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Scott M. Lawin Of Candy Digital — A New Digital Asset Content Company Building An Innovative NFT Ecosystem, Plus: Ethernity, And More…
The sports and entertainment industries would not exist without its passionate fan communities. This can be greatly seen in the huge market for collectible items, where fans actively engage and showcase their identity. Taking the fan experience to a whole new level through an innovative NFT ecosystem is Scott M. Lawin. He is the CEO of Candy Digital, a leading platform specializing in sports and entertainment digital collectibles. In this episode, he joins us to share all about their new digital asset company, its origins, and why they think this technology has broad appeal to a mass market audience. Scott also talks about how NFTs are transforming the fan experience, citing their sales of over 1.9 million NFTs. He then discusses the future of the sports and entertainment industries, especially as they weave into Web3 and digital ownership. The fan experience is only going to continue to evolve with digital assets. Don’t get left behind by the opportunities this present.
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Scott M. Lawin Of Candy Digital — A New Digital Asset Content Company Building An Innovative NFT Ecosystem, Plus: Ethernity, And More…
This is Scott Lawin of Candy Digital, the Web3 platform re-imagining fandom. I’m here on the Edge of NFT. I’m a fan. You are a fan. Let’s enjoy another great show.
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NFT-curious audiences, stay tuned for this episode to learn how Candy Digital is leading the charge in sports and collectible NFTs to deepen fan connections and expand the rich legacy of collectibles, why you should check out our social for a chance to win one million Ethernity Stones, your ticket to the next amazing collector’s experience, and our guest’s secret to cornering the childhood lemonade stand market through mergers and acquisitions. All this and more on this episode.
Before we move on, don’t forget that our Outer Edge LA event returned to Los Angeles in March 2023. Do you think you missed out? You can now catch up on all the discussions, presentations, and more by heading over to Watch.OuterEdge.Live and register with your email address. You will have access to over 60 captivating conversations and performances. Binge watchers are welcome. Netflix, look out. We will see you inside.
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This episode features Scott M. Lawin, the driving force behind Candy Digital, a leading platform specializing in sports and entertainment digital collectibles. Scott, apart from leading Candy Digital as the CEO and COO, has an impressive track record. He founded Parametric LP, a firm dedicated to early-stage investments and advisory in blockchain, FinTech, art, and real estate.
He has held significant roles in the industry, including the Chief Operating Officer at Moore Capital Management, a $15 billion global alternative investment firm, and the same position at the Liquid Markets business at Fortress Investment Group, following a fruitful twelve-year stint at Goldman Sachs & Company. Candy Digital is reshaping the digital collectible landscape with unique NFTs that allow enthusiasts and collectors to buy, sell, and deepen their connection with sports culture and entertainment. Scott, welcome to the show.
Thank you so much. It’s great to be here.
It’s always a special moment to hear what you’ve accomplished. I’m sure when you get out of bed in the morning, you might not always be a little bit tired and be like, “Did I ever do anything?” It seems like there’s a lot there. Josh had a question to launch things off. Josh, what was your first one?
Let me ask Scott. It has been a long time coming having you on the show. It’s great to have you as part of the original genesis version of NFTLA. I’ve been admiring your work in the space for quite some time. When it comes to digital collectible potential, nothing hits home for me more than the world of sports and entertainment. I would love to go back to the beginning to start things off and talk about the genesis of Candy Digital, and what makes it unique. What was unique about your approach to digital collectibles going into this business?
Without going too far back, the story of Candy’s origin started in 2012 and 2013, which was when I started paying attention, doing research, and trying to get my head around what blockchain was and what it was going to become. I was still deeply immersed in the financial services world. I was trying to understand what was Bitcoin, “Was it going to be a new digital currency? Was it a store of value? Was it going to be a new transaction processing layer, a funding mechanism, a scam, or all the above?”
