Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Tag: NFT

  • It sounded stupid when I said it

    https://twitter.com/DocumentingBTC/status/1553901007964442624?s=20&t=gRvygaF5RVVcIY-d_IHHeQ

    Click here if you can’t see the embedded tweet above.

    This is your daily reminder that many/most of the things that are ubiquitous today were once difficult to explain and understand (in the above example it’s email and the internet). Once a new idea or technology becomes widely adopted, its inner workings and technical aspects tend to recede into the background.

    Most people, for instance, probably aren’t familiar with all of the various internet protocols and how they work. Could you explain the difference between TCP and IP and SMTP? If you can’t, it doesn’t matter. The various protocol layers of the internet now work behind the scenes to power our daily lives. And the innovation that continues to be built on top of them is getting increasingly more user friendly as time goes on.

    The same thing will happen with crypto, which is talked about today in much the same way as the above folks are talking about email and the internet. New ideas will continue to emerge and we will all start deriving more and more utility from it (beyond just NFT art). And at that point, most people will stop caring about how all the sausages are made. They’ll just like eating them.

    P.S. One of the nice things about blogging every day is that I’ll be able to look back on this post in ten years and see how right or wrong I was.

  • Happiness vs. satisfaction

    I have heard from some of you that you don’t like it when I write about crypto and NFTs. This personal blog is supposed to be largely about city building after all. So today I thought I would write about crypto and NFTs. More specifically, this podcast episode, which I watched last night.

    It’s with Marc Andreessen and Chris Dixon of the venture firm a16z, and it’s actually less about specific things like NFTs and more about the reinvention of the internet in general. Why I found it particularly interesting is that Marc co-invented the first widely-used web browser. Anyone remember Netscape?

    So he was around for what we are now calling web 1 and he is around for what we are today calling web 3. And there are lots of parallels between then and now. Similar to today with crypto, the early internet had lots of critics and lots of people who thought it was dumb and that it would never amount to much.

    Oops.

    Here are a few other thoughts and ideas from the podcast that I found interesting (some of them even relate to city building):

    • No matter how many times we have seen the same movie, humanity seems doomed to repeat the same mistakes when it comes to, among other things, embracing new ideas and innovations. I agree with Marc in that part of this is generational. Younger people are often more open to new ideas because they view it as a way for them to establish themselves and make their mark on the world. Whereas older people (established people) often view new ideas and change as a threat to their current position in the world.
    • Marc drops a number of books throughout the talk and one of them is The Mystery of Capital — Why Capitalism Succeeds in the West and Fails Everywhere Else. This is a well known book by Hernando De Soto and the big idea is that property ownership and property rights are really the fundamental ingredients in our modern world. People need to know that if they hold title and invest money into something, it’s not just going to get taken away by someone. And it is this underlying legal structure that has allowed people to leverage property into wealth.
    • This is a fascinating observation in its own right, but it also relates to crypto. Hear me out. Chris Dixon makes the argument in the episode that web1 democratized information (anyone can search for stuff), and that web2 democratized publishing (anyone can share stuff through platforms like Twitter or the blogging platform I’m writing on right now). He then goes on to argue that the promise of web3 and crypto is really to democratize ownership of the internet. Anyone can buy crypto tokens.
    • Why might this be a big deal? Well if property rights in our offline world are a fundamental ingredient to modern society, it seems logical to me that property rights in our digital world(s) might also be equally transformative. And this is precisely one of the things that blockchain technologies enable for the very first time.
    • Finally, on a mostly unrelated note, I liked Marc’s comparison of happiness vs. satisfaction in life. Happiness, he explains, is like getting an ice cream cone on a hot summer day. The first and second feel great, but after that you move on. Satisfaction on the other hand is enduring. It’s the feeling you get from working on something really challenging and then finally succeeding. And that’s exactly how I feel about real estate development. There are lots of shitty days and lots of grinding. But in the end, I do feel very satisfied.

  • Virtual sneakers to cutting-edge kicks

    Toronto’s Bata Shoe Museum has an exhibition on right now that is all about sneakers. It’s called Future Now: Virtual Sneakers to Cutting-Edge Kicks. I haven’t been to it yet, but it’s on the list. Because this is interesting to me for a few reasons.

    One, shoes are important and, as a general rule, I always wear them when I leave the house. Though there may have been some exceptions to this general rule.

    Two, sneakers are high fashion. Just look at everyone walking around Paris.

