Last month, a JWS column explained why Big3’s plan to decentralize sports team ownership was different—and frankly, more exciting—than any previous endeavor hatched. The league is giving Fire-tier token-holders premium seats to every game, the option to monetize team IP, voting rights and the opportunity to participate in the financial upside if/when the club is sold.
In the weeks since, the 3-on-3 basketball league, co-founded by the rapper Ice Cube, has announced DeGods (the Solana blockchain’s largest NFT community), Gary Vaynerchuk (creator, VeeFriends), Kevin Rose (founder, Proof Collective, the group behind Moonbirds) and Bill Lee (co-founder, Craft Ventures) are all buying teams. Rose is partnering with tech entrepreneurs Sunny Madra and Vinny Lingham. Snoop Dogg and Ken Howery (co-founder, PayPal) also bought a team. While it may seem curious that groups and individuals betting on Web3 success are buying NFTs for the real-world access and assets they come with, Lee explained that “NFTs with utility are [actually] the next frontier. What Ice Cube is really doing is bringing the power of Web3 to the Big3. [He] is making it so that any developer, team owner, sponsor, or even fan can create unique experiences and rewards for NFT holders.”
JWS’ Take: Lee has long been an advocate for NFTs. But last week’s crypto sell-off only served to strengthen his belief that while “people love speculation, and crypto may just run again,” he does not think it can “be sustainable unless it involves utility.”
He was an early investor in OpenSea and in RTFKT, the virtual sneaker maker acquired by Nike, and he has shares of NFT artwork. Yet he sees “most NFT .jpeg [projects] as speculation,” and says people will eventually “figure out instead of buying apes and owls that this [kind of utility] is the real potential of Web3.” Apes refer to the images associated with Bored Ape Yacht Club, and owls are depicted in the Moonbirds project.
There is a place for digital art collection and price speculation. But the venture capitalist believes the crypto industry, in general, must evolve into more than just gambling and staking to support the hefty valuations of cryptocurrencies. “You aren’t going to support multi-billion dollar valuations on things like BAYC/Apecoin solely on day trading, yield farming and speculation. I just [cannot] see these valuations sustaining unless they [begin to] offer real use cases such as what the Big3 is [doing].”
Much of the conversation pertaining to NFT utility within sports has a gaming or daily fantasy slant to it. While Lee agrees there is likely space for that kind of application, “That is still like crypto v.1,” he said. “When I think about Web3, I am thinking more about real utility. Things just like [Big3] where you get access to the games and [are able] to help influence what the team is going to do.” That includes voting on a buyout offer.
The new club owners may be betting on Web3 success. But as Lee noted, “There is no wager here.” The beauty of the Big3 offering is the league can deliver the benefits that come with token ownership to token holders with technology that exists today (think: ability to scan NFT for entry to venue). “Few people understand that NFTs are really programmable membership benefits.”
That is different than many of the metaverse-related projects investors are pouring money into. Lee did not want to refer to those investments—including his in The Sandbox—as a gamble because he does believe the Ready Player One vision people have for the metaverse will arrive in time. But he acknowledges that it remains “years away.”
“If you look at DAU, daily active users across the metaverse, it is miniscule, non-existent,” he said.
Lee bought Big3 Fire-tier NFTs for the access and assets they come with. (“I invest in my passions. At the end of the day, I want to go to the games,” he said.) But said he won’t be upset if his investment in the club secondarily helps to create a use case for Dogecoin and leads to further adoption of the cryptocurrency. Lee—the founding chairman of MyDoge, a “self-custodial wallet” that facilitates Doge transactions—believes Dogecoin can evolve into a digital tipping currency and can envision supporters of the team “giving Doge” to players and coaches as a reward for their performance. High gas fees (think: blockchain transaction fees) prevent Bitcoin and Etherium from being used in tipping.
There is reason to believe the “Doge army” will support the Aliens and Big3. “Billy Marcus, the co-founder of Doge, is already tweeting about [the tie-up] … and people are already throwing tips—Dogecoin—at Big3 and [Ice] Cube. This all just started happening [when Lee sent Ice Cube the tweet]. There was zero coordination,” Lee said.
And if the Doge army does embrace the Aliens, there are enough of them to move the needle for the league. “Last year, 60% of Robinhood’s quarterly profits, quarterly revenue from cryptocurrency trading, was Dogecoin [related] … So, you have this violent Doge army that exists. We wanted to give them something to do besides speculate on the price,” Lee said.
Utility looks to be even more important in the wake of the recent crypto crash. The price of Dogecoin fell more than 26% last week (it was at $.09 as of Friday evening).