That started my path of understanding more about the technology and thinking about its impact and ultimately where it was going. Fast forward to 2020 along that journey, I became more active as an investor. My business partner, Mike Novogratz, had started Galaxy Digital, building the leading merchant bank in the blockchain and crypto space. In the mid-pandemic, we were sitting down and marketing to the market where was crypto from an adoption perspective with institutions. We knew that big pools of capital were starting to invest in Bitcoin and Ethereum.
A lot of major global players were starting to build the infrastructure. There were regulatory framework discussions that were starting to be afoot. We said, “How does this technology go from being an investible asset into something that has broad appeal to a mass market audience and is focused on content?” It’s understanding the power of what it means to have an authenticated ownership of a digital asset, the power that creators can have then in the ongoing royalty stream, and ultimately the role that digital identity will play in the future. I spent time thinking about art, music, and sports culture and zeroed in on sports.
My cofounder is Mike’s brother, Matt Novogratz. Matt had been at Galaxy, building a sports business there. We looked at the role physical collectibles played in people’s identity in the community and as a broader collectible market store of value and said, “We see a future with physical, fractional-physical, and ultimately digital collectibles. There’s a natural progression there.” If we can think about the sports industry with billions of global fans and super passionate communities and a collectibles business that people are already engaged in and understand, we think that’s a great path to onboard the next 1 million, 10 million, and 100 million people into the space.
That was the genesis of how Candy got started. It was looking at what we thought frankly was going to be a longer progression into a digital-only world sitting in 2020. I like to say that unless you were in the crypto space, very few people knew how to spell NFT. It wasn’t something that had captured the zeitgeist yet for most folks. 2021 changed that. We pivoted toward developing our digital-first strategy and then serving with our first partner, Major League Baseball. That was the fire that started Candy’s growth.
Here’s the next question here. Major League Baseball has been a big part of what’s going on with what you’re doing. In your mind, how are NFTs transforming what’s going on with baseball fans and their experience?
We have always approached the space from the perspective that we think NFTs aren’t just the next-gen version of the physical trading card. We see it as an evolution, but we think of NFTs and the role that digital assets will play in any content relationship as something that can enhance and extend that experience of being a fan. Let’s talk about baseball in particular.
We have developed a series of core products at Candy with our partners at Major League Baseball. The first is very much a digital trading card. We call it our ICON card, which is trading card 3.0, a digital ticket, a commemorative asset that starts to tie people’s experience back to being at a live event, watching the game, or watching it on TV, and then a video component that captures those special moments.
We’re thinking about those not necessarily as distinct separate products, but starting to think about how these digital assets start to build that loyalty engagement and fan value both for themselves as a collector for the community, and then ultimately for that relationship with people’s favorite team or player. We’re still in the early days of that. We started out with our digital ICON collectibles. They have a lot of the same types of scarcity and rarity features that traditional physical trading cards do. They come in blind packs but they are much more dynamic assets.
They incorporate static imagery, video, audio, motion graphics, and signatures, and they change over time. We use the power of smart contracts and the blockchain to pump real-time data into them. Every time those players play a game, those stats update over time. They have their own characteristics as collectibles. They also become items that our collectors can use in challenges and to solve puzzles. There’s an engagement component of being able to not just complete a set and unlock something unique, but also to use those in an online trivia game that changes over time and builds people’s loyalty scores and engagement scores.
Ultimately, the things that we’re working on with baseball and exploring now are taking those assets off your computer screen and out of your phone and digital wallet, and giving them value in the stadium. You can see the world as our fans and collectors. New people come into the space. Not only have you collected a handful of your favorite digital icon players, but you’ve been to a number of games. You redeem digital tickets.
Let’s say you’re a Mets fan. The Mets now know that Josh is a huge Mets fan. Before he goes to the game, his NFT of Pete Alonso catches on fire. He has an opportunity to go early to batting practice, and maybe meet Pete ahead of the game. Eathan, you’re sitting out in the right field. Your favorite player hits a home run there. Suddenly, you’re airdropped with a video moment of that home run that commemorates your experience at the game. Those are the things that we’re working on building and where we see the future of fan engagement going where digital assets aren’t just things in and above themselves, but they relate to what that fan experience is.
