Bored Apes Yacht Club: The monkey business behind the world's most expensive NFTs

2/15/2022

Celebs and NFT platforms sing the project's praises—while secretly pursuing their own interests

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Jimmy Fallon zeigt in seiner Tonight-Show ein Bild von Paris Hiltons "Bored Ape" (Quelle: "The Tonight Show Starring Jimmy Fallon" auf Youtube)
Table of contents
  1. BAYC drop was a flop
  2. Whales gonna Whale
  3. Ape flex with PFP
  4. Yuga Labs earns with each resale
  5. Why give away 100 valuable NFTs?
  6. NFTs are a hell of a drug
  7. NFTs was the case they gave me?
  8. Steph Curry inflates Google search
  9. Jimmy Fallon uses Moonpay
  10. NFT services crack the mainstream with celeb power
  11. Yuga Labs is worth billions

The Bored Ape Yacht Club has become one of the most-prestigious NFT projects on the planet. But what kind of tactics did it employ to tower above the millions of other not-really-dissimilar NFT collections? OMR cut through the monkey business and found companies pushing the project on the downlow—all in the pursuit of their own interests.

An exclusive club with a logo featuring a comic ape, membership perks like exclusive parties and members such as A-listers like Eminem, Snoop, Serena Williams, Gwyneth Paltrow and NBA star Steph Curry—if you’ve heard of the Bored Ape Yacht Club (BAYC) that description would seem more than apt.

BAYC drop was a flop

It’s been long road for BAYC to reach its current in-demand status. In April 2021, Yuga Labs, the company founded by two thirtysomethings behind the BAYC, releases 10,000 NFTs (If you’ve been living under a digital rock for the past year+ here is our detailed breakdown of WTF NFTs are) to attract NFT collectors. The pre-launch drop flops; only 650 BAYC NFTs are sold.

It’s not until the "reveal" and the official launch that two influential individuals from the crypto scene snatch up several BAYC NFTs and start banging the drum: NFT entrepreneur Jimmy McNelis aka "j1mmyeth" finds out about the BAYC from a tweet from an "Honorary Ape" (a  collection of 35 NFTs of special members, that Yuga Labs gifted to smaller-scale crypto influencers). McNelis buys 100, then 320 more, tweets repeatedly about it (at the time McNelis has followers in the low 5-figure range) and ends up elevating BAYC’s profile in the crypto scene.

Whales gonna Whale

While this is going on, McNelis recommends BAYC to a group of business associates in a private chat (listen to the exchange in the Gary Vaynerchuk podcast), including anonymous NFT collector "Pranksy." He gained notoriety in the scene as a collector of NBA Top Shot NFTs (Top Shots are video moments from the NBA packaged and dropped as digital trading cards). Pranksy is said to have turned a USD 600 investment into an NFT portfolio worth several million dollars.

There are divergent opinions about whales in NFT circles like Pranksy. On the one hand, they are admired for the success they’ve had. Even more, as they often purchase numerous NFTs from new collections, they help generate awareness and subsequent demand. On the other hand, some of these NFT whales have a reputation of being able to inflate prices and a collection’s value just through their name and social media reach—only to sell high and make bank. Smaller investors are then left holding the losses of a given project.

Ape flex with PFP

On May 1, 2021, Pranksy buys 250 BAYC NFTs and over the course of the coming hours expands his collection to a total of 1250. Just like McNelis, Pranksy tweets repeatedly about the purchases—at the time, Pranksy has nearly 50k followers on Twitter. These two "sweeps" unleash a snowball effect: interest in BAYC NFTs skyrockets, the message spreads rapidly on crypto Discord servers and the Bored Ape logo becomes a status symbol on crypto Twitter. It takes Yuga Labs fewer than 12 hours to sell out the entire collection—an estimated USD 2.8m in revenue for the company.

In an interview a week later, the BAYC founders confirm that McNelis and Pranksy were both instrumental in the success of the project. They underscored, however, that they had zero prior contact to the two NFT entrepreneurs—only after McNelis' initial purchase did the team send him a message thanking him.

