The Baer Faxt Founder and CEO Josh Baer sits down with SuperRare Founder and CEO John Crain for a freewheeling intergenerational conversation about the past, present, and future of NFTs.
John Crain. Courtesy SuperRare.
Josh Baer: I’m not especially known as Mr. NFT. So, I think the fact that we’re doing this City Guide to the Metaverse will come as a bit of a surprise to our audience. Earlier in the year I surprised them by saying that I think we’re in for a little bit of a reboot to that whole sphere and that I could see something coming. When I talked about how I was interested there, people thought that meant I drank the entire Kool-Aid, and that’s not true either. For me, it’s been less than three years since I got the question from a client, “what do you think of NFTs?”. Then I went, “what is that?”. So, where are we in the NFT market now?
John Crain: Yeah. So we’re six years in for me. We started SuperRare in April of 2018, and there’s been lots of ups and downs along the way, but I always like to give it the whole historical context. So with SuperRare, in that first year, we did $90,000 in total sales.
If we fast forward to today, obviously things are not as crazy and frothy as they were in 2021, but I think that’s probably a good thing. We’re currently doing about a million dollars a month in sales, which again is small relative to some of the craziness of a couple of years ago, but as far as looking at a scale, things are generally improving. I think the market’s getting bigger and I think it’s at a much more sustainable place. When you had these crazy, low effort, generative PFP collections going for millions of dollars, obviously that was very irrational. The art market’s been around for a while and I kind of view us as an evolution of a potentially market expanding moment for art in general.
Baer: I think people get confused with whether this is like painting, or sculpture, or video. For me, I always think of it as a medium. When it’s interesting, it’s interesting. And, most of the time, it’s not like most art.
Crain: Yeah, I agree with you there.
Baer: In every market that’s been off a big high—including the art market—everybody goes, “Oh, it’s so much better. It’s less frothy.” I’m not sure that people actually believe that in a certain sense. It’s kind of like saying, “Wow, I was making too much money before, that’s terrible.” Do you feel like the crypto market functions like the art markets?
Crain: I feel it’s very cyclical, and it’s hard to say that making more money isn’t better or more fun. One of the challenges we experienced in 2021 was kind of trying to differentiate what we were doing from what Bored Ape Yacht Club, for example, was doing, which were very different things.The only thing we share is that we use a similar piece of technology. It’s like the internet coming out and saying, “Wow, McDonald’s is the same as this sushi restaurant because they both have websites.” They’re completely different things. And so I think that’s what I mean when I say it’s better: things are less sensationalist.
Baer: I remember in 2021 or 2022 one of my investors, from a merchant bank and a really smart media company, came to me and said, we should go heavily into and have the apes, and his avatar became a Bored Ape, and he paid 100 and something thousand dollars. I said, “Whoa, dude, this is not going to go well.”
And they looked at me like, “Why are you not on the boat?”. I’ve seen this story before, and they weren’t too happy with me taking that view, and now they pretend it never happened a little bit. That’s why I think we’re at sort of a reboot, a 2.0—do you think it’s like starting over with the lessons that we learned a bit?
Crain: Yeah, I think we’re starting over a little bit. I think people have short memories. Over the span of things, it’s like we tend to forget the downtime. So people are starting to forget the sadness of maybe being wrong or losing money, but I think there, it’s fairly simple, right?
There’s kind of a new technology standard. It can be used for different things. And we’re seeing the actual utility continue. People are continuing to build on top of the technology. There’s better products and services around it. And I think progress is happening.
And so I think there is some renewed interest. I’m sure we’ll get to a state where things get frothy and ridiculous again, but the underlying core value proposition hasn’t changed. There’s more things being built and in general, they’re getting better.
Baer: How much of this do you think is just correlated to—put them all in the same category—crypto, blockchain, and smart contracts? I think that you add in NFTs and there are four different subjects that are sort of all sort of lumped into one thing, particularly for those of us on the outside.
