Mike Townsend: This interview is with Scott Lawin, the CEO of Candy Digital. Candy has raised over $100 million in less than two years straight out of the gate with an evaluation of over $1.5 billion. They are creating NFTs. They partner with large-scale ticketing agencies professional sporting, organizations, and he describes exactly how they do it. The project started as a joint venture between GalaxyDigital and Fanatics. We talked about the origin of the project, how they're doing, his long-term views on NFTs and Crypto more generally, and just his overall journey, which is fascinating. So hope you enjoy this conversation with Scott Lawin.

Mike Townsend: Scott. We are live. Thanks for hopping on today.

Scott Lawin: You bet Mike, glad to be here.

Mike Townsend: Yeah.Yeah. I'm excited to chat with you. You're running one of the most interesting projects slash companies I've seen and had the chance to talk to, the thing that struck me in doing research on candy was the structure of the origin with the JV between Galaxy Digital and Fanatics. I wanna ask you about that story. Where were you positionally in these two companies? Like how did those early conversations go, to structure the business?

Scott Lawin: Yeah, so you know, really interesting way that Candy kind of came about a lot related to sort of my background. So my career prior to entering the web3 space was in finance. So I spent kind of 27 years in finance, in various forms along that journey, I met and became business partners with Mike Novogratz, the founder of Gallaxy Digital and so really my entry into sort of the blockchain space happened in 2016. You know, around the time that Mike was really ramping Galaxyup. My first sort of foray into blockchain and Crypto was really through the lens of finance, right? It was sort of looking at Cryptocurrencies and smart contracts and really looking at them through the lens of, okay, what does this mean from a traditional finance perspective? How is it gonna be disruptive? You know, what was this was that was back in the days of ICOs you know, was this gonna change the way financing worked? Were these securities, et cetera? And so that, that's kind of where I first sort of went down the rabbit hole and started to kind of educate myself and, and get involved in the space. Fast forward to 2020 you know, mid pandemic Mike and I were, you know, kind of sitting down and talking about, you know, where we saw adoption look like not just from an institutional perspective, but really what, where we're gonna getthe next 1 million, 10 million hundred million people right into the space. And thinking about content as an on-ramp and looking at music and entertainment, sports and culture, and then really leaning into sports and saying, okay, billions of global customers, passionate fan communities, and a sports collectibles business that you know had existed for decades and was sort turbocharged by COVID. You know, it feels like a, a, a place where you could start to see that extension of, you know, existing activities, bringing those things on-chain and then sort of moving from physical collectibles, into digital collectibles.

If you're gonna start a business in the sports space, really number one, two, and three on the list of potential partners or Michael Rubin and Fanatics. So that's really how you know, kind of that union came Together, the joint venture between Galaxy and Fanatics. Then, as we were preparing to announce the launch of the company in June of last year, you know, we added a third founding board member, which is Gary Vaynerchuk. And, you know, for folks who know Gary, Gary's really at the heart of not just the sports collectibles business, but you know, early pioneer and adopter of really seeing the potential of, of NFTs and, and web three.

Right. And so that's really kind of how the dream team from founding board came together and, and how Candy got it.

Mike Townsend: Interesting. Yeah, I think probably more people are familiar with Gary than they are with galaxy or maybe even Fanatics. Yeah, what's the main business line for Galaxy Digital and, also separately, but for Fanatics?

Scott Lawin: Yeah. So, Galaxy is kind of, you know, the premier merchant bank and the blockchain and Crypto space. So think of, you know think about what Galaxy is doing as sort of building the Goldman Sachs of Crypto. So you know, a trading desk, an investment banking advisory firm, a private equity sort of venture fund management business. And Mike Novogratz was kind of the earliest sort of senior person in the TradFi world, really telling the story of digital assets. Right. You know, and why blockchain was going to transform, not just finance, but, you know, culture and art and, you know, connect with everyday people that, you know, and not just be a store of value or something that the Crypto native community is betting on.

Fanatics is the world's largest e-commerce player in sports and really around sort of sports apparel essentially running thee-commerce sites for major league baseball, the NFL you know, strong relationships with teams, leagues, and athletes. And so bringing together not just the content component, but the commerce component in the sports space.

Mike Townsend: Interesting. And then the strategy, or at least what played out was pretty early on the company raised a hundred million from SoftBank and insight partner, which is kind of what, what sparked the whole project. I, I feel generally that you have the option to do that. You know, if, if we'll trade a ton of capital, if you have like celebrity founders, like what quinidine, or if you have joint ventures with other invested partners, some sort of momentum to kick it off. How, what was the, you know, typically 99% of the time's like family fund puts in 300 K they find product market fit series, a seed-round series B C D IPO, a hundred million raise. How was the path different on just injecting a hundred million into this from such an early?

