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Digital collectible platform VeVe is the go-to destination for comic book and superhero fans looking to collect and trade digital versions of their favourite characters. But the company founded in 2017 and which grew out of co-founders David Yu and Daniel Crothers’ life-long interest in collecting, has won more mainstream acclaim in New Zealand business circles on the back of phenomenal growth since its public launch in the midst of the pandemic in 2021.
VeVe, which uses blockchain technology to authenticate the provenance and ownership of the digital collectables it sells through its app and marketplace, was named 2023’s fastest growing company by Deloitte in its annual Fast 50 index.
VeVe’s revenue grew 13-fold (1239%) last year and has now sold over 8 million collectibles in partnership with the likes of Disney, Star Wars, Pixar, Marvel, DC Comics, Warner Bros, Dreamworks, and MGM, Universal.
On top of that, David Yu, VeVe’s chief executive officer, was crowned EY’s 2023 Entrepreneur of the Year, around two decades after he was nominated in the young entrepreneur category as owner of Auckland trading card and games store Vagabond.
“Coming back 20 years later, being a finalist and taking that award away has been a dream for me,” Yu told Web3NZ. “My parents never thought this was going to land me anywhere.”
Web3NZ caught up with Yu about striking licensing deals with some of the biggest brand owners in the world, launching a Web3 business during the pandemic and finding the talent to support VeVe’s stellar growth.
How did you convince big brands like Marvel and DC that Veve was the right place to sell digital collectible versions of their biggest assets?
It was very difficult to convince the brand partners because, number one, we were pre-revenue and it was almost at a conceptual stage. They didn't even think there was going to be a market for it.
The licensing world has always been very old school. But we came to them with a collector’s mindset. We explained to them my background, my retail business. They understood Fortnite and Roblox, teens and kids buying upgrades or new skins and accessories for their gaming characters. We explained to them, think of the digital collectible as a new medium. They asked us to try that.
It was a very difficult journey. You go through contractual lawyers, their security teams, the whole shebang with marketing and using their brands. There were a lot of speed bumps. But when you go on the VeVe app, you see we have Marvel characters, Star Wars characters, DC, RoboCop.
Not many apps have all these characters in one place. We created something groundbreaking. That was very hard for them to understand, that all superheroes are superheroes. They are not superheroes because they are Marvel, or Star Wars, or DC. You love superheroes because you grew up watching them.
You’ve been diversifying out of the superhero niche into other areas. What’s been the strategy for that?
What VeVe really looks for is brands and things that you have nostalgia for or an emotional connection with. That’s number one. Number two is to release something where in the real world you couldn’t own it because it's’ so scarce or too expensive to buy in real life.
We have Lamborghini and Coca Cola because they celebrate certain things that are super collectible.
Stamp collecting was huge in the 1980s and 1990s. We’ve worked with New Zealand Post and the United States Postal Service to release their stamp artwork on VeVe. We are bringing brands that might have felt like a sunset collectible hobby business and making them relevant again.
What does your typical customer look like at the moment in terms of demographics, and what they are interested in?
Up to 50% of our business is in the US, with 35% in Europe, including the UK. Asia Pacific, including Australasia, makes up the balance. We’ve seen great opportunities in China, Korea, and Japan.
Collectors are predominantly male, up to 90% of them, and aged from 25 - 55 years old. They are used to collecting things, maybe basketball cards or comic books. VeVe has brought them back to collecting again.
What are you doing in the so-called phydigital’ space, where digital collectibles are paired up with physical collectibles?
My background is very much physical collectibles. I still own the shop. So every day I’m engaged with customers and physical products shipping into the retail store. Last year we did a number of [phydigital] trials, including one with Marvel and Funko.
We released an 18 inch Tony Stark figure with five colour variations. When you purchase one of them and have it delivered to you in the US, there’s a redemption code that allows you to redeem the digital version on VeVe.
We even partnered up with Marvel to release a shoe brand called Christian Louboutin. You purchase a Marvel pair of shoes and you also get a digital version of them. We’ve done cinema projects where there’s a theatrical release and you get a digital collectible to go with it.
I'm always thinking, wouldn't it be great if we could use the augmented reality (AR) effect on your phone and project an AR version of that superhero and take a photo of you standing next to it.
What do you make of the rollercoaster ride for NFTs in the last couple of years? There was a lot of hype followed by a clear out. Has it brought some rationality and sense to the market?
We rode through the market with every other project out there. The barriers to entry are low. Any independent artist can mint their own NFT and sell it on platforms. But people forget the long term sustainability, the community management. You need to continue to grow your audience, which is the hardest part.
When you stop doing that, your audience leaves. They don’t think [you’re] relevant anymore, they stop collecting. At VeVe, we are still seeing an influx of users. A lot of these projects have fizzled, it's cleared out a lot of the weeds. It was getting pretty crazy, some of the prices out there.
We stick to our knitting. We focus on the licence, the premium, the utility.