Crain: Yeah, there’s a definite correlation. I think part of it is, especially with NFTs, that the early adopters were almost all people who had understood crypto and bought into the idea of digital assets being a store of value.
I think most NFT holders would agree that Bitcoin is going to have value for the long term, which maybe isn’t lots of other participants in the art market, so something out of it was just understanding how the technology works. I think it kind of looks like voodoo. If you don’t really know what a blockchain is, you’re like, well, let’s stop it.
Baer: At that point, do you think the blockchain is something that we should be using? You know, I’m a traditional art advisor. Should I be putting my client’s Basquiat onto the blockchain? I’m a little nervous to do that, and I’m not planning to.
Crain: I think it depends how you define that. My sort of personal take here is that you don’t need to. You know, there’s this idea that you put the painting on-chain and there has to be a perfect connection between an NFT or a token that’s on-chain with the physical artifact.
And I don’t think that’s true. I just think NFTs are or can be a much better proof of authenticity than a paper record or a record in a private database. Blockchains are essentially a very, very secure data store that’s publicly auditable. So if you think about ARV, or provenance, a lot of it is proprietary.
There, it’s really hard. There’s a lot of trust involved. Whereas if you put things like Certificates of Authenticity onto a blockchain, they’re very hard to forge. I think in general, just keeping a very simple Certificate of Authenticity on-chain and requesting something like that when you acquire a piece of art would be a very big improvement to how it currently works.
Homepage, SuperRare. Courtesy SuperRare.
Baer: I see the argument that if you had a piece of paper and lost it or you didn’t put it in it’s solid with wall drying, and keep the certificate, you’re screwed—and you can’t sell it. But who’s in control of this data, and how public is it? What happens if OpenSea has it, but then OpenSea is bought by Goldman Sachs, and they’re like, “Hey, that’s good data for us!”
Crain: There are certainly data privacy concerns, and that’s kind of a personal decision for folks, how public or private they want to be with these types of things. But , one of the benefits is you get very high quality provenance data that anyone can look at. And I think that is arguably something that helps—it’s an interesting historical fact, right? I think it adds context, which is obviously a big part of art in general. And so I think as this grows, it will become less acceptable for provenance data to be gatekept by individuals and people will expect more open high quality provenance data.
Baer: For all forms of art? Or more for digital art?
Crain: I think both. If I look forward 50 years from now, that distinction will be silly. I think the quality of the provenance data will have increased, at least moving forward. Does every Andy Warhol get tokenized and tracked on a blockchain? I don’t know about that.
Baer: It may be a generational thing.
Crain: Yeah, it might be generational.
Baer: You’ve grown up with that, and it’s normalized for you.
Crain: Yeah, exactly.
Baer: The next part that comes to my mind is this smart contract thing. What I was disturbed with was this notion that so many artists are losing out on the secondary sales and all the money that they were going to make. In plastic arts, to use a term I’m not sure you’ll like, 99.999999 percent is worth less than what it’s sold for. Most of it’s worth zero.
So that part of it is like a solution looking for a problem for me, at least in my world. Now that the froth is off, is that a little bit less of an issue that the artists are concerned about? Is the “I sold it for a thousand, now it’s a million, and I’m poor” kind of issue disappearing?
Crain: My sort of opinion or thesis is that the real value is in having this very high quality provenance data. I think the royalty smart contract stuff is an interesting feature that’s trivial to implement. For SuperRare, the royalties on secondary market transactions, it’s like a couple of lines of code.
And so part of what we’re doing is just trying to play with the market mechanics and see, are there more interesting models? We’ve never had programmable money before, so what can you program it to do? I think that it makes total sense to experiment with these types of things. Is that the biggest problem to be solved? No, I would agree with you. It’s not.
Baer: I mean, it’s been talked about in art from at least the early ‘70s. California was actually disallowed from doing it, but it’s in Europe. Again, it benefits so few artists, but your point is that it’s easy to implement it and it’s inherent to the digitalization of the transaction. It’s tied to crypto in a sense.