Scott Lawin: So I think what was differentiated about it was, was maybe two or three things. One, was the fact that we launched the company with an exclusive partnership withMajor League Baseball, right? A long-term partnership. And so, you know, Candy is a business that's set up to really focus on world-class, IP and content and create efficiently, licensed collectibles across sports, entertainment, and culture. Starting out with partnership with major league baseball and the Major League Baseball Players Association, and then you know, looking at launching our business in October with the backing of Galaxy of fanatics Gary's involved.

I think what insight and SoftBank and our other investors saw was, you know, couple of different things. One the idea that you know, relationships and licenses in this space matter, right? That we weren't out there trying to create our own IP, right? Our own avatar project. And hopefully itcaught on et cetera. We were connecting with, you know, the hundreds ofmillions of fans in the space. To onboard them into this world of digitalcollectibles at web three and that, you know, our ability to go and sourceadditional rights and additional partners, which, which we have now withNASCAR, with WWE, with Netflix, with Getty images in college sports you know,that this was gonna be a really big business and so that was, those were reallythe fundamentals you know, for around our series A raise.

Mike Townsend: How doyou think about the, the weighted influence of technology versus partnerships?I imagine if you have those partnerships, those are very difficult. There'sonly one. I imagine there's only one NFT partner for NASCAR. You know, there'sconfusion in the market or redundancy if you have multiple. So they pick one,you guys are the one. Is the technology kind of a softball, you know, like alayup, so to speak, or is it really about the, the big partnerships or how doyou think about that?

Scott Lawin: So Ithink it's you know, listen, the tech is important. You know, I think ourCandy, our approach to the space is really around designing, compelling assets,engagements, and building communities that connect to fans and connect tocollectors. Right? So, you know, our thesis in the space is, you know, creatingsort of the next generation of collectibles that connect people to theirpassions.

You know, the tech that we've built. Is the full stack techfrom, you know, our marketing to our design, to our primary, to our secondary,to our customer support, to our community. But the tech that we're buildingisn't necessarily gonna fundamentally change the way that web three functions.Right. And so, you know, we view ourselves as the institutional grade partnerfor these world class brands, to bring their content and their communities intothis space. We ourselves are gonna go, you know, continue to go and partnerwith folks who are deep in the tech space. And so, you know, we can, we canhave multiple partners there as this space continues to evolve.

I think that was one of our core thesis was that, you know, in2020, nobody really knew how to spell NFT. Right. Unless you were sort of inthe Crypto space in 2021, The world exploded $25 billion of volume later. Butas you know, we're still super early, right? And so this is very much about,you know, from our perspective, reaching out to folks who are coming into thisspace for the first time a Fiat first approach. You know, connecting them tothe content and the stories that they love via a digital asset and then sort ofshowing them the path on how those digital assets can enhance that experienceor the entertainment value or the connectivity or the rewards of being part ofthat community.

Mike Townsend: Whathave you found so far? I know it's kind of early and I know we just hit kind ofa depression period on Crypto in general, but are there, you know, youmentioned the collectibles sort of emphasizing that I'm picturing there's thein person experience. There might be. Enjoyment of having a, a piece of art or,or something. But I imagine the collectibles is largely associated with aaudience base that is much more passionate than the average casual NASCAR,participant or NBA sports ticket holder.

Scott Lawin: Yeah ,our kind of core philosophy here is that there's kind of two important things.One, is not trying to convince people to change the way that they engage or experiencea sport, but to take what people are already doing as fans and amplify that andadd additional value through digital collectible. And so if I just think aboutlike, kind of our, our core product sets, right, the first is a digital tradingcard, right. Which is sort of a, a natural evolution of. You know, trading card1.0, the piece of cardboard that, you know, we all grew up collecting and manypeople still do. Right. We think of that 1.0, we think of the digital pictureof that as 2.0 and then we think about, you know, what we're creating which isthe digital collectible. That's a static image, a video file, a digitalsignature, has audio, has motion graphic, and has dynamic statistics thatactually change based on the player's performance. Right. Taking something thatisn't just scarce and rare, you know, through the blockchain and through , arelease structure. But also connects people back to the sport in a real timefashion. Right? So that's amplifying what people already do. We have a digital ticketproduct that, you know, harkens back to the days that you'd show up at theballpark and get, you know, your ticket that you could put up on your bulletinboard that doesn't exist anymore. Our digital ticket, you know, has that, hasthat same commemorative value to the individual. May not be worth anything inthe secondary market, but that's okay. Right. You know, we're not in thebusiness of just creating digital lottery tickets, we want to, we want thingsthat connect people to their love of the sports. Our digital memorabilia, adigital Jersey is a, is a, a rare asset that you can collect, but it's alsosomething that through an AR lens you could wear and take a picture of andshare out to your community. Right. And so that idea of connectivity to thegame itself the participation of the fan and then this spectrum of digital onlydigital, physical and digital experiential is, is really kind of what our wholethesis of the space is.

Mike Townsend: It's interesting.

