Luca Schnetzler: When NFTs Crashed, He Led Pudgy Penguins to Success

Non-fungible token (NFT) enthusiasts have faced existential angst in 2023. In September, researchers dappGambl said 95% of NFTs may now have practically no value.

But, Pudgy Penguins, with 25-year-old entrepreneur Luca Schnetzler at the helm, has weathered the crypto winter and established itself as a beacon of hope for digital collectibles.

This profile is part of CoinDesk's Most Influential 2023. For the full list, click here.

"Pudgy Penguins is going to 2x or 3x last year's revenue," he said in an interview. That's why Schnetzler, who spent part of his childhood homeless, is part of CoinDesk's Most Influential list for 2023.

In April of 2022, Schnetzler and a group of asset holders acquired the Pudgy Penguins NFT collection following a public bidding war that included Zach Burks of Mintable and Web 3 influencer BeanieMaxi. Since then, Schnetzler, who also goes by the shortened "Luca Netz," helped to oust the founders and became CEO. He has led the brand with a "thesis around emotional attachment," taking inspiration from the likes of Pokémon and Hello Kitty, he told CoinDesk.

While other leading NFT projects like the Bored Ape Yacht Club, which earlier this year hit a 20-month low floor price, leaned into Web 3 with initiatives including ApeCoin and Otherside, Schnetlzer said Pudgy Penguins "needed to create a Web 2 approach and a real business."

In May 2023, Pudgy Penguins completed a $9 million dollar fundraise. The same month, it began selling its "Pudgy Toy" collection online, a series of physical products modeled after the NFTs. The collectibles became available in 2,000 Walmart stores in the U.S. by the end of September and debuted in Canadian Toys R Us locations in November. The toys provide customers with access via a QR code to the Pudgy World platform on the zkSync Era blockchain, and have served as an entry point for new consumers who may not be familiar with the NFT collection or the broader Web 3 ecosystem.

Toys being linked to a digital experience may not be a novel concept (see Webkinz from the 2010s). But Pudgy Toys gives owners real IP for their money. We"took 16 holders [of Pudgy Penguin NFTs], 16 licensing arrangements, and made 16 toys. Every time one of those toys sells, they get the license in perpetuity," Schnetzler said. "IPs have been built around brand and consumption, we want to change that to brand and participants."

Pudgy Penguins has also garnered a non-crypto fanbase through its Web 2 social media platforms, sharing content like animated shorts of the Pudgy Penguins characters on TikTok (5.4 million likes) and Instagram (966k followers).

"We've set a bar for what it looks like to be capitalized in this space and what people should be doing with the money they have," Schnetzler told CoinDesk reflecting on his accomplishments in 2023. "Going into year two and year three, we want to up the notch a little bit."