Web3 Galaxy Brain 🌌🧠

Web3 Galaxy Brain

Character Brands with David Horvath

30 May 2023


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Nicholas: Welcome to Web3 Galaxy Brain. My name is Nicholas. Each week, I sit down with some of the brightest people building Web3 to talk about what they're working on right now. On today's episode, I sit down with David Horvath for an epic dive into the world of character IP. Since the late '90s, David and his wife and business partner Sunmin Kim have been creating character brands in the U.S. and Korea. Their two most famous creations are Ugly Doll, which started as a handmade designer toy at the original giant robot store, and Bossy Bear, which began life as a children's book. This episode is a treat for people who want to know how to create characters as popular as Hello Kitty and Paddington Bear. David shares contrarian insights about his experience growing character brands that endure. In the first part of the conversation, we discuss how David got his start making kids' TV cartoons in Japan, the Ugly Doll and Bossy Bear development arcs, and strategies he's learned for retaining character IP. We talk about the value of being discovered in meaningful places, the pitfalls of being perceived of as marketing, and the difference between successful toys and enduring characters. There are links to the many characters, people, and shows that David mentions in the show notes. As always, this show is provided for entertainment and education purposes only and does not constitute financial advice or any form of endorsement or suggestion. Crypto is risky, and you alone are responsible for doing your research and making your own decisions. If you'd like to sponsor the show, send me a DM. @Nicholas with four leading Ns on Twitter. I really enjoyed this extensive conversation with David Horvath, where we had the opportunity to go deep on the small world of building big characters. I hope you enjoy the show. How's it going, David?

David Horvath: Hey, how's it going? Thanks so much for having me.

Nicholas: Absolutely. I'm super excited about this conversation. I've been thinking about it all week. I was binging some of your blog posts or newsletters, I should say, and some of the podcast appearances. I really liked your appearance on Mumbot. That was a really fun conversation with someone who's in the game too, as well, I guess.

David Horvath: Oh, yeah. I'm a big Mumbot fan, like many are. She comes from the previous movement that I was very much involved in and a part of what some call the designer toy movement or the art toy movement. Yeah, we started coming up along with that, which really became a phenomenon and continues now, mostly in Asian territories. Mumbot's big in that one as well.

Nicholas: Okay, I have so many questions. But first, I guess for people who aren't as familiar with your work, maybe you could give just a brief overview. I'd love to do the full story starting from the NHK period and through Ugly Dolls and into Bossy Bear and anything else along the way. But maybe you could just give a little overview for folks who aren't familiar what you have gotten up to in your career.

David Horvath: Oh, sure. So my wife, Sun Min Kim, and I, for the last 22 years, have sought out to create character brands, both in the lifestyle character brand space and in the story-driven character brand space, two very different businesses. So we are the creators of Ugly Doll, which started as a line of plush dolls that we self-produced that went on to become like a--. Some could see it as a competitor for Hello Kitty. Others interfaced with it through the books that we've published, through Random House, Abrams, and Chronicle Books over the years. It's been everything from tin toys and wind-up toys to handbags. And, I mean, if you mostly discovered us through one of the loft stores in Tokyo, to us, to you, we were mostly handbags and zipper wallets and things that were a little more useful. If you found us in North America, we were everywhere other than Walmart and Target. We never really went mass until more recently when we did a deal with Hasbro. And on the other side, on the story-driven side, we had a book series out with Disney Publishing back in 2007 called Bossy Bear, which was okay for the book sales, but became our best-selling toy line. Yeah, by far, and that globally. And so in 2018, we brought Bossy Bear to Ron Howard's Imagine, the company that did Apollo 13, et cetera, and developed Bossy Bear with them and brought it to Nickelodeon soon after. And it just started airing on Nickelodeon and Nick Jr. in March of this year, finally. And then, yeah, on NHK, which is like the big government channel in Japan, 20 years ago, we had an animated show called Little Boney, which is like a little skeleton character that you saw every weekday morning. It was a really young preschool.

Nicholas: How did you get into that opportunity? Because that was sort of the start of your career in this business. -Is that right? -True.

David Horvath: Yeah, that was mostly cold calling. I was in New York City, and I went to the import store where I could buy PlayStation 1 games. You know, months before they came out, -I would get the Japanese versions. -Sick. And there was a game called Parappa the Rapper. And the artwork looks really familiar. It looked like, and it was, it was done by Rodney Allen Greenblatt, who's like a fine artist, an early CD-ROM artist from, like, the '80s and the, you know, like, really early '90s. And I thought, "Wait a minute, if this guy works with Warhol, how is he releasing a Japanese PlayStation game with Sony?". So I looked on the back of the box, and it said, "Copyright Rodney Allen Greenblatt, Sony/Interlink.". So I thought, "Oh, what's Interlink?". So I go on, dial up AOL, and then, you know, after 20 minutes, I find the Interlink website, and turns out they're a Japanese artist representative that handles or specializes in artists, representing artists from outside Japan. And they had represented many of the illustrators that I grew up with and now have become friends with, but adored at the time. So I just sent them an email with, you know, I sent, like, a physical packet of artwork with my last $100 via FedEx to them. This was, like, 2001 or 1999, something like that. And they wrote back and met with them, got little bony almost immediately, was very spoiled. I thought, "Oh, this is how you make animated shows," which it totally isn't. Like, Bossy Bear went beautifully, flawlessly well, and it took us from the end of 2018 until, you know, like four months ago to get that on the air. So people will have various, wildly different rates of success.

Nicholas: So the NFT project's promising animes. It's going to take a little time, a little patience.

David Horvath: Oh, yeah, you know, you never know. I mean, our Ugly Doll movie was ready in two years. And, yeah, you can tell.

Nicholas: But Little Bony was a character that you brought to the partnership or that they provided?

Nicholas: Action script and tweening and all that. I remember.

David Horvath: Yeah, yeah. I didn't even know what they were called. But yeah, I figured, you know, those were the few functions that I understood and I knew, like, how to do a site. Took off from there. And that's where I learned... I started to learn the most about licensed character goods and consumer products and especially the human behavior surrounding the success or not of such. It was the beginning of a fascinating lesson after coming from, you know, a place where I thought I knew everything I was talking about. I met my wife at the Parsons School of Design in the mid '90s and we both wanted to be storytellers using consumer products and toys as storytelling vehicles. Had no interest... You know, especially toys, but we didn't want to be... We didn't want a job at Mattel or have an interest in starting a toy company. Rather, we were so curious and interested in how Sanrio, you know, derives still to this day, like 50% of the revenue or some big number of Sanrio's revenues are plush, yet they are not a toy company at all in any capacity. So I found that really fascinating. I didn't understand who the customer was. And so Little Boney was like the... It allowed me to be on the ground and spend time there and then started looking around the surrounding territories. Decided to move back to where my wife is from in 2007 in South Korea so I could be closer. And I started to get a funny feeling, which proved to be true, that the things that we would do in Japan and Korea or Taiwan had way more impact than I thought it would in New York and Los Angeles. And I started to realize that there was no really such thing as the Asian market. You can call it that. If you work at Disney, you kind of have to. It's structured that way. But that, at the same time, Disney's the master of also realizing that there kind of isn't also, right? I could never get a job there doing this stuff. But starting Character Brands from Zero kind of became our focus and our specialty. And now what I'm trying to pass on to anyone who's interested, because I really do believe that just anybody starting from zero, surely if I was able to, that there are far more talented people out there who would be able to do phenomenally well using, I think, the approach that we're constantly putting to the test. Once things change and our theories no longer work, I'll be the first to write that too. But so far, so far, the system still seems valid.

Nicholas: Yeah, I'm looking forward to getting into more of it because your insights about the Character Brand industry are counterintuitive, or maybe they are ultimately intuitive in common sense. Maybe.

