinite because it's digital.

This is the difference between physical collectibles and digital collectibles; NFTs inherently possess the attributes of physical collectibles, only they are digitized. So when we first entered this industry, many were quite confused, asking what we were doing. My response at the time was: I was just doing what physical collectibles are supposed to do. I just wanted to do it as well as they do because there's really not much difference. Everyone is trying to redefine what digital collectibles should be.

What we need to do now is to align these digital collectibles with physical collectibles in terms of brand recognition, brand affinity, emotional connections, and more. This is actually what we've been doing for the past three years: How do we become hugely popular? How do we become internet idols? How do we create love and resonance around this brand? And then work backwards.

Host: I remember I once saw Pudgy Penguins' NFT collection; at that time, it was only $60. Now these NFTs are worth $100,000, which is really amazing! But I feel it hasn't reached that point; there is still a long way to go. I have a bigger vision. But looking back at these achievements is still exciting. This isn't just your team's effort; it's also about you and your vision. After all, achieving these things requires a lot of entrepreneurial spirit and business acumen. If you could give everyone a brief overview of how you saved Pudgy Penguins, elevating it from a $60 asset to today's $100,000, that would be really helpful.

LucaNetz: In simple terms, we spent about $2.5 million to acquire this project three years ago, with an initial investment of $500,000. The day we acquired it happened to be the beginning of a bear market, so we faced continuous decline from the start. We went through many tough moments during this process, even nearly going bankrupt multiple times.

We haven't taken a penny from the community apart from programmable royalties, which were reduced by 90% in the month after we acquired it. We are just trying our best to do the right thing, to create a project that everyone can love. What we've been striving for is to create value for our holders and community. Although it has been tough along the way, we have kept persevering.

Even in the last three months, many people still think 'the penguins are dead, their golden age is over,' thinking I don't know what I'm doing. In fact, there are many stories in between that I can share with you. We have now entered 10,000 retailers, the most famous of which are Walmart and Target. We have also done significant collaborations, like with Vandy, and recently did a collaboration with Pokémon, which is really cool.

Our video views on social platforms have surpassed 50 billion, with 40 billion views just on Giffy. That's massive, so clearly, through MEME propagation, I believe no other crypto-native IP can spread as widely to the ordinary world as we do besides Doge. We have many necessary conditions, like a large user base and an opportunity for transformation.

I don't know if you've seen the performance of Pudgy Kindness or Kind Pango on TikTok; we changed these users' usernames. Although this content is simple, we are really changing lives on that channel. Like 10 videos brought 500 million views; it's truly a beautiful story. I want to do my utmost to represent this industry well, do the right things as much as possible, elevate people's lives, and set a worthy example to follow. Of course, we are not perfect; we have made mistakes, but we will do our best to lead this industry.

People's misunderstandings about cryptocurrency.

Host: So what do you think are the most common mistakes people make when talking about cryptocurrency and the Web3 ecosystem?

LucaNetz: They feel this is their own show; it feels arrogant and lofty. To be honest, I can only talk about this issue based on our success. You might agree or disagree, but I believe the community should come first; take care of your community, and they will reward you. You see, we are still here; we are still doing our thing. We know that as long as we take care of them, they will also return this value. I'm not sure what that return will look like, maybe now I already know some, but we just want to do our best to take care of them and help them succeed. Some people just see things too arrogantly, thinking 'This is my business, I call the shots.'

Host: But if we step back and look at it from an outsider's perspective, how do they view the cryptocurrency industry, and where are they mistaken?

LucaNetz: I think they actually have PTSD because every time there is a bull market and adoption cycle in cryptocurrency, it's just centered around rising prices. But the problem is that retail investors are always the last to take the plunge. So in every adoption cycle, suppose a million new users enter, perhaps only 50,000 can make money, see opportunities, and stick around, while the other 95% will feel the pain of cryptocurrency until they forget it, until the trauma dissipates. But the reality is that 95% of people, from the perspective of the general public and retail, will ultimately be burned by cryptocurrency. So the problem lies here. You know what I mean? They feel cryptocurrency is not real enough or too elusive.