    And three, sneakers are such a great example of a clothing device that went from utility (we need to protect our feet) to fashion (we all have a desire to express our unique identities) to art collectible (yes, lots of people buy shoes that they never actually wear).

    So if you’re looking at stuff like NFTs and digital fashion and scratching your head as to why they have any value, sneakers are probably a good place to look to help you understand why many of us seem to have a need to collect things that help us define our sense of self.

    This is, of course, one of the reasons why Nike bought a digital shoe company.

    I suspect that the exhibition will be at least partially about this and at least partially about really cool 3D-printed shoes.

  • Over 60% of global luxury spending now happens in Asia

    The global luxury goods market is somewhere around US$300 billion if you exclude fancy cars. And in just 4 years, global luxury spending has flipped from over 60% of it being in Europe and the Americas, to now over 60% of it being in Asia — with over 40% of it being in mainland China alone. See above chart from the Financial Times.

    But I think what really happened is that when global travel shutdown in 2020, Chinese buyers just started spending all of their luxury goods money at home instead of flying to Paris for the week. Because if you look at Chinese luxury goods spending in 2018, somewhere around 1/4 of it was done in mainland China, whereas today it’s close to 100%.

    So the Chinese have been moving this market for quite sometime. But now that the consumption has moved entirely home, what does that mean for cities around the world? Hong Kong used to be one of the most important places for luxury consumption in Asia (no sales tax), but that has changed and it probably won’t return. This is for reasons that go far beyond luxury goods.

    But I think we’ll see spending in Europe bounce back along with Asian travel. Because buying a luxury good is about much more than just the good itself. It’s about the experience. It’s about how it makes you feel when you buy it. And it’s about signalling to others who you are as an individual. This may sound vacuous, but we all do it, with or without expensive luxury goods.

    There are also new opportunities emerging by way of NFTs. I am sure that some brands are already doing this, but if I were in charge, I would issue a unique NFT with each luxury goods purchase that records, among other things, where it was purchased. Is a bag purchased on the Champs-Élysées worth more if there is a record of it that is etched in stone permanently? Maybe.

  • Right-click, save as — world’s first Bored Ape restaurant opens in Long Beach

    The common criticism with NFT art is that it’s just a JPEG image. So why bother “owning” it when you can just right-click, save as? Who in their right mind would spend thousands, let alone hundreds of thousands on such a thing?

    But as I’ve argued before, this is missing the bigger picture and missing what this new technology has the potential to empower. Take for example, the new Bored & Hungry restaurant that opened up in Long Beach, California this past weekend (with lines down the block).

    It is being dubbed the world’s first Bored Ape Yacht Club restaurant, and here’s the backstory. Andy Nguyen is a successful food entrepreneur in southern California. And last month he spent US$267,000 on Bored Ape #6184 (yes, a JPEG).

    After doing this, he took to Twitter and asked: “Worst decision I’ve ever made or best idea of all time?” Of course, he clearly had a new business idea in mind.

    Fast forward to today and he now has a pop-up restaurant concept that is branded with his Bored Ape. And because the Bored Ape IP is very permissive, he is perfectly within his rights to do this. He can create whatever business he wants on the shoulders of his NFT, as can others with theirs.

    His restaurant is also accepting the new ApeCoin that is part of this NFT community, and if you yourself have a Bored Ape, you qualify for perks like free food. All you have to do is scan your crypto wallet. Digital asset ownership = real-life something.

    This to me is just one small example of the kind of new businesses that crypto and other digital assets might unlock. And I am sure that it’s the tip of the iceberg.

  • Who cares if there’s an NFT bubble?

    The Financial Times recently reported on “the great NFT sell-off” here in this article. Daily trading volumes on OpenSea, which is the largest NFT marketplace, are down 80% ($50M) from their high in February ($248M). Bored Ape Yacht Club, which is the most expensive NFT collection out there, has seen its average daily price come down by about a third (see above). Of course, they still remain extremely valuable NFTs. And a recent CryptoPunks auction was just pulled from Sotheby’s so that the owner could “HODL” until things recover.

    I don’t think any of this should surprise both NFT holders and the naysayers. This is a high-risk space and it is all very speculative. You can’t run a discounted cash flow (DCF) model on a Bored Ape and most other NFTs (though some might actually produce cash flow through, for example, secondary sale royalties). The more important point of all of this is that we are living through what many people believe is the creation of a new kind of internet. Cryptocurrencies are what underpin these new digital economies, but we are still figuring out how they will function and what their long-term business models will be.