David Horvath: Well, it depends what level, right? I have friends at Disney who've always only been at Disney except for when they used to be at Mattel when Mattel had Disney. And they have no, you know, they're like, "You're insane.". It's like, "I understand. I'm insane, but I keep applying these same formulas to everything.". And it works most of the time. Some things really don't work. And that's a big one too, like learning how to identify. When it's not working, you just, you know, throw it out and start fresh. Not everything that we put into our system works. You still have to like the thing.

Nicholas: Right. Well, okay. So we might as well get into the... I want to discuss the sort of... There's like a few themes that come through in a lot of your writing and the podcast appearances that I've listened to. that I think we have to address. The main one is how a person feels where they are when they discover the brand that you're trying to perpetuate. And I'd love to go through some of these themes and then maybe we can get to some advanced questions for people who've already sort of indulged in your approach and want to take it to the next level. So maybe you could explain a little bit about the ideas that you talk about related to like being in museum stores versus having big brand partnerships and that kind of direction.

David Horvath: Oh, absolutely. Yeah. We've always kind of felt the same way about this. I've just more recently learned how to kind of actually put it down on paper. We've always put it into practice, but we've never really had to relay this to anyone. Once I realized that there was actually no... There's nothing on paper for those who dream to do what Hello Kitty's doing, but are starting from zero. So that was kind of like the mission of the Substack was, even just for my kids, if they, and I doubt they care, but if they ever wanted to do this, that they'd be able to find how one take on how one might go about doing it from someone who's done it repeatedly. And, you know, we've had, you know, I think 0.002% of Tenrio's market share, which is a lot more than I ever thought I would ever be able to achieve doing this. But it's all about, for us, instead of, you know, we always say, "Become one with culture instead of marketing to it.". And what that meant for us, especially when it comes to lifestyle character brands, meaning like Sanrio, Rilakkuma, Moomin, increasingly so, Pokemon, Snoopy. These are lifestyle character brands that primarily the consumer base is women and then women and they're like, you know, post-university, then mostly in 30s and 40s and then outliers all the way into their 60s. And that you should never really be broadcasting or seeking attention. Rather, you should be a point of discovery within physical places that people already care about, that people already resonate with or have some sort of emotional connection to, places that people already are in love with. And that when you are discovered there, that feeling that already exists about that place will then hopefully also be assigned to you. So we kind of applied that formula with Ugly Doll. And it seemed to work very well. So we kept doing that with everything else. And it still, to this day, seems to work. Sometimes we'll try different things and poke at that theory and see if what we're talking about still makes sense or if we're just literally from the 90s and talking nonsense. But, you know, museum stores, it doesn't have to be museum stores. You might have something that's meant for comic book stores. Like, you have to find who are your potential tribe members and then where are their stomping grounds, right? There are places that many people resonate with. Like, yeah, this place is me. This place is so me. When I walk into the MoMA museum store in SoHo, right, I will verbalize, "This place totally gets me.". And my nine-year-old son is like, "This place is definitely not you.". No, no. But it is. I feel that it is, right? And so the things that I find there, I would probably walk right by if it was at Costco. But I'm automatically assigning a certain other type of meaning to them. Like, "Look at these cool box of crayons.". Like, yeah, they actually do have that at Costco. You walk right by it. But finding it at the MoMA where I already feel a certain way and I see it next to other things that I already identify as having come from that world, I start to associate that box of crayons or that Miffy rubbery plastic lamp with those things. And I walk in the MoMA or the Whitney store, you know, and I see a Miffy lamp, and I go, "Whoa, that's the rabbit by Dick Bruno that came from, like, a preschool property.". And now I'm understanding it in a completely different way. And then a year later, I'll go into a fancy shop, you know, on a multi-sando in Tokyo, and I'll see more Miffy stuff and right away, subconsciously, connect my first interfacing with that at the MoMA. And it's not one interfacing that does it, but thousands of them that you kind of have to make. or that what we do is we execute on thousands of what we call microtransactions in culture. And that over time, like, individually, each little thing that I'm telling you to do, each of my suggestions on their own, like, would get laughed out of. Mattel, Hasbro, Disney, Warner Brothers, like, they'd be telling you, "Man, those don't do anything. What is he talking about?".

Nicholas: Because they're too small. Being present in a single store is not significant enough for it to affect their bottom line.

David Horvath: Yeah, we call it "It's the right small," where these little cultural microtransactions added up together start to make a very powerful whole. And I think that that's the major contributing factor to our characters resonating with people and meaning something to people versus being something that we're selling.

Nicholas: So it's both that I'm discovering it in a place where I feel a kind of aspirational connection with the culture of the place. I identify with it or I'd like to be more identified with it. And I also respect the curation that's taking place in selecting what's in that space. And so I have more, I'm giving more attention and I'm also giving more credit to other objects that I'm seeing there by association. Is that right? Sure.

David Horvath: And you feel like you're discovering something. And when people feel like they're discovering something and they fall in love with it, I think that they're far more likely to go and just tell absolutely everybody. Right? When we first were found at Giant Robot Store on Sawtelle, it was at a time when there was still a very deep association with the magazine. And the magazine was one of the first interfaces most people had with Takashi Murakami and Cause at that scale, right? Back in the early 2000s, late 90s. And so when you walk into this place, that's like the physical manifestation of that magazine that you've been picking up at like the Virgin Megastore in New York or wherever. And you already have a sort of association or something in your mind and your subconscious about how you feel about that magazine. And you're walking into like the embodiment of the Giant Robot brand. And you see to your right, there's a Takashi Murakami plush. You know, this is back in like 2002. And then there's like a Nara ashtray. And then there's these ugly doll things there that you're seeing for the first time. So it's discovering them in these places that mean something to you alongside the things that you're beginning to understand in a certain way is belonging to a kind of like same sort of weird new universe. And then kind of attaching everything else that you find there to belonging to that same realm. I like to say that I belong in the same realm of Murakami. I definitely don't, but I felt like we had a much better chance of being discovered there versus replicating ugly doll, you know, by 10,000 pieces and shipping them to 2,000 target locations where they'd be completely unknown and probably just, and people would just walk right by them, right? So there is two very different approaches. So if starting from zero, I would say that you're giving yourself a much better likelihood of making a connection by seeking out, you know, physical places or even people where there is already a connection with your potential tribe.

Nicholas: To me, the thread that this connects to throughout all of your work is the quality of the relationship you have with the people who like your character rather than the sort of vanity metrics that people often go for with brand partnerships or distribution in big stores. You've talked a little bit about that, about how brand partnerships are not what they once were.

David Horvath: Well, sure. I mean, and there's always outlier cases where while I'm saying this, there very well may be this incredible one-time thing with Coca-Cola that if you did that, it would completely erase everything I'm telling you. And in fact, we have done things like that. But yeah, when brand partnerships 20, 25 years ago, they took everybody by surprise just because they hadn't really been seen in that same way before. And they've never been "doomscrolled," right? Just like TV advertising in the '50s was new, so it had a higher chance of working where by the '80s, you had to be a really funny TV commercial, right? And then by the year, whatever, 2000, it's like you don't even see this stuff. You kind of make jokes about it at the Super Bowl, right? So I always felt like brand partnerships, in general, just in general, in sort of the same way, and we've seen them. When we first started coming up through that designer toy movement, it's so funny. There were a lot of parallels. We had our blue chips. Like Yuga Labs was Michael Lau and Cool Cats was Pete Fowler. You know, I could find some equivalent to everybody. It's so funny. And it was around the same number of people, too. Like the number of people operating and then the same number of people into it. It's very interesting.

Nicholas: What era was the design toy movement start?

