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Les Borsai Of Wave Financial On Authenticity In Web3, Plus: CoinLedger’s NFT Tax-Loss Harvesting Tool, TIMEX Bored Ape Watches, And More…
Web3 represents a new and revolutionary way of looking at how assets are owned in the world. And much of it comes with authenticity, a topic that Les Borsai so eloquently unpacks in this episode. Les is a serial entrepreneur and consultant specializing in the cryptocurrency and blockchain industry. He co-founded Wave Financial, to offer early-stage VC investment, asset management, treasury management, and strategic consulting within the crypto and blockchain ecosystem. Coming from a background of managing recording artists, Les understands how authenticity is valued differently in the old-school corporate music industry compared to how it is becoming a defining aspect of the emerging Web3 environment. Tune in as he shares his thoughts on that and more in this conversation. Plus, get to hear about CoinLedger’s NFT tax-loss harvesting tool, TIMEX Bored Ape watches, and more, all in this episode of The Edge of NFT podcast.
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Les Borsai Of Wave Financial On Authenticity In Web3, Plus: CoinLedger’s NFT Tax-Loss Harvesting Tool, TIMEX Bored Ape Watches, And More…
This is Les Borsai of Wave Financial, bridging the gap between traditional asset management and cutting-edge blockchain technology. I am on Edge of NFT, the show bridging the gap between traditional artistry and non-fungible digital work.
Stay tuned for this episode to learn why our guest believes contrary action is where growth lies, and all about vegan eating in Los Angeles, plus what an iconic brand like Timex is doing hanging out with a bunch of Apes. Don’t forget that we put together a gathering called NFT LA that brought out thousands of the world’s most innovative doers in the NFT space. Head on over to NFTLA.live to get tickets to our bigger, bolder and better, but also as intimate and impactful event happening in Los Angeles from March 20th through 23rd, 2023. We will see you there.
This episode features Les Borsai. He’s the Cofounder of Wave Financial, which offers early-stage VC investment, asset management, treasury management, and strategic consulting within the crypto and blockchain ecosystem. Les is a serial entrepreneur and consultant specializing in the cryptocurrency and blockchain industry. After ten years of managing recording artists, he launched and built successful startups in digital music and cryptocurrency.
In 2013, he saw the potential of blockchain technology and started working with Ripple, one of the largest cryptocurrencies as an advisor. He was an early investor in the Ethereum presale in 2014 and now provides advisory services to multiple blockchain companies, including RightMesh, YouNow, and Backstage Play. Les, welcome to the show. How are you doing?
It’s funny. That bio was perfect until the last line. I’m going to have to change that because in getting into cryptocurrency early, you interact and deal with a lot of companies. I swear to God that all three of those companies are gone. I’m doing well. Thanks for having me.
We had some fun pre-show banter here. It’s going to be an exciting show. We’re all pretty pumped. We’re jumping right in. Let’s talk about this climate that we are in. What will NFT launches look like after this blow-up in liquidity? What are your thoughts there?
We’re in a climate. It feels so normal to me. Having been in the space for a fair amount of time, I and the people I work with get a vantage point of a lot of fluctuations in the market and a lot of volatility. If we take a look at the early days when I got in 2013 or 2014 and you look at Mt. Gox or what happens in Asia, they’re outlawing cryptocurrency and making it illegal. We have the ICO craze and then the blowout from the ICO craze. If you’ve been in the space, you understand there are two types of markets, bull and bear.
When we started the company in 2018, we went straight into a bear market. That sucked but it makes you stronger and more resilient. I feel the same way about the market. I have a lot of personal antidotes about that. If you’re old enough to remember, which I am and you aren’t, in Web1 in particular, the companies that were able to sustain all of the scammers, domain squatting, and all the nonsense that was happening ended up being the bigger companies.
Dave, my partner and CEO of the company, is conservative. Because of his financial history, he does have an appreciation of regulatory guidelines. He made the decision that we weren’t going to try to be competitive at the cost of anything that crossed the line. When you look at the market keeps expanding into a place, the market is what it is because you had a lot of young guys generate a lot of wealth but do not understand the basics.