Candy Digital: Digital assets aren’t just things in and above themselves, but they really relate to what that fan experience is.
That’s fun. We’ve got a fun sponsor called Swoops. We have a digital basketball team. We get digital basketball players. We get to play against other teams. The players are NFTs, but I can imagine the next level of what they’re doing is why not have actual trading cards where there are multiple instances for those particular players? We can own the player but then other people could trade the card and have fun with that experience. Maybe there’s a partnership in order. There’s so much potential here. It opens up the possibility of collectibles to a new domain of fans. Some people might have been, “There are physical cards. I don’t get it,” but then once you can engage and interact, they’re having a lot more fun.
I was browsing a little bit the internet for stats. I came up with this stat. There’s an increase in fandom from 35 to 44 than there is from 18 to 34. I imagine that MLB looked at what you’re doing as an opportunity to tighten that relationship with younger fans that are into gamification. Along that line, you crushed it with your token sales and a pretty astonishing achievement there. To what extent was that tapping into the zeitgeist of the younger fan versus the more traditional fan?
It’s pretty interesting. Most people would expect that our fan base skews younger given the interest in blockchain and digital anything. The reality is it’s balanced. We have 18-year-old collectors and 65-year-old collectors. The core of our collector base is in the late 20s to mid-30s. Some of our largest collectors have been collecting for years. They’re huge baseball fans. They collected cardboard and memorabilia. One of the comments that one of those collectors made to me that’s always stuck with me is he was a specific collector of cigarette cards.
The Honus Wagners, if you’re familiar, were the very first baseball cards, which were giveaways in cigarette packets. He said, “If I had a time machine, I would snap my fingers, go back, and buy every one of those that I possibly could if I knew what I knew now about physical card collectors and collectibles. That’s why I’m in this space. I know that digital collectibles are going to become hugely important over time. I want to be on the ground floor, help be part of that movement, and build this next phase of what collectibles and fan engagement is about.”
Getting into the details there, how exactly did you pull off such a big sale? It’s over two million token sales.
We sold that. We’re over 1.9 million NFTs at this point. That’s not just with Major League Baseball. That’s also with our other partners at NASCAR, WWE, Netflix, Getty Images, and college athletes. Our approach to the space was that sports content, entertainment content, and media content all have different approaches. All have passionate fan bases, but they aren’t necessarily mutually exclusive.
I can be a fan of Stranger Things and also be a huge Yankees fan. I can watch NASCAR races on the weekend and still collect photography. Creating ecosystems for our partners and creating the right product structures that resonate with their core communities is important, but there are also some interesting synergies across those different partnerships. When you add it all up, it’s about two million.
I should clarify. We’re talking about non-fungible tokens. NFT is not your traditional token that sometimes people associate with. It’s a very special type of token that we love dearly on this show.
I love that story about cigarette packs. When you say, “Know what I know now versus know what I know then,” it’s interesting to think you would throw away the actual product or the actual cigarettes. They keep the collectible. It says a lot about collectibles and their value over time.
At the core of how we think about our products and how we work with our partners, this is ultimately about digital identity. It’s about the things that you own that tell your story and connect you to stories and communities that have shared values and interests. That’s what gets us excited. It’s not just about what we have done but where the future is going and the role that NFTs are going to play in that.
Are there any more words on how NFTs are allowing people to strengthen the connections and bonds they’re looking for with players and the sports that they love?
We try every day to think about how we bring more of that value to our collectors. We’ve got two examples. We had a group of collectors down in Atlanta to meet with the player Mike Harris. Those collectors are not just fans of Mike and the team, but they have collected across all of the different products and teams. That was an IRL experience that they wouldn’t have otherwise had if they were going to baseball games or buying cardboard cards.
We had a meet-and-greet with Pete Alonso from the Mets. Pete was an early player who discovered Candy and started buying our products and trading our products. He’s a Candy ambassador. It’s the same type of thing. It’s a small group of our fans and collectors who got to have that one-on-one experience with Pete. We want to do more of those things.