Crain: It’s tied to crypto, and crypto is facilitating it right now. But I think as markets evolve and digitize, the mechanics are going to change. And so to me, this is an experiment. Can you build better systems? Part of the idea is this new technology is going to help build better, more equitable systems. What are things we can build that we think will benefit individuals?
Baer: So tell me a little bit more about SuperRare and give me a sense of the scale. How many artists are you working with, how many artists want to work with you that you turn down, and how does that compare to the old brick and mortar gallery, painting, sculpture world?
Crain: SuperRare is different from something like OpenSea in that we onboard a select group of artists. Most people are really focused on building large, open web platforms. I feel like the digital art market can be quite large, but there’s also a mental leap, right? For people that are like, “I don’t have this painting in my house. What am I buying?”, there’s lots of components there. So we felt like the most important piece to get right was trust and authenticity. That’s the big reason why SuperRare doesn’t just onboard everyone in the world. Right now we work with about 3,000 artists.
Baer: And how many artists would you say are in America? I assume that it’s global, but how many artists would you count in a census who are saying, “I am a digital artist”?
Crain: We’ve received about 300,000 applications, and you could probably say at least 50,000 of those are frivolous. So there’s at least 250,000 people who personally feel that they are digital artists.
Baer: And to what extent do you think you think those 3,000 artists are interesting? Obviously, you do. That’s an interesting, non elitist view. I’m an elitist. I’d be guilty of that. It’s a different standard—it’s different somehow from the traditional art world, right?
Crain: It is different. It’s an interesting position to be in. On the one hand, if you think about web platforms, it’s all about scale, algorithmic curation, that sort of thing.
We felt that for art, that wasn’t going to exactly work—but one of the advantages is that we can build tools and lots of people can use them. For example, the first thing we built was a minting tool, back in 2018 when there weren’t thousands of various NFT minting options out there.
Similarly with the marketplace, we added artist royalties just because no one else was really doing it at the time. And so, we’re kind of in the middle: on the one hand, it’s highly curated and we’re selective with the people we work with, but at the same time, we do have software that I think can benefit people. So, we try to open it up to as many people as we feel like we and the current size of the market can support.
Baer: We’ve been talking about this from the perspective of the artist and we’ve been talking about this from the perspective of the intermediary, now I’d like to ask about the perspective of the buyers, and the scale of that.
Something which has always been sort of the Holy Grail for the art world is like, how many digital collectors are going to go from buying NFTs to buying fine art? I mean, I would say that’s the main reason that my world is interested in your world. Could you talk about the scale of the buyers, and are they likely to flip?
Crain: Sure. We’re very crypto-adjacent—I think we’re in a slightly different category, but I think Bitcoin is a good analogy here—where you have this new technology, the blockchain, that’s facilitating different types of economic systems.
At first it was a bunch of rebels who were like, screw the banks, we’re doing this ourselves, this is a new money, it’s for the people. Fast forward 15 years, BlackRock releases a Bitcoin ETF. It’s growing, there’s billions of dollars flowing into it. But what happened in between there is the two worlds kind of came together.
So there were a lot of early Bitcoiners. At least anecdotally, I have friends whose first financial assets were Bitcoin and other crypto assets, and then they got interested in finance and started to become more sophisticated and learn, what’s the existing financial market doing? How do ETFs and options and futures and all these things work? And I think we’re starting to see that with art.
So again, NFTs are newer. They’ve been around for about six years or so, and I think there’s kind of like cross pollination where people who get interested in collecting NFTs start to have a newfound appreciation for art.
Maybe they didn’t take an art history class in school, but they’re enjoying this act of patronage. Maybe people don’t think it’s art or whatever, but the act of patronage is interesting. They start to have more sophisticated tastes than they had before, and they go pick up an art history book and actually start to get involved in this.