I don’t know what it takes to understand the basics. If I take your money, I’m not supposed to use it for anything other than what it has been deposited for. I’m not supposed to leverage it long and take a risk with it or cover debts that have nothing to do with those customer funds. That’s the simplest stuff in the world. Not understanding that is the first problem.
The other thing that’s the bigger problem is when everything is so incestuous and interconnected for that extra percentage for the land grab, what do you expect? It’s a house of cards because everyone wants the customer. I’ve seen customer acquisition costs in the market being as high as $600 a user for an account that was $500 a user. I don’t understand how that math works.
We sit here wondering why the whole world has blown up around us. I’ll finish this thought. It’s like a poker tournament for us. I played a lot of poker tournaments in my life. You can be aggressive and try to win the damn thing but you will probably get knocked out pretty quick or you can sit back and let everyone else knock each other out. That’s what we have done by playing appropriately.
That makes a lot of sense. What I became aware of to a large degree when the news hit about FTX, and the mainstream media that’s covering this stuff makes everything seem like it’s exploding and imploding, is I automatically thought of all of these projects and people that are deeply entrenched in the system. It had very little to do with that in particular. We talk a lot about how the creator economy is growing. We talk a lot about putting real estate on the blockchain or functional use cases, going to Switzerland for the World Economic Forum Conference, and seeing huge corporations getting deep into the blockchain. I was like, “This doesn’t seem as unstable as it looks to many other people.”
That’s a whole other point of view that I have. I came from the entertainment business. Authenticity mattered in the way artists were broken. It did for me anyway. There are two types of artists. You could be a big pop artist where they throw everything against the wall and hopefully the song sticks, but it’s not a good strong underlying base, or you can be an authentic artist that works at it.
This isn’t that much different. When I hear about the big corporates coming in and everyone is so excited about it, I’ve been through enough cycles with apps, web, and other technologies that I’m like, “I’m not excited by that shit. I don’t care.” I want to take a look at what’s being developed by these innovative kids and what’s being monetized. That’s what I’m interested in. I’m not sucked into, “Universal is going to do this.” Who cares? Everything they’re doing is archaic and continues to be because they’re looking at the numbers and not the creativity and the innovation.
I suppose a lot of my feeling comes from the Napster days and watching Shawn Fanning and Sean Parker get thrown out of a building, and then IP being used as leverage. IP isn’t leverage. IP is something that people create with their soul and blood in that whole process. To use it as something that becomes some barometer for profit is gross to me. I got my idealism back. Somewhere in the middle, I was probably just as gross but that’s how I feel about where we’re at in the corporates coming in.
In parallel to the music industry, you’ve got the gaming industry. There has been a tremendous amount of disruption over time in gaming with these different business models. You’re in a pretty unique position to be able to see some of these paradigm shifts as they occur. I’m curious if we could expect to see another iteration here sometime soon around gaming monetization, how it works, how you disincentivize scam-like behaviors and all these different factors.
I’m doing it in a whole bunch of different ways. Wave Financial is an RIA. We’re adhering to the SEC and its finance, but I was never going to do anything in entertainment or the re-imagination of what a Web3 studio could look like because once I got done working with artists, I didn’t want to talk to them anymore. I still don’t. It was a lot of decades talking to artists. It was hard.
I re-imagined through this mechanism called SeaWorld what I could do within the Cardano ecosystem. We’re pretty close to Cardano. They’re one of the ones that are surviving now in a nice way because they didn’t tie their wagon to anything except their own abilities to create. When I think about this Web3 studio model, I think of it as an antique mall. If you have ever been to an antique mall, it’s a building that has a whole bunch of shops inside it. Every single shop is different.
I compare that to what RTFKT did with Nike, Larva Labs, and all these different things that are happening that happened together without communication to happen together. When it came to gaming, I hired some game guys and started to build a game studio. When it came to the rights because rights are different, I hired a rights guy and an agency person doing a deal with streaming across the board for TV, film, music, and merchandising. All of these things are going to function together based on IP.
The thing that people don’t realize is IP and ownership are different. We’re talking about owners of NFTs being able to exploit those rights. That’s very different from a publishing company and a record company owning two sides of a master with six writers that you need to get phone call approval from. That is the ethos of Web3 and the metaverse. On the other side of that, there are projects like the Gremplin project. Anyone can use it because of creative commons.