    For me, this is an exciting thing to be a part of. I’m not a venture capitalist, but buying NFTs and doing other crypto things feels a bit like I am an amateur one. Holding ETH or SOL is similar to holding Canadian or US dollars (currencies that underpin economies). So what I am doing is using these currencies to put money into ventures (NFTs) that seem interesting. And to do that, you look at the art, the team behind the project, the roadmap, and how well they appear to be executing against that plan. Indeed, many of the most successful NFT projects are naturally run by teams who are constantly building and shipping.

    At the same time, I mentally write off every NFT I buy to $0 as soon as I purchase it. I am also limiting my total crypto allocation to between 5-10% of my non-real estate investments and buying with a scheduled dollar-cost averaging approach. So if this whole web3 thing went to zero tomorrow (which I firmly do not believe will be the case), my life would still go on. None of this is, of course, investment advice. Please do your own research and make your own decisions. But I can tell you that it is a lot of fun following and learning about what smart, creative, and entrepreneurial people are doing in this emerging space.

    If you’re interested in NFT photography, check out my global citizen collection on Foundation.

    Chart: Financial Times

  • Be a global citizen — my new NFT photography collection

    I have enjoyed photography for as long as I can remember. But I got into it in earnest during undergrad while studying architecture. At that time, Toronto-based photographer Sam Javanrouh was in the early days of running his decade-long photoblog called daily dose of imagery. And I remember checking it religiously to see his captures of the city. This was a fairly novel medium for photos at the time. Instagram wouldn’t arrive for another 7 or so years. So I found it deeply inspiring.

    So much so that I went over to Henry’s at the corner of Queen and Church, bought a refurbished Canon Rebel, and started capturing my own photos of Toronto — often at night after school. I’m positive that I’d be embarrassed if I ever pulled out those old photos from the archives, but regardless, photography more or less stuck with me as a hobby. It also formed an integral part of the design portfolio that I used to get into graduate architecture school. (My photos proved to be less useful for business school.)

    I later moved onto shooting with Fujifilm cameras (currently a Fujifilm X-T3). And nowadays I mostly shoot when I’m traveling and have some free time. But two decades after buying that refurbed Rebel, I can’t help but feel like we are at yet another important turning point in the evolution of photography (and, of course, art more broadly). We now have tools and technologies that allow for the ownership of digital assets. (See non-fungible tokens.)

    So I have decided to start minting and making my photography available for sale on Foundation. The first collection is called “Be a global citizen”, and the plan is to slowly add my photography from around the world to it. The floor price is currently set at 0.25 ETH. And all of the photos were taken on my Fujifilm X-T3. I hope you like it. To check out the collection, click here.

  • My predictions for 2022

    As promised, below is a list of some of my predictions for this coming year. I have tried to be both punchier and more precise in my prognostications; because, well, obvious predictions are boring and precision will allow me to better evaluate my thinking at the end of the year. So here goes.

    1. 2022 will be the year that COVID-19 becomes endemic and finally fizzles out to a point where it no longer factors into our decision making in the same way that it has for most people over the last two years or so. I think this will happen by as early as the summer.
    2. As a result, I think the majority of people will be back in their offices by this September at the very latest, with many coming back much earlier. The whole hybrid/flexible work thing won’t completely disappear, but the majority of people who used to work in offices will be back.
    3. Recreational/fringe residential real estate will soften in 2022 as a result of 1) its tremendous run-up during this pandemic and 2) the renewed pull of urban/office life. Conversely, urban apartment rents will continue to rise and eventually surpass their pre-COVID levels. The SF Bay Area could be one exception.
    4. The explosion of travel that I thought was going to happen in 2021, will truly happen this year. The summer will mark its official return, with European travel volumes (to give just one example) returning to their pre-COVID levels.
    5. We will see meaningful efforts to further breakdown the hegemony of single-family zoning throughout many North American cities. This has been building for a number of years and I think we will see some tipping point-like moments in 2022. Specifically, expanded permissions for multi-unit housing and greater densities.
    6. I wish I could say that autonomous vehicles are destined to do something truly remarkable this year, but I think we are still a few years out (2024-2025?) before a large chunk of us are ride-hailing AVs. But on a related note, I do think that Uber will come into its own this year and finally become profitable (and not just with adjusted profits).
    7. Public transit ridership will, unfortunately, remain depressed and below its pre-COVID levels for this entire year. The beneficiaries of this will continue to be cars (not good), bikes, and micro-mobility solutions like e-scooters.
    8. 2021 was a huge year for NFTs and other fun stuff like digital fashion. Given these trends, I believe there will be growing demand from people to better integrate their digital and physical lives through technologies like augmented reality. Snap has been at the forefront of this space for many years and 2022 will be an important year for its Spectacles (AR glasses). But Apple and others will also make major announcements.
    9. Miami’s ascent as an important tech hub will get interrupted by questions surrounding the climate crisis and its own resilience. At the time of writing this post, the price of carbon on the EU’s Emissions Trading System (EU ETS) is about €80 per tonne. I think we will see it break €125 per tonne this year, and possibly go even higher.
    10. Ethereum, Bitcoin, and Solana (in this order) will be the top three cryptocurrencies according to market cap by the end of the year. At the time of writing this post, their market caps are $446 billion, $895 billion, and $55 billion, respectively. I am also expecting some breakout web3 consumer applications that will push, maybe, 40% of Canadians and Americans into the crypto space.