Baer: This ecosystem has been around for a long time. That’s why I laughed for a while, because at the beginning it was so often described as being disruptive. It’s like, wow, it’s disruptive, but they can’t wait to show at Gagosian gallery or sell at Sotheby’s. I mean, where’s the disruption? It’s exactly what you’re saying.
And, within a few years, there’s BlackRock or Blackstone or, you know, they tried to break up the financial system. Then in fact, it was just a new system that is consumable by all the existing systems to some degree.
Crain: Yeah, I agree with that. But I also think that it is a market expansion moment. I think there are reductions in friction that are part of it, so it’s not getting rid of the old system. It’s expanding it and maybe augmenting components, but ultimately it looks similar.
Baer: That’s why at The Baer Faxt, we’re going to be interested in exploring partnerships that say we’re experts with this, we’re highly curated, we’re the best at the market and selling art and experience. We’ve worked with TRLab. I happen to love them, what they do. It’s a level of content that’s really sophisticated. So for us, it makes sense. I want to come meet your guys or be that cranky old guy on the crypto panel. And, I think it’s an opportunity for a couple percent of each of our audiences, if we do that.
Crain: That’s a couple percent at a time. It compounds, you know, over the next 20 years that that really adds up.
Baer: I think that there’s a great opportunity for growth. I’ve called for a bull market in the art world, that there’s hundreds of thousands of people who can afford and should be buying real art who aren’t.
Crain: I love that. Just from my personal experience, when I was living in New York before I started SuperRare, I had a friend who was running a gallery in San Francisco. She would come out for the art fairs, and I would just go hang out at the booth and help sell prints and buy some from her.
It was this moment of like, “Oh, this is really fun, but you have to figure out how to get involved.” I think NFTs are kind of like this. They’re an easy onboarding tool. Maybe lots of the NFTs are not going to be in the historic canon of art that’s in museums, but if you convert a few people to start participating in the market, I still think that’s great.
Recent releases from SuperRare. Courtesy the artists and SuperRare.
Baer: I think that’s an interesting point because the gateway to collecting art used to be photography, and now that market is completely destroyed. And then it was prints, and that’s sort of its own thing. And I think there’s the young. Part of that might be that the energy is going to NFTs, that sort of entry level. The new people are coming in, their first purchase of a work of art might be $5 million, when it used to be $500.
But, all these things are happening simultaneously, and that’s why I’m interested, because I think the process is really scalable from both sides in an interesting way, if we can keep it from being beanie babies. Yeah. So you have to do a good job. Maybe 3,000 is too many people!
Crain: It could be. You know, six years is old in crypto, but as far as building a company, it’s not that old. So we’re still experimenting with the model and learning all the time.
Baer: I did a little film that was shot like a year or two ago by nft now—I brought in a friend of mine who was the chief curator of the Guggenheim, and he’s involved in, I think, one of these companies that Jennifer Stockman‘s involved with.
She made a really interesting point: We got so far out ahead. How do we collect these things? How do we lend them to museums? How do we display them? Have we caught up to that? You’ve got these things. What do you do?
Crain: I think the collecting component’s gotten fairly easy. There’s different email based wallet creation services and the transaction process has gotten pretty good over the past few years. I think the display component that you mentioned is still fairly terrible. There’s various frames at various price points, but we haven’t had the “aha” moment where everything just clicks and you’re seamlessly collecting a piece of art and then putting it on something that doesn’t just look like your TV in your living room.
I think that will be pretty critical for this market to really expand. I think that it’s going to have to be very easy to use. It’s one of the most common questions. Almost every person who’s not in crypto that I’ve talked to about this is like, “Okay, say I buy this idea of collecting some digital thing. Like, what the heck do I do with it?”. There’s options out there, but none of them are amazing.
Baer: Well, and especially if you want to have an institutional, historic, curated sense of it—not just for Joe Smith in Spokane, but how does MoMA do it, or how does the museum that isn’t MoMA do it?