The first thing that comes to mind when you sort of map thatout, 1, 2, 3 is what's 4, 5, 6, and I, I tend to think that there's, this istell me your reaction to this, but I tend to think that there is a, like acentralization decentralization or organizational, and then fragmented Patternsto these things. So, you have the, originally you just have people throwing aball around in a garage and then like put a rim up there, like we're bored andthen they throw, throw it in. Okay. Now we got basketball and then basketballkind of grows and there's teams and there's people playing it's reallycompetitive and all people care about is basketball. And then there's like theanalog representation of the game. So you can't participate in the highestlevel. I can't afford to go to a game. I don't live in a tier one, whatever itis, or even if I do go, I wanna play when I get home. Or even, even using thatword play is like a reference to it. So I collect these cars. They'recollectibles. I have all these collectibles, you get together with friends. It'slike, when you, when you care so much about it and you collect them, you wantto engage other people. So I found one thing that was interesting about POGS isthat you don't just collect POGS you play POGS. So there's like a competitiveelement to it with other people like a gaming element. And I tend to think thatthere will. This continued pattern where like collectibles represent the realthing and then collectibles get more dynamic. Like you said, digitally, they'remore dynamic. And then, then they're now integrated with other people'scollectibles and they're, they're somehow competing or they're playing witheach other. And now you're sort of like rep you're like re reproducing the inlife, actual game in sort of a new remixed digital. Does that resonate with?

Scott Lawin:Absolutely. That's really, you know, that element of engagement is another sortof core part of what we're doing. Very simply, you know, we start out withcollection challenges and all of our products that we release have an element of,you know, if you collect the full set or some subset, right, there's a rewardor an upgrade, we've moved there now to burning challenges.

One of the things, ifyou were a traditional physical card collector, when you opened up your pack ofcards, you, you got a bunch of guys that you didn't really care about, right?They went in the trash or they sat in the shoebox. Well, now, you know, we'vecreated ways for people to actually dynamically burn those NFTs and upgrade fora new rarity. And so creates this really interesting sort of supply demand youknow, dynamics, some game theory around you know, let's, let's just say youhave an unpopular player and everybody wants to burn that player. Well,suddenly now that player who might have been a core rarity, there's only ahundred of those left and suddenly now that's a much rarer card than even someof the most popular ones. Right. And so that sort of game theory is, you know,our community loves it. Right. And they're, and they're super excited about it.And so then taking that to your. Using those dynamic statistics and starting touse the unfield performance to create challenges and gamification, et cetera,like that. That's the next step.

Mike Townsend: Yeah.It feels like it has to be because there's a certain attrition of attention. Ithink that's correlated with collectibles. You know, you, you collect them andthen if, if that's all there is, if there's just collection. Especially if it'sdigital, cause you have to like boot it up.

You know, it's not like a piece of art. I can hang in the walland sort of casually with no effort passively. I can get value from it bylooking at it. Like if I have to double click on it, pull up the thing. It'slike even in POS, right. People tend to lose interest. I dunno what the numbersare, but I would imagine that people tend to lose interest on collectiblesbecause you have to like pull it out of the shoebox out of the closet, put iton the ground.

So people generally display collectibles, like if you'recollecting license plate or bottle caps or whatever it is, but I do thinkyou're, that sounds spot on to me that there, there, there has to be acontinuation or there's just an atrophy of what you can do with these things.

Scott Lawin: Well, Ithink there's also, a future, which we're testing today, which is also howthese collectibles actually enhance and amplify your experience. So you canimagine, we have a product which you call play of the day, right? And so everysingle day that baseball games are played MLB determines the most importantplay of the day. We create that as a collectible overnight, we minted for 12hours and then it's done. Right? And so some days we have 250 people who decidethey wanna get play of the day. Sometimes we have 5,000 people who want thatplay of the day, right? Depending upon who the player is, what, what it was, etcetera. But, if you own the icon, which is what we call our Digital TradingCard of a particular player, you are at the stadium, you're sitting in thebleachers and that player hits a home run. Right. You know, to where you'resitting in the bleachers, suddenly now your card can get upgraded. You can winthat play of the day or you can win something else. Right. And so this idea ofhow do you reward fans for their ownership and participation and, you know, notjust sitting at home, you know, on their computer opening blind box packs, butactually at the, at the stadium, right or watching the game on television. Andso, you know, we've been really lucky with Major League Baseball as a partnerand with our other partners. Because they're leaning into this whole idea,right? They see the future. They wanna find more ways to understand their fansand connect with their fans and they see digital assets as, you know, as thepath forward.

Mike Townsend: One thing that comes to mind here is the influence that a glasses that I put onthat will augment or virtual my reality is that something that's like on theroadmap or is it more kind of high level thinking about what might be someday?How do you sort of see our transition from where we are now to, I don't knowwhen people say metaverse, I think they're just generally referring to all thisweb three stuff, but I think of like specifically VR and AR things that Metaare, are creating in Oculus.

