There are only 4 ways to make a lot of money on NFTs:
1) Start a project that goes incredibly well (lottery)
2) Steal from your own project (rug)
3) Pump and dump schemes (scam)
4) Invest in the right projects (smarts)
Most projects are not #1 and don’t intend to be #2.
I think most projects aim for.. let’s call it option A. It’s not a way to make money in NFTs though.
A) Work really hard at a project, sell out the mint, and then do your best to make it a success.
This will not make you rich, unless you rug your own project.
The more you steal from your own project, the richer you’re going to get. But unless you slip into #2, A will never make you rich.
Here’s a way to think about it.
When people buy into your project, they are buying into your vision, your pitch, your hard work, etc. It’s pretty similar to if they’re investing in your business. They want you to be a success, they hope you will be a success, and they put their money where their mouth is.
Of course, everyone invests hoping that your project will be a #1 and take off to the moon. Every startup investor hopes to invest in the next Google. But investors are (hopefully) realistic, and know that that won’t always work out. And it may even work out quite rarely.
What investors, in startups or NFT projects, don’t expect you to do, after they’ve trusted you with their money, is to take it and retire to the Bahamas. In regular investments, that would land you in jail.
In the NFT world, that just gets you labelled a rug pull.
Many startup founders pay themselves minimal salary until the business is generating enough cash to pay themselves properly. And even then, they don’t take much *cash* out of the business. Cash is there to fund growth.
Startup founders get the big payout when the business has a “liquidity event” and sells for a large amount. Until then, they are not getting a big payday. They share that risk with the investor.
NFT project founders should be the same. Don’t treat the money as money you’ve earned. Ideally you shouldn’t pay yourself a dime out of it. It’s investors’ money. It belongs to the project. It’s there to grow the project.
It should be pretty obvious by now that even in the mad world of NFT land, building a genuinely successful project is very hard work. And it will likely cost you a fair bit of money.
Your warchest is precious. It’s like a startup’s runway: it represents the time you have until the project is dead (or needs to raise again). Except most NFT projects can’t raise again – though they do get a small proportion of secondary sales.
But if the project is dying and you need money to do some kind of big thing to push the project forward, well, you’ve failed. Because you won’t get royalties from low volumes and you won’t be able to go to investors for another round.
So, if you use that precious runway to pay yourself a big celebratory payday because “we sold out mint”… not only you’re probably NGMI… but also, you are slipping into #2. You might not be doing an outright rug, but you are stealing from your own project.
Paying yourself living expenses so you can focus full time is an accepted practice in the startup world, and it should be in the NFT world too. But living expenses should be reasonable and as low as you can make them. After all, the lower they are, the longer your runway.
In the startup world we have this term, “Ramen profitable” – when the startup is making enough to pay very basic founder expenses (e.g. put a roof over their head and buy enough dry noodles so they don’t starve to death).
NFT projects, so far, don’t really generate “revenues”, since they largely don’t have products. So they can’t really ever reach ramen profitability.
Instead, they have to wait for the big payday. In the NFT world, that’s the point where the NFTs price is so high that selling just a few of the NFTs they gave to themselves (which are sort of like their stock options) is enough to make them wealthy.
That’s option #1 from the first tweet. And I really hope your project makes it there.
But 99.99% of NFT projects won’t. Especially with how many projects are starting every day.
So, back to the point of the thread.
You’re starting an NFT project to get rich?
Unless you’re willing to steal from your own project, that won’twork. You won’t get rich. Like many founder, you’ll work really hard and have little money to show for it at the end.
If you are willing to steal from your own project I’m not really addressing you. But I’d wager most people who start the bajillion NFT projects we see everywhere do want to get rich. But they also don’t want to be unethical. Most people don’t.
TL;DR: Don’t start an NFT project to get rich unless you’re a thief.