PROOF & Moonbirds with Kevin Rose & Co-Founders | Overpriced JPEGs #25

Hello everyone, GM GM. Welcome back to another episode of Overpriced JPEGs. This is a very special episode because it is another one in person in a studio here in New York City and I am joined by three very special people. We've got Kevin Rose, Justin Mezzell. Did I get that right?

You got it really right.

I thought I was going to mess it up, maybe better than I've ever said it. Beautiful. And Ryan Carson. Ryan! And I'm Carly Riley. No, we're joking earlier. Okay, thank you guys so much for being here. GM GM GM GM. Just fresh off the plane for some of you and Ryan, you took the train in.

The train. I'm the poor guy.

Just proximity, close. Really all it is. Okay, I want to start by just orienting. Probably Kevin will start with you. We're obviously going to talk about Moonbirds here, that's why we're here, but we're going to go a bunch of different places. So you have this, you know, long history. You started a bunch of companies, sold a bunch of companies, done the venture thing, and then a year ago or so you start Modern Finance, the podcast, right? Do I have that right?

Okay, what made you launch Modern Finance?

So did you see that coming? Like, from how far away did you kind of see the NFT smart contract thing popping off? Because you're known for like seeing the future a little bit.

And were you at True Ventures at the time? What were you in your career when you launched Modern Finance?

Okay, awesome. And then so walk me through now getting to Proof Collective and the decision to move from just these podcast content you're putting out to a brand. What would you call Proof Collective at this point?

And you're Kevin Rose.

Okay, I'm going to bring you two in in just a second, but I want to follow up on that. Was Flamingo where you were first? How were you individually combing through all of the space to decide what you were bringing to your listeners?

Exactly. Yeah, for a year. What are you talking about? Okay, so that's the origin story for Proof Collective. Okay, want to start bringing this alpha, can we use that word, to a group of my early diehards. I don't know, I feel like I'm probably not characterizing this perfectly.

So that was literally going to be my next question. Now connect the dots for me. Y'all's perspective on how this happened. Justin, starting with you, how did you get involved here?

I was coming home from a vacation with my kids. We were on spring break, and I think I got a DM from Kevin Rose. He was just like, 'Hey, I like your work. Do you want to work on something?' It was Kevin Rose, so I was like, 'Okay, yeah, what are you working on?' He's like, 'Let's just hop on a call.' I was like, 'Am I being scammed?' Checking, like, when he's like, 'How about now,' I sent him seven ETH. I did scam him. Which honestly was a great lesson to learn. He learned the hard way. He never gave it back, but at the same time, fees. So we're working on it. When I kind of came on board, it was just kind of working on the podcast. He had some ideas about some of the visuals. At first, we were kind of rotating on these really 80s synth wave kind of fun stuff. Then we talked about when Proof was launching, what does it look like to build a brand that allows other people's artwork to really, we're giving the platform to that. It's not all about Proof being this loud big thing.

Are you describing right now like the thumbnail for the podcast and the website? Are those the two big design pieces?

In terms of our brand at the time, yeah. It was very much like we have a masthead or a logo type identity, and then thinking about how that plays with some of the artwork we're doing. Obviously, we're in an audio format, which I know, and describing these JPEGs is a little hard. So we knew that there were going to be brand extensions at some point outside of it, whether it was pursuing more of an editorial route. Kevin had also at the same time started taking a lot of the guests that had been on the show and was running this Discord of artists too. It was really neat to see artists that I've watched in the space just talking every day about what's going on in their life, and sometimes they're sharing about their drops. That was one of the cool things too with Collective that we had. There was already this amazing community of artists that existed, and now we're adding more people from the Collective to talk to them and ask questions and see when something is going to drop. They're posting in there like, 'Hey, I've got this kind of coming out.' So it was a really neat blend with Kevin's product thinking about seeing, okay, there's something going on here with how people are looking at the NFTs and how Proof is growing, and taking that and being like, 'We could grow community around this appreciation around people that are excited about collecting.' Since then, it's just kind of done what it's done. You've accepted the ETH loss, etc. I don't bring it up anymore.

