They say that the market tends towards “max pain.” In the world of NFT companies, max pain is bearish market conditions existing just long enough that company funds (which are often stored as volatile assets like ETH or SOL) dwindle to near zero just before the return of a bull cycle. This is crushing. Companies that went lean to survive in the bear market have either still failed outright, or failed to prepare significant enough deliverables to capitalize on the return of the bull. Often, this leads to a final conclusion for many teams: Sell or dissolve the company.
We see this story play out in spectacularly disappointing fashion with the 3Landers and the Gutter Cats. Both companies garnered serious attention during the bull market of 2021-22. Their peak floor prices were ~1.8 and ~8.8 ETH respectively. However, after years of achieving neither any serious PMF nor cultural prominence, the founding teams of both projects have sought exit.
Gutter Cats managed to find a buyer: an individual who goes by the name “Noah” (@mauloadream on X). He claims to be a highly successful entrepreneur who has previously sold a company for $1.2B, which, we’ll take him at his word for. The jury is very much out on the result of that buyout, so for now, we’ll reserve judgement. 3Landers, however, have not been so lucky. They’ve effectively entirely dissolved, leaving holders with a floor price of 0.0219 ETH, down 99%(!!!) from ATH.
A question then arises for the more entrepreneurial among us - should you look to buy out one of these failed collections? In a world where Luca Netz’s purchase of the Pudgy Penguins led to one of the greatest revivals we’ve seen in recent startup history, acquiring previously exciting collections would appear to be a really strong opportunity for well-intentioned businesspeople. However, this would be (in my opinion) a false belief.
People often forget that the Pudgy Penguins had very unique factors that made them a strong opportunity in the first place. The Pudgies were known to be held in large part by DeFi native whales and market participants. Their holdership had (and still has) a strong understanding of crypto ecosystems fundamentally and remains markedly different from most NFT communities which are heavily siloed from the rest of the world of crypto. This is a *critical* point. Collections need rich holders, and further, holders that can continue to make money and become richer - especially while bringing other holders along with them. The wealth effect that is created by these types of holders drives the price of the collection up, leading to happier holders, higher sentiment, and a flywheel of success budding into existence. Holders that aren’t rich, and struggle to make money generally, will be much quicker to dump a project on any uptick in price, and much more likely to harbor negative sentiment as price drops leading to a perpetual death spiral.
Not to mention… IP does actually matter for many of these collections. While you can theoretically “just change the art” if the IP isn’t amazing as it stands, it is remarkably difficult to refresh something that people already strongly dislike and create something that people instead love (rather than dislike slightly less). To date, only Pixelmon comes to mind as having managed to successfully switch the art and produce something that has strongly performed since - though, it’s important to consider that they’ve also announced the launch of a well-backed gaming token, which does quite a lot to bump up the floor of the collection.
The Pudgy Penguins were an excellent opportunity for acquisition because of their premiere holdership and high level IP (cute penguins!). 0n1 Force also showed to be a strong candidate as well based on similar holdership, and similarly strong art (I expect to see them and their company perform well over the next year). The issue now is, who else might be strong candidates for acquisition/executive takeover with this in mind? My answer: there are none left.
All of the NFT collections that displayed traits that would make for a strong opportunity for acquisition (strong IP, crypto-native/rich holderbase, cultural and/or memetic fit) have either already been acquired or have weathered the bear market and are preparing to deliver in a big way during this pending bull run. Collections like the Lazy Lions will likely change hands soon, but I’d argue that the current ownership should be forced to PAY people to take the company off their hands, rather than asking for money in return. Their IP frankly sucks (too much like BAYC, and doesn’t match the IP that Lions should display (hyper cute or hyper masculine/wealthy)), their holders skew towards a bizarre demographic that isn’t crypto-native and isn’t good at making money within crypto, and further, the only funny memes the Lazy Lions can produce relate to how badly their floor price has performed.
If you have capital and want to take over Lazy Lions, or really any collection like it, you’d be vastly better served simply spending that capital on a new collection you launch yourself. You can target specific types of holdership that YOU want, rather than what already happens to hold these now poisonous assets. The art and IP can be whatever direction you choose to take it, rather than the failure has-beens of old.
This applies towards effectively any collection that may be up for grabs over the next few months. I’ve been asked by would-be buyers for over a year now as to what collections might be worth buying… and to this point my answer hasn’t wavered. Launch your own and let the previous cycle’s failures succumb to natural selection.