Something that ha I'm pretty Optim bullish / optimistic on theimpact that it'll have on, you know, even just this conversation. If we couldhave this in a setting where it's like indistinguishable from real life andwe're at a coffee table, it's just so many things become so much more richer.And I'm curious what your thoughts.

Scott Lawin: Yeah. Sowe we're huge believers in, you know, the direction that we're going in termsof blurring the lines between digital and physical experiences. And soeverything we design, we design as, you know, kind of a unity based, you know,AR or VR asset, even if today, the experience isn't there. And so, you knowwhat we think about as we think about, okay, first of all, like, you know, likeI said, sort of the digital Jersey. It's a digital collectible, but through anAR lens, you can wear that Jersey and, and share a picture out. Right.Ultimately as we start to we're, we're doing some interesting things in like,you know, 360 video motion capture where, you know, we're scanning physicalobjects and actual athletes. Right? So, you know, to get to the point whereyour favorite player. Can show up in your living room, right? Swinging the batand hitting that home run. And because we scan that player and Rigg them almostlike a video game character. You know, what they do can change based on whatthey did the night before.

Right? So when you, when you pull up your Justin Turner 3Dfigure and the Dodgers won the game, you know, he might be celebrating and hisbat might be on fire. Right. And so, you know, and that can happen in yourliving room. Right. And then as we get to a world where VR becomes morepervasive and I'm a little bit of a seller of the idea that everyone's gonnawalk around with Oculus riffs on their head but, those experiences will becomemore meaningful. These assets will have a role there, right? And so, you know,this idea of composability across platforms and interactivity is just gonna getricher and richer as this whole ecosystem gets built out.

Mike Townsend: Sorry. When you say seller, are you able, do you believe that's to be to the case?

Scott Lawin: Sorry, that's a wall street trading term. I don't think we're gonna get to aplace where we're, you know, in a Ready Player 1 world where everyone just sitswith Oculus riffs on. But I think those experiences will become more pervasive.

Mike Townsend: Yeah. It certainly has to be like ground, locally, right? In your living room or something. Yeah. Where you have the first there's gonna be the line and the big helmet and it's gonna get super thin. Then as I look at you, you have glasses on eventually. It'll be like, I don't even know if those are, yeah,

Scott Lawin: It'll be, nearfield. I listen, at the end of the day, right? Not to get philosophical, right? Humans are social creatures and while putting on anOculus and being in a virtual world, for anyone who's done it, right? You realize very quickly what the potential is, because your mind believes that you are there. It's like the fax machine, right? The value of one fax machine is very low, but when you build the network, the value increases exponentially. And so as more and more people start to experience. Then it won't feel as strange , where I have my goggles on and everyone else is watching me. We'll be doing it together, but I think we gotta ways to go to get there. AR is gonna be, I think the, you know, the pervasive tech that bridges that gap, its not, it's not gonna go away and be replaced by VR it's just gonna become a more important version. .

Mike Townsend: Yeah.Yeah. I tend to think that's right. Like there'll be an overlay, which probably is where the majority of the like collectible NFT, your world stuff sits on the AR side. Like I'm wearing glasses and then, my, you know, on the table, there's nothing actually there, but on the table, I can see these cards and they're tied to a digital unique nonfungible token.

Scott Lawin: Yeah,f you think about it, right, collectibles are about identity.They're about storllin, they're about expressing my identity as a fan either of a player or a team or a sport that I love. They're about expressing my identity as a collector of art or music or whatever. They'reabout connecting with those stories, right? And so as you move into a world wher AR it becomes pervasive. I might have my NFT of the Green Bay Packers spinning over my shoulder. Right. And for anyone who has the glasses on they see that NFT, right? Wen, when they've got the glasses on, they know I'm expressing my identity

So you think about the way we express ourselves now through clothing, through accessories and things like that. Digital assets are just gonna be another evolution of that.

Mike Townsend: Yeah. I almost find that in, in times when technology accelerates the quickest, its most helpful to have a strong philosophical grounding cause the, the potential for the technology to go in different directions is very high, and the practicality or the, the gut check on what we're building and why we're building it seems to be correlated to, to the potential for the technology to go in different directions. It's like, well, if you could do anything in the world in this new, in this new virtual world, what do you do? Why do you do it?You know, the concept of a collectible to me seems, seems like its collectible, cuz it's unique. If I could just print a million of 'em defeats the point. So NFTs create that potential for digitally representedcollectibles. Then you say, well, why do we have collectibles? Is it, is it a sense of scarcity that people feel that they want something to, you know, preserve their wealth? Or is it like, I wanna have fun cause I'm bored, or is it like connecting with other people?

Like there's some, there's some bedrock to the emotional drive behind this whole movement. And I find if you're, if you're detached from that, you don't have to be a philosopher, but if you're completely detached from it, then you wind up like, you know, 10 X leveraging on some, you end up becoming the buying at the peak, like, cuz you're sort of not grounded in like what are we doing?