What were you drawn to in Justin's work that made you be like, 'This is who I want'?

It's just running the gamut. I started off in editorial design doing magazine design, then I was working at an agency doing branding design, and from there I broke off and did illustration work and just worked for a bunch of companies contracting with them. I started off with the PayPal illustration system, then I went to Twitter, then worked with Google. As I was doing their illustration teams, I was like, 'How, where are you guys using these things?' I wanted to learn how product was being developed, how do you decide where illustrations go. Then it was doing product work, and after that running product departments. I've just gone all over design. What's been really fun about Proof and originally Modern Finance is we get to start with a brand or an identity, but it evolves into all of these extensions through a ton of different mediums. That's the way it feels today. Proof, it's like, sometimes I'm working on Moonbirds, sometimes I'm working on some of our brand stuff, sometimes I'm working on some of the podcast stuff. We have so many ways to visualize what it is we do. Sometimes we take a front seat, it's all about Proof. Sometimes we're in the back seat and it's about the other artwork. You can flex a lot of muscles.

Okay, we're going to pause there. Ryan, your piece in this. Tell us, I know you and Kevin go way back- one of the fun things when I have guests on that I like and that I want to listen to, I get to go back into the archives and listen. I listened to a conversation with the two of you from like four years ago. So tell us how you got involved here.

I used to run a conference called Future of Web Apps. Way back in 2006, we were doing an event in San Francisco and Digg was big around that time. It was like, clearly we need to get Kevin on stage. So we met for the first time on stage, right backstage right before he was going on. It was just kind of weird. We're the same age, we both studied computer science, just like a ton of weird similarities. We just kind of hit it off and became friends. He spoke at every Future of Web Apps. The London one was great. He threw the best conferences back then. I learned that was Gary Vee's start too. We had a blast in London. I'm just a big believer in human relationships IRL. There's just so much value in getting people together. I was doing conferences, and Kevin and I became friends. Then at some point, it was like, 'Well, if we really want to empower people, doing conferences isn't the best way to do it. We need to teach code online. Let's just teach people how to code online.' So we launched Treehouse, sold the events business. Then I was doing my earnout, and Kevin spoke for me in LA, no, it was Vegas. I was like, 'Hey Kevin, check out the spreadsheet.' I was like, 'This Treehouse thing is really growing a lot.' He said, 'I want to invest in that.' I was like, 'Oh, I don't know how to do that, let me go read a book.' I literally read a book by Brad Feld, you know, his classic how to not get hurt by investors book. I thought about it and after a while I was like, 'All right, let's do it.' So Kevin was my first investor in Treehouse, and that was a decade ago. We've just been friends forever. Both lived in Portland at some point. Then he kept pinging me about this podcast because in 2021, I began to get inbound acquisition offers on Treehouse. I was like, 'Okay, I think we're going to sell.' He's like, 'You should listen to my podcast.' I'm like, 'Okay, fine.' I listened to the first episode of MoFi, which I think was DCInvestor. Then I first listened to all the MoFi episodes. I love DeFi, so that was kind of fun. I was learning how Ethereum works and all these things. Then Kevin integrated the Proof podcast, and I was like, 'Oh, NFTs.' I'll never forget, I was driving and I was listening to DCInvestor talk about NFTs and I had to pull the car over because I was like, 'Oh my God.'

Why did you have to pull the car over?

