3LAU on The Future of NFT's, Web3, and Tokenized Music (royal.io)

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Welcome back to the Casey Adams Show. Today we are joined by the one and only Justin Blau. Thanks so much for coming on the show, Justin.

Thanks for having me. Always fun local Vegas crowd, of course.

Thanks for coming out. So I've been following your journey for quite some time, man, obviously from a music angle, but the past year you've just been on an absolute roll. When I see you with NFTs, your new company, Royal, you guys just raised, I believe it's $16 million, correct?

Yes, sir.

You've just been, you've been such a incredible person that's been in the space, that's been innovative and I'm excited to talk about it. So for those that don't know what Royal is, I'd love for you to give some insight into your new company you guys just raised. And again, congratulations on that.

Yeah, no, absolutely. Royal is a platform to enable anyone to own their favorite music alongside their favorite artists and participate in the success and the financial upside of their favorite artists.

Where did that idea come from? Because I know obviously your music background, I'd love for you to even touch on that. Like, how did you get involved in music initially? And obviously what led you to that idea with Royal?

I think I started out at Wash U studying finance and English. So I've always kind of had a financial background. I was studying derivatives and structured products in school and then became a dj. Right. So naturally, when kind of the crypto ecosystem started to grow, I was first introduced to it in 2014, really took the deep dive in 2017 and was just fascinated by the technology and its ability to disintermediate entire industries. With music specifically, there are only a couple of people that have had access or A couple of parties, I should say, that have had access to investing in music assets, right? Record labels, private equity firms and hedge funds. For the most part, individuals have barely any ability to actually invest in something that's truly emotional and meaningful to them. But music has been generating, I think Globally, global or US streaming revenue was 23 billion last year and that's growing every year by at exponential rates. Right. And so giving the public the ability to participate in that revenue because the public is ultimately responsible for disseminating, distributing and sharing music. Right? Letting the public invest in the, in the assets they really care about is something that I've always thought to be a great idea, maybe for the past seven years. It's just that the timing really worked out in terms of, you know, the mainstream kind of onboarding to this whole NFT ecosystem. And because the timing is now, I reached out to a bunch of friends and we put together Royal.

Love that. So when did you guys initially start it?

So my best friend jd, who I started the company with, he went to college with me, we've been best friends for 11 years. And he started another company called Opendoor that's now a publicly traded company. And you know, ever since Opendoor went public, he's been at, he was at Atomic, which is an incubator, a VC style incubator that's based in Miami, nsf. And you know, he's just an incredible operator and builder. And when I, when I wanted to, you know, really own in on Royal, I reached out to him to see if he wanted to start it with me because he's a lot more experience building tech companies and he has been doing that for the past 11 years. I'm, you know, more of the crypto native artist side. And so I really needed a great team. Right. Like every, every big idea that's a hard idea to execute on needs an incredible team. So that's kind of where it started. And then Fred Arzum, who was the, one of the founders of Coinbase with Brian, has also been a close friend of mine and I had been chatting with him about, you know, where I thought the future of NFTs was really going outside of just collectorship. And the answer in my mind is ownership, right? Like, what does it mean for a fan to actually own a song and then actually own rights in that music and participate in strong streaming royalties generated by that music? And so when I was originally kind of talking about this concept with some of my closest friends in tech, everyone was like, you need to do this, Justin. And I was like, oh man, I don't know if I'm ready to start a company right now. But I was very, very quickly convinced. And it's been, it's been really only since May, since we started, but I would say we've been operational for a little over three months.

Nice.

We've hired some incredible people along the way that have worked. People that are From Instagram, from GoFundMe, from, from, you know, law firms like Cooley. We have a pretty awesome team.

That's incredible. So when did you first get put on to NFTs? Because, I mean, you are a true innovator in that world on top of the music side of things. And I think I saw today, it was like the three year anniversary since you did your first, I think you said NFT experiment, Is that right?

Yeah, yeah.

What was that experiment that you were talking about today?

