Since the dawn of web3, holders of various projects have been asking “wen utility” as a method of getting some return on their digital assets that isn’t just selling them for more than their purchase price. Plenty of projects have rolled out various types of utility over the years, showing newcomers methods of trial and error that will hopefully help guide founders in the future.
2024 brought about some interesting new updates in this area, especially for holders who have long awaited legal clarity in order to receive a financial stake in a project and its business endeavors. While regulation by enforcement continues to be the norm, founders are consulting lawyers to find new ways to reward holders in the existing legal framework.
One founder who surprised web3 with a major announcement this year was Ovie Faruq, better known as OSF, the founder of rektguys. Earlier this year, OSF announced a surprise snapshot of rektguy holders and a gift of equity to those holders in the venture Rekt Brands Inc. Rektguys can be found at https://www.rektguy.com/. OSF can be found on X at https://x.com/osf_rekt. In the interview below, we get into this groundbreaking holder utility and some additional topics.
In the following interview conversation, “DH” precedes a question asked by the author, and “OSF” indicates a response from the interviewee.
DH: For readers who might need to become more familiar, you founded a project called rektguy in 2021. Take us through what rektguys has been about to this point and how you’d summarize the project in your own words.
OSF: Rektguy is based off a character I randomly doodled while I was still sitting in my day job in 2021. It had no specific name then but I quite enjoyed the ideology of getting “rekt” as an artistic concept and a lot of my art used this theme. I decided to make it into a pfp project, it was honestly just like a side quest and I spent evenings/weekends doing it for fun. By the time we got it ready for launch (April 2022) my art had taken off a bit and there was some good hype around it. It was a free mint and the roadmap was “lol”. I didn’t want to create something with any expectations, it was just meant to be a bit of fun. The market then crashed in May 2022 which weirdly helped us given the name of the collection and we found a lot of people joining the Rekt community simply because they were rekt; we also gained a bit of virality after Snoop Dogg bought a couple. The community stayed strong throughout the bear market and we started to develop some ideas for what this could be beyond just a pfp project. Ever since the day I generated the first artworks, I always had that feeling in my ballz this could be something special, and I’ve now challenged myself to attempt to take it to the next level with Rekt Brands and Rekt Drinks etc.
DH: Rektguy was a free mint back in its day, which is much less common these days than it used to be. Can you speak on how you were able to grow the project and the brand to the size that you have in three years without using the mint as a way to raise funds for the project? Any tidbits of advice for founders short on capital looking to grow?
OSF: We managed to capture a decent amount of royalties and we used these funds for IRL events and building community tools such as rektguy.com. Of course, royalties died very quickly but what you realize is you don’t need very little money to keep a community going; you just need a bit of genuine desire. I feel very lucky in that I actually find our community hilarious and I’m not someone who’s scared to go into our Discord…I love it…it’s like a massive group chat with all my mates and it’s great banter. I’ve put in a lot of my own funds too, and we have had other revenues from selling my artwork, etc., which have supported things so far. My suggestion to new founders is build your community first and focus on it. The most underrated power is having a loyal community who will have your back no matter what; once you have earned that opportunities will present themselves. For smaller projects short of capital I would also look to collaborate with larger projects; if your project is any good you must have some non-monetary things you can offer.
DH: Rektguy has now developed a parent company (please correct me if this is not an accurate portrayal of the relationship) called Rekt Brands Inc. Are you able to share what the vision behind this was and how having Rekt Brands allows you to operate in a way that the original structure of a free mint NFT project did not?
OSF: I set myself a challenge about a year ago to take things to the next level. I felt like there was a huge amount of potential with Rekt and I was just doing myself a disservice letting it be a meme-based pfp collection with a fun discord. I’ve dabbled in lots of things in the past few years but I’ve never really been a proper entrepreneur and started a business…I like challenging myself and succeeding at it and so I set Rekt Brands as the next challenge…ie…make Rekt into something big and legit. By having a company, Rekt Brands Inc, we were able to gift equity to our NFT holders thereby giving them real economic benefits for example if we ever get acquired or pay dividends one day. As just an NFT holder you would not get any of that, and we went through a very careful legal process via an SEC exemption to do things compliantly. Now, we have a real company which will report real financials and our community owns a piece of it; it transforms our community form just bagholders into turbo-charged marketers for anything we do going forward. It also allows us to raise capital; in the past NFT projects that have raised capital from investors have done it at the cost of “consumerising” their holder base; I feel like now that our community are also shareholders, incentives can be more aligned.
