Inside The Pixel Vault: The Real Story

velvetsea Pixel Vault

Stories.

They give life meaning and purpose. Without them, context and perspective crumble, and imagination and hope are extinguished.

Some stories seem so authentic, so true, that we question nothing. Others we immediately discard as improbable, too unthinkable to be true.

But the stories that survive the friction required to pass them down to future generations are both believable and unbelievable. They have nothing to do with us and everything to do with us.

We unpack them in search of truth. And whether we find that truth or not, they force us to rethink our own. The story I am about to tell you is one of these stories.

You might think you already know how my story about Pixel Vault Inc. ends. After all, the company announced today that it has secured $100M from my firm, Velvet Sea Ventures, and 01 Advisors, to build the world’s first decentralized entertainment company. This is the story behind that story.

Meet the Main Character, Sean Gearin

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Most stories borrow from one of a few proven plot structures: David

versus Goliath, rags to riches, a quest for treasure, the epic journey, and, of course, the great tragedy and the classic comedy.

The story of Sean Gearin and his company Pixel Vault, one of the most successful NFT projects in the world to date, steals liberally from all the above.

Sean was born into a world of stories to a father well known in Hollywood’s production industry. Sean has always been on a mission. But the specifics of his particular mission were unclear to even himself. He crisscrossed the country in search of answers – east to the University of Connecticut, west to the University of California Irvine, followed by Loyola Law School in Los Angeles, only to head east again to the Duke Fuqua School of Business.

Sean built a “massive collection” of sports cards as a kid. Those cards helped him grasp the world of non-fungible tokens, or NFTs, before many others, tweeting that he “could EASILY see the NFT market supplanting the trading card market in the near future.”

Soon Sean owned an enviable collection of historic NFTs. In them, he saw the future of ownership. For the first time ever, unique digital items could be owned securely thanks to small morsels of data unique to each NFT. These tokens, created and managed by software running on the Ethereum blockchain, made it possible to authenticate, buy, and sell digital items.

His favorite, the Cryptopunks, was a groundbreaking project of 10,000 unique pixelated digital art pieces widely recognized as the first of its kind digital collectible project. The project helped Sean understand the power of NFTs as a new medium for a global, frictionless, transparent, liquid, and always-on marketplace.

Unlike physical goods, NFTs do not need to be shipped. They do not take up shelf, garage, closet, or wall space, all of which Sean had very little. Price data is transparent. And the community is welcoming to all new entrants like Sean.

Sean, reborn as a believer in all things NFT, emerged from the rabbit hole as “GFunk” and “Comicman.eth” on Twitter. In doing so, he faced his first fork in the road. Would he continue as a businessman and lawyer serving the needs of others? Or would he choose to gamble his future on the entrepreneurial game of risk and reward?

Well, let’s say that I would not be writing about Sean if he had remained chained to a desk.

The Pixel Vault Origin Story

GFunk’s vision was to develop crypto-native IP assets and then expose them to a broad community of fans across a wide variety of media – NFTs and digital ownership, television and movies, video games, and more.

He imagined a project that combined epic storytelling with the key tenets of Web3 at the center – community empowerment, decentralized governance, and true digital ownership. He imagined a media company larger than Disney, with franchises more engaging than Marvel and Star Wars.

Sean envisioned a company powered by fans that would empower them back by letting them capture the profits from the appreciation of assets they own. An entity with fully aligned financial economic incentives. Customers, creators, and the company would all be in it together in stark contrast to the massive platforms, and value extraction, of Web 2.0.

The vision was big. Unfortunately, GFunk’s bank account was small (less than $20,000 to his name, GFunk recalls). So he did what all great entrepreneurs do: He reached out to several well-known investors. GFunk knocked on the doors of the most well-known crypto and NFT influencers. None of them opened the door. Except for one – an anonymous “professional gambler” and “investor in Web3 native protocols” known by his handle @beaniemaxi on Twitter.

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In many ways, Beanie was the perfect partner for GFunk at the time. Beanie had the capital from other entrepreneurial endeavors, a wallet filled with Cryptopunks purchased before the market appreciated, a large and active Twitter following, and a larger-than-life personality that would form the basis of one of Sean’s characters in the first issue of PUNKS Comic.

Beanie had also proven that he could use these tools of his to help popularize the Cryptopunks, GFunk’s initial inspiration for his project. Beanie was one of the first to use a Cryptopunk as his online identity (the name inspired by one of his Cryptopunks). And while Beanie rubbed many the wrong way, Beanie was at the time “a well-respected member of the crypto/NFT world, consulting with NFT developers and running the now-suspended GM Capital VC fund,” as recounted by Jake Silbert.

Beanie invested the much-needed cash to start the project and contributed 13 of the 16 original Cryptopunks that inspired the first comic. He also agreed to introduce his followers to the project.

In hindsight, it would be easy to conclude that Sean made a big mistake by partnering with Beanie. The truth is more complicated. I remember well what it was like raising money for my first company in the 1990s. The number of rejections I received filled a small stadium. The excitement of getting a yes is electric. Beanie gave life to Sean’s project.