Well, you know, I'm so excited I might crash this vehicle, throw up or something, I just can't control it. My brain, I couldn't focus on driving. It was like my brain was processing, 'This is literally going to change the fabric of society.' That's amazing. I've never had to pull the car over. I just sat there and listened to it. I was like, 'Okay, you can burn NFTs, you can...' It just blew my mind. I was like, 'This is so interesting.' I remember you, Kevin, hit me up and you were like, 'You don't understand.' I'm like, 'No, I do. That's why I'm doing this.' You were like, 'No, it's just going to be-' He was going over the top so excited. He was losing his mind. I was selling my company, it was just very busy doing all that. So eventually, I listened to every single episode of Proof. Then Kevin had told me, 'We're going to do a thing. It's going to be a thing.' Then it was announced. Treehouse was bought in December. I decided, actually in New York, I was having breakfast with my wife and it was minting day. I was like, 'I think I'm going to get a Proof Pass.' I was talking to my wife about it because I thought it was going to be 5 ETH, so I was like, 'That's a decent investment.' You've got to talk to your wife about that stuff. She's like, 'We should do it.' I'm like, 'Yeah, there's going to be smart people in this group.' I was going to retire at that point, so I just thought it'd be fun to be in this group. I just got sucked in. The Proof Discord is just so fun. I mean, for 50 ETH the Proof Discord- I have like inappropriate jokes I want to make about what must be happening in the Proof Discord. Very good, 50 ETH to get in early. You knew it was a good community. I got in there. I was just a Proof member. I wasn't the COO. I was just in there learning how to use Discord. It's a good question what's going on there. Discord for 50? I mean, at some point I was just reading Discord all day and my wife is like, 'What are you doing?' I'm like, 'I think I'm obsessed. I think I'm down the rabbit hole.' Then I woke up one morning and I was like, 'Honey, I think I want this to be my job. What would you think if I went to Kevin and asked to work for him?' I remember when you hit me up and I was like, 'You want to be a moderator?' I was like, 'Dude, you're the CEO. You sold the company. You're retired. You want to be a moderator?' But it was a little bit like you were like, 'I love this Discord so much, I want to be involved.' I'm like, 'What does he want?' He's like, 'You're overqualified.' I was like, 'No, no, no, I want to be your COO. I want to run your company.' Then he's like, 'Okay.' Then you two obviously had a conversation. He's like, 'You got to talk to Justin.' Justin and I hit it off like soul brothers, just true. We have all these hilarious conversations and here we are.

So at this point, is it the three of you full time?

It's the three of you?

You want to announce it? I mean, we can do that now or do you want to?

Well, congratulations to all of you. Seems like a win. Do you want to come say hi to YouTube or something? I know podcasters won't be able to hear it, but say hi to Ryan, Melting Ice on Twitter. That's awesome. This is the second episode I've had where somebody's made a big engineering announcement on this show. Doodles' Jordan Castro announced that. So this is, we're becoming the place for this. I'm so glad this happened.

Well, and I know it's something you've talked about with Moonbirds, which we should get to because I have some other bigger picture questions I want to ask. I'm cognizant of time here. I know you've talked about having a panel of folks who have been helping advise on Moonbirds where diversity has been super important and super helpful. I don't know if you want to say anything on that or I'll just start diving in with questions about Moonbirds.

And it felt important because a PFP is still a PFP I'm sure to a lot of people, but in the Web3 space, it is becoming a part of identity. People are building brands around it and they're being recognized by their PFP. As low table stakes as it might seem, it's also really important and it can be a real powerful piece. We thought it must be really difficult to see the same collections rehashing the same traits, the same ideas, and every time a new collection comes out to say like, 'I don't see myself there. I don't see myself here.' When it came to Moonbirds, it was really important to try to think about that through the lens of how can we make sure somebody who hasn't seen themselves somewhere else says, 'Finally, this feels like something or an individual that I'm proud to represent as my identity.'

In case anybody who's listening has missed this, I'll give the context which is why this is so important. You all are saying this is the first PFP, and I don't know, only PFP drop you all tell me, that is coming out of the Proof Collective. You started with these membership passes and we've been on Twitter Spaces talking about this and on podcasts. I don't want to rehash things that can be found in a couple of other places, but the Proof membership pass, beautiful art, not a good PFP. This was your way to sort of forge right into that. Let this be something that folks can use to socially signal to say they're a part of this group, and that's what's landed us here, right?