So four years ago is when I actually, I actually started experimenting, but didn't actually have a product. I was just playing around with the technology. I'm not a developer, so I worked with other engineers and developers to kind of like see some of my crazy visions come to reality. And then in 2018, I threw a music festival where the festival app that had, you know, the schedule and the artists that were performing, it was Zed, Big Sean, myself, Matt and Kim. We performed at Berkeley in Berkeley, California, at the theater there for 8,000 people. But I wanted to create a crypto dimensional layer to the festival. So everyone with the festival app had a native wallet where they could actually scan QR codes and claim free NFTs at the festival. They're actually limited fungible tokens because stellar doesn't support NFTs, but they were the first like kind of digital collectibles that I experimented with. And one of those tokens was a Blau loyalty token, which was really cool because there were only 50 of them. And the only way that you could actually get it is if you found me at the music festival and scanned my phone. The only way that you could get this like exclusive asset. And. And it was gone in like 45 seconds. And that's when I knew that like, you know, digital scarcity was definitely something that was going to be important long term. But, you know, crypto went through its bear cycle for, you know, from 2018 to really March of last year. And, you know, when the NFT hype started to kind of grow again, of course I had the previous experience and was kind of ready to really start experimenting at a higher level. And that started in the summer of last year.

Wow. So the summer of last year is when you really started building out your own core products around NFTs.

Exactly. So experimenting with it three or four years ago, when the public really, you know, no one really cared at all. And then what I started to see was this, you know, particular manifestation of NFTs. Right. Because NFTs can be used for pretty much everything. All it is, you know, for those who are listening, I think NFTs are misdefined a lot in the public. And NFT is just a certificate of authenticity that lives on a blockchain. And then that certificate can point to anything, really. It doesn't have to be an image. It could be audio, it could be a contract, it could be a legal agreement. Right. It could be anything. But I imagine, you know, a lot of people, when they think of NFTs, they think of it like as the image itself, when in reality it's not. It's just a piece of code that proves a certain, you know, wallet, address, owns, owns it. And so, you know, one of the things that got me really excited last summer is I saw NFT technology beginning to emerge as art. That was like the first time I had really seen that, like, oh, wow, there's like digital art. And, you know, these artists spend hours and, you know, if not years owning their craft. One of these artists is, is a good friend of mine, Slip Sunday, who has done all my art direction for Blau. And these artists have generally been underpaid. It's not like a painter, you know, who can go work through the ranks in, you know, different auction houses and start selling their paintings for a lot of money. These digital artists, they spend just as much time on their art as physical ones do, but the world doesn't value it because you could just right click save it and put it on your tv. So all of a sudden NFT started to introduce this idea of, like, what does it mean to own digital art? And there are all these really talented digital artists like Slime Sunday and Beeple, who ended up, you know, setting some records, who's also a friend of mine. You know, this gave them, you know, was able to. NFTs kind of gave these creators a real means of capturing the value that exists in that art. Right? Because people still think, you know, people's work is incredible. There's just no way for a, you know, a regular person to show patronage for that type of art. So when NFT started manifesting as, like, digital art, there was this big sale on Nifty Gateway for $55,000 by Trevor Jones, who did this crypto bull. And I, I'll never forget this moment. I was like, wow, it's back. And this was like, right after Covid, I wasn't touring. I was home, right? My, My dj, my regular career was kind of on the side and had all this free time to kind of start experimenting with things. And so when I, When I saw that happen, I. I dove in head first and I said, is anybody doing, like, has anybody done music NFTs? And like, what would that even look like, right? What would a collectible edition of. Of a song really look like? It's quite a bit different than like, art. And so I started conceptualizing that last summer and ended up teaming up with my art director, Slime Sunday, to do audio visual art with songs that I never released to the public. And that's kind of where it all started.

Love that. And that ended up, if I am not mistaken, I remember seeing it earlier this year where it's like the auction style, right? Where there was like the number one highest bidder, then there's like the 2 through 10. Is that what was the manifestation of that idea?

