Earlier this year, General Motor’s Chevy decided to dive into the Web3 space with an NFT (non-fungible token) auction.
They worked with an artist to create a one-of-a-kind “Minted Green” Corvette NFT and the winner would also receive the real car. The NFT artwork was named 'Own the Color,’ because Chevy promised that it would never apply the same color to any other Z06 model. All proceeds from the auction were going to DonorsChoose, an education charity.
The auction went live from 20th-24th June and at closing had not received a single bid.
SuperRare, the auction site, issued a statement saying they were extending the auction for 24 hours because “interested parties” had missed out on the chance to bid, due to the NFT.NYC event happening that week.
24 hours later the action closed for a second time, again with ZERO bids.
On the face of it, Chevy seemed to do everything right. They hired an artist to create the NFT artwork, it came with bragging rights for ‘owning the colour,’ the winner got a real car, and they promise to donate all proceeds to charity.
So what went wrong?
Reddit on the other hand made their foray into NFTs’ at a time when the market was down 97% from its peak in January. One could argue that their timing could not have been worse, launching in the middle of what is being called the Crypto winter.
What did Chevy do wrong, and Reddit get right with their NFT launches?
ONE: Unlike Chevy, Reddit did not dive headfirst into a public action with their first NFT launch. They had been experimenting with various NFT initiatives for over a year. They had already teased users by allowing NFT profile pictures, and launched a limited edition Reddit CryptoSnoos digital NFT last year, built on Ethereum. Reddit spent time testing it within their core community, listening and learning, before taking a full scale and public plunge.
Reddit involved members of their community from the start. They partnered with independent artists on the platform, asking them to design tens of thousands of unique versions on Snoo (the company mascot). Reddit’s approach in contrast to Chevy’s was of the community, by the community, for the community. One wonders if Chevy did any research to even determine if Corvette fans were interested or engaging with NFTs?
Reddit’s NFT holders got more than bragging rights, about owning a unique paint color. Owners of multiple Snoo avatars can further customise their profile picture using Reddit’s Avatar Builder. Every owner gets unique benefits within the community, like standing out in comments, unlocking specialty effects and a right to display their NFT anywhere - on or off the platform. Chevy’s NFT on the other hand was a one-off that did not confer further benefits or attempt to build a long-term fan community.
Also, Reddit made it easy for users to set-up a Vault; Reddit’s digital wallet. Learning from their first NFT release, which was built on Ethereum, this time they built it on Polygon; which is a layer-2 blockchain that is compatible with Ethereum but able to process transactions much faster, and has lower gas fees; both barriers to NFT purchase and adoption.
Reddit airdropped free NFTs to their most loyal and active users on the platform, and the starting price for people who did not qualify for the free drops, ranged from $9.99 to $99.99. Contrast this with Chevy, which set the starting bid for the auction at 206 ETH, which at the time worked out to about US$240,000. Even more problematic when people realised that the Corvette Z06 is expected to cost around $90,000 to buy. Which makes the NFT premium, an awful lot to pay, even for a wealthy and diehard Corvette fan, for a unique paint colour and an piece of artwork that cannot be hung on the wall in their home.
*NOTE: Not for moment am I dinging Chevy. In fact, I think it's laudable that GM had the courage to experiment with this new technology and brand-building tool, and expect Chevy will take the lessons learned and apply them to their next NFT initiative.