Kevin Rose might be a Silicon Valley cowboy, one with a keen eye for discovering uncultivated cool and then the guts to cultivate those ideas until a seed bears fruit. He’s been that way since the pre-Big Tech days. In 2004, Rose founded Digg, a sort of Reddit precursor which attracted millions of monthly users and helped catalyze the ethos of early Web 2.0. Rose went on to play his skills via a number of entrepreneurial projects and a successful investing career, always on a quest to find his next Web 2.0. During the pandemic, he found it.
Rose quickly became one of the most esteemed leaders in the corner of crypto and Web3 dominated by non-fungible tokens (NFTs). He added “art connoisseur” to his résumé by cofounding an NFT collective dubbed Proof, based on the idea that “art is proof of our collective humanity.” Token-gated with a membership NFT (which looks like a virtual credit card), Proof invented new ways to exhibit fine art.
In March 2022, it launched its first series, Grails, which let members blindly mint 1 of 20 NFTs for free—they could see the artwork, but knew nothing about who created it. Those unnamed NFTs turned out to be exclusive works by kings of crypto, including Gary Vaynerchuk, Mike Shinoda, Gremplin, and Reddit cofounder Alexis Ohanian—Rose’s former rival in the social media wars, turned ally in the crusade to evangelize crypto.
A month later, Proof launched its flagship profile picture (PFP) collection, Moonbirds: 10,000 unique, pixelated owls wearing witch hats, monocles, and astronaut helmets. Within a week, the NFTs were trading at over $100,000 each on average—with one selling for $1 million. “It absolutely exploded,” Rose tells me when we chat in July. “In retrospect, I wish it would’ve gone a little slower, because we got out of control. We were so busy putting out fires and running around.”
Then came the crypto market crashes, and things slowed way down. NFTs sales fell by over 80% year-over-year in January, and Moonbirds shed 95% of its value from peak prices. Proof nearly lost 50% of its holdings when Silicon Valley Bank collapsed, and it scrapped long-gestating plans for an ambitious metaverse called HighRise.
But that hasn’t stopped Rose. In the dead of crypto winter, Proof is releasing yet another NFT series, Mythics—an expansion of the Moonbirds universe. En route to the Los Angeles launch party, Rose caught up with Fast Company on why he’s still a believer.
Fast Company: Congrats on Mythics! What inspired the project?
Kevin Rose: PFPs can be very expensive—to the tune of thousands or tens of thousands of dollars—and we wanted something with a lower price point. We also wanted a higher-fidelity collection that wasn’t pixel art. We ended up hiring illustrators who were ex-Pixar. When we thought about what the followup to Moonbirds means for us, we circled around to what we’re going through as a team, and this idea of “fear, uncertainty, and doubt” that creeps up. We call it “the dread” in our lore.
FC: Fear, uncertainty, doubt—FUD, right? Is there a lot of that now?
KR: There are a lot of founders in the PFP space who are saying, “Hey, we’re having a hard time here mentally.” Twitter is filled with personalities who are in the NFT world for different reasons: They come out of the woodwork and turn against you very quickly. Projects can be attacked for slight missteps, and that’s your life’s work. It’s hard to wake up every morning and jump up from bed with excitement when there’s pitchforks out.
FC: You mention many different personalities in the NFT world. Who do you see buying NFTs today and why?
KR: There are people who are serious art collectors who believe in the future of digital art, and then you have people who treat NFTs as high-frequency trading objects to make a quick buck. Low-fee marketplaces like Blur have gamified the trading, so you have people hoarding NFTs to earn points, which really messes with the ecosystem.
You don’t see this happening as much at the high-end art level. If you were talking about a Fidenza from Tyler Hobbs—it’s like $100,000-plus—that’s not happening. But a lot of PFPs implode with this type of trading, because big whales that are playing the game can dump dozens of these PFPs all at once, and it completely decimates the floor price of a project. A lot of collectors worry about buying, because that’s in the back of their heads. There’s a paralysis that takes place.
FC: How has this financialization of NFTs shaped the trajectory of the industry? What about Proof?
KR: When times were good and everything was up and to the right, nobody was pissed, and there was not a lot of question about purpose behind these collections. It was like, “Okay, cute art. I vibe with this community.” But in the last three-to-six months, as things are down and prices are falling, they’re asking, “Why should we exist?” For Yuga Labs, it’s saying, “We’re all about gaming and the next metaverse and that’s our true North.” Doodles said, “We’re about embracing kids and a family-friendly brand.” Pudgy Penguins said, “We’re about toys and creating plushies.”
For Proof, we’re about the intersection of art and collectors, and embracing movements like AI art and generative art—like how you can press a button and get your own unique piece of artwork from an algorithm, and all these new paradigms popping up. If you have a Moonbird, you have a front-row seat. We do a lot of art drops. Last year, we paid over $1 million to artists to get them to mint art for our community. We’re launching this new space called the Foundry that’s gonna have an enrollment process, classes, speakers—almost like a Y Combinator for artists.