So it start. It actually started out even soon, like earlier than that. We just did these like audio visual clips that we tokenized and sold. And then the kind of final manifestation of that in January of this year, I did like the first tokenized song where it was basically like the album artwork for the song, the audio file that represented the song, just like on chain and then. Or I should say on ipfs. And then we actually sent people, we mailed people a physical block of the waveform for the song, like as a physical collectible. And these were all kind of experiments, like, what does tokenized music really look like? And I wasn't sure, right, because no one had done it. And it's hard to conceptualize because, like this idea of digital ownership and scarcity was new to visuals, let alone to music, which is a different medium. So. So then in February, I had this idea of tokenizing my album with this auction format that ended up being the big blockbuster sale that of course after that everything changed. But I think that it was really just a lot of people ask, how did it happen? And I think it's just me being involved. I've been involved in the community for years. I've really loved the technology. I've loved playing with the technology, pushing it forward however I can. Even though I'm not a developer, you know, I love working with developers to kind of make my Crazy visions into reality. And that auction was one of those crazy visions.

Absolutely. And I remember watching that because that was actually, for me, like one of the first, when I was really going down the NFT rabbit hole is when you were doing this auction and I was seeing how it worked and just watching and it was mind blowing to see the level of. And I watched interviews after about how intentional you were with it, how much work went into it. But I want to ask you, from that moment, as you said, like, that was the life changing moment. Like, what changed? And on that day when that auction closed, like, where were you, what were you doing? And most importantly, how are you thinking about the future?

Yeah, it's funny because everyone, everyone looks at the dollar signs and all I was thinking in that moment was, shit, what do I do next? Like, now all the attention is here. Like, what? I never intended this to happen. Right. This was completely unintentional. And my goal was always, well, how can fans invest in music? Well, the first manifestation of that was, you know, music NFTs like we had sold, you know, in the auction. But that was only a stepping stone in my head to a longer term vision, which is now royal, which is like, how do you give fans ownership in the music they listen to, which is way more powerful than just owning a collectible edition. And, you know, we're going to, you know, all of my existing NFTs are going to, you know, actually earn rights in the future. And we're building a lot of that stuff. I've already announced that on Twitter. But, you know, when fans actually have ownership in something, their incentives change. Right. When you listen to new music that you like, you typically just like, keep it on a playlist and listen to it. And like, maybe you share it with a friend if you really, really like it. But you might just like sort of love, love a song that, that you don't share with a friend that, you know, really means something to you. When you have the ability to share it and then earn upside in its success, that changes your incentives as a listener. Now you're not just a consumer, but you're a participant in the ecosystem. And this is kind of like how music always used to be. And then, you know, the streaming kind of era happened and music became the opposite of scarce. But back in the day, you know, in the early days of like, classical music, you'd have to, like, be a really wealthy family to get access to a Mozart show, right? Like, Mozart would play in your home. Only. Only, like the highest elite would even have that experience. And there was no such thing as recorded music. So people like couldn't even necessarily hear Mozart play unless they were in the room. Right. Like, there's no recorded music back then. So, you know, like scarcity in creativity and music did exist back in the day, but digital media kind of just took it completely away. Now we're reintroducing that and human behavior follows in a really interesting, you know, it follows suit, right? Where if music is scarce and you can own music now, you know all those conversations you've had with friends about, oh, I saw them before they were big, or I saw Halsey when she was opening for this person. Or you know, in my case, Millennium and the Chainsmokers, who are both huge artists now, they both opened up for me on tour back in the day. If I could have invested in those artists, I would have. But then was just no means for me to. Right. So it's not just a way for fans to invest in creatives. It's also a way for other creatives to co sign creatives. You know, I imagine a world where a tiktoker who might have 20 million followers likes this song a lot for their video. Maybe it's from an unknown artist. They go buy the NFT of that song and then post about it because they have influence on the success of that song. Now they're incentivized to really push it and the artist benefits as well. Right. So there's like all these interesting incentives and dynamics that could exist. And you know, distributed ledger technology has the potential to power it.

I'm curious about that. Let's say that that tiktoker buys an NFT of that song. A like, how many NFTs could be available in a song and how much upside is like, how much potential upside is there for, you know, let's say that tiktoker, that blows it up. A song that goes from a thousand listens to 10 million in a month. Like, where is the. Where's the upside?