    Photo by Dave Xu on Unsplash

  • Of course, Nike buys digital sneaker company

    This week it was announced that Nike has acquired RTFKT Studios (pronounced “artifact”) for an undisclosed amount. When I read the news (official Nike announcement here), I immediately thought to myself, “Yeah, of course!”

    Some of you may remember that I wrote about RTFKT back in April. They are perhaps best known for their digital sneaker NFTs (on the Ethereum blockchain). And so this is an exceedingly obvious and strategic buy for Nike.

    But more importantly, I think this is great validation for the crypto/NFT space and further evidence that our digital and physical worlds are continuing to collide in some new and very interesting ways.

    What this ultimately means for life in 10 or 20 years is anybody’s guess, but sneakers are the tip of the iceberg. And this doesn’t necessarily mean that we’re all destined to live in some sort of metaverse video game.

    Another way to look at this whole metaverse thing is to consider it not as an actual place or space, but instead as a moment in time (Shaan Puri makes this argument here). Put differently, the metaverse is simply a point in time where we begin to bestow tremendous value on our digital life and our digital assets.

    Instagram is one example of this. Profiles have become integral to people’s identifies. We use them to vet restaurants. We use them to vet travel destinations. And we use them to vet potential dating partners, among many other things.

    So while sneaker NFTs might be a new thing, there’s already lots of evidence that digital goods can have just as much value — and potentially even more value — than physical goods. I am sure that Nike recognizes this and it’s part of why they bought RTFKT.

  • Dwelling in peace

    These “aesthetic monsters” are part of a new NFT collection that I recently bought into. They’re called Angomon (supposedly “ango” translates from Japanese into “dwelling in peace”). And they can be purchased on the Magic Eden NFT marketplace. At the time of writing this post, the floor price is about 1.15 SOL.

    The ultimate plan is for these characters to live in some sort of 3D world that will be called the Angoverse (which is an obvious play on metaverse). The team is also planning to provide NFT holders with the original 3D files for these Angomon so that owners can 3D print their own real-world figurines. Longer term, the hope is that there will be official Angomon collectible figurines available for purchase.

    All of these things are of course future plans. They could happen or they could not. These NFTs could have tremendous value or they could not. I just thought these monsters looked cool and fashionable, and so I bought a few. Right now the plan is to frame them and display them all at Parkview Mountain House.

    But it is also interesting to note how go-to-market strategies are changing in this new world of crypto and web3. Fred Wilson recently wrote about this over on his blog. In web2 (think the Facebook/Instagram era), most consumer applications started out with a tool. The network came after.

    Chris Dixon called this strategy, “come for the tool, stay for the network.” In the case of Instagram, the tool was initially photo filters. People used it to apply those filters that made every photo look brown and hipster-like. But eventually network effects took over and that became more important. There are were lots of people using it.

    In web3, everything now seems to start with some kind of asset or token. People buy in and then become invested in the project, which is interesting because they then begin to market out of self-interest. This post is not about that and is more about sharing something that I think is cool.

    Fred Wilson has proposed a new slogan for this. It is: “come for the assets, stay for the experience.” So these Angomon are now assets of mine. If the experience does eventually come, I guess I’ll stick around. Hello web3.