Scott Lawin: Yeah. I mean, listen, when we got started, we said very definitively we're not gonna build a company that just makes digital lottery tickets because , there's a certain segment of people who will be looking for those, but there's no real sustainable value there. Right. And so we think about, you know, this idea of value exchange. There's no question that in the world of physical collectibles, you know, there's an economic value exchange. People want to find the rareversion, right? Or they want, they want to collect the asset of the player who's a rookie who they think is gonna become Mickey mantle in the future. Right. But there are other forms of value exchange, right? There's entertainment value, right? You know, collecting something that is joyful to look at compelling to look at has entertainment value, there's utility value. Right. I've built my collection, maybe because I'm the biggest collect, you know, one of the biggest collectors of Yankees NFTs, I get to go to the stadium early andwatch batting practice.

There's a community value. Because now that I'm a collector of these assets, I'm part of a like-minded group. I mean, you go to our discord. I think we've got one of the best discords in the space because not only are they collectors, they're passionate baseball fans, right and these people have become friends.

They meet up and go out, you know, they go out to dinner together because they're excited about being on this journey and connecting their excitement of. Where we're going with web three with their passion, for baseball. So, you know, there are lots of different ways to exchange value in this space. And if people only focus on, Hey, I can mint it for 0.1 ETH then I hope it's worth five the next day. I think that's short lived.

Mike Townsend: Yeah,it's a good, I like that you bring that stuff because there's like, there'sdifferent almost hierarchies. So if you picture like social hierarchies anddifferent domains, you have baseball and NASCAR, like even within the globaldomain of sports and people are in that community, they see what the top lookslike.

And they know they, they recognize the hierarchy. Like if youwin the game, it's better than losing the game. And if you win the series ofgames, That's the best. And if you win the series of games, every season,repetitive, repetitively like a franchise dynasties, like that's the, that'sthe holy grail, right?

Those are the people we we like worship effectively in thishierarchy the most. I think the recognition that you're in this hierarchy thatyou're participating in it as a fan says, this is maybe I can't be aprofessional sports athlete, but I can at least like climb the hierarchy bybeing connected with that or there's, there's something that I think thatpeople like deep down inside hate feeling lost or, or any lack of identity. So,you know, typically I would say in the us, like it's been, and even in the last19 20th century, it's been country like identify with my country. Yeah. And,and now that, that seems to be like rapidly disintegrating the like religion israpidly disintegrating. The people under 40 years old are like way less likelyto go to, I forget what the stat is, but way less likely to go to church. Thelike loyalties of the country self-identity the country is decreasing. I thinkthis is like what you're creating this or helping to create this. Thesehierarchies are what people are identifying with and these new, like structuresof value seem to be how we, the NFTs are almost like a mechanism forquantifying the social placement to some degree within these different areas.And I, yeah, I mean, I'm kind of riffing on this a little bit.

Scott Lawin: No, Ithink, I think you're spot on. Right. And if you think about kind of what wejust went through in, in kind of web two and the internet, right. What, youknow, what the internet allowed you to do was to sort of find your peopleanywhere on the planet, right. Where, you know, pre-internet, depending uponwhere you grew up, right. If you were in a city, you had a much better chanceof sort of finding the other weirdos like yourselves with common interest. Ifyou grew up in the sticks, You might never find those people, right? Because,because your, your connectivity layer just wasn't there, the internet blew thatwide open, right. It doesn't matter what your niche interest is or yourpassions. Like if you go digging, you can find it. Right.

What I think web3 does is it brings ownership to that idea of community,right? Where not only are you connecting to those people, like you can now sortof own assets that bind you together in an economic fashion, if it's a DAO orthrough a series of collectibles where you're on that journey in a much moreinvested way. I think that's really interesting with super early, right? We'rejust gonna continue to see this sort of evolve and, and figure out what itbecomes.

Mike Townsend: Do youthink the influence of NFTs, maybe broadly web3 will increase the number ofplaying fields or will it act in the reverse where it consolidates them? Solike, will there be new games created and new, like people are more diverse intheir interests or do you think it kind of has the opposite effect?

Scott Lawin: I thinkit's gonna do both. The most powerful element of web three is, is reallyunlocking the creator economy in a, you know, much more significant way. Thisis sort of motherhood and apple pie in the space. Right. But the idea of notjust creators, but participants being able to sort of have ownership and aneconomic stake in building something together is a really powerful idea andthat's not gonna go away that said, That, that results in a lot offragmentation. There will, I think almost by definition, be organizingprinciples that bring some of those things together and whether that's in anexchange or whether that's through a platform, because at the end of the day,you still have to find those other people, right? I think it puts a lot of thepower back in the hands of creators and communities. It takes away power fromthe intermediaries, which I think we all feel is a good thing, but it doesn'tmean that, some of those centralizations gonna disappear forever. Like, youknow, that that's the utopian vision that I just don't think humans are, arequite ready for or necessarily want if they think about it but we'll, find theright balance.