What are your plans for the metaverse?
Already in beta is the VeVeverse. What could you do in the metaverse with your collectibles? We’ve seen Roblox, and Epic Games with Fortnite corner the metaverse. It already exists, people live in that world of gaming.
There will be other metaverses, like what Facebook is producing. The metaverse is about community and connecting with each other. But not everyone will be there at the same time.
We’ll bring out the VeVeverse in multiple phases and segments. Number one right now is in the VeVe app you have a thing called ‘default’ which is where you put all your collectibles and decorate that room. The 2.0 version of that is allowing people to build their world together.
When we talk about building the world, it’s building your home, with a digital couch, a digital TV, where you invite friends over. Build massive towers, go as wild as you want.
Where we see the future of this business and monetization is in micro transactions. You could be an artist making beautiful 3D sculptures for someone’s VeVeverse home.
Then we move into the creator economy. You could be doing a talk show in the VeVeverse, where people pay you for it.
Augmented reality stands to be a big part of that. Have you tried Apple’s Vision Pro yet and what do you think of it?
I was very lucky to be delivered two pairs. When we were pitching to licensees and investors in 2017, we were saying, one day there will be devices like this. You’ll see digital layers of collectables around you when you put on these glasses.
It’s really a dream come true that this is happening. I’ll expect to see our app on the Vision Pro. We are on there already, but the AR function hasn’t been optimised and switched on. When everything is up and running, the sky’s the limit.
The other thing is AI. Imagine all those non-player characters in the video games just in the background walking around. They become active, they start talking to you, interacting with you. AI and blockchain, these two technologies go hand in hand. The blockchain will be able to make sure the AI is working and not just running off and double counting.
What was it like setting up a Web3 business in New Zealand when you knew your business would always be mainly overseas?
Myself and [VeVe co-founder Daniel Crother] go back 20 years. He comes from the web and digital side so his background is instrumental to the success of VeVe.
We were pretty much working remotely outside New Zealand for a number of years. You don’t really think, where should we set up the company? You go with your gut feeling and just do it. We came back to New Zealand due to Covid.
We were on the last Air New Zealand flight from San Francisco before they closed the counter. We then weren’t able to travel. We now know you can run a company from New Zealand or anywhere in the world.
We were very lucky to be able to launch our platform in the middle of that Covid period. People were surfing through websites, going through apps. A lot of gaming companies and apps went through massive growth during that period.
What’s the makeup of VeVe’s workforce these days? Do you have developers in New Zealand?
We’ve mainly used New Zealand for the administration side, marketing, behind the scenes operations. The majority of our team is still offshore. You get a lot more talent that way, they are a lot more up to speed in terms of the technology. Blockchain is a small part of it. Being in the app store, you are constantly upgrading the app.
There’s a team of artists, creators, 3D designers. There’s a licensing team, a production team. It used to be just me and Dan and about six others around the world trying to achieve this. Now we have a diverse range of expertise and talent.
When you're a startup company, it's very difficult to attract talent because you are pre -revenue, pre-launch. People who work at Google just go, I work at Google, why would I want to come to a startup company to put all that effort in, not knowing if it's going to take off or not?
We went through that experience trying to grow the business to where we are today. We are still in the very early stage. The digital economy is here to stay.
Where are you at from a capital raising point of view?
As a CEO of a company, it's probably my biggest failure. We failed to raise properly in the 2018 - 2019 period. People didn't actually take NFT or digital collectibles as a segment that was going to be very successful at all.
All the VC money was very much focused on blockchain technology, how many transactions they could move per second. It was only in 2021 - 2023 that VCs decided that you really need to have real world uses for these blockchains.
By that time we were pretty much self-sufficient as a company, because we rode that initial phase of growth. We’ve built the business to around 95 employees and contractors to help us get to the next stage of the company.
The competition in this industry is immense. So our job is always to think what we're gonna be in five, six, seven years time.
What’s your advice to young entrepreneurs considering getting into the Web3 space?
When I started in 1997 selling trading cards, my friends and my parents thought I was nuts. In 2017, when I started doing this digital collectible business, I was told the same thing, they thought I was insane.
Number one is that you want to be in this industry. You want to get in before people actually understand what it is, because by the time they understand it, everyone’s got it. A lot of people talk about it, the number of people who act on it is very limited.
The beauty about Web3 now is that there are a lot of resources available. Companies have built these technologies. There are communities you can go to for advice.
There’s always the dark side out there in any industry. There are scammers. You hear the good stories, not the bad stories because people are too embarrassed to tell you. You want to learn from people who went through that.
This is the era where young entrepreneurs, if you have a great idea, you now have the tools. You don't need to learn about how to make AI. You need to learn how to use that resource to help you build things faster.
We go through generations of new technology and we're definitely in one of those eras where you either embrace it, or you're gonna lose out.
Don't just listen to me, go out, meet people in the community, be part of those events and build the dream from there.