To the Moon: NFTs Are the Latest Digital Investment Mania, Roblox vs. EA, Skydio Gets Unicorn Status, Qualtrics (XM) is Serious, +More
Let's start with the big picture: In the U.S., people are naturally driven to put their money into things they hope will make more money. In a normally functioning U.S. economy, there are both safer and riskier ways to do that. The safer way is to put your money into a savings account or to buy highly-rated bonds, both of which earn you money based on the prevailing interest rates. You're almost certain to earn a bit of money over time if you're disciplined, but you won't get surprisingly rich on this alone. The riskier way is to put your money into stocks, or trade in currencies, or gamble on any number of games of chance. With a combination of timing and luck, you could win big ... or lose big.
Which brings us to today. Because of a series of events over the past decade or so, the powers that be in the U.S. have been keeping interest rates low. The idea goes that if interest rates are low, it's easier for entrepreneurs to borrow money and take the kinds of risks that grow the economy and create new jobs and opportunities. It's easier for families to borrow money and spend it, to take out mortgages. Low interest rates also discourage people from putting their money into the safer things, because the safer things don't earn much interest. Instead, low interest rates tempt the masses to go out on a limb and take risks: Stocks instead of savings accounts. Roblox instead of Electronic Arts. Bitcoin instead of gold. And now, NFTs (short for non-fungible tokens) instead of old-school baseball cards.
This week, one of the things I did was take a deeper dive into the world of NFTs. But most of what I'm covering these days in the world of tech and innovation is happening with the backdrop of risk and the hopes of future growth. That's why this week's newsletter theme is To the Moon:
Which Will Rocket, Roblox or EA? On the Other Hand
Roblox is now a public company, and with roughly the same market cap ($40B) as Electronic Arts. Is Roblox worth more than EA? I weighed in with this week's edition of On the Other Hand:
High Hopes: Mahomes, Memorabilia, and the Rise of NFTs
I did a pretty deep dive on NFTs this week, the latest investing craze. What do I think about them? First off, I think they're widely misunderstood. NFTs themselves aren't worth anything. Think of NFTs as a new form of digital paperwork, making it possible to more confidently and cheaply complete transactions involving unique and expensive items. Because of this, some people are using NFTs to sell things like digital files that wouldn't have had value in another era. But that's not all they're being used for. On CNBC on Friday, I talked to quarterback Patrick Mahomes about why he's launching into NFTs, and what he thinks the technology will do for the collectibles market:
+Gronk Groks NFTs
Earlier on Friday, the Squawk Alley team and I also spoke with Rob Gronkowski, who is also launching NFT-backed memorabilia with the help of Adam Richman. Richman explained that it's important to have meaningful experiences or items behind NFTs; he mentioned that the band Kings of Leon weren't just selling NFT albums; they auctioned off front-row tickets for life to the highest bidders in the auction:
+Power to the Beeple: A Milestone for Digital Art and NFTs
Also on Friday, I spoke with digital artist and NFT pioneer Beeple, real name Mike Winkelmann, who this week sold an NFT-backed piece of art for $69.3 million. I learned that while he got his start in digital art, his intent is not to simply sell files; he's been creating physical versions of his works that buyers receive as well. He was also very clear about the idea that cryptocurrency bulls are fueling the rise of the digital art market with their winnings from early investments in Bitcoin and Ethereum, partly to diversify within blockchain-powered economies and partly to advance the idea that the crypto revolution has legs beyond just currencies. I think that in that way, these crypto-capitalists are doing what mainstream venture capitalists have so far failed to do: awakening the mass market's imagination about the potential of the blockchain beyond betting on cryptocurrencies:
So, bottom line for me in all of this: Beeple is smart. He didn't just wake up one day and doodle on an iPad and decide to sell it as an NFT. He's been working at this for years, he's built a brand, and now he's looking to build out an ecosystem. He realizes that the crypto-capitalists are pumping up prices in the NFT-backed digital art market for their own purposes, and that they can afford to do that because of the stratospheric rise in the price of crypto assets like Bitcoin. That trend might continue, or it might not.
Beyond the Stock Chart, Qualtrics Customer Numbers are Soaring
After their latest earnings report this week, we had Qualtrics Founder Ryan Smith and CEO Zig Serafin on CNBC to talk through the particulars. What's most interesting to me is the momentum Qualtrics sees in large customers, and how much that echoes what I heard from Snowflake CEO Frank Slootman a few days ago:
Look, A Flying Unicorn! Skydio Hits a $1 Billion Valuation
You might remember Skydio co-founder and CEO Adam Bry from Fortt Knox about four months ago. He joined me on CNBC this week as the company touched a major milestone:
Here's a moment from that conversation last year:
Many readers of this newsletter will be familiar by now with my latest project: The Black Experience in America: The Course. I designed it last year after the tragic killing of George Floyd, and I'm building out an online learning experience based on the content.
The students and alumni of my alma mater, DePauw University, gained access to the course material this week. I'm looking forward to more collaborations that lead us to a deeper understanding of this moment in history, the ideas that got us here and the work to move forward.
If you're interested in exploring the same material, a bundle of three lessons is available for purchase here for $12.