Mike Townsend: Yeah.It's a good point. How about within the different sports and the differentcategories that NFTs operate, are there some that stand out from others,? Likeis NASCAR or MLB or one of these like very, more popular than the rest?

Scott Lawin: You knowfor, I mean, it's pretty early for us, right? So we, we launched in June oflast year with Major League Baseball as our partner, as I said, you know, sortof now WWE, NASCAR, Netflix, Getty, we've got a Couple of other sportsproperties that are sort of in the works, but the bulk of what we've brought tomarket right now is around baseball. We're actually in the market with our firstWWE product today. We're really excited about it. I think from our perspective,our approach to the space is there isn't a one size fits all strategy. Ourstrategy around what we're bringing to market with Major League Baseball, we'renot gonna sort of copy and paste that for NASCAR or copy and paste that for WWEcuz the fans are different, the sports different, the way people engage aredifferent. For us, that's kind of the exciting thing is testing and learning.And you know, there's a universality around collecting a card with a athlete'simage on it and statistics. But the way that that looks for WWE is verydifferent than what it looks like for baseball.

Mike Townsend: Yeah.No, that makes a lot of sense to me and I imagine you would say, you'd see afragmenting out to eventually it's like every sport is gonna, no matter howrare it is, small, it is. Why not? Yeah. And you just started.

Scott Lawin: Yeah, Ithink in five to 10 years, Digital assets are just gonna be pervasive. We won'treally call 'em NFTs anymore. Right? They'll just be the things that weinteract with and get when we buy a ticket or go to an event or, you know, joina community online and they become part of our digital identity and, you know,part of our experience. You know, as I say on many of these types ofconversations, I wanna put a bounty out there for people to find a better wordthan NFT, right? Because I, I think it does. It does a disservice to wherewe're going, because it turns people off and the idea is, it's a digital token.It's a digital receipt that represents ownership in something.

Mike Townsend: Yeah.I almost, I almost think it'll just dissolve over time because it'll be,

Scott Lawin: No onesays I'm gonna go to the internet to look something up, right?

Mike Townsend:Exactly. You know, if you watch like old news channels, they're like go toHTTP, semicolon, www dot, you know, it's like, they would always include thewww dot, but now, like if you give someone your domain, it's like, you wouldn'tsay www dot candy dot, you would just. Dot com the.com at the end is thereference to it.

So I, I almost wonder if there's like a dot, like, if I saygive you your email, you know, just putting the at, just putting something. Andthen at Gmail will indicate it carries, like it carries the concept of emailwithin it with that little at sign. So I almost wonder if like, like thehashtag, right? Like when you see hashtag it carries so much, it's like, okay,that's something, that's viral on the internet, probably on Twitter. It's gonnabe clickable. So, it's like we need the hashtag or at symbol. I think it's morelike a symbol than it is another word. It's a new just left on the keyboard.All right, it's gotta be, let's go with dollar sign start, Scott. You're theguys go with the dollar sign. If it's got dollar sign name, that's the nFT.

Scott Lawin: Yeah,too much heavy association with dollar sign. We gotta go somewhere else, butwe'll figure it out.

Mike Townsend: Oh,okay. Well what's the next one. You got the ampersand. That's the next one?That's funny. So I wanna, I'm curious to ask you about the market. What wouldyou sitting here August 16th? What do you take away? What are your like lessonslearned? Observations about other people's on this like RO fast rise, fastfall, and now we're kind of figuring out what's next. How do you sort of 2020 analyzeit?

Scott Lawin: Yeah, Iguess what I would say is it wasn't, it's not totally unexpected. Certainly ifyou've been in the Crypto space, you've seen the run up and the, and theretracement for sure. I think what got people and, and like any new tech rightthere, you know, lots of people get excited about it sort of rush in the marketgets ahead of itself. It, retraces, it flushes out the folks that, you know,are the tourists, not the, you know, not the settlers and then you kind of goonto the next phase. Right. And I think that's exactly what happened, right?Like, like I said , at the end of 2020, no one was talking about NFTs in 2021.Everyone wanted to min an NFT buying NFT trade in NFT, et c. As you know, the,the, the barriers to entry are, are pretty low for people to come into thespace. And so a lot of people got excited about the potential. Probably an evengreater number of people got excited about the idea that, Hey, I can make awhole bunch of money, either buying these things, trading these things, orstarting a company in the space. Then, what you realize is that when you lookat the headline numbers and you say, oh my God, you know, $2 billion of BoredApes of trading, money is falling from the skies. And then you look under thecurtain and you say, well, there's really only 3000 people who are tradingthose, like how many people are actually in the space, right. How, how scalableis it? Right. And, and where are we? I think we have tried to be veryconservative in the way that we've approached the space. In particular, insports and licensed properties, you know, we went from January of last yearwhere we were explaining what blockchain was and what NFTs were to suddenly,you know, six months later, sports leagues and teams getting 93 differentproposals to be their NFT provider.