I mean, it's just a market, right? I like, like I like to liken it to sneakers where, you know, if there's, if there's a hundred pairs of something that everybody likes, the price could go to infinity, theoretically. Right? The same with, you know, cryptopunks where, you know, I've owned a crypto punk actually not even for that long. I ended up just like buying one in March because my friend was like, you, you definitely should. And I waited. I was trying to buy one in November, but I couldn't find One that I liked, that was available. And so I waited and waited and waited and finally one went up for sale and I bought it just because I liked it for no other reason. It wasn't an investment by any means. But now cryptopunk prices are like minimum 400, $500,000 and everyone, you know, one of my friends got an offer for 10 million on his. I saw that recently and he didn't sell it. Why? Because it's a part of his identity and he also didn't need the money. Right. I think like realistically who gets to decide the scarcity, like how many of these things exist? It's up to the artist, it's up to the issuer and then the market decides the price. It's literally like everything else.

Yeah. When you think about NFTs as a whole, obviously there's like the hyper specialized people like yourself that get it, that are building for the future. And then on the flip side you see projects that, you know, probably 90% of them won't be anything in a year and a half. Like what's your advice to people getting into this space today, October 2021? Because I'm sure there's going to be ups, there's going to be downs and people like yourself that actually stick with it obviously have this cutting edge mentality about the future. But like where's. What is your overall thoughts on the current state of NFTs?

I think that you know, dollar signs kind of dollar signs pervade the narrative about NFTs. Right. Like it's just like a big part of the media narrative. But most of the people who are excited about NFTs, at least when they were three, four years ago, a lot of the friends that I've made over the years were excited about it for their like real use cases. And also like price discovery of creativity. Right. Like price discovery in markets of like physical assets and equities is interesting. But does a third of a cent truly represent the value of a song in society? The emotional value it creates? Probably not. Does a like on Instagram represent the value and the time that people put into his work? Probably not. That's why you have these people that are willing to pay these prices for that art. I think that what I would suggest in NFT land is like if you're doing it to speculate, learn a little bit about the team of people behind the project and like if they're, if they're doing it for financial reasons or for you know, experimental reasons, like there are like lot, lots of Teams out there that do things as experiments. Loot is an NFT project that was a complete experiment that just exploded because it's, you know, super, super interesting and innovative. And Dom is a genius. And, you know, I'm in a group chat with him and a bunch of other people, and it's just like, people's intentions. It's pretty clear to see if the intention is to generate money or if the intention is to experiment. And if I was, like, new to the space, I would look for the people that are experimenting, not the ones that are looking, you know, looking at things from a purely speculative lens. Now, speculation is healthy for any new market. Like, everyone's like, oh, it's so volatile, it's so risky. Yeah, but so is everything, right? Like, it's healthy because it helps kind of stabilize things long term. Realistically, you know, I will never sell my, my crypto punk, or at least, you know, not, not for a long time unless there's another digital identity that I like more. But. But, you know, my advice to everyone is, you know, be cautious. Don't. Don't enter to make money. Although you might be able to. Right. I think it's definitely something that you should learn a lot about before you take big risks.

Absolutely. When you talk about this idea of digital identity for the people that aren't familiar with the metaverse or, you know, building that digital identity identity, I'd love for you to dive into that, Right. Where it's like, if you got an offer for $10 million and you're crypto punk, like, would that change your opinion on that?

You know, Richard didn't sell his. I would have sold at that price because my punk might be worth a million. I don't really know what it's worth, like the market says worth a million, but at 10, I would say, well, I could just go buy a bunch of other punks. I could probably go buy a punk. That's like, close enough. That makes me happy. And then also, you know, buy a bunch of other assets. Right. So that, like, that's how I would have thought about it totally. But for Richard, it's a bit different because he's a developer. Like, I understand why he made the choice. I certainly don't fault him for it. I think, like, everyone would. Would analyze that in a different way. But I think with digital identity, the first manifestation of digital identity, I like to say this a lot in interviews, is the Instagram verification check mark. Why? Well, it's a digital asset that is controlled by a central party instagram but it validates your identity. Right. Your. Your profile picture. Like, you are who you say you are when you have a verification check mark on Instagram. And a lot of celebrities, like, are, you know, have fake accounts. And that's why the verification check mark existed. Yeah, because finding the right handle sometimes was difficult and sometimes it wasn't controllable. So, like, that was one of the earliest manifestations of, in my opinion, like, scarcity and digital identity or at least validation. Right. But now you can. There's a market for it. Whoa, that's crazy. Right? And now you see apes, punks, all these different assets. And like, yeah, I mean, there's a. There are communities of people that are excited about these assets. And, you know, in NFT nyc, that's coming up here, people are, you know, going to unite around their, their digital identities that they've purchased. And there's like infinite potential in that world that we have yet to even see.