I would love that. I know I heard you mention somewhere like a mobile app that can easily make this an access pass to IRL events. It seems like there's a lot of blending of IRL and metaverse, and we'll talk about that. But if any of you want to chime in on what that might look like.

I think we have an amazing community number one in Collective. Now it's going to expand to an extra 8,000 people. We have this amazing group of holders that we can just reward and reward and reward with interesting things. We've got this idea of nesting. This is cool. There are just so many permutations of fun value that we can drop into our amazing holders and reward them for being a part of the community. We have a long time to do that. We're really excited about that.

It is stunning this hasn't been done before given all of the talk around community and how every project claims that's what they're about.

It's a great question. So Proof Collective has always been about the most hardcore NFT collectors. It's a thousand members in total. They get the research reports, almost like Forrester level, like if you're familiar with the old stock market world, the really deep PDFs explaining to you why you should care about a project. So it's our curation with a point of view. It's podcasts released early before anybody else. It's that private Discord of only a thousand members. So the Moonbird holders are not allowed into that Discord. It's for the hardcore collectors and that will always remain to be that separate entity. The Moonbirds are more about in real life having fun, unlocking physical and digital things as well. Some of that will spill over. Some of the benefits that we offer to the Proof Collective will spill over into the actual Moonbirds, but there'll be other unique things that we do for that community that are just different. I'll give you an example, and this isn't one that we have to offer, but it's an example of how we're thinking. We have a little Moonbird that has a little space helmet on it. There's probably going to be 100, 150 of those. There is a world where we take an attribute combined with the nesting time and we tie it to something that you can do. In this example, we know people that work at SpaceX, so we do a SpaceX tour every year for the people that have that particular attribute. So you can think about attributes actually being used in the reward system as well. We have a Moonbird that's going to have a little grail on top of its head. We have all kinds of things like that. We have one that's glitch, looks like a little glitch type thing, and you can imagine we have certain glitch artists that we know that would play into some of that type of airdrop mechanic. So it's really having fun. Moonbirds is all about having fun. And then it all ties back to Proof of Conference, which is our big yearly conference that's launching next year, that's going to be a multi-thousand person event. We'll have all the Moonbird holders and Proof Collective all come together for that. Great speakers, and of course we got the best person in the world to throw those events right here. It's going to be fun. It'll be the best NFT conference in the world. I mean it's going to be a blast.

Can you say more about what Highrise and your metaverse will be, since we have a sense of what it won't be?

All right, I'm in. I'll come. I'm intrigued.

I think this team has the credibility that you guys can do that because you have a public enough platform to signal that that's what you're doing. So like, 'Hey, don't take this as the final version of what all this will be.' You can signal that properly.

It's when you go into some of these metaverses, I'm sure you've done this too, you look around and you're like, 'What is happening here?' They're like these empty things. You can literally run in the woods in Central for a while. You can get lost. There's no purpose outside of an NFT gallery show or something which makes sense.

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Do you all really not think this is going to sell out at 2.5 ETH? I'll give a little context before you guys answer that. The mechanism here is a Dutch auction. That's how you did Proof Collective. Ryan, you made reference earlier to the fact that you thought it was going to sell out at 5 ETH. I think it ended up selling out Proof Collective Dutch auction at 1 ETH. This Dutch auction will be starting at 2.5 ETH. You've sat on a couple Twitter spaces, you don't expect it to sell out. The momentum question is really no. Like real talk, a lot of momentum has gained since then and so I don't know. We'll see.