I don’t think the bigger companies that you talk about that are coming into the space have the first understanding that this is a generational shift of how collaboration is going to happen. That’s bad for business if you don’t know where it’s going. When I started to put all of that together, I started to quietly collect rights. To your point, everything is different. You look at Gala and what they did with Townstar the Death Row catalog. When Eric first did that, I was like, “You don’t even have the rights to a Tupac song.” He nailed it by being able to put it into a different environment.
I look at things like YGG and what they did in the Philippines with some of the early play-to-earn stuff. They were giving back to the community. You can see what’s possible. That’s always the thing that’s so frustrating about people saying, “An NFT is just a JPEG. It’s not worth anything.” Who cares? It’s not a JPEG. It’s something that’s meant to be connected to other mechanisms to create a bigger ecosystem. I went on a tangent. You got me on a rant.
It’s all good. That’s why we’re here. It’s to have this convo. There are so many different elements about what’s happening that elevate it. It’s universal themes that we’re talking about and how that influences where things go. Do you see something specific within the gaming business model that’s shifting? Where do you see this next iteration going? What are some of those attributes that we should expect to see from some of these games as they evolve, and new games as they come to bear?
It’s deeper integration. The thing that struck me the most is I did a deal with this artist named Lil Pump. I stuck him in a game called Aavegotchi. Aavegotchi was one of the first gamified NFT-driven banking. They had all these innovations in Aavegotchi.
Jesse** is great. He came on our show a little while back.**
Jesse and Dan are incredible. They’re probably too smart for the market in some ways because they can surpass it. When I did that deal with Lil Pump, I didn’t want to do anything the way we did it. It was a different economic deal. I’m not going to do what they did with apps, and throw stupid money at artists. If you want to be part of something innovative, then you should be a part of it. If you don’t, there’s someone else. I don’t want to set a ceiling of what people are paying to have artists participate because this isn’t influencer culture in the same way.
If you’re not connected and you don’t understand what this is, then you’re probably not the best spokesperson. Kim Kardashian, you should be fined because you probably didn’t know shit about what you were promoting. When I think about how this is going to change, it’s deeper integration through immersion. That’s some of the stuff I’m working on. It’s understanding what global streaming looks like. I don’t know if you saw Lensa that came out. It’s this popular app.
It’s going viral. All my friends are posting these crazy pictures of themselves on Facebook. Some of them look cool.
The ones I did look cool. A lot of them look cool, but when we start to think about AI and how it integrates into Web3 and how that works with immersive technologies in the metaverse, then we start to put that together, whereas going with the Aavegotchi point was, “Banking is not meant to be something fun.” You can argue that the GameStop moment made banking fun because people were fucking with hedge fund guys, but when you look at Aavegotchi, it was the gamification of banking or Coinbase producing a movie.
There’s more imagination. There’s the ability to be different types of companies and do different things. We never saw that. If you were a telecommunications company, you were doing that. There wasn’t a business model that you could color outside of the lines with. That’s cool we’re seeing that. What I want to embrace are all those opportunities.
Let’s talk a little bit more about the market dynamics. In times like this where there’s a little bit more of a bear position, there’s consolidation and M&A. I heard a lot at Art Basel of companies buying out smaller projects for their audience. Meanwhile, there’s a lot of building going on with DAOs and DeFi coming up with version 2.0. There was even a DAO hackathon at Art Basel, which was interesting. I’m curious about what perspective you have on that from an M&A perspective and retail. Looking at companies like YouTube, Reddit, Starbucks, and these types of players, are we going to see some interesting consolidation between Web3 and traditional brands?
Before we talk about Web3 and traditional brands, let’s talk about the M&A conversation. We were pretty actively involved in buying an asset and bidding on an asset. It didn’t go our way. We know as a company where the market is and what the market is. We’re not going to be able to generate the same returns that we were able to generate in 2021. We have to do things that are a bit different. We are looking at assets and companies that are distressed, and the value to build.
We have lots of things we’re looking at. We have lots of partners we’re looking at those opportunities with. It’s a good way to hedge again and do something productive and good for the economy and the consumer. It’s the reason we’re doing the media stuff as well. In terms of retail, NFTs, and what that looks like, I had to hold back on buying one of those Tiffany necklaces because I would have never done anything with it, but they blew those out in a second. Interesting retail that is specialized is going to work.
