Launching NFTs as a non-crypto company: Seven lessons from Reddit
Step one - don't call them NFTs. You are welcome
How Reddit got NFTs right
Source: https://reddit.zendesk.com/hc/en-us/articles/6213835889044-About-the-Collectible-Avatars-Shop
Reddit’s NFT launch has been by far the best one by a non-crypto company so far. Since their introduction in July, their NFT avatars have achieved broad adoption among the platform’s users.
@polygon_analytics’s Dune Dashboard shows that the Reddit NFT avatars are held by almost 3 million crypto wallets. According to Reddit, at least 2.5 million of these are paying customers. This is higher than the 2.3 million wallets which have traded on Opensea (see @rchen8’s Dune Dashboard), the leading crypto NFT marketplace.
Assuming a similar number of daily active users as in 2020, in just four months almost 5% of Reddit’s active users have bought an NFT avatar!
Source: https://dune.com/polygon_analytics/reddit-collectible-avatars
The launch has been a success by other measures too. Reddit NFTs are popular on OpenSea (the top NFT marketplace) and one even sold for 18 ETH (almost 30k USD).
At this point, while impressed, you may be a bit unsure what NFTs are, so let’s define them. They are tokens which certify ownership of an object, usually digital, and are hosted in their owner’s crypto wallet. Reddit’s NFTs represent ownership of digital avatars which can be used as profile pictures on the Reddit platform. They are first purchased on Reddit and can later be traded on NFT marketplaces. The Reddit NFT avatars co-exist with their standard, non-NFT, avatars that all their users already have. [check out my NFT post for a deeper NFT introduction].
So, how did Reddit get their NFTs adopted among a notoriously anti-NFT crowd? And what can we learn from their success?
I have identified seven key takeaways:
Use your own language to describe NFTs, not crypto jargon
Integrate NFTs where they can add value, not be a distraction
Make NFTs a positive experience for your community, not a cash grab
Use NFTs to humanize digital experiences and fulfill emotional needs
Curate high-quality pieces, do not compromise on aesthetics
Limit your community’s exposure to price bubbles and financial ruin
Ignore the initial backlash, not everyone needs to be onboard
Let’s dig in!
Rebranding works, and is not cheating
Lesson 1: Few NFT haters understand NFTs, so you can easily avoid backlash by using another label.
In 2021 the “crypto” label became so toxic that it had to be rebranded as “web 3”. Reddit is rebranding NFTs in a similar manner by calling them “digital collectibles”. Their CEO Steve Huffman has explicitly stated that they avoid using any crypto-native language in their messaging:
“We try really hard not to use any crypto words — it just confuses people,” Huffman said. “The ecosystem is so confusing. I can’t figure out half this stuff.”
Source: The Verge
Source: Reddit
Pick a use case that makes sense
Lesson 2: Adapt NFTs to your platform, not the other way around. It should be clear what the benefit the NFTs provide is.
Reddit’s NFTs did not disrupt the current user experience. Users have always had avatars that they can customise. Now, these can also be NFTs hosted in their crypto wallets and can be traded on NFT marketplaces.
Crucially, no one is forced to buy NFTs to use Reddit. The core user experience is identical for those who choose not to purchase NFTs. Yet, the NFTs have enabled a new functionality for users who value owning their avatars and being able to trade them.
Source: Reddit
Reward your users, bribes are fine
Lesson 3: People like freebies and flattery. They are less likely to complain about changes when they get something in return.
Reddit started their “Digital Collectibles” avatar launch by gifting their active users with free NFT avatars. While they haven’t disclosed the exact rules for Redditors to qualify for one, the community believes the cut-off was so low that many active users would qualify (at around 2,500 karma points, which are awarded when you get upvotes on your posts and comments).
The NFT avatar giveaway achieved several goals. First, Redditors were flattered to be highlighted as “top” users and viewed the gifted NFTs in a positive light. Second, Reddit’s NFT avatar users can be easily identified in the reddit forums due to the hexagon surrounding their profile pictures. So the NFT giveaway to the most active platform users effectively recruited them to provide free advertising for the NFT launch.
2 normal reddit avatars and 2 NFT reddit avatars. Source: Reddit
Source: Reddit
Emotional appeal increases retention
Lesson 4: Both babies and pets grab people’s attention. Pets are easier to incorporate into products.
Many of the Reddit NFT avatars came with "pet” companion avatars.
Example avatars with pets, Source: Reddit
This simple trick made it harder for some anti-NFT redditors to ditch their avatars even after they found out their avatars were NFTs.
Source: Reddit
Social media can be isolating and having a pet companion can make the experience less lonely. Getting your users emotionally attached to their NFTs will increase their appeal and help with retention.
Get the basics right, quality matters
Lesson 5: People like beautiful things. Give them a product that they would feel proud to own and show off.
If your NFTs are high-quality people will be more likely to want them. Reddit didn’t just allow anyone to build NFT avatars, they collaborated with selected artists who produced stunning, distinctive avatars.
They did not want their early NFT adopters to get exposed to mediocre products. I fully expect Reddit to allow more creators on their NFT platform as it matures. But they wanted to make a positive first impression other community and that requires curation.
Beautiful Reddit digital collectibles [yes, beauty is subjective]. Source: Reddit
Haters gonna hate
Lesson 6: You can’t convert everyone. Ignore the haters and they will eventually find something else to complain about.
So did everyone on Reddit embrace the new NFT avatars? Not at all. Several subreddits (groups) banned any Redditors who used the NFT profile pictures.
The majority of Redditors were puzzled their free avatars would cause so much backlash:
In the end some of the mods ultimately relented and reversed the ban:
While some subreddits still ban NFTs, this approach has not spread widely. Once people acquired their NFTs and experienced having them they were less likely to blindly follow the opinions of NFT haters.
Protect buyers from financial ruin
Lesson 7: Take care to protect the financial downside of your community. Do not indulge their gambling tendencies.
Some Reddit NFT avatars currently have offers of over 1 ETH (1.5k USD at current prices) on Opensea. But this is likely to be a volatile market and prices can tank at any moment.
Reddit has chosen to shield their community from the price speculation. All NFT avatars on their internal marketplace have sold at prices between 10 and 100 USD, limiting the downside of speculators. The only way Redditors can buy the NFTs at higher prices is if they go external NFT marketplaces.
This requires familiarity with how crypto works. The average reddit user is unlikely to go to those sites unless they hear that their avatar has significantly appreciated in price. So native reddit users are more likely to encounter a positive price surprise or just enjoy using their avatars, rather than be financially ruined in an avatar price speculation scheme.
Does this mean that Reddit will never add avatar trading to their marketplace? Of course not. They will add this feature eventually and profit handsomely from it. But they will do so once the initial hype has settled down and users are less likely to get caught up in irrational speculation.
The NFT future is bright
The successful Reddit NFT launch demonstrates that NFTs will not remain a niche crypto product for long. Instead, they will, in short time, be adopted by virtually all “non-crypto” companies. Buckle up!
Soon NFTs will be like the air we breathe - all around us, but invisible.
The era of the Digital Collectibles has just begun!