I think that solving those questions where you’ve got this almost mature market without basic answers, it’s kind of interesting. It’s super close to the answers.
Crain: I think we’re not that close to the answers. I mean, it’s interesting to see, for example, the Refik Anadol acquisition by MoMA, right? That was a very well known NFT acquisition by a well respected institution, and those are like custom displays for Rafiq’s art. They require pretty intense GPUs to run. It wouldn’t run on my computer, that’s for sure. I’d say we’re really not close to solving that.
The general consumer tech is getting better. I think that technology is getting closer for your friend in Spokane than, okay, how do we really display this properly at a world class museum?
Baer: Parenthetically, I have a master’s in computer science. From 1979, there weren’t even PCs. So, what my phone can do versus working on a computer the size of my loft with index cards is where I come from. That’s why I ran to the art world. One last question: AI. Aren’t you supposed to put that in all your fundraising things?
Crain: Yeah, now we’ve crossed out Web 3 and we’ve written AI next to everything and emailed everybody. Right.
Baer: That brought you a couple hundred million dollars.
Crain: Yeah, I wish. No, I mean, it’s a controversial topic. There’s lots of opinions about it, especially within the artist community. Ultimately, my philosophical stance is that it will get fairly commoditized and become this tool and people are going to continue to use it in new ways.
If we actually achieve the holy grail of generative AI, then maybe things really change. But I think right now, what we’re seeing anyway is the really pioneering artists are playing with this new technology in interesting ways that we think can be historical.
Baer: The Whitney Biennial is supposedly about that, by its title sort of implying that a large part of the topic is AI. It isn’t, but that’s one of its supposed topics. I think even they felt like they had to pander to that.
Crain: Yeah, it’s the topic of the year. That’s for sure. But I don’t know, I’m an optimist at heart, so I think probably we’ll figure out how to use the tech rather than the tech figuring out how to use us.
Baer: And if we can get a skeptic or cynic like me, with an optimist, like you, to find common ground, that’s pretty good. Where are we going to be in a year? That’s like 20 percent of the lifetime of NFTs?
Crain: So I think for us, and especially NFTs—it’s a very broad category, us being in art—I think we’re going to see slow, steady institutional adoption. MoMA acquired the Refik NFT last year. The LACMA accepted a pretty large donation. I think it was like 22 different NFT works that the Pompidou accepted, at least some. I think we’ll continue to see slow and steady acceptance. Then what I’m hoping for around the display situation we’re in is that we need more standardizations.
So the NFT is a nice, simple standard. That’s good for the internet, but hopefully somebody smart out there is working on standardized display technology, because I think that, like you said, is one of the things that’s missing.
Baer: I think one thing that your generation might not understand is that my generation has been thinking about this for a very long time.
I remember being at a talk that Glenn Lowry did as the director of MoMA, 25 years ago, and he said, we’re going to need a digital art department. It’s going to need to be as big as the painting and sculpture department. 25 years ago, I remember saying people asked me, what’s the future of art? I said, the future of art is going to be community.
And this is before social media came out, we could see around the corner a little bit that something would be coming. It’s up to your generation to really develop it. I think there’s reason for optimism that we’re more open minded than some of you might think because we’re not talking enough together.
Crain: Yeah, a hundred percent agree with that.
Baer: I think that the issue now is that we’re in such a polarized society of left and right and free and safe and NFT and painting.
Crain: NFTs are dead or NFTs are the future, you know.
Baer: I mean that’s why I like Kenny Schacter, because Kenny is willing to dance in both worlds.
Crain: Yeah, big fan.
Baer: It’s time to come together a little bit more, but in a more deliberate way. Yeah. Is there anything you’d like to tell our audience that we didn’t really get into?
Crain: Yeah. NFTs are not a scam. Feel free to reach out. I’m happy to chat about art and NFTs anytime.