Yuga Labs earns with each resale

In the months post-launch, McNelis and Pranksy continued to raise awareness for the BAYC—in their unofficial role as BAYC marketing ambassador to celebs, as well. In August, Pranksy, for example, sells a BAYC NFT to superstar DJ Steve Aoki, who tweets it out to his 8.2 Twitter followers. Two months before, in June, Pranksy sold Bored Apes to NBA players Josh Hart of the Portland Trail Blazers and Tyrese Haliburton of the Indiana Pacers. When the two teams meet in November 2021, Haliburton wears custom sneakers featuring his Ape, which leads to Hart taking to Twitter and pointing out that his Ape is better (because it has rarer attributes) than Haliburton’s.

These episodes further push the standing of the BAYC. At the same time selling BAYC NFTs figures to have made Pranksy several million dollars in profit. Yuga Labs also earns on these transactions.  According to multiple reports and social posts, the BAYC NFT smart contract includes a 2.5% commission for Yuga Labs on each subsequent sale.

Why give away 100 valuable NFTs?

McNelis also sells several of his Bored Apes – and at least one of them for an incredible sum of money. In October, one of his primates fetches USD 3.6m at a Sotheby's auction. But he also gives away 100 BAYC NFTs for free, as he disclosed in the Gary Vaynerchuk podcast. "Why? Because I can hack into people’s brains." He says that when he gives something to someone that he knows is going to increase in value, he basically plants an NFT virus in that person. He also gave Vaynerchuk five apes, as Gary V has confirmed.

McNelis is a serial entrepreneur in the NFT space: In 2020, he launched an NFT project under the name "Avastars," he runs the Tokensmart community and founded the company NFT42. One of the products of the service provider: Nameless, a service that lets brands and companies launch and manage NFT collections. Some of the first onboarded clients include Pranksy (who runs NFT subscription service NFTBoxes) and Vaynerchuk, who has his NFT collection and community Vee Friends. McNelis has a vested interest in promoting NFTs as a medium.

NFTs are a hell of a drug

During a panel discussion in November 2021 with Vaynerchuk as a part of the NFT.NYC event, McNelis draws an even more interesting description than planting a virus. When asked how to evangelize others about NFTs to others, McNelis said, "Give them a rising NFT. Give them an Open Sea account (an NFT marketplace editor’s note) and notifications so they can see the offers. It's their first hit of crack and they're hooked." Gary Vaynerchuk then cracks, “so you’re a drug dealer. But I agree with you!" Just 10 minutes before, Gary Vaynerchuk stated that carnage was imminent as so many people had invested their personal assets in NFTs and many would end up being worthless.

Nevertheless, he is a major player in the scene. In the past three years, Vaynerchuk has transitioned from an entrepreneur's guru and social media ambassador to a crypto bro. Not only does he have his own NFT community with "Vee Friends," but since July 2021 his company, Vaynermedia, also has a subsidiary, VaynerNFT, that helps brands enter the NFT space. Its first client: AB Inbev, owner of beer brand Budweiser.

NFTs was the case they gave me?

Vaynerchuk is not alone in his efforts to raise the mainstream profile of NFTs. Other celebs and well-known names from the US tech and entertainment scene are active participants as well. Jimmy McNelis is well connected to several of them. As he stated in the "Metaverse Podcast" (starting at 46:33), his NFT42 venture completed Seed funding in February 2021. Participants included Sound Ventures (the crypto fund of movie star and tech investor Ashton Kutcher and Guy Oseary, manager of U2 and Madonna), tech billionaire and owner of the Dallas Mavericks Marc Cuban, Salesforce founder Marc Benioff, Live Nation CEO Michael Rapino, Nick Adler (head of brand partnerships for Snoop) and Gary Vaynerchuk’s holding company Vaynerfund.

Oseary even took on a management role for Yuga Labs in October 2021. The NFT scene is closely knit—and the line between NFTs and the entertainment scene blurred. McNelis, for example, founded a virtual band, named Kingship, with four Apes from the Yuga Labs collection. The band is signed by 10:22, a new sublabel of Universal Music. Purchases of Bored Apes are also making more headlines. Some of the famous buyers, like NBA star LaMelo Ball from the Charlotte Hornets, use the purchases to plug their own NFT collections. It is what it is—never clear what’s done on conviction and what’s done in blatant self-interest.