So much of Pudgy's work is about how to connect with consumers and retail, not focusing on price. Maybe they will stumble upon PENGU or Pudgy's NFTs, but we prefer to create first impressions by introducing them to actual products, like toys they cuddle with in their sleep, or charms on their backpacks, or social media posts sent to them by their significant others, because these things are fun, exciting, or make them happy. We want these to be their first touchpoints. Then, over time, if they are willing to join and believe in Pudgy Penguin's vision and movement, they can do other things, but the first step is to align and connect.

Host: So how do you view outsiders' perspectives on cryptocurrency, especially those who haven't yet entered the Web3 ecosystem? What misunderstandings do they have about the entire industry?

LucaNetz: I think they actually have PTSD (Post-Traumatic Stress Disorder). The problem is that the cryptocurrency bull market and adoption cycle always revolve around rising prices, but retail investors are always the last to take the plunge. So every adoption cycle, out of a million new users, perhaps only 50,000 people make money, see opportunities, and stick around, while the remaining 950,000 will complain about cryptocurrency until they forget about it, until the trauma passes. Like, 95% of people, especially the general public and retail investors, have been hurt in the cryptocurrency market. So this is the crux of the problem. Do you understand what I mean? They don't believe cryptocurrency is real, they think it's not tangible enough, or that its value isn't concrete enough.

So one of Pudgy's tasks is to cater to consumers and the retail market, not focusing on price. They might stumble upon PENGU or Pudgy's NFTs, sure, but we hope to attract them with some tangible products first, like the toys they cuddle with at night, the charms on their backpacks, or social media posts sent by their partners because those things will make them happy, excited, or entertained. We want these to be their first touchpoints with Pudgy. Then, as time goes on, if they are willing to join and believe in the vision and movement of Pudgy Penguin, they will make more choices. But the key is to align and connect first.

The entrepreneurial history of Pudgy through hell.

Host: You mentioned you have a team of 60 people. For entrepreneurs like me wanting to enter this industry, can you share how you made this project successful? What was your first step? After you bought this project, what happened next?

LucaNetz: After we acquired Pudgy Penguins, we went through a very tough first 12 months. Initially, we couldn't rely on royalties to make money. I knew we had to establish a sustainable business model quickly, but I didn't expect to go bankrupt so fast. In the first month after we acquired the project, the royalty income was $500,000, but in the second month, it dropped to only $20,000. I thought this was insane! It wasn't because the market volume dropped significantly; it may have decreased by 20% or 30% in trading volume, but royalty income went to zero, and we were left in dire straits. You can't imagine how difficult that time was. We had a few people who, I believe are still here, were part of our early team, but in the end, they really stabbed us in the back.

Host: What do you do when someone betrays you like that?

LucaNetz: Ah, I really cried. It was simply terrible at that time, that kind of betrayal was just the most painful. I also had to face some major holders talking behind my back about how foolish I was. We had a few such guys early on who leaked their NDA contracts and spread FUD. You don't understand? I was working hard, trying to make this work, we were completely out of money, the whole team was only taking $1,000 per month in salary. Jennifer, our CLO, who is clearly a lawyer from Stanford and could earn $40,000 a month, chose to stay and trust our vision, trust that we could do it, trust that we would always find a way to get through.

Then I also had to join a conference call with 300 venture capitalists discussing fundraising, and the answer I got was 'no.' I found it very strange; I had previously built a company worth over a hundred million dollars, so how could you say no? You invested in projects I can't understand; I feel insulted.

Host: What do you think the reason is? Why aren’t they optimistic about you? Is it because they think this is a 'children's industry'? They don’t understand?