I love that. And when you think about just entrepreneurship as a whole, obviously I know your background is in music. Like, where and when did this drive for entrepreneurship come from? And has it always been with you since the early days of your music background?

I think I've always just loved to build things that create value. Right. Like, building things that create value for other humans is a passion of mine. Building songs is in many ways a form of entrepreneurship. Building a brand as a DJ is a form of entrepreneurship. And even since I was a kid, I just, I just loved building things from Legos to playlists. Right. For my friends to share. And so, you know, that entrepreneurial spirit, I think, is that spirit of building things to create value. And that applies everywhere. Something I always knew I wanted to do while I was in college, but also had a passion for finance. And so this is kind of me Royal, at least represents kind of a bridge between both of my number one passions in life. So I couldn't be happier.

I love that. When did you start creating music?

So I've been making music since I was like a baby, like maybe five years old, four years old. I was playing piano. So I've always. Piano is my main instrument. I've been writing music since I can remember, but professionally since I was 19. In college.

What was your. Your first big show that you remember as a milestone for yourself?

Ooh, there's a couple of those, I think there was. When I was like 19, I sold out a show of like 700 people in Boston, and I was like a nobody. And everyone was really confused, like, why did this thing Sell out. Like, who is this kid? It was just from things taking off on the Internet, like mashups that went viral on YouTube. That was a big moment at the Royale in Boston. And then of course, EDC 2014 was an incredible, like, at 9pm it was like just a massive crowd and a really special moment.

How are you currently? I don't want to use the word balancing, but how do you spend your time? I think, you know, just seeing how you've progressed throughout this year from an outsider with the NFTs, with the music, you're still doing huge festivals, you have this new company now, you just raised all this money, you're doing NFT projects. Like, where do you spend your time and how do you manage that?

So I've actually been spending a little bit less time on the music side with, you know, the intention of, you know, once the company is. Is in a place where the team, the team is growing pretty often. I'm like, number. I'm first the CEO of Royal before I'm a dj, at least I have been for the past four months. A lot of the shows that I've been doing are actually makeups from COVID For the most part, I'm not doing as many shows, so. So, yeah, but. But I'm definitely CEO of Royal first and then musician second. But those are the only two things I do and I try to block out.

Well, I mean, with that being said, I appreciate you coming on the show. When you think about being a CEO and building team culture, how have you guys developed a culture at Royal and what does culture mean to you?

I think at Royal, all of the people that we've brought on the team have a real passion for fixing the music business and they've all, either, you know, they've all understood how inefficient it is today and the necessity of building a monetization layer on top of the existing infrastructure that exists for music, because artists are just not valued as much as they should be. Right? And so I think the whole team has bonded around that. We hired Nate. Nate Jones out of A16Z. A16Z is an extremely reputable fund. He's been there for years and he came and joined the Royal team because of his passion for music and because of his, you know, general knowledge of just how bad things could get. And some of the stories that ours share with us at Royal, like, that are going to be working with us are pretty incredible and like, we want to be a resource for those artists. I'm basically starting. I started Royal to create tools that I didn't have when I started. And I want to create those tools for the next generation of artists.

That's incredible. When you say working with artists, what does that look like? If someone's listening to this show today and they're a musician, like, how can they work with Royal and what does that look like?

So lately we've just been taking inbound requests from lots of different artists. We're working with a couple of really, really big artists and then we're also working with a couple of smaller artists that just have incredible stories. We want to show that Royal is a product that works for both sides of the, all sides of the spectrum. Right. For new newcomers and for existing celebrities. And so some of the first things we do will be in that arena and then hopefully in quarter two of next year, the platform will be more open to everyone. But as a, as a collector and as a consumer, you can come and start buying Royal assets pretty soon.