David Horvath: Frank Koznik was early, rest his soul, in the late '90s with Bounty Hunter and the founding of Medicom Toy. But for us, it was like the peak, mid-2001 era. And like when Giant Robot physically opened in Los Angeles and like around the time that Kid Robot was opening their second location in SoHo, those years.

Nicholas: So just to give people a little bit of context, temporarily, so you get the NHK show in the late '90s. Then in 2001, you made like a drawing to your wife, right? And she sent you back a plushie that became the Ugly Doll brand? Is that right?

David Horvath: Yes. It's unfair for me to say it. That's how it reads in most of the past press. But really, that's like saying, you know, the Eames chair, the guy just made a piece of furniture. So she, I mean, to me, she designed the, plush is very tough. Like it's an incredibly tough category on its own. And I did send her a drawing and she created, she created a plush doll out of that drawing. But the doll itself was, like I would show it to very picky friends who were designers at Mattel who always ripped into anything I'd ever shown them of my own stuff. And they were just blown away. So they're like, I don't know where you got this or who did this, but this is like, you know, decades of being here in this industry, I've never seen anything like this. So that gave me the courage to go, you know, bring it up to Eric Nakamura who owned that store, Giant Robot. He had just opened it. And I was just kind of showing him, right? But he was like, yeah, man, I'll take 20. Like, oh, okay. Yeah, I'll be right back with 20. So I ran home to Sundman and thank you for sending this to me. And I need 20 more. And like one of his, like a friend for him. Can you please, thank you for this nice gift. And can you please just make 20 more? And I thought that that would be it. I thought, we'll get into Giant Robot. I'm going to put these right next to the Murakami stuff. And then I'll figure out what to do with that, right? So we dropped them off. I dropped them off after she sent them. And that was like Friday afternoon. And Saturday evening, Eric wrote back, hey, do you have any more of them? ugly dolls? Like they're gone. Which was horrifying to me because I didn't even get to take a picture yet. So I thought, somebody from Mattel went down there and just bought all of them and they're going to cut them up and show them on mood boards and expense the whole thing. So then we dropped off 40 of them. And those lasted two days. And for every 20, that would add an extra. They just kept selling out like crazy. So we had sent some to this place, Zaka, which was like a design, a Japanese design bookstore on Grand Street or previously West Broadway in New York that I'd been friendly with the owner forever. So he let me put some there. And those disappeared in one afternoon. So just, we would look for these interesting stores that weren't really toy stores that attracted just like, you know, like design furniture stores. or if we were in a children's store, it was in a children's store that was weird and mostly sold those rubber Roddy horses. Remember Roddy? R-O-D-Y? Yeah. Like the designy looking kids stores that are more like for the parents. Decorate their house and feel cool sort of way. And they just kept selling really quickly. So after quite a bit of doing that, someone was like, "My hands are changing colors and you either have to make these for real or stop. Like, you know, it's getting to be too much.".

Nicholas: So... We came to the Apple computer story there where they were trying to sell like kits for people to make their own computers at home like Arduino style. And one of the stores asked them for a hundred or so fully finished computers and it kicked off the decision to make consumer products rather than kits. I think there's something about this. There's this narrative that repeats itself often in startups where people think they're making one thing and it's not working well and then they do something and that really clicks with people immediately and they pivot to it. Was there something that you were doing that wasn't working before?

David Horvath: Oh, everything that I tried before that never worked. I'd always been cold calling random companies. I mean, that's why I reached out to Interlink in Japan on the back of, I was always finding like... There was like game magazines from the UK at Barnes & Noble or Borders bookstores in the U.S. It's like really oversized ones that had just all the company info and I was constantly writing people, sending flash animations and some nonsense. But, you know, the mistake was that I was trying to do everything myself and really the brilliance was Sundman's execution of that physical doll is what I think what it really was. And she didn't want to be in any of the press or talk to anybody. She was like, "Just let's do these.

Nicholas: Is she in the room now? I'd love to have her on the show.

David Horvath: No, she's not. Oh, even 20 years later, I don't think she's ever been a part of any... I've tried. There's a clip where we're at the movie premiere where we're just standing next to each other because she had to. But yeah, no, but she drives it. Absolutely. I mean, her designs and then her wisdom in regards to, you know, what direction we brought it. this was most certainly not just me at all. I just talked too much.

Nicholas: But yeah, it was Sundman Kim for anyone who's interested. And there is a picture of both of you on the Ugly Doll Wikipedia page with her looking like she'd rather not be in the photo.

David Horvath: Especially like the feel of the plush. And it was, you know, it was like a combination of the way they looked and the way they felt when you picked it up and then the name of the thing, right? In contrast to what they actually look like. And then the stories inside the tags were like the moment when someone would say, "Oh, this is totally me," or, "This is totally my Uncle Bob," or whatever. And that sealed the deal. I used to drop them off at Giant Robot and run home and on dial-up watch. They have like a webcam at the store. So once we get through those first 40 and they actually sat around on the shelf for a full day, I would just watch and see how people interacted with them. It was just fascinating to me. I couldn't believe it really. I did the same thing in New York when Kid Robot opened in SoHo. It was going to be a weird creep across the street and watch through the window.

Nicholas: That sounds like a great strategy for someone trying to make something people like. So Ugly Doll started in 2001. When did you start Bossy Bear?

David Horvath: Bossy Bear was in 2007. It was published in 2007. We started talking to... Disney Publishing wasn't even called that at the time. It was their imprint, Hyperion. And we had the same editor as Mo Willems, who's the fantastically successful children's book author of The Pigeon Books and Elephant and Piggy. If anyone doesn't know Elephant and Piggy or Don't Let the Pigeon Drive the Bus, this guy is like the modern Disney of our time, really. People throw the word Disney around, but this guy is just... The amount of real estate between him and the guy who does Captain Underpants at Target is phenomenal. And it's something that I like to talk about on the Substack a lot that we keep thinking about. "How can I make my character brand into XYZ?". And many assume like, "Oh, I need to get a show.". Or, "How do I go from this to getting everything on Cartoon Network?". But I like to point people when it fits to the direction of children's publishing. Because it's the same odds in regards to outlier level success. Getting a show on the air at Nickelodeon and getting this much real estate at Target are the same in regards to the odds. But if you're going to go for it, the children's publishing, there's no overhead and you don't have to share... You don't have to sell the rights to anyone, right? You get to keep it all, other than just what you split with your publisher. So if the odds are the same and they both interest you, I highly recommend, for me, The White Spaces is children's publishing right now.

Nicholas: And in that kind of arrangement, would you split the rights with the publisher for everything subsequent or just for the books?

David Horvath: Oh, yeah. So when we went to Hyperion or when we go into any publisher afterwards, they have the rights to publish those books. And you might do something where, "Oh, if Bossy Bear takes off, then you agree to a certain number of books in a series with them so they don't have a big hit and then get courted by their competitors," right? But they might share in the rights to publish those specific books with you for a certain set of time. But you can also get those back and renegotiate after a set period of time. And they certainly don't own it. Whereas in children's media, in general, unless you're paying to produce the thing, the rules are the more you pay to get it made, the more you get to hold on to. Not just in rights. There's actually tricks you can do to keep all the rights, but as far as control, especially. If you have children's publishing first, but you don't have enough money to make a show on your own and you take it to the major companies, whether it's for movies or for TV, having a book series gives you major leverage. And it's by default that you'll always be in control of publishing no matter what. I have friends who've created famous comic book characters and other major properties where it started either as a comic book or a children's book. And they've always retained control of the publishing, which is incredible. Imagine having a show on the air and then the publishing is just all you, especially if it's preschool. That's massive.