8 Months of Explosive Growth

The initial agreement around the formation of Pixel Vault put Sean in charge of the project. It was his idea, and he had brought the parties together to make it happen. Sean held weekly public town halls on Twitter Spaces, engaged the community on Discord, and has always been the project’s operational lead.

As the financial backing, Beanie took control of the funds and how they flowed. While they knew each other from online communities, they were “still very much strangers on the internet.”

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PUNKS Comic Issue #1 launched on May 10 and sold out five weeks later. Total proceeds from the sale were 2,000 ETH, just shy of $8 million based on the Ethereum price of $3,900 on launch day.

Pixel Vault’s franchises would go on to generate 20,000 ETH in primary sales and another 72,000 ETH in secondary sales in the eight months it operated in 2021. Pixel Vault drops now sell out in minutes, and the project is in rarified air among the early NFT projects. Only Larva Labs, creator of the Cryptopunks, and Yuga Labs, creator of Bored Ape Yacht Club, had more transactions of crypto collectibles in 2021, according to OpenSea data.

On the outside, all seemed swell. But inside Pixel Vault, a rift developed between the partners.

Beanie, an active promoter of the project, proved very successful at attracting attention. With the attention came controversy that culminated in @NFTEthics’ investigation into the business activity of Beanie’s real-life identity, Charles Moscoe.

Charles has confirmed his identity. He denies the allegations.

A more fundamental divide between founder and investor was only growing larger as the project’s sales accelerated. Charles saw the project as a cash cow for the partners, advocating strongly to distribute to the partners the ETH earned from NFT sales. GFunk, meanwhile, wanted to reinvest the capital to build one of the great media companies of this new crypto generation. In venture capital terms, Charles wanted a lifestyle business while Sean wanted to create the first media entity of its kind.

It was obvious that a parting of ways was in order.

Introducing Pixel Vault Inc.

In November 2021, Sean accelerated a plan that had been in motion for months to restructure the project. As of yesterday, GFunk’s plan is complete. And the future is bright.

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This week, my firm, Velvet Sea Ventures, and 01 Advisors, led by former Twitter CEO Dick Costolo and Twitter COO Adam Bain, invested $100M to fund a new company, Pixel Vault Inc. The company now owns 100 percent of all the intellectual property, assets, and operations of PUNKS Comic, MetaHero, and all future franchises. The only Pixel Vault Inc. shareholders are Sean, his team, and the new investors. (TechCrunch art

I have joined the Pixel Vault board. Adam is a board observer and adviser. Our only role is to support Sean as he executes on his vision.

I have worked with Dick and Adam for more than a decade, starting when they ran Twitter and, more recently, working together to lead Autograph’s Series A round. There are no better operator VCs for Sean, and the community of Pixel Vault collectors is lucky to have them as partners and advisors.

And to be clear, let me settle any confusion: Charles does not own any shares in the company. Nor does he own any tokens or NFTs. As the new lead investor, a long-time community member, and an experienced entrepreneur, I made a clean and full separation, a requirement of the deal to protect GFunk and his team, the community, and our investment.

The upside of the unbelievable Pixel Vault formation story is that Sean is now battle-tested. The project not only survived but thrived under intense scrutiny. There are no thanks big enough for all the supporters who stood up for GFunk. In the end, this is what community is all about.

Where do we go from here?

This story forced me to think back to the earliest days of the project and ask myself why I decided to mint a bunch of the original comics last May. And I keep coming back to a simple word: stories.

Stories are powerful. Really great storytellers are the beloved teachers who capture our imagination and whose stories guide us. They are the senators, governors, actors, and real estate developers who ride personal tales to become presidents. They are the writers who win Nobel Prizes. They are the directors who snag Oscars again and again and again and again.

Every medium has its master storytellers. I was attracted to NFTs because of how they empower creatives to own their stories more than ever through digital ownership. And while many projects that we know and love started with art, GFunk put the power of storytelling at the center. His story will provide a model to other media companies that want to empower their fans.

Pixel Vault’s franchises are full of powerful stories — good versus evil (MetaHero heroes and villains), the quest for treasure (PUNKS Comic Issue #1, The Hunt for the Lost Robbies). And in true life-imitating-art fashion, the founding of Pixel Vault Inc. has just as many – a new beginning, plenty of tragedy and comedy, and, if all goes well, a rags-to-riches story for not only Sean but everyone lucky to own a piece of the Pixel Vault story through its NFTs.

The structure of Pixel Vault has changed for the better. One thing that has remained constant through it all is the heart of the project. GFunk never lost sight of what matters most: his passionate community of Pixel Vault collectors, of which I am a proud member.

The story of Pixel Vault and the story of digital ownership are intertwined and will be written over the next few years. The best thing about Web3 stories are that they can now involve you. If you have been a part of the Pixel Vault community, it has been an epic prologue. The next chapter includes us all.

Congrats Comicman.eth! Onward!