Baseball has been a great partner. They’re excited about the future of Web3. The Baseball Hall of Fame helps with that. We would love to do those things every day. They’re harder to organize than you think. We try to balance that out over the course of a season and think, “How can we cross that digital-physical and digital-experiential divide in a meaningful way?”
That’s great. While you’re at it, Scott, I know you have a lot of free time. Can you do something about getting the Red Sox into a less competitive division? This AL East is killing me. What’s going on here? The records of our teams are all better than every other division practically. It doesn’t make any sense. The Red Sox would be almost tied for first place if they were in the center.
I don’t think I can help you on that one. We’ve got more Yankees fans at Candy than Red Sox fans, but we got a decent number of those as well.
We could take the city of Boston and move it to the Midwest or something.
Whatever we have to do. It’s killing me. It’s crushing my soul.
Less lobster bisque, more competitiveness.
There’s still a lot of the season left. We will see.
Anything can still happen. It has been a wild few years in sports. You touched on your deep relationship with MLB. There’s another element of your maturation in this space, which was your partnership with Fanatics. I know that relationship has evolved. I would love to at least touch on the initial impetus for that partnership and how your perspective is rooted in a different hypothesis at this point than the Fanatics.
Fanatics was one of our first partners when we got started. When we were thinking about this opportunity and deciding to focus on sports, we said, “Who do we want to build a business with in the sports space?” Fanatics is at the top of the list. When Candy got started, it got started with Galaxy and Fanatics as early investors. As we saw a run-up in 2021, and then the market start to readjust in 2022, our view over time that the opportunity here was in the early days about digital collectibles but about Web3 fan engagement, and all the things that we think Web3, digital ownership, and decentralization can bring to the table.
In a down market, Fanatics’ perspective was rooted a little bit more in their physical-first business, and thinking about the physical collectible and how digital might pair with that. At the end of 2022, we realized we’re in a challenging market and will likely be challenging for a while. We see a great opportunity for consolidation in the industry, and we want to be a catalyst for that. We decided to go our separate ways from that perspective. Fanatics continues to be an investor in the business but less significant than they were before.
That makes sense. I have to imagine that in a down market, even the physical merchandise business is impacted.
I don’t know the numbers but the macro environment is somewhat inescapable if you’re selling products, whether they’re physical products or digital products.
Doubling down on what you’re good at and what you know makes sense. We’re bullish on the long-term potential of this industry and digital collectibles. What you have done with MLB is a great case study. We appreciate you sharing that insight with us.
It’s great to be able to hear some details there. I believe this was one of our Hot Topic stories at one point, talking about Candy Digital and Fanatics and walking through it. It’s great to have a firsthand perspective. Web3 is burgeoning here. Even though we talked about down markets, withdrawals, and things like that, there are a lot of sectors still doing a lot. You see very interesting players at a time when some people are withdrawing. Where do you think this is all headed? Let’s at least talk about the sports industry. What is the future role of Web3, NFTs, digital ownership, and stuff like that?
Our key thesis is that a digital asset is going to be at the center of most brand and fan engagements in the future, whether it’s called an NFT, digital collectible, reward point, game piece, or whatever it is. It’s the idea of ownership of that token or content and the idea that a content owner and a brand or a creator can start to have a much more dynamic one-to-one relationship with a customer and a fan. We believe that’s a big idea.
A record album by Queen.
Classic. Do you have a favorite Queen track?
It’s hard to argue with Bohemian Rhapsody.
Is it appropriate to say Fat Bottomed Girls?
It was a radical song at the time, for sure.
He had a prime location on the street.
He bought up all the lemons from the store.
Yeah.
Wordle and crosswords.
There we go. There are no stones in the bag.
I try to always.
Thank you.
Important Links
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Crypto Banter - YouTube
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@EthernityChain - Instagram
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Palm NFT Studio - Previous episode
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Twitter - Candy Digital
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Facebook - Candy Digital
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Instagram - Candy Digital
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Spotify - Edge of NFT
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