DH: What do you see as the vision for Rekt Brands?
OSF: I see it as some sort of a web3-base lifestyle brand with drinks being our marketing channel. Red Bull or Monster Energy are good examples…I suppose you can say we’re trying to be the crypto version of that except our drinks (so far) don’t contain any caffeine. I just think Rekt can be a really sick brand and I’m focused on growing it beyond our immediate cult.
DH: One seriously notable announcement that echoed across Web3 was that you surprised rektguy holders with a secret snapshot. This snapshot was to award holders equity in Rekt Brands as a surprise utility for being holders of the rektguy NFT. In as much detail as you’re able to disclose at this time, how is this being rolled out? Is the equity proportionate to the number of rektguy NFTs a wallet held at the time of the snapshot? Is there a claim process for holders to get their equity? What happens to unclaimed equity?
OSF: We took an unannounced snapshot and then announced the intention for it about 3 months later. This was done as to not give any future value to NFTs whatsoever; you can even view is as not really being linked to the NFTs at all, we just used it as a filter to define our community. We then did a Reg-CF offering, a crowdfunding exemption in the US. This involved our team and company going through bad actor checks, providing stated financials and information, executing the offering with an SEC-registered dealer-broker and conducting KYC checks on everyone who claimed their equity. For holders to claim, they just had to connect their wallet to our website and sign a message to prove ownership, and then fill out a KYC form which was all handled by our broker (Dealmaker). Once completed, shares were issued.
DH: The effort that must’ve gone into sorting out the legal side of how to award equity to your holders had to be enormous. Are you able to speak on that process a bit? How did it get started? How many months did it take between starting this process and announcing the surprise snapshot? What obstacles did you face from having a global holder base?
OSF: Yeah I mentioned some of the process above, but it took a while for us to get it over the line. We took the snapshot in October 2023 and we were only able to complete it in June 2024, so the whole process was about 9 months and we had a great lawyer (Ray Genco) help us through the process. I think the reality is a lot of time was spent figuring out HOW to actually do it, if I were to do this again I reckon I could bang the whole thing out in a month or less.
DH: How far along has this process of awarding equity to rektguy holders come since the announcement and when can it be expected to conclude?
OSF: It concluded in June 2024.
DH: You also helped to found Rug Radio, so I’d be remiss if I didn’t sneak in one communications question. How do you see the importance of web3 native media coverage to the growth of the space compared to the media coverage that crypto and anything that touches it gets in the major outlets?
OSF: I retired from doing the daily shows on Rug Radio as I just have too much on my plate at the moment but it was something I greatly enjoyed and of huge importance with regard to educating people. We all know that mainstream media is a load of bollocks, and these guys basically do zero research and shit on our industry all the time. It’s important we get people who are actually knowledgeable to report things accurately and give balanced views to help us make our decisions.
DH: What would you say to folks who are thinking about a rektguy? What can prospective new holders expect from the project through 2024 and beyond?
OSF: I’ve never forced anyone to buy a rektguy and I never will. I’m not a good salesperson or persuader, I generally find it quite cringe and hate getting shilled…and thus hate shilling to people. So what I would say is if you like what you’ve read in this interview and understand the vision then you should buy one. If you don’t vibe with it then fair enough I’m not here to force something that ain’t your cup of tea down your throat. The only thing I would say is this is my main focus right now and I’ll try my hardest to make it work.
DH: Where do you see Rekt Brands going through the end of the year and beyond?
OSF: We have manufactured a LARGE amount of drinks and are basically swinging for the fences with an experimental D2C mechanism. The best-case scenario is we sell out in a short amount of time and I think that’s really gonna put us on the map. I’ve long been a fan of Luca Netz and Pudgy Penguins and a lot of what he has done is an inspiration for me. A turning point for them was the sales numbers they did on Plushies on Amazon. Getting those numbers in the door makes people realize “fuck…this is legit”. I want people to come to the same realization this year. I think because of my persona on X and my active trading etc. people think the Rekt stuff is just a bit of fucking around…but I want people to realize that it’s not…it’s the real deal…and you can only do that by showing results.
DH: Any final parting thoughts on the status of web3 at the moment and the growth of the space since you first entered crypto?
OSF: Web3 feels “tired” to me and I think we need new and exciting stuff. We need more success stories. I hope to be one of them.