LucaNetz: I think they haven't seen the big picture; they are too focused on the micro, thinking it's just an e-commerce or consumer goods company. They don't realize that we are a real team; we are a team with dreams, and I am a dreamer founder. Most venture capitalists don't do well; I can tell you from an investor's perspective: when you invest, you don't just look at the project itself; you look at the team. Investing is about investing in people; the core importance of the team is more critical than the idea or product. All the good investments I've made are because the team is strong. The projects I've invested in succeed because the team is amazing; that's it; that's the only place worth betting on.

So at that time, we were in a really tough situation. In the end, we were left with about $200,000, and those venture capitals were still saying 'no.' Meanwhile, I saw them writing huge checks to other companies, like Moonbirds getting $50 million at the start. Do you know how I felt? I thought, 'Are you crazy?' I was really furious; they didn’t trust us. At that time, I decided to remember the names of these people; I wanted them to know they missed an opportunity. I have a list; I know where they put their money, and it was really hard because I was planning to offer him 50, but he wouldn’t even give a bid on a Mia.

Host: I always hear people say, 'I wish we had a Luca on our team.' Right? I said I wish I could be like Luca in some companies, especially in the children’s IP space, which is hard.

LucaNetz: Even so, there are still many problems. That wasn't the hardest part; the hardest part was watching these other NFT projects. Some projects once peaked at two Ethereum, and then someone got to 20, 50, 100. When I went to show, they would say, 'No, it's fine, you’re doing great, it's cute.' That was the hardest part, even the attitudes of people.

That was indeed the hardest part because I was doing the Spaces tour, working harder than anyone else. You can't work harder than us, every effort we put in, every meeting, every flight, every conference; they always put me in the back row of every meeting, up until three to six months ago, they still put me in the last row. That was the hard part; now I won't accept anything less than this.

That was indeed the hardest part, not just for investors, but almost everyone was downplaying it, except for the community, which I really appreciate. I truly have great respect for them. One guy stood up; we have Spencer here.

Spencer's NFT fund might be the best-performing in history, right? His biggest investment is Pudgy Penguins. I love that because you know how many big NFT funds there are? They are all buying art pieces that don't really push the industry forward. Right? Now, if Pudgy can accomplish what we want to do in the coming weeks, we will bring the NFT market back, not those artists.

I respect that; I love it; I'm not belittling it. But the question is, brother, how can you spend $10 million to buy that but not own a single penguin?

I'm telling you this to inspire those who will eventually replace me. I am at the top now, moving forward. I will hold this position firmly for a long time, but I want you to know that those who take my place, you know? They will push you into oblivion, just like we were. You have to dig deep within and stay strong; you must never let these affect you. Because, brother, there were days I was really about to break down; it was really tough.

I'm telling you this story and background on this podcast to inspire you, to encourage you. I know what you see now is fun and exciting, but I tell you, every bad thing an entrepreneur can experience in a company and business, we have gone through, and not just once. So, as a source of motivation for all entrepreneurs and builders, I hope you all can persevere, brother. This isn’t a victory flaunt; we still have a lot to prove. So I’m not saying I’m a 'GOAT' level person, you know? But at least we’re somewhere.

Why will PENGU fill the last gap in the Solana ecosystem?

Host: There is a lot of content in this industry. We've talked about NFTs, now gaming, and then tokens. So can we talk about games? Talk about tokens. How does it relate to all these? Give us some key intel; just lay it on us. It's not just a meme coin; it's more than just a cryptocurrency, just say it.

LucaNetz: I want everyone to define what they think it is. Is it a community coin? A cultural coin? A meme coin? Or a consumer brand token? It is all of these things. To me, it is the face of cryptocurrency; do you agree with me that it is the most beautiful story in the crypto industry over the past four to five years? It is an 'underdog' story. I believe if it succeeds, it will change the entire industry for the better.

