Growing any brand is challenging. But growing a nonfungible token (NFT) brand in today’s crypto climate? Near impossible.

Luca Netz, chief executive officer of NFT brand Pudgy Penguins, isn’t deterred.

“We want to build web3’s first ever character legacy brand,” Netz said to me in a recent conversation. “The idea is, how can we democratize IP [intellectual property] and leverage this aligned incentive and participation vehicle—the NFT—to our early believers and first adopters? It’s finding out how we can create and leverage that origin story to accelerate the brand building process.”

According to Netz, legacy IPs can typically take decades to build, and the mission for Pudgy Penguins is to accomplish the feat in a fraction of that time.

To aid its quick ascension, Pudgy Penguins recently entered the physical consumer goods space, dropping a collection of Pudgy Toys in 2,000 Walmart stores across the United States.

“There’s a reason why Star Wars is in the toy aisle, Hello Kitty is in the toy aisle, and Pokémon is in the toy aisle,” Netz said. “This idea that NFT brands should just wait for consumers to meet them where they are is a fool's errand and a fallacy. You have to meet consumers where they currently are, not wait for them to come to you.”

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Netz and his team worked to create a physical and emotional attachment with the Pudgy Penguin end-user that they believed would play a huge part in cultivating enthusiasm for both Pudgy Penguins NFT holders and the Pudgy Penguins digital community.

Today, the physical toys consumers can purchase at Walmart are based on the intellectual property owned by Pudgy Penguin NFT holders. The company then licensed that NFT intellectual property to make the NFTs into toys. 

“Everytime one of those toys sells, the NFT holder receives a royalty,” Netz said. 

Every toy Pudgy Penguins sells also comes with a QR code, which points to Pudgy World—something anyone can join by signing up with email. The Pudgy platform creates a wallet for users who can then start minting and collecting NFTs for free.

While the integration of a digital NFT brand to the physical sphere has been growing in recent months, Pudgy Penguins is the first NFT brand to effectively include its early digital holders as part of the licensing deals for its physical products.

Luca Netz

“We were the first to do it which was unbelievably shocking to me at the time,” Netz said. “It was very strange to me that people did not see it as obvious low hanging fruit. We’ve since been able to inspire other projects to follow suit and hopefully more people will do so.”

In the meantime, Netz said Pudgy Penguins will continue to focus on building its own character legacy brand.

“We’re now getting about 50 to 60 million views per day on socials and we’re selling tens of thousands of toys each week,” he said.

That’s about 50,000 toys per week across Walmart, FYE, Five Below, and all the stores across Europe and Asia that Pudgy Penguins has a presence in.

While the licensing value is significant, it’s not everything. According to Netz, the larger vision is about believing Pudgy Penguins can grow into a business that generates hundreds of millions of dollars per year in revenue.

“This year, we’ll probably do $7 million in revenue,” Netz said. “Last year, we did $2 million. We’re on a growth trajectory that I think is pretty impressive, but the real monetary gain is going to come from the deals that are three, four, five years from now—if you believe Pudgy Penguins can be a legacy brand.”

In the short term, Netz believes the emotional attachment of owning a Pudgy Penguin NFT will help propel that legacy further.

“You own an NFT that has physical toys in the real world, toys you can give to your friends and family,” Netz said. “They can enjoy your NFT, and that emotional attachment has a price on it that far supersedes the monetary value given through a licensing deal.”

He continued, “We’re building a brand, the hardest part of which is marketing really well. You can take your Pudgy Penguin and build on your own, just like Bored Ape lets you do. You can make Pudgy Burgers, you can create a Pudgy ghost kitchen. I would argue if you built a brand around a Pudgy Penguin, you would sell more units because of it.”

Pudgy’s model is yet another example of how an NFT brand with a loyal community provides value to the community, and in turn, the community provides value to the brand.

“Without the community, we’d have nothing,” Netz said. “It starts and stops with them, I’m super thankful for them and I’m happy to be on this journey.”