Nicholas: Advertising is like free ads. Okay, so this is a comparison that I'd like to make. I'd like to hear what are the similarities or differences. You started Bossy Bear six years later or so. I take it that the choice to start with publishing was deliberate based on this experience that you had with the difference in rights.

David Horvath: Yes, yes. That it felt like that was something we wanted to be very much story driven. And we didn't really picture it entering the lifestyle arena. And then just on its own, the plastic toys became just... Those did phenomenally well for us, especially in... In Japan, okay. But man, in South Korea, big time. In Taiwan, they did really well. In Singapore. And never at mass market. We've always just stayed in the specialty space. And when I say specialty, there are more museums in North America than there are... I keep saying it. More than Starbucks and McDonald's locations combined. And now if you take the 20% of those museums that you don't need, like the Weird Meteor Museum, the Bruce Museum in Greenwich, Connecticut. They probably don't want to be in their gift shop where they do sell rocks. But most museums have some sort of functioning shop within them. Right? And our major portion of our revenues for both Ugly Doll and Boss Faire came from museum stores. And museum stores are incredible. I mean, it's like going to more locations than Walmart has without having to go to Walmart. The only bad part is that each one is a different buyer and it'll take the rest of your life to contact each one for re-rooms.

Nicholas: Yeah, it's a crazy statistic to bring up. And I take it. you know that statistic from experience, from having looked up all the potential boutiques in the museums. Is that right?

David Horvath: Yeah. So what you do is you try to get into a couple of the main ones. I have a friend down there, Clem from Big Shot Toy Works. For example, he just had announced his project just got passed where he's going to be shipping these incredible mini toys. And I was recommending go to just one. Get into the Whitney Museum or the Cooper Hewitt or even the Dallas Museum of Art. The buyer there is really friendly. And just try to get into one of these main kind of like blue-chip museum shop locations because all the other museum shop buyers look up to those tremendously. So if you can just get into just one and then you set up a little table at the museum store show in Colorado. They have like a trade show for museum shop buyers to check out what you have to see if it's a good fit for their museum stores. And if you can just get in a couple of those main ones, like the big, then it's like they all want you because they want to carry the stuff that the MoMA carries and that, you know, the Whitney carries.

Nicholas: What's so interesting to me about the way that you think about this based on your experience is that rather than going directly for trying to impress people on Twitter or your like closest peers outside of the industry, you're still focused on using people's like appeals to authority. You know, be it with the context of the MoMA store or equivalent for whatever domain you're in or being at the museum store conference where other people are looking up to what the museum stores have in stock. It's still like the mechanics of maybe appeal to authority is a little bit reductive, but you understand what I'm saying. But nevertheless, it's not focused on like going directly to Walmart, going directly to having the Disney or Coke or Nike partnership, but instead focusing on who the taste makers are and when you, specifically, not just taste makers in general, but taste makers who are speaking to an audience that you think could be your tribe.

David Horvath: Well, I think that's the real ticket. There's nothing wrong with trying to go to Walmart and Target. The big scary part is that you really should only be going there if a certain percentage of the people who shop there are already in love with you. So, I mean, I don't worry about like tarnishing the brand. And everyone, when we were coming up for the last 20 years, said, "Oh, I see. You're not going to Walmart so you don't tarnish your brand.". Well, no, it's because if we go there, you won't even notice we're there. It won't tarnish us because you won't see us. You'll walk right past us. It will be invisible and then we'll get a bunch of returns and we'll go broke. So, really, it's the things that everybody already knows. With one exception, toy brands. There's lifestyle brands, character brands. There's story-driven character brands. And there's toy character brands. And with those, you can go straight to Target, straight to Walmart, and go from zero to billions. I mean, that's actually the nature of the toy business. And the way you do that, though, is very different than if you're doing lifestyle character brands where your audience is primarily adult women or story-driven where it can be primarily children. Toy brands live or die on the mechanics of play patterns, first of all, and then a combination of play patterns and design. And if you've got those two and you've got the winning combination of those two, you don't need to worry about any museum stores. You can go straight to Walmart and Target and do phenomenally well. You can. It's still outlier success when I point to MGA's Bratz or LOL Surprise, which were genius, right? Unboxing fashion dolls at the height of the unboxing craze on YouTube. They're brilliant. But those are the mechanics where you'd be able to succeed in that environment where you don't need to be previously known. But if you have a character brand, I wouldn't bother going to Walmart and Target until you know for sure that, say, 20% of everyone walking in there is actively seeking you out.

Nicholas: To focus on the toy brands. for a second, you mentioned play patterns and design, and I think it was in the MumBot conversation that you mentioned that, from what I understand, play patterns are kind of like the interaction loop of interacting with a toy, whatever makes it fun to play with. And design is rather like the more eye-catching element that gets you to stop in the aisle or cross the store to go find it. But those things are kind of, they burn out after a while. Is that right?

David Horvath: Yeah, it's so funny. And many have tried to analyze why. Now, the play patterns themselves remain. Like, there's a great YouTube video that I've linked many times on Twitter over the last few days. There's a fellow on there who explains with super clarity and simplicity what the various play patterns are and who they resonate with the most. And those never really fall out of favor. It's kind of funny how those remain the same. But for some reason, like, I used to wonder, like, why does Barney the Dinosaur work so well, but then not work so well with the next babies? Why do the next batch of babies no longer resonate with Thomas the Tank Engine? I don't understand. Shouldn't those just go forever? Maybe it's a bad example because those are media brands, but there's something about certain toys that you kind of get like a seven-year span if it's great, right? And toy companies are aware of the four- to seven-year cycle. And this is their business. So they always have the next one ready to replace that one, right? And they're hoping that... It's like making movies where you hope they just all do okay. And then you need, like, that one hit every few quarters. that kind of propels everything else. And it's a totally separate business. It's an incredible one. I mean, that's the business that Mattel has. Twitter was like, "This guy talks too much.".

Nicholas: No, no, please go on. So you're saying... So maybe give a little bit of an overview for people. We've talked about a few different ways that you break this down. Your sort of character brand taxonomy. There's like lifestyle brands. You mentioned Hello Kitty, Rilakkuma, Snoopy, Moomin, Pokemon, Miffy, Sanex, maybe even Nike Swoosh. It's not a character exactly, but maybe it is. Do you think of those as lifestyle brands too?

David Horvath: Oh, it could be. Once we start getting into, you know, streetwear/brands that go more apparel. I look at Human Made as just a brilliant example of how you might grow from zero. Although, you know, he was not from zero. I mean, Bathing Ape was the opposite. It was huge. But the way he then went from there to growing Human Made, for me personally, just really resonates with me. I think Bobby Hundreds is a much better... I think a go-to guru when it comes to the dynamics of why Nike works the way it does versus, you know, some of these other brands. I think you could apply some. He would probably disagree with a lot of my takes on brand collaborations. I think that brand collaborations for that world might work differently. I don't think it's quite the same dynamic. My whole thing about brand collaborations is you just never want to be associated with the noise. And that's why I always go about kind of like, especially in the formative years, I don't really care about social media. I don't really care about brand collaborations in general just because I think that these days everyone's so sharp that it's just subconsciously understood to be marketing. And finding something through marketing, to me, in my experience, I have found that then your brand becomes associated with the noise. Like if you live in Tokyo, if you live there, not if you go there as a tourist, if you go there as a tourist, you're like, wow, the bank has a character and the toilet has a character, everything, you know, the thing you tie your bike to has a character. There's a little tiger guy with a yellow hat. And so when you're not, when you're just visiting there for the first time, it feels like this bombardment of crowded characters everywhere and the market is crowded. But if you live there, you don't see 80 to 90% of stuff, right? It's just background noise and you've learned to just get through your day and filter it out because the buildings are literally singing to you, right? But then there are these physical places that serve as these kind of like escapes or breaths of fresh air away from that noise where then suddenly you snap to attention and the things that you discover there, you do notice, right? Your stomping grounds, we say it, right? Here in North America, it might be comic book shops or a funky sneaker store down there on Avenue A that has no sign on the outside, you know, wherever it is. I was able to identify this far more easily in Japan and kind of use that as a template and then realize that there's versions of that in every other territory.