I can say one thing. No matter what it sells out at, people should know that 100% of this capital is going back into building. It goes back into the company, not into our pockets. None of us walk away with anything from the bag and go do something with it. It's all going right back into how we're building and how we're structuring. I think that is a key difference. We're not building a project just to collect money and then figure out what to do with it. We want to build a lasting company that stays around and used to make incredible products across Web3.

So how does building a company in the Web3 space feel different from building it in the Web2 space? I have even more specific questions on that, but let's start broad and see where you guys go.

It's so much more fun. I mean, oh my God, to have a community that just loves your product and is your biggest fans and is involved in the success of it.

Let me ask you about the flip side of that. I think about what you guys are doing. You have a little bit of venture money, I know, and then you're putting all that's coming from the community back in. Where my head goes is, 'Oh my God, all the stakeholders.' It feels like it's scarier because you have the Proof Collective community, now you're going to have the Moonbirds community, you have your venture community. Does that scare y'all at all?

There's just so many people that now expect something from you and want you to drive value. The venture company wants to continue to mark it up in their books and the community wants the value. I guess these all work in alignment.

This is something I was going to ask about because Proof Collective was very stealth. It felt like I was vaguely aware of it but I can't believe I wasn't more aware of it given I listen to your show. How has it changed this time around? Now it feels like it's overkill.

Hilarious. I mean people said nobody knows about Moonbirds. I'm in all these Discords and literally nobody knows. People don't even know who Proof is. And then we said, 'Okay, just wait.' We did one Twitter space and Kevin has 1.6 million followers. I was like, 'Kevin, we got to spin it up from your account. Let's go and let's just talk about the project.' During the Twitter space we started to see Proof passes fly and it's like, 'Oh that's cool.' We don't talk about floor, we talk about quality, but that was fun. Then all of a sudden everyone came back and said, 'Oh my God, everyone's talking about Moonbirds.' I was like, 'Cool, well we're going to continue the plan. I've got us booked in these shows. Let's go.' We got accused today of buying bots for our Moonbirds. There was somebody who was like, 'I don't know, this looks really fishy.' It was like 1,500 not like two Mondays or something like that and then now 50. We broke 60k just today. People are now scared that it's going to be a massive gas war. That's fair, probably will be.

I love that you guys made the decision not to do an allow list. I thought that was really smart because I feel like the initial conception of allow list was around to avoid gas wars, but then in theory the Dutch auction is supposed to avoid the gas war. So it's like, 'Okay cool, they're doing the Dutch auction that avoids the gas war, not doing an allow list because if you're doing an allow list for any reason other than the gas war reason, it really does just become an insider's club.' I think not doing it is super smart. But now I'm like, 'Well now I feel like we're back to the gas war.'

Okay, a couple bigger picture questions. I want to have you all back individually at some point so I can really dive deep with you guys because there's so much I think you can bring in terms of wisdom in general. You've been talking about community, Ryan. One thing I thought was fascinating in an interview I heard you do with Kevin many years ago was at Treehouse you experimented with a no hierarchy thing. It sounded essentially like a DAO. To the point you had software, you had built products to make this work. I want you to talk about your experience with that because I think it's very interesting.

The thought was, 'Why do you need managers? People are smart, people work hard. So let's remove all the managers.' We did that. If you hire good people, they'll be motivated.

You were following a book though, right? Wasn't there a book that was written on this?

Oh yeah. I think Tony Hsieh, yeah Tony was doing it first at Zappos. I'm pretty sure I got the idea from him. I was like, 'Yeah this makes sense. I inherently believe people are good.' So we announced it to the company and said, 'Okay, we're going to remove all the managers. Don't worry, you managers are going to stay, you just go back to being ICs.' We were probably like 100 people at this point. We built a piece of software called Convoy which was basically Reddit. The idea was you make a proposal and you'd talk about the resources you need and people would vote. What got voted got done. It was a disaster. It was fun for like a month and then I was like, 'Oh my God, I can't control the company. We can't do anything. We can't get anything done.' It turns out the popular forceful people control things anyway because they influence everybody. So we unwound it.