Mike Townsend: Wow.

Scott Lawin: Suddenlythe, the money that was getting thrown at the space because the VC communitywas underinvested got way ahead of itself. We walked away from some verysignificant partnerships because the dollars and cents didn't make any sensein, in terms of what partners were looking for. We weren't predicting that, youknow, the market was gonna reset to the degree that it reset, but we very muchsaid from the early days that 97% of the NFTs that were being created wereprobably gonna be worth zero or very little, 12 to 24 months from now. And so,you know, we've kind of seen that first. And so I think, you know, likeanything, if you approach this with a longer term vision of where you're goingand, and to say, listen, we're not, we're not just in it to make a quick buckwe're in it to really build a sustainable company and sustainable partnershipsand you know, We're we're, we're selling $15, $20 products to consumers. We'renot trying to, you know, create a hundred thousand dollars, you know, NFTsovernight, just a different philosophy. I think the, to kind of level set onwhere we're at the market has reset itself. Some of the folks who showed upour, you know, are gonna get washed out, but the handful of companies that arereally thoughtful about what's being built and why it's important and how youdo. Are gonna be the leaders of the next wave and, you know, we, we certainlythink we're one of 'em.

Mike Townsend: Yeah,I agree with that. What's a typical, you mentioned 93 NFT providers coming in.I'm sure. The marketing offices that some of these sporting companies must havebeen overwhelmed. What does a typical structure look like? Assuming you can'tspeak specifics about anything, but just broadly speaking. Is the money flowfrom the company from say like NFL, as an example, to some NFT provider, likewhat are the typical talking points?

Scott Lawin: Each ofthese are unique snowflakes but you know, what I would say is the Licensed NFTbusiness has kind of evolved very quickly , to mirror the traditional licensingbusiness. Generally, you have kind of a revenue share with your contentpartner, and then depending upon the length of the agreement, you may or maynot have some sort of financial guarantees that you're gonna deliver whether ornot you sell those products. Right? So, you know, if you are the NFL to useyour example and you know, you want to, you wanna license their logos to createt-shirts, you're gonna pay a percentage of those profits to the NFL to usethose logos and they might ask you to pony money up front to kind of secure thefact that you're locking up that, that license.

What's different, obviously in the NFT space is it's not justthe initial sale, it's also the secondary sales, and so the revenue streams arein perpetuity, because the assets are Unchained and distributed on theinternet. And so, you know, it's a different model from that perspective, but,you know, again, like anything, I think people tend to take existing models andextrapolate them to, you know, new technology. You take individual athletes,agents who you know, their job is to negotiate big numbers for their athletesto be on a billboard or on a, on a product. You know, they were drooling, youknow, when they, when they, when the NFT opportunities came around and youknow, what you found was there was a bunch of companies that went and signedthose deals who now can't sell any NFTs, but they still owe those guarantees.That'll all get sorted out in the next year.

Mike Townsend: Butit's not player specific. It's not like you would have a contract with the NFLand then you'd also have contracts with each of the players.

Scott Lawin: Some,some companies have done that. Where they've done deals with individual playersand you know, if they couldn't get a deal with the league, then they said,"Hey, player X, I want to do a deal just with you. I can't use the, I, Ican't use a picture of you in your Jersey, but I can use a picture of you in yourt-shirt throwing a football". I'm gonna make an NFT of that

Mike Townsend: sothat would be more like I'm picturing, like what brands compete over like Nikeand under armor they're they're not competing. They don't put the NFL logo onthere. They put, you know, the commercial has like, LeBron it doesn't haveLeBron in an NFL or a MB background. Right. Interesting. That's like a wholenother level of competitive bidding and probably I'm sure you guys have teamsof people that engage with athletes.

Scott Lawin: We'vegot a great partnerships and business development team that really reaches outto leagues and content providers kind of tells the candy story, talks about,you know, how we can deliver value, not just commercial value, but engagementvalue, fan value and data value. That's a core part of our business.

Mike Townsend:Interesting, awesome space. I mean, it's fun to just be on the front running ofsuch a high octane space.

Scott Lawin: But youknow, what I tell my team is we've been building the company is, it's a greatchallenge and privilege to build a company from scratch. It's an even greaterchallenge and privilege to do it in a space that doesn't really exist, right.To, you know, define what does it mean to be a digital collectible company in this,in this new world?

Mike Townsend: Yeah,that's a good way to put it. And you were you started parametric, you had beenin finance, but I think parametric was your foray into Crypto blockchainresearch slash investing, advising. Are there other people that you've learnedfrom, or really try to pay attention to books, YouTube channels, et cetera.Like when you think about going from what you were doing to what you are doingin such a short period of time, I I'm sure you must have dedicated time to like,learning about it. Is, did you approach it more casually, like surf Twitter, ordid you to focus on.