Another example: When Justin Bieber posted a picture of a Bored Ape to his 220 million followers on Instagram in late January 2022, the entire world just assumed that the music superstar bought it himself. But it seems that the owner of the BAYC NFT is actually Bieber’s business partner Gianpiero D'Alessandro, designer for Bieber’s fashion line Drew House who recently released the NFT collection Inbetweeners, which Bieber has promoted as well. According to Coindesk, shortly thereafter “the InBetweeners Twitter account began gloating about how the (maybe) Bieber-owned NFT was inflating the price of [D’Alessandros] InBetweeners NFTs.

But probably the biggest awareness push for BAYC came from NBA superstar Steph Curry, who, as far as we can tell, has no vested interest. In August 2021, Curry bought a Bored Ape for USD 180,000 and uses it occasionally as his Twitter avatar (Curry has 15.5 million followers) and joined the BAYC Discord server for a quick chat. Both his celebrity and the price make headlines; the impact is also recorded by Google Trends, which registered a spike in searches for BAYC in the next week.

Jimmy Fallon uses Moonpay

After all of these events helped advance the BAYC brand beyond crypto circles, the project then reached the next level: Infrastructure platforms from the crypto and NFT space begin piggybacking off the brand’s mainstream status to indirectly market themselves. Crypto payment service Moonpay especially has profited from the practice. In December 2021, it sponsored "Ape Fest," an exclusive party for the BAYC community in New York, where, among others, rapper Lil Baby performed.

A month before, during an interview with NFT artists Mike “Beeple” Winkelmann, late-night host Jimmy Fallon announced that he had purchased his own "Bored Ape" —thanks to  Moonpay, "which is like Paypal, but for crypto." In November, clips of a “Mutant Ape” that Lil Baby acquired using Moonpay went viral on Tiktok. Then there is rapper Post Malone whose song "One Right Now," which has 44.6m views on Youtube, shows him using Moonpay to buy a Bored Ape right at the start of the video. He also posted screenshots of it on Instagram and Twitter and tagged the company.

NFT services crack the mainstream with celeb power

"As we strive for mass adoption, we understand that big splashes can go a long way in providing visibility for those outside the crypto space," writes Corey Barchat on the Moonpay blog. " This level of exposure can only happen with Bored Apes."

Moonpay has continued the practice. In late December, Snoop announces on Twitter that he bought a "Bored Ape," "Mutant Ape" and Bored Ape Kennel Club NFT. In a follow-up tweet,  he thanks both Moonpay and Jimmy McNelis, who sold him NFTs. The celebrity NFT Moonpay boom reached its climax, so far at least, in late January when Paris Hilton and Jimmy Fallon showed each other their apes during Fallon’s show—again thanking Moonpay. A video of the cringy scene went viral.

Yuga Labs is worth billions

US journalist Max Read made an attempt to map the "NFT Celebrity Complex." He speculates that Creative Artists Agency (CAA) might be instructing its clients to push NFTs, because CAA is an investor in NFT marketplace Open Sea—the most-important platform in the space at the present and who earns a commission on every transaction. CAA represents stars Ashton Kutcher and Jimmy Fallon, as well as "Jenkins the Valet," a fictitious BAYC NFT character, who is set to release an autobiography, and NFT collector 0x1b, who owns Bored and Mutant Ape NFTs as well.

Yuga Labs, the company behind the BAYC figures to have generated a massive amount of revenue with the project. In addition to the USD 2.8m of Bored Apes and the USD 90m from Mutant Ape sales, there are commissions on resales. Estimates made by Cryptoslam on BAYC- and MAYC NFTs including the secondary markets put the total revenue at USD 2.17b. For Yuga Labs, that could mean an additional USD 54m in revenue from commission. According to the Financial Times, the company is in negotiations with the most well-known US VC venture Andreessen Horowitz about a possible investment, based on a valuation between 4 and 5 billion dollars.

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