So how does that influence your feeling or opinions on DAOs?

Well I think we all believe in strong opinionated leadership. I'm not super bullish on DAOs running things quickly. But you're in Flamingo, so yeah I'm in a handful of them. I would say that when it comes to having very smart, motivated, financially committed people to these investment DAOs, they tend to bring their A game when they come and bring ideas to the table. I think DAOs have to be very careful about who they vote in to that community or who they allow into that community because it's almost like you're only as good as your weakest loudest link. In Flamingo's case, it is the most hardcore kind of investor in NFT collectors that I've seen in terms of financial doubt that's been put together. There's over a billion dollars of NFTs under management at Flamingo and they've run a very tight ship. But there's two people at the top there, Aaron and Pre, that kind of orchestrate everything. So still, there's voting on should we buy this NFT or not, or a collection of this NFT, or the allocation of these NFTs, but there's still someone making sure. The way I like to think of it is it's almost like the kids bowling alley when they flip up the little paddles on the side. The ball makes it all the way through the end, it's going to bounce around a lot as it's going down the alleyway, but it always makes it through to the right spot. That's kind of what you have going on. There are examples of centralized leadership. The iPhone would have never been the iPhone had it not gone through a very tight group of people that had a very specific opinion on how something should be built. We saw what all these devices looked like prior to that, they were just a hodgepodge of crap that were out there. In terms of what we like to do and what we've done so far, we kind of set the agenda for what we want to go out and build and we want to surprise people with some things. I think so far with Grails and other products that we've homegrown, people have liked that surprise of, 'Oh this is new and unique.' But in terms of shaping the community and who we are from that standpoint, we're all ears to bottoms up and help mold that community. For individual little things, I love taking input and then bringing that back to the team that is making the decision. When you go out for attributes that you want included into something or pieces of functionality, the way that I found that worked quite well back in the day at Digg is that we would have five things that we were working on in any given time and then two of those five were community suggested. We would stack rank all the community ones and we would slot those in. So we still got to do what we wanted to do and we still listened to the community and built what they wanted as well. They were like another seat at the table. So you don't treat them as someone that has complete control over everything, but you definitely give them a collective seat at the table to help shape what you're doing. That so far has been amazing and I think that will work well for us.

Okay, we are essentially at time. One thing I will have you back on because there's something that really stuck out to me. I was saying this before we kicked off here. Kevin, you were Tim Ferriss's first guest on the Tim Ferriss Show, which is a very fun fact. Y'all were talking about Twitter at the time and you were saying that one of the things that made you invest in Twitter was part of its moat was that the followers weren't portable. You couldn't take them anywhere. That's so fascinating now given being in Web3, decentralization, take your followers anywhere. In general, business models that are trying to be disrupted with decentralization, how does that change the investing calculus as a VC? Can you exit a company like that? There's a lot of philosophical questions I have that I really don't have time to get into. I don't know if you have like a quick reaction to that, but that'll be the teaser for when I somehow convince y'all to come back on.

It's such an interesting evolution in business thought though, that we have to be so closed, we have to be protected. That's our moat.

We didn't even get into IP rights. I'm really fascinated by how IP rights will play out in this space over time and what Hello Sunshine is doing partnering with World of Women that are owned by these individuals. I think all that's going to be fascinating. I know you guys have said on a Twitter space, Moonbirds, the individual Moonbird you will own it, you will own the IP rights. I think more will be revealed on that front.

Actual last question. How did you get to the term Moonbird? I've heard you, Justin, talk about it. I think people should go listen to the Twitter space to hear about that. But how did the name come to be?

It was your idea though, right?

Love it. Well thank you all so much. I really appreciate you hopping on and your busy media schedule. I know you run a tight ship here.

I would love that. There's a lot of big picture questions that I would love to pick all your brains on. So we will make it happen. Thank you very much.

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