Nicholas: Yeah, I find it fascinating that you describe Japan. I was just in Japan for ETH Tokyo and I had a somewhat popular Twitter thread just posting some of these characters all over in branded material, graphic design, et cetera, all over Tokyo. But I completely understand what you're saying, but it's surprising to hear you say in other interviews and in your writing things like Japan is a total white space for character creation. It's shocking, it is.

David Horvath: Oh, yeah. I mean, I still see it. Like, we're going to be launching something new from zero starting in October. Maybe not have anything physical to put out there until, you know, a couple quarters later. But I would go there first. I would go there first not because I really want to appeal to the Japanese market because it's just such a, it is such a white space in regards to being able to launch a character brand and to be seen. And it's a great opportunity, especially now that it's just opened up again, wide open, right? I mean, they're at like 2019 numbers and they haven't even really opened China yet. But it's such an opportunity to be found in these places that, you know, resonate with people. Like, we had an office in Farmland, Texas. There's limited choices when it comes to special places where you can really resonate with people. Like, the cool store in our area was Barnes & Noble in the Totoro section. And so, for me, Japan just has so many different places to physically be found and to hopefully, hopefully, you know, end up meaning something to people, you know, over time. Not by just being found one time and then everybody's in love with what you've done, but by having these hundreds or even thousands of little kind of like microtransactions that add up to a brand story that starts to make sense to people or that you become something that people actually get excited about and feel like they found you and they want to share it with everybody. It's, you know, it's wonderful.

Nicholas: I was going to say, you talked about being in Tokyo, being in Seoul, etc., in order to speak to LA and New York. Maybe you could describe a little bit about how do you, is it like necessarily those places? or how is it that you suss out what place is relevant for making the waves you want somewhere else?

David Horvath: Sure. In Japan so far, and I'll see, you know, this summer I'm going to do a whole thing. I'm going to run up and down like all these places that I've been using for the last 20 years. There's some new ones and there's some that have closed up. But in general, it's kind of the same versus Korea where if you're gone for six weeks, it's completely changed. So that's just rapidly changing. But there are still just as many relevant places. And there are staples, funny enough, like Dunkin' Donuts is like the kid robot of South Korea where if you tried Dunkin' Donuts in New York City, I don't know, it's not going to work the same way. But there, yeah, in Japan there are certain places. Great example, you know, going back to cause. In South Korea, we live way out in the boonies. And right next to us is a newly built town that's even way more out in the boonies. Far from Seoul. And by the time you get off the train, there's almost no one left. You're last. But it's nice. You go up there. It's this new place. And you go up there and right in the middle of the center of the town, there's a massive giant cause statue. So at first I thought, you know, I guess the owner of this place, they got money, they must be a cause fan and they just put that there. And the locals in general have no idea what it is. It's just cool looking. And then I noticed that surrounding that statue are some other fixtures by South Korean artists that I do recognize. Some of them are friends of mine. And we were sitting there and we noticed that these kids were coming up out of the train exit to take pictures of the cause statue. They would look around a little bit and they'd buy some whatever and then they'd go back down. And that this was just going on. Like every time we would sit there at this cafe and just kind of stare out into space, we kept seeing these kids that I won't say that I was able to identify how I know, but my wife was like, these kids are definitely from Hong Kong. They're not from here. That what is going on? that this place, and it turns out that this place in the boonies in South Korea was for some reason known as like a cool spot where it was believed that this is where like the cool kids, like Avenue A in New York in the 90s. Like this was some place of meaning for some people and that they were coming down to photograph this cause statue and they knew exactly where it was. And they had an impression that that place meant something because this most certainly happens in other neighborhoods. So we had a store in Seoul in a neighborhood called Insadong in a mall called Zamjigo, which was like the number one which is default. Like if you went to Korea for the first time, everybody went to Zamjigo. And so our store was there and we became, that one location and what happened afterwards propelled Korea to be our number two market after the US. But most of the actual purchasing was not done by the locals, right? It would be people discovering us there from elsewhere, then coming home and realizing that we're already in six or seven other places that are just as special or have that same sort of designed and non-mass market vibe. They didn't really realize it, right? So we become a source of discovery for somebody and then they realize, oh my God, this stuff is already out there. It's like when I bought Macross toys in 1985 at like a Toys International, like some specialty import shop. And then they started playing Robotech six weeks later in America. And I freaked out like, oh my God, I already have this. I have those things, right? So trying to figure out just, you know, places that could potentially be points of discovery really above all else.

Nicholas: And it sounds like it's really a relationship driven thing to be able to get into those stores rather than, it's not a Facebook ad marketplace. You're getting to know people who are the buyers at these locations.

David Horvath: Yes. Japan for me has for some reason been the easiest, but Korea definitely second place where you can actually find most of these shop owners by going to all the various creator functions we call them. Like there's an artist, Dihara or another artist, Bridge Ship House. They kind of all run together and they all go to the San Diego Comic Con together. And they all, whenever there's an opening, when one of them has an opening, all the other artists will show up there and they all bring their tribes and they've told their separate tribe members to come on down and the place fills up. And all the various shop owners of that ecosystem, you know, congregate in these places and it's a great opportunity just to get to know them. Not to try to seek them out in some weird way to kind of, "Hey, how can I get my stuff in your shop?".

Nicholas: Pick up artists. Yeah. Sounds like for people who are familiar with the Ethereum ecosystem that it's similar. Everybody knows everybody within the narrow, it's not such a huge community of both locations to sell and also artists that are trying to do so.

David Horvath: Yes. There are so many parallels really. I mean, I haven't physically gone to any of these events but when I read about the NFT NYC or the VCon and how people had such a great kick out of hanging out together and it's, you know, it's very tight knit, right? And that's how all these systems are. And for those who you don't meet, there's shows that you can attend or that you can show at. Like in Japan, there's the GIFTS show. The GIFTS show is brilliant. It's like every owner of every small little nook and cranny shop like in the entire city goes down there looking for interesting things. And between that effort and making sure you just get involved and go to all these places. And it's a great time to do it. I mean, did you see the yen versus the dollar? Yeah, it's cheaper to hang out there than it is just to go down the street.

Nicholas: Yeah, I was surprised. It's not the Japan I was warned about when I was a child. It's not expensive right now. Do you have a hard stop at the hour or can we keep going? Because I have a bunch of questions left.

David Horvath: Oh, yeah. No, no. Yeah. Ask away. You know, the hard stop is me wearing down everybody's eardrums.

Nicholas: Excellent. Excellent. Then we have some time. So, okay, there's a couple things. Before we get too far away from it, earlier on, we were talking about licensing and retaining rights. I don't know how deeply we can get into that conversation here. But maybe the high level question that is on people's minds is, I don't know how to deal with rights. How do I figure out how to deal with rights? Rather than, you know, give me the playbook for every potential scenario. How do you go about finding the answers that you need?

David Horvath: So, I would say that the best, if you're going to like, it's a lot cheaper than any sort of university for sure. But the best lesson that you can take is to propel yourself into physically to go to the Vegas show that's coming up, the licensing show. Just to go on foot and just to be immersed in it. And, you know, for me, I'm kind of introverted. So, I like to kind of just walk around. And it's really hard for me to go up to a booth and ask silly questions.