I went to Universal Studios for the Halloween thing. In every line, they had a QR code saying, “Get your collectible NFT.” The thing about that as I looked at it wasn’t like, “It’s expanding. Universal is doing this shit.” It was like, “That’s a pretty boring use. I wish they were more innovative.” That’s how I feel about everything. We’re going to see it.
Here’s the other part of that. I bought my first NFT in 2017 that I lost. When the NFT thing started going, you saw two paths. You saw the NBA Top Shot path. You then saw authentic projects like Art Blocks. Everyone who had a Fidenza or a Ringer all of a sudden was balling hard. You saw this real division of where the world is going. You’re going to see Starbucks and the other retailers doing their thing.
The thing that was the most cringe out of everything I’ve ever seen was Taco Bell talking to Kentucky Fried Chicken talking to Pepsi Cola. It was on Twitter. They were doing the whole GM thing as a brand. It was all those buzzwords. These brands were doing it. For me, that was gross. I don’t care about those brands. I don’t think that’s interesting.
Do you know what I think is interesting? I did some work with FIFA. They’re smart and credible. I don’t even know if it’s public or if I can even talk about it, but they looked towards the metaverse as an organization. I thought that was smart because whatever is being built now is what’s coming next. You’re going to have to pick and choose who those guys are that built an amazing next opportunity.
Authenticity In Web3: Whatever is being built now is what’s coming next. You just have to pick and choose who those guys are that built a really amazing next opportunity.
You mentioned Pepsi. I don’t know if you saw that quasi-documentary on Netflix about Pepsi and the rewards program they did.
It’s for the Harrier jet.
One thing that sticks out in my mind is that for them, that was a major shift in their branding in terms of rewarding consumers beyond buying the product itself. I do feel like rewards in gamification and rewards, in general, are great use cases for using Web3 technology that we’re just scratching the surface of so far.
It is. I’m not saying that corporates and retailers are not going to use all of this in the way that they use it for the masses. I’m scarred. I saw Nirvana at the Roxy when they were coming off of Bleach on Sub Pop. That whole thing about being early with music stuck with me. I’m always interested in how I get there early. By the time it gets to the big retailers, it’s late. I watched that Von Dutch documentary. I’m like, “Gross.” By the time it got to the big stores, even though they were making all that money, it wasn’t something cool.
I’m always the guy that wants the underdog creator to win. I even want some of the guys that aren’t underdogs. I’m very curious to see what Stani does with the Lens Protocol. It’s going to be interesting because it’s going to be a shift. Even further to that point, when we talk about our data and privacy and who is monetizing it, it’s unfortunate if it’s not you and you don’t have a say in it.
Information is too readily available for any of us. Anyone can find out anything about anyone. We need to be a little more precious with our privacy and our data. For me, because I’m older, it goes back to the guys that started this thinking. It’s all those early cyberpunks that started this thinking with cryptography, where they came from, and what they believed in.
It comes down to the details of what co-creation means. There are opportunities for co-publishing, co-data ownership, and things that haven’t been done yet that are starting to be done. That’s one thing that we’re looking at as one of our projects from a media technology perspective.
Can you imagine me as a father? It’s terrible.
I’m ready.
What’s the most recent thing that you’ve sold?
That sounds great.
Am I trying to be kind? Am I trying to be mean?
Kindness brings kindness. Click To Tweet
That sounds like authenticity.
I know the spot.
Nicole Buffett hit me at a place called Au Lac.
It’s downtown. It’s good.
It sounds like a red flag there.
Why not?
Thank you, regulator Joshua Kriger.
When does that drop?
It must have sold out in five seconds.
I missed it in 2022.
What else can we do to make Les jealous, Josh?
That didn’t make me jealous. I’m happy.
The Sandbox party was incredible.
That’s a blessing. I don’t want to go anywhere.
Les prefers NFT LA. It’s closer to home.
That’s even a stretch but I can make it there.
Important Links
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Jesse Johnson - Previous episode
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@TheMiamiApe - Twitter
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Instagram - Les Borsai
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Twitter - Les Borsai
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Spotify - Edge of NFT
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iTunes - Edge of NFT