Scott Lawin: Yeah. Imean, I would say, my career in finance has always sort of been at theintersection of finance and technology before I started on wall street. Youknow, my education is an I'm an architect from MIT. And so, you know, bynature, I'm a builder. I just happen to do it in, you know, with financialproducts as opposed to, you know, bricks. But I've always been interested inbuilding new businesses in the finance space. I'd created a ton of newfinancial products and sort of started new businesses and, helped to build newtrading technology. So that's always been a core interest of mine. Soblockchain was just a natural extension, as I said, you know, kind of reallythinking about what, what was it gonna mean? What was this new technology gonnamean for stories of value and transactions and transaction process? You know,as I mentioned, my partner, Mike Novogratz was, was kind of the guy who reallygot me, you know, excited and oriented in the space. Once I sort of started tolearn about it, you know, I, because I'm from MIT, you know, there's, there's alot of work that was done early days at MIT and so there were resources thereto, you know, to kind of dig in on, you know, done a bunch of reading. Youknow, I try to stay as curious as I can be. You know, as, as you know, there'san almost, there's an infinite amount of information you know, in this spacethat you can stay on top of, you know, I'd say like the Bankless guys are, aresome of my favorites in terms of just kind, you know, staying on top of what'shappening in the space. I try to be smart about looking around the corner andsort of seeing where things are going right. And. You know, what's the outcomeof the chain wars that I think we're sort of ultimately in. We are we moving toa multi chain world, what's the impact of the merge gonna be. I try to read asmuch as I possibly can. I try to talk to smart people just be humble about whatI don't know and figure out how I learn more.

Mike Townsend: Anyspecific things you're reading like sub stack or any Twitter accounts that youfind undervalued, worth mentioning?

Scott Lawin: I would,nothing I would say that is, you know, secret alpha. Right. I, you know, sure.I try to, I try to stay on top of, of Crypto Twitter and you know, I love theguys at a 16 Z and the stuff that they put out, whether it's on the podcast orwhether it's you know, the newsletters and so I try to be a Voyager across lotsof different sources and not just rely on one or.

Mike Townsend: Smart,smart. Scott, where are you online? We'll have all the links for, I likecandy.com. I was, I was doing a little homework on the the domain. I don't knowexactly how you guys acquired it, but I listened to a short podcast of the guywho sold it to the people who were building the candy company prior to, whichis that, is that the origin? Like, did it go, did it go like business idea,find a domain. This is available or did it go kind of serendipitously? Hey, wehave this available.

Scott Lawin: It wasno, it was you know, start the business you know, kind of put the visiontogether, started building the team and then really thinking about what did we,what were we gonna call the company? kind of thinking about, okay, as I saidearlier, like we, we didn't because we, because we're speaking to a non Cryptonative audience, We didn't necessarily want a, a bit or a Crypto you know orsomething that was too inaccessible for the everyday consumer in our name, wewere starting in the sports space, but we knew that we were gonna do stuff inentertainment and culture. We didn't want to have something that was completelysports focus. Along the lines of, you know, what, what are names that everyonerecognizes people have a positive association to, and can be kind of extensibleacross lots of different things. Candy came up on the list. And so, you know,we, we narrowed in on that and negotiated it and ended up getting that youknow, getting that domain.

Mike Townsend: Now,can you mention how much it was?

Scott Lawin: That Icannot.

Mike Townsend: Yeah.I'm guessing it wasn't cheap domain. Yeah, it is. It is a catchy one. I mean,I'll give you that it's worth it.

Scott Lawin: It costsmore than my, you know, than my ENS domain. I'll just tell you that. Leave itat that.

Mike Townsend: Yeah.Yeah. I think, I think I saw it traded for 3 million. The guy in the podcastmentioned that's what it was, the transaction was to the candy company, butthat was years ago. So yeah, domains aren't cheap, but. That's awesome. Any,any particular throw things you wanna throw out? Are you tweeting? Are youwriting personally? We'll have all the candy references,

Scott Lawin: I try tokeep people posted on what, what I'm doing on LinkedIn. You know, mainly, youknow, around, around the company, we, you know, we're active on, on Twitterprimarily. You know, I'd been probably less active. Putting my own sort ofgeneral thoughts out there around what's happening in the space. I need to geta little bit of breathing room to to spend a bit more time on that. I'm I'mless personally active on Twitter. I'd say, you know, LinkedIn tends to bewhere I, where I put my, my thoughts out there. Nice.

Mike Townsend: Scott,thanks so much for hopping on. I enjoyed the time. Congrats on everything.

Scott Lawin: Yeah.Likewise really enjoyed the conversation. Appreciate it, Mike.

Mike Townsend: Allright. Talk soon. Thanks.

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