Very cool. That's exciting. I want to ask you about mentorship because I think just seeing your journey and how you've evolved in the music world, but also nft, I'm sure you've been spending a lot of time with incredibly smart people, as you mentioned earlier. How have mentors played a role in your life over time? And what, what do you look for in a mentor?

Yeah, I think mentorship. Mentorship is extremely important. I like, I like the word friendship. Right. I think that a good mentor is someone who you also mentor with your perspective. And so a lot of my mentorships I feel like, have been really great friendships. And, and that's because there's unique perspective that each party can really lend. And you know, as a young kind of up and coming entrepreneur or someone with a big idea, you do have unique information that someone older and maybe more successful doesn't have. And that's why the most successful people are the ones who hire the young guns that, that have a lot of fervor and a lot of talent. There's, there's a passing of the baton, so to speak, in a lot of ways across tech, across VC world and across all types of businesses. Right. Inherently, younger people are just more in tune to the environment. And so I think finding, you know, as a, as someone who's trying to build something, just becoming friends with as many smart people as possible, I think is the best advice I could give. And listening. Right. I think that, you know, a lot of young entrepreneurs are really excited to speak and to explain their vision, when in reality you Know you should be able to explain your vision in two sentences and then let someone tear it apart and then continue to make it better. It's like I always, I always, you know, liken ideas or entrepreneurial ideas to like working out where you kind of have to tear the muscle down for it to grow, to grow. And realistically, right, like no one's first idea is their best idea. It always takes time. Royals evolved over a series of years of ideation that ended up where it is now. I didn't like pull the trigger on necessarily forming an entity surrounding the idea seven years ago when I started thinking about it, but it took that long. So don't be afraid to get feedback and take critical feedback. I think critical feedback is probably the most important part of any entrepreneur's journey.

I love that. So I'm 21 years old for context, and I think for me just over the past couple of years, sitting down with people doing exactly what you said, listening, asking questions and getting my ideas torn apart has been incredibly valuable for me. And something that I always look back on that I say I'm extremely proud and glad I did that for you. What advice would you give to yourself if you were to think back on when you were just either becoming a DJ or getting into NFTs or business overall, what advice would you give yourself and why?

I think this will be like counter maybe some other things that you've heard, but I think like, I don't know if I would change anything myself. Looking back on it, I think I made a lot of the choices that I would stand by today. But the one thing that a lot of people say is don't like, don't work too hard, take breaks. And it is important to take breaks to clear your head. But it's also important to recognize what breaks are value add and what breaks aren't. And so like, if you want to win with your ideas, partying is not really the answer. And that was my job for a really long time. So I might be biased. But if you have that extra time on the weekend to read an article instead of going out with your friends, read the article. If you feel like your mind is imbalanced and you need to take that time for yourself to clear your mind, then go take that time. But be able to recognize when you need a break and when you don't. And if you don't need a break, drive, go. Because someone else is working harder than you. So I guess my biggest advice is work hard, take breaks, but work hard.

I love that. Well, Justin, before we wrap up here, I just want to say thank you so much for coming on the show today. It's been an absolute pleasure. And for everyone watching, thank you so much for tuning into the Casey Adams show. Where is the best place for everyone to follow you and stay in touch with everything that you're doing At Royal.

I talk mostly about crypto things on Twitter, which is just at 3 Lau. And then on Instagram, sometimes I talk about crypto things, but mostly it's it's life moments, which is also at 3 Lau. And then if you want to check out Royal, you can't do anything on it yet, but you will be able to soon. And it's just Royal IO.

Awesome. Thanks so much for going on Justin.

Thanks for having me, dude. Appreciate it. Monarch Legacy of Monsters An Apple original series. The world is on fire. I decided to do something about it on November 17th. This place, it's not ours. Believe me. The most massive event of the year arrives. If you come with me, you'll know everything. I promise. Oh, my God. Go, go, go. Legacy of Monsters streaming November 17th only on Apple TV.