Nicholas: You surprised me with all of your cold calling. I wouldn't have taken you for such an introvert.

David Horvath: The cold calling for some reason, I don't know, I used to do a lot of prank calls as a kid. Can't do that. But the, but no, but I would, you know, every time I worked up the courage to go talk to someone at a giant scary booth, like nine times out of 10, you'd get people who are just like overall sharing in what you should do and like really helpful. It's always been like that. I can't explain why. But I would recommend going down to the licensing expo, right? And just as an observer and, you know, to go to like the giant Disney booth where it's all shut down in private and then to check out the little funky ancillary booths, like the independent places and a lot of the manufacturers, right? Like the guys who fill up all of Hot Topic with all the little chachis point-of-purchase display stuff, right? And sort of just get everybody's take, if you can, on everything from rights issues to is it worth showing at this show? If you weren't going to show here, would you recommend where I start first? And you'll get thousands of different takes. As many questions as you ask, you'll get that many versions of what they think you should do back. And from there, you kind of, for those who are starting from zero, I think it's a great place that you walk away no longer at zero. Like you're now, you're now at the end of the last day, you've been initiated, no matter what. It's, I think, quite a brilliant experience. And if you can, to then do the same thing at the licensing expo in Japan, if you can, and here's the really crazy one, to go to like the Bologna Book Fair. That one, yeah, I don't really exchange right now, but that, I mean, that's where Moomin did their licensing deal with Barnes & Noble. If you've noticed, all the Barnes & Noble locations now have Moomin. That, that's, that, I mean, Moomin's massive in, in South Korea and Japan, and of course in the Nordics and in Europe. But, you know, they were finally able to enter the North American market in a coordinated way. Not at the licensing show, but that was put together at the book fair. So 10 years ago, that was not true of the book fair. My first choice would be Vegas licensing, Tokyo licensing show. And then maybe even the Tokyo gift fair. Any of those like character driven events at Tokyo big site.

Nicholas: So, okay, so there's these events where you can go and sort of brush up and meet people and get a bit of a lay of the land. But if you're actually going to try and take a character to market, do you need like a lawyer or is there a single human that you need with a certain kind of professional title? Or is it you making the decisions and you're relying on specialists as needed, but it's really you're the brains?

David Horvath: I mean, if you're an individual and you're self producing everything, like if you're making toys, I would more worry about the legality surrounding making sure that you're labeling everything properly. And, you know, like you can't really make toys and then just call them toys and then market them to children without being compliant, right? With the various toy laws and having everything safety tested. And a good factory will, you know, be able to do that for you and understand how you find it straightforward, etc. But you figure all that out. The legal stuff, you can go to LegalZoom and I mean, there's really trademarks and, you know, filing all that the obvious is really all you really need to do. Especially if you're following the guidelines I'm talking about. If you're talking about from zero shipping to Walmart and Target, then yeah, you probably need to.

Nicholas: Sure, sure. And then in terms of retaining IP rights, etc., having some kind of expertise when you go to the negotiating table with a potential partner, I suppose like a mentorship relationship would be the best thing, right?

David Horvath: Yeah, well, if you're looking for funding, if that's what you mean, if you're looking for partners that are going to become either, you know, financially become partners, then yeah, I think that you probably need a lawyer at that point or at least seek out a mentor. And then I would watch out for, really, if you're starting from zero, like I've talked to a few who are worried now because they don't have VC backing or something like that. They feel that they need to be signed with CAA or have this stuff. And in general, what I've said is, in general, there's outlier cases, but in general, you're better off without VC funding because, you know, investors, even if it's your uncle, they're going to want to see results per quarter. They're going to not want to hear about how you need to go say no to Walmart for 20 years. That's ridiculous. They're going to need to see how you're, you know, when are you getting into the gap, not tell me that you're saying no to them. Are you crazy? Like, it's just, there are going to be so many expectations and the, you know, wherever the funding is coming from, whether it's your uncle and family or friends or investors or venture capital, the more serious it is, the more they're going to need. So, you know, they're not going to want to hear about the thousands of necessary microtransactions, unless you get Illumination or Sanrio to invest where they already know this.

Nicholas: There's actually a question. You've talked a little bit about the pleasure of identifying the people who will create character brands that will be successful in the future. Like a personal pleasure that you derive from that. Is there such a thing as like straight character IPVC? Does that exist? Or maybe what you're saying is it shouldn't exist because it's too slow.

David Horvath: Oh, yeah. That's a good question. I mean, you know, you might find roaming around the licensing show and at San Diego Comic-Con, or more likely at the DesignerCon in California, you might come across interesting individuals on a case-by-case basis who understand this or who don't understand it but are willing to listen to your theories and be willing to take the right small approach. But I don't know. I've never heard of an outfit where that's... It's not something...

Nicholas: You don't like ever write an angel check to somebody like, "Hey, here, go make your character for a year and cut me in for some percentage of the proceeds because you know it'll take too long or it's just not a custom of the industry?".

David Horvath: Yeah. I just... Well, it'll take longer than that. It's tricky. I think the better idea is that because you don't really need it, it's not really required. I mean, there's no correlation between funding and success in those formative years, really. I've never found it to be true at all.

Nicholas: So I think that... And the minimum order quantities for like, say, doing plush or doing like even self-publishing a book, they're not so restrictive as to require the capital that a VC could provide if you like saved up from having a job or something?

David Horvath: Yeah. Self-producing toys are, of course, extremely expensive. So for the, you know, for the very first few thousand of something, it's going to hurt. That'll be the biggest pain point. But that, if it's successful and that it works, you can work up to... Like, if the minimum order quantity is 10,000 pieces, you can always negotiate down to 2,000 pieces. to pay a lot more per piece and probably be breaking even or even losing a couple pennies on everything that you're putting out at the very beginning. It's most certainly painful. And there's nothing non-painful about those early years, for sure. And if you can find someone, you know, who's willing to go in on something like that, then that's pretty incredible. But the... I think by year five or so, in general, I mean, there's no way to know for sure. If I pick on various creators that I'm friendly with, it started to really... What most would consider happened for them, right? At really wildly different times. So... I have so many friends who are in that creative space and went from zero to being very successful in the character space. And I can't think of even one that has gone to anyone for funding because they've just grown it so very slowly. Some of them have gone to toy partners. There's Kaori Hinata from Japan. She started just making resin figures and then moved up to working in Sofubi factories, the ones that we use in Japan, where they're used to making runs of 50 of something, right? And that they're very happy to do that if you can get in. And then that attracted the likes of Medicom Toy, where then they sort of took over the manufacturing responsibilities and freed her up to manage her brand. And they made some sort of partnership, right? So yeah, each situation, I think it's going to call for a very different outcome. It's the least formulaic thing you can...

Nicholas: So it's very different between... And I think I didn't finish enunciating all the different types, but lifestyle, there's the lifestyle brands, there's story-driven brands, which you subdivide into publishing versus media, publishing being like Wimpy Kid, Dogman,

David Horvath: Pete the Cat,

Nicholas: Cat in the Hat even, versus media being more like Paw Patrol, Mario, Star Wars, and then the toys, which we discussed. So one of the takeaways is that story-driven publishing is one of the best ways for a small creator to make it in the space and retain as much of the IP as possible. But the toy example you gave, the seven-year cycles in the toy play pattern and design business, are those companies that are achieving those kinds of successes, is there a secret ingredient that they already have distribution, that they're already a company with ties into Walmart? and what have you? Because if it's a seven-year cycle, it's like from year one, they're making money and it has an expiry date versus what you're talking about in the story-driven and lifestyle brands that come from an individual creator. It's much more like a slow burn towards a larger audience.