I find it hard to argue against this point, of course, I have my biases. So everyone can assess for themselves. But you can't say that Pudgy's success isn't a huge victory, isn't a great force pushing the entire industry forward. To me, Pudgy's success is a great force moving this field forward. I think this is easy to understand; many might think of it as a supercharged meme coin, right?

From a technical and structural perspective, it resembles a meme coin. 4 billion views on Giffy; all the content is meme-like. So you know, it has a lot of interchangeability and meme-like qualities. I think from this angle, many people would recognize this narrative. And you know, the prophecy and legend of Penku Man existed before me.

From this perspective, I think many would recognize it as a meme coin. But you know, I want to place that blue penguin in Walmart and Target, at the top of the App Store, in the hands of millions, all over social media. I want to bring it to the big screen, and one day I will do it all.

So meme coins usually don't do much, right? But I firmly believe this will be the first case of meme coin evolution. I believe if Doge had a team like ours behind it, its value would multiply, because Doge can be utilized in many movies and TV shows. You can't tell me that the popularity of the IP wouldn't create demand, and demand makes things more valuable. This is a very simple concept; anything with a fixed supply is like this.

This is essentially the supply and demand model. So you're telling me millions of followers and billions of views every day won't impact or support this ecosystem and theory? I think this view simply doesn't hold water.

Host: So what can the PENGU token do?

LucaNetz: I can't say specifics; anything that matters to you is meaningful. Buy things, do anything you think you can do. Everything is. You know, it all depends on your understanding. We are a smart team, right? But in the end, it still depends on everyone's involvement.

But don't have greater expectations for it than your local Doge or Pepe. It’s just the same vessel; any other ideas are unexpected surprises and delights.

Host: Why choose Solana instead of Abstract or other chains?

LucaNetz: Because the initial plan was to do it on Abstract, but it wasn't ready yet. Timing is really crucial in cryptocurrency, right? There was a moment when my intuition told me it was time to do it. You can't rush into doing something so important just because you want to meet an unrelated timeline, right?

It will only make the community larger, create more hype and momentum, and will only make things more grounded. So many people building on Abstract are actually focused on two things: they believe Abstract can bring the distribution power of Web2, and they also believe Pudgy is the best community to engage with cryptocurrency. The first reason still holds; the second reason has become even more meaningful now because I will soon have thousands of holders, and soon there will be hundreds of thousands, possibly millions of holders. Now the 'penguin army' is no longer 10,000 people but 500,000, and it might even reach a million; it will go multi-chain; it will be a multi-chain project, right?

I believe in a multi-chain future; I think Solana is where we most want to be. I believe what we can bring to Solana is very important for that ecosystem. I think we can do some things from a unified perspective; I think we can bring everything together. You know, Solana has its PvP, and we stand on its L1, but from our perspective, Pudgy is not the face of Ethereum; it is the face of cryptocurrency, right? For us, I believe in the Solana ecosystem, I trust its community, and I trust its culture.

If we weren't here on Solana, I think it would be a huge mistake for us to help pioneer this new field and lead the way. It would be a great loss for us, for our ecosystem, and even for Solana, and I think it's a good fit for us.

I believe what we bring is, in my view, the beginning of a cultural phenomenon. I think this is exactly the last puzzle piece missing from Solana. You put a cultural phenomenon on Solana, just like Bored Apes and Punks did, and I think it will make the entire ecosystem better. Based on my interactions with the Solana community, I hope to do something for them; it's a great opportunity for me. Of course, ultimately it will become an SPL token. Eventually, you know it will be a token standard based on Solana, and such tokens are SPL tokens.

Host: SPL tokens; explain to listeners what they are.

LucaNetz: SPL is one of Solana's local token standards, and there are different types of token standards on Solana, with SPL being the most common. So there's really nothing too complicated; everyone can understand it.

Host: So when is this token plan going to launch?

LucaNetz: Very soon, very quickly. We don't plan to wait until the end of the year, nor do we plan to launch immediately. So, according to the plan, this might already be online at the time of release.

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