FC: Are NFTs securities?
KR: I think it’s silly to call NFTs securities. When you think about traditional art today, if I own a Picasso, I can get loans against that art from major auction houses. I can put it into a trust and have fractional owners. But when you apply that to the digital world, people tend to get worried even though this already exists. When I’m buying a Tyler Hobbs, I’m buying it to hold for decades, because it’s a beautiful piece of art. Not because it’s some type of currency.
FC: Proof celebrates artwork with NFTs, but some have questioned how well the industry incentivizes artists. In particular, enforcement of creator royalties has been fraught. What do you make of that?
KR: You can punch back at royalty-free marketplaces with code, but it’s a little bit of a whack-a-mole. There’s not really an elegant solution. It reminds me of the music industry, in the sense that you’ve got artists experimenting with monetization. Some people tour, and some offer physical pieces with their NFTs that sell for six figures.
But I don’t think 10% royalties, like some artists have enabled, will be acceptable. When collectors are comfortable with something that seems more fair, there will be less people trying to find ways around it. With Moonbirds, some people are selling them for a profit, but some people are underwater. If you’re underwater, why would I ever want to charge a consumer like that? This is insane to me. I would never want to kick someone while they’re down. Our collection is not on a royalty-enforcing contract.
FC: It’s no secret that crypto markets have cratered. How do you think about the reality that there’s less money in the space?
KR: I’ve been in crypto since 2011, and I’ve gone through this cycle with enough cheese one prior time. There was zero skill involved in this, but I minted some of the early CryptoPunks back in the day for free. I had 10 of them and they sat in my wallet for years, worth $75 or something. It was one of those things where there was a bunch of hype at first, then it completely busts, and it’s a couple years of just nothing.
Then years later, you had launches of marketplaces that really put emphasis on art, like SuperRare, and a new spark happened. A month ago, Sotheby’s sold that goose for $6 million. You’ve still got generative art going for multi-millions of dollars for some of the best pieces. When I meet with various galleries like Pace, they see the trading side of NFTs as just a distraction. They’re like, “I’m buying blue-chip artists, putting them in a vault, and forgetting about them for the next couple decades.”
FC: So, it comes and goes in cycles. How down is this down cycle?
KR: This is just back-of-the-napkin estimates, but let’s call it 7,000 unique wallets are actually buying and creating NFTs. It’s true that right now, the majority of trades are on Blur, and 70% of the volume is just high-frequency trading. People who are actually buying blue-chip artists is obviously a very small subset of that 7,000. So, it’s a really small community. But three, four years from now, it’ll rush back and reach new highs. It’s gonna be bumpy as hell, but we’ll have to see this cycle happen four or five times until people finally wake up and realize this wasn’t just a fad.
FC: You had a hotly anticipated Proof conference scheduled this spring, but canceled a few months out. Was that a consequence of crypto winter?
KR: We’re building to the state of the union, and there’s no reason to be hosting a 4,000-plus person conference when there’s less eyeballs. We were kind of reading the tea leaves of the time and said, “Hey, let’s not waste capital on this.” We’d rather go into conservation mode so we have runway for many years to come, and we can continue to build, heads down.
FC: In January, you made headlines when you fell victim to a phishing scam that cost you $1.4 million in Chromie Squiggles, Cool Cats, and other NFTs. Did that shift your view on crypto’s decentralization at all?
KR: It was a portion of my collection, and I actually feel very grateful. I come from this place of abundance in my life. But there’s a time when I had zero dollars my bank account and had my car repossessed in my early 20s. So, the fact that I even had those NFTs to lose is a blessing. I don’t know that I really cared that much.
FC: What’s it going to take to bring crypto back into the mainstream?
KR: When it happens, the fact that things are NFTs won’t be the main selling point. It won’t be that geeky. You won’t need to know what gas fees are, or which blockchain they’re on. It’ll just work. When I’m doing any number of activities online, I’m not asking, “Hey, is Oracle or Microsoft powering this database?” That, to me, is the math on the consumer tipping point.
FC: Historically, you’ve always had a finger on the pulse of what’s cool in popular culture. Are you exploring other spaces now that hype has moved from crypto to artificial intelligence?
KR: Sometimes it’s best to be hunting where nobody else is looking. In AI, the valuations are insane and people are paying up in multiples. It’s clearly in full-blown hype cycle. That said, there’s massive opportunity on that side of the house. I was on a phone call with a longevity company: They’ve got a pretty interesting take on ways to address some diseases like Alzheimer’s with AI. Drug discovery is gonna be huge. I spend a lot of my time on health and wellness. I also think AI is gonna be great for weird things, even relationships with AI: Her is gonna be a real thing. I probably look at two or three deals a month, more like opportunistic investing. AI is a very crowded space, but it’s like, “Can I find the thing that’s high risk and high reward”? Not many people can.
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