Just about three years ago, non-fungible token (NFT) brand Pudgy Penguins was nearing bankruptcy — now it’s projected to end the year with $50 million in revenue.
CEO and owner Luca Schnetzler (better known as Luca Netz) built a fortune through Instagram before breaking into the toy industry. In the blockchain world, he was among the largest Pudgy Penguins holders, but like many in the community, he wasn’t happy with the collection’s price performance. In April 2022, the project was at an all-time low. He decided to strike, acquiring parent firm Igloo for $2.5 million in Ether .
But soon, Netz had some hard choices to make. The Terra collapse in May 2022 sparked a prolonged bear market. NFT assets tanked in value, threatening to turn Netz’s acquisition into a failure.
In a recent interview with Cointelegraph, Netz explained his thinking at the time: “This company is going to run out of money in six months if I don’t start making real money, and it’s clear that I’m not going to make any Web3 money... Physical products were the only thing I knew how to do.”
Netz expanded his NFT business into the physical toy industry to extend the runway. Initially, it was just enough “to pay the bill,” but it has scaled into a multimillion-dollar cash cow.
Meanwhile, a physical collectibles craze is spilling over into digital assets, setting collections like Pudgy Penguins up for the next surge in NFTs.
Pudgy Penguins is Netz’s next Instagram hit amid NFT struggles
Netz has told his story countless times. His family struggled to find stability during his childhood. He moved frequently, which made high school frustrating and eventually pushed him to seek opportunities outside of school.
According to Netz, he made his first million at the age of 18 through a drop-shipping business on Shopify, selling jewelry he promoted through Instagram fan pages of popular hip hop artists. He went on to become the chief marketing officer of Gel Blaster, a toy gun that shoots water gel pellets sold in big-box stores such as Walmart.
When NFT revenues and the larger blockchain ecosystem spiraled, Netz relied on his consumer products background to expand Pudgy Penguins into a physical toy brand.