The Inside Story of an NFT Project That Didn’t Sell Out
The lessons learned from a PFP drop on Ethereum
There are two types of content that prevail across social media when it comes to NFT projects—tutorials and success stories. This is not unique to NFTs or Web3. In fact, it’s natural for humans to talk about success and teach people how to repeat that success (even if the teachers are not yet successful themselves). However, learning and educated decision-making requires an understanding of the full picture. And we can only get the full picture by understanding success and failure.
This is not a story of failure, though.
At least not in the way I think about it. It’s a failure compared to projects that sell out and make millions. It’s a failure compared to highly hyped projects on social media. It is not a failure in the sense that it (we) built an awesome community. We built an Indie Art loving community that really has fun together. And it’s still going.
But we didn’t sell out. We didn’t come close. And with that framing, I want to walk through the lessons I personally learned, the lessons I think anyone interested in NFT projects can learn, and the numbers that no one else tends to share (even though they are all publicly available).
First, let’s talk about the project. Zombie State University is a collection of Zombie NFTs. They are first-year students at the new university built by Zombies for Zombies after The Great War. You can read more about the backstory on the website. I joined this project after turning down dozens of others. While I have made a tiny bit of a name for myself in the NFT developer community with my tutorials, I didn’t have any interest in jumping on projects that felt more focused on getting rich than they did on the utility and novelty of NFTs and their cross-section within creative media. When I was approached by a friend about the Zombie State University project, I was immediately sold by the story and the art.
Quick shoutout to Josh Stifter for creating amazing art for this project. He’s a brilliant artist and filmmaker.
So, I came on to write the smart contract and work on most of the technical implementation around the project’s mechanics and drop. This was interesting because, as the protégé effect mentioned in the article linked at the top of this post suggests, I had been writing tutorials about NFTs without a ton of mainnet experience.
The timeline for the project was aggressive. On September 9th, I joined the project. We had very little done by that point. Some art. No code. A slight concept of a possible plan around the community. So, the first step was deciding on when we would drop.
With Halloween coming the next month, we decided to drop a few days before so that people could have their Zombies when the day arrived. We also decided to give ourselves time behind the scenes to work before starting the community.
This was our first mistake.
We worked from early September until the end of the month and launched our Discord community on October 1st. In hindsight, it’s clear that we should have been building the community immediately. We had a decent burst when we launched the community, and then we struggled to grow it. We were mostly focused on organic growth, and to be frank, that’s a beating. Ask any independent artist out there. Growing a community generally takes years. We were trying to do it in about 28 days.
A dirty secret-that-is-not-so-secret is that almost every NFT project out there pays influencers to promote their projects. Some of this is obvious. You see a tweet from someone about a project and that’s person’s bio specifically says “DM for promo” and you know. But some of it is less obvious. Celebrities (both real and Twitter-famous) are often paid to boost projects. Initially, we didn’t have any kind of budget to do that. We all put some money in to cover the inevitable gas fees for deploying and interacting with the smart contract. We each contributed about $1,000 for a total pool of $4,000. We now know that this was a laughable amount, and you’ll see why when I reveal some numbers a little further on in this post. But the point is, we couldn’t pay influencers even if we wanted to.
Not at first at least.
Our community growth stagnated. In fact, we had a week in the middle of October where we didn’t just see stagnation, we saw a drop in overall community members. That’s a terrible feeling. It was around this time that one of our team members was able to connect with a DAO (PieDAO). PieDAO was very excited about our project and our art, and they wanted to reward their community with some of our Zombies. We struck a deal for them to pre-purchase 100 Zombies.
We had some money to work with now!
Stinging from not only NOT growing our community but watching our community shrink, and stressed because the drop date was fast approaching, we decided to reach out to some influencers.
For the final two weeks of the project before the drop date, we spend almost $3,500 on influencers. The result? Not much, honestly. We added 450 new Discord users across all those promotions. For the math folks in the audience, that’s a CAC (customer acquisition cost) of $7.77. That’s not good.
But the costs kept coming. As the hope for a sell-out slowly (then quickly) faded, we fired off a hail mary in the form of Rarity Sniper. We knew that we would be allocating a big chunk of the pre-purchase funds from PieDAO to cover the costs of rarity rankings through Rarity Sniper. Our hail mary was to also pay Rarity Sniper for a featured post slot. This cost 1 ETH, and it netted us (as best we can tell) 38 new community members in the Discord. With an ETH price at the time of about $4,000, that gives us a CAC of $105.
To be clear, this isn’t Rarity Sniper’s fault. It’s not the fault of Twitter influencers either. This type of thing happens outside of NFT projects all the time. I’ve worked in the startup world for the last 7 years. Throwing money at a marketing opportunity and not having it pan out is all too common.
This brings us up to our pre-sale launch and public launch. We had built up a whitelist of wallet addresses for the pre-sale (not a large one, mind you), and we had a list of wallets from PieDAO that would need to receive airdropped Zombies. We had orchestrated a bunch of giveaways as well throughout the month, and it was coming time to execute on those giveaways.
But gas was spiking. Spiking hard. Our pre-sale was slated for 10/28/2021. The average gas price had been creeping higher and higher.
This was another mistake to add to our list of mistakes. We should have postponed our pre-sale and public sale. But we didn’t. So, we toggled the pre-sale live on October 28th, and gas crushed everyone. We toggled the public sale live on October 29th, and gas, again, crushed everyone. To be fair, gas has remained high even to this date, so I don’t know what exactly we would have done differently if we did postpone the launch, but I do know that gas prices impacted the minting potential for the project. Were we going to sell out? Absolutely not. Could we have sold more had gas been reasonable? I think so.
Now, remember, we still have some obligations to fulfill here. People are minting as best they can through the high gas prices, but we also have to do things like mint giveaways into people’s wallets, toggle functionality on the contract, airdrop the pre-purchased PieDAO Zombies. This proved to be incredibly expensive. How expensive? I’m glad you asked.
I tallied up all of the transactions we executed against our smart contract from our developer/deployer wallet. Here’s where we have landed thus far:
We spent nearly $16,000 in gas fees alone.
Had we not been able to broker that deal with PieDAO, we would not have been able to pay for giveaways, pay for toggling the pre-sale white list, for anything really. This is an indictment on Ethereum as much as anything.
There has to be some good to take away from all this right? Absolutely, there is! The community we built is tight-knit. We have movie nights, live art streams, and chat in Discord. It’s so much more fun than sifting through a bunch of comments about floor prices and rarity rankings.
In addition, I personally learned so much just by participating in this. I am a better Solidity developer now than when I started. I was able to build some cool tools like our own rarity gallery (which we should be launching soon). I also learned the mechanics of NFT PFP (profile picture) drops. I was able to dogfood from the company I work for (Pinata) and it has helped me learn how we at Pinata can help these projects better. I’ve also had creative sparks around NFTs that I want to explore as a result of this. When you focus on a community that appreciates the boundaries you can push with NFTs, media, and interaction, what can that look like?
I already have some ideas. In fact, Josh and I have already started planning out what’s next for this community and how we might grow the community further with intention rather than with speed. If NFTs are going to help artists explore new avenues for creativity and revenue, Josh and I want to prove this out by experimenting.
If you’re interested in joining us in these experiments in artistic and technical creativity, join the Zombie State Discord.