David Horvath: You know, again, every story that I've ever heard or every creator from that side has had a wildly different story. You know, the best and easiest to access background story is Isaac Larian who did the Bratz, right? I think he started as some really low-tech competitor to Tiger Electronics. I can't remember the name of it. I think that's why they call it MGA because MGA was the initials of the gaming company. They were making these really like low-tech, you know, like black and white digital low-price point games and then transitioned into fashion dolls. So there are stories like that where they're already a company. Like Kidrobot was making minidiscs or selling Japanese minidiscs, right? And then sort of pivoted into at first bringing in other people's toys and then once everything was going, you know, bait and switch, shifting to just producing everything in-house. So every story is very different. The toy companies have inventor relationships with certain inventors where you can gain access to the toy inventors. That might be worth going to Toy Fair in New York City to just kind of walk around. There's toy inventors there. There's major toy companies. There's tiny toy companies. Like there's like the Schilling Toy Company at a Newburyport that they just focus on tin toys and new versions of antique toys. It's going to be a wildly different story depending on everyone's approach. No one really has the same origin. I think that the founder of MGA is a fascinating look into going from absolutely zero. It's an outlier case. I mean, he was one of the most successful like in the world. But I think it's a really good story and starting point for those who are just really going from zero. I would visit the Otis School in Marina Del Rey just outside Los Angeles by LAX. And even seek out like Mike Andrews, one of the toy professors there that teaches the classes. There are so many interesting characters that come from this world that they'll all have their own take. I would definitely recommend going to Toy Fair in New York and walking that show. You go from Mattel to a couple making plush hand puppets that sell only in specialty.

Nicholas: And for anyone who's curious, I'm going to put all these names and links to them in the show notes so you can check it out. about taking it down now. And that New York Toy Fair is at the end of September. So coming up in a few months. One thing I'm very curious about in what you talk about and especially that story about how Ugly Doll came together, which obviously both of you are very talented artists contributing your unique skills. And maybe even the most interesting part to me is that your wife was supportive of the project and took something that maybe you wouldn't have focused on and realized it manifested in physical reality. And that kind of kicked off the thing, which reminds me a little bit of this talk of like fragile ideas in startups and other kinds of creative work where if you submit it to criticism too early, maybe you kill the thing before it actually has an opportunity to live. I'm curious, you talked in some other interviews about genius illustrators on Instagram and what have you who are not pursuing the kinds of steps that you suggest. I'm curious if you, can you observe anything about, is it really the motivation to live through this like 20-year process of building a character if you're going the story-driven route or the lifestyle route, but not the toy route? Is it really more about motivation than like raw technical skill? Or do you ever have the urge to like airdrop yourself into the lives of some of these incredible artists from around the world that you can find online today and just really push them to follow some better character brand building strategies? Or how do you think about technical ability versus motivation?

David Horvath: Oh, let me just, I think I know what you're talking about. The quote I've said maybe in a couple of interviews was that if I was a kid today and I looked at Instagram and I would look at all these illustrators who are brilliant, right? Like I was. so, I was in my school, I was the kid in my class who was the kid who could draw, you know, like before the internet we had that where it was like

Nicholas: the kid

David Horvath: in your class and then the kid in your school and then like maybe that was as big as you were. If you're the kid in the school who could draw, then man, you're like the top. And that gave you, that kind of tricked you into thinking that you, you had what it took, you know, to go, at least to get to the next stage, right? Where man, I don't think I would do it if I had Instagram and I was scrolling through all these absolutely incredible illustrators beyond like better than the books I used to pour over as a kid, like going through like Ralph McQuarrie, the art of Star Wars. and then these kids on Instagram are better or, you know, as subjective, but I would think they were better. And then, then you look at, you kind of go down the rabbit hole and you go, hey, yeah, but then there's nothing kind of happening. Like they're not, they might have like 400,000 followers, but they're this good and then nothing's really going on. So what chance have I got? I would default to that position immediately. So I'm really grateful for being a kid of the seventies and the eighties that I missed, that I could grow up in a totally illusionary atmosphere where I, I was the kid who could draw in class. And I thought that translates to me being able to do anything. All right. So maybe, maybe it is all just belief and I'm, I'm not that good at any of it. So I did not have anywhere near the outlier success of like a Matt Groening or, you know, who's the guy who did Family Guy, right? I'm getting that age where I can't even remember like the most - Seth MacFarlane? - Yeah, Seth MacFarlane, Like this guy, like he's a showman. He does the, not Galaxy Quest, but you know, like the Star Trek, like he, he just doesn't stop. He's J.J. Abrams doing Harrison Ford movies at the age of 18. like this is the thing, right? There's that on that scale. I was on the opposite of the scale where I'm on the other end of the bell curve where really I'm just doing anything. so I'm convinced because either my wife is super lean or I just kind of brute forced it, right? But yeah, especially in the story-driven media side, it's very difficult. It's so impossible. It's like a miracle to just get even one meeting at all, right? And to get chased out of that office is like a miracle for most, really. There's that, that's, that was it. and many would be, I remember how, oh yeah, I had a, I went to Parsons School of Design in New York and my favorite teacher grew up next to Frank, I'm sorry, Frank Olinsky, my favorite teacher, grew up next to Fred Siebert, you know, the, the owner, founder of Frederator, the guy who produced Adventure Time and endless number of other shows. So he did a favor and sent me down to talk to Fred Siebert. and Fred Siebert said, what are you doing here? What, what is it? what are you here for? And I said, I'm here to have a chance to, to fail spectacularly. He said, okay, that's a good answer. And he kind of, he kind of gave me like a, you know, four hour spiel of mentorship on, on how truly difficult it is, even if you're like the best of the best. And he kind of went through the whole thing for me. And, and at the same time, through being in Giant Robot Magazine early on and featured in the magazine, we got a call from Linda Siminski, who's brilliant development executive who produced some of the, just the greatest shows over the last 20 years. She was at Cartoon Network at the time and then later took over all of PBS. I, I think recently left and is, has maybe retired, but just by weird coincidences, being able to meet the very first two people who then could, you know, ended up introducing me to the other person. And you just kind of have to put yourself in weird positions where the miracles have the highest likelihood of occurring. that's very hard to orchestrate.

Nicholas: Mm-hmm. But, but continually creating your own luck by, by just continuing to grind and not, not being defeated by the amount of defeat you experience.

David Horvath: Yeah. Combination of cold calling and just standing around Comic-Con as much as you can.

Nicholas: I wonder if the equation has changed a little bit since the earlier part of your career where now you can publish without anyone's permission and potentially even build a following which could justify the meetings. Maybe.

David Horvath: I don't know. I'm going to be starting a new character brand from zero through Substack to show that even someone who you might perceive as having "connections" or, you know, I can absolutely, you know, call the founder of this major company or whoever from over here. But they're, they're going to be as likely to hate what I'm showing them as if you were to meet them. Like, there's, I can, I can meet with them and that's a miracle. but they're, the odds are they're going to absolutely hate everything I'm showing them. That's like the default, right? So, I'm going to go through that process and like, well, you know, it's still, you really are starting from zero every single time even when others might pursue, you know, when you're lucky enough to have a little bit of the ability to call on others. to get these new Bossy Bear books that we're publishing in the spring, it's coming out spring of '24, the first few. It did help that the publisher of my comic books from 10 years ago is now at a great, like, super small but new, hungry, you know, Little B. And I really like that. they're, like, before I was seeking out Chronicle books and Random House and now, I kind of look for the smaller publishers who get into the same, they get you that same shelf space but I think would give you a little more. they'd be a little out there more for you. You're not part of a vast library of thousands and the top bestsellers are. Like, if you're with Random House, they've got their previous New York Times bestsellers to take care of. It's tricky. But, if you can find a company that does what you'd love to do and you're able to partnership with them, look for the, there's a lot, there are many more small, hungry companies now than there were when it first started, for sure. Absolutely.

Nicholas: You've expressed this disappointment, you mentioned it a little bit earlier in the conversation, disappointment at NFT and Web3 brands sort of spending a lot of time basking in the adulation of CAA and, like, traditional fiat agencies and fiat money and fame signifiers. Even, I see it a lot with, even, I mean, we talked nicely about MoMA earlier. but, in terms of art, it is the traditional institution and yet, everybody seems to be really excited about being at Sotheby's, being at Christie's, being at MoMA, et cetera, which seems to be contrary to the idea of building a new world. Do you have any idea what it would mean to, like, not do that but instead actually build something native? I feel like there's something in the way that you talk about being in places where people will have a certain feeling based on the association with the other objects and the taste that was put into selecting what's in that space and the way that they feel. I feel like there's something similar with, I don't know, dare I say, crypto-native brand? Do you have a sense of what it would mean to lean into that rather than to immediately tap out and go to Hollywood?

David Horvath: Yes. So, when I first got here in March of '21, I immediately fell in love with what we call Web3. I still have goosebumps over it, right? The idea, especially the idea that a digital artist could actually offer originals the way, you know, my wife brilliantly does with canvases. I've always been very jealous of being able to hang something and offer an original work of art. So, just the mental leap to get to the point where some would accept and be interested in that that's what's actually happening, but digitally, was just fascinating to me. I started to listen to the various gurus or whatever you would call them, the thought leaders, about how there's this incoming disruptor to the legacy world, right? That there's going to be some sort of decentralized space, right? That, you know, it's based on Ethereum and Ethereum is censorship resistant. and if it's censorship resistant, shouldn't also the properties that, you know, are layered on top of it, etc. I kind of loved how everything sounded because I do feel that the character space that we come from, while I'm in love with it, I also feel like it can sometimes get a little stale and is ripe for some sort of disruption. So, I totally bought into it and I still am 100% sold. But the first time I heard CAA pop up, I mean, they're brilliant. I've been with them for years and it's amazing, the audience reaction was what it was puzzling to me. There was like a like a let's fucking go, like LFG, I don't know, the bad language is recorded.

Nicholas: No, no, you're fine, you're fine.

David Horvath: But, you know, like there was a, there was kind of like this massive celebration over things that I don't know, I was just talking to them and they don't really know what this stuff, I just found it very confusing why if we're like, like, it would be like Elon, you know, just closing SpaceX and announcing that from now on he's going to be making rocket toys with Mattel Hot Wheels. Or you can reach more people that way and mass adoption.

Nicholas: Or he's got a partnership with Boeing or something.

David Horvath: Yeah, you, what happened to the space-faring species and all that stuff, right? So it just, first it just bothered me at that level because I didn't, like.

Nicholas: But I think it's, I think it's because it's a, when punks and et cetera started going to Sotheby's or Christie's, whatever, and people, influencers, NFT influencers and collections started signing with these agencies, I think the reason people were excited was because they were primarily interested in the speculative opportunity of having more people to dump their bags on. And they require the legitimization of being in MoMA for like the families of weapons dealers and pharmaceutical monopolists to buy their bags later, right? So, it's not so much about, I don't think it's the case for everybody, but I think for many people the reason those things are interesting is because it gives them an opportunity to sell to somebody else.

David Horvath: Okay. So, yes, now I have a much better understanding of exactly what you just described. I had no understanding of any of that back then. I really was quite clueless. Like, um, as far as the market dynamics that now we're all very familiar with. I thought it was just like this romantic excitement that we're just here and all of a sudden Time Magazine knows about us, right? Like I thought that that was what it was. I think you are right that it probably was more about the financial component or the potential for it, right? Perhaps.

Nicholas: So, yeah, I don't think that characterizes everybody in the scene, but I think in a manic phase that's very important.

David Horvath: Yeah, absolutely. Oh, that was a phenomenal, you know, year and a half or however it lasted. Yeah, I don't, I don't, actually, I don't think of any of it in a bad way anymore. I was, now I'm more concerned for young creators who might feel like, well, I don't have the CIA, I don't have these big agencies, and I'm not connected to Christie's, and what hope do I have? The way I might feel as a kid if I was seeing all these illustrators on Instagram. A big part of my sub-stack was to try to make it clear to anyone who's really just at zero, like, you know, with no connections and they don't live near the MoMA, and, you know, like that, that I don't want them to get this unnecessarily feeling of hopelessness or that they might have missed the train or something, which they absolutely didn't. I mean, you don't go to CIA in the early years when you're forming a brand. You go there to them when you've already got your tribes and you've got everything figured out, and now you just need to do these specific things. They're brilliant at taking something that you've already built and executing on certain projects that you would like to see happen that, like I said, otherwise the meetings might be small miracles, right? So they're very good for that. And some of the other agencies other than CIA have now, you know, specific departments that focus on publishing or, if you want to get a book published in it, which is another impossible feat, right? Those are all small miracles. They perhaps can help a published author to take things even to the next stage. I think it's better for when you've reached a certain level. But for everybody going from zero to 10, it's not necessary.

Nicholas: I read the book Powerhouse CIA, which is like a great book. I think that's the right title. There's one that's just like interviews with people who worked at CIA over the years and one paragraph from each of them chopped up to tell the story chronologically. And my understanding is that, I don't know, maybe tell me if this is still their strength, but my understanding is that what really defined CIA was that they would bring together many of their clients who had different skill sets in order to sell a package deal to a studio. And they would come with all the component people. And so it was a much easier sale to make. Is that still the reason? Is that still the strength of something like CIA?

David Horvath: Yes, absolutely. If I identified a certain studio that was perhaps missing, like missing an entire, they didn't even have a kids and family division, I might start thinking about going to them and maybe going to a really good executive producer or someone who maybe had experience running a studio and for a first project, find all the main components and have, or they would find them, right? But go to them with the idea of wanting to do this and putting that magic formula together. Yes, I do believe that's their...

Nicholas: So that's why in the early days it wouldn't be useful because you need to have some expertise and grown audience in order for it to be useful for you to be paired up with a superstar actor and director in order to do a movie version of your property.

David Horvath: Yeah, there's always going to be outlier cases where somebody went from zero to 100, you know, and CAA helped them do it. But in general, I think that they'll be able to do a better job if you've already brought everything up to a certain point.

Nicholas: Absolutely. not even time. Like someone like Charlie D'Amelio, if you have millions and millions of followers on a new social media platform, maybe it's already useful for you to have that representation. But if you're just starting... But to return to the real question, let's say you're an NFT creator today. I mean, you are an NFT creator today, but let's say your main business is making NFTs and character property around. NFTs are in the Web3 space and you want to focus on cultivating an... I don't know if... It's a dumb word, but an organic audience within this crypto space in much the way you've done physically with physical objects, toys, and books. Do you have a sense of what it would mean to be like a genuine, authentic, cool, and exciting crypto-native character property?

David Horvath: Oh, that's a funny one. When we first started what we were calling Web3 in March of '21, I thought that I could then just go to our existing fan base and audience and reach out to them and tell them all this stuff that we're super excited about and they would just follow us here. And I think two people did. One of them is in this room. I even went to the super deep secret Facebook group where the 30 most dedicated of our fans of the last 20 years had been congregating forever. Yeah, it was just one or two of them and one of them stayed. The other guy turned around and left. So for us, it was realizing that we were starting over from zero. And so it was just me on Twitter alone and minting a couple things and figuring out what any of this meant. And then, so I wouldn't have some great advice for how to succeed in Web3 because it was quite by accident. 4156, the founder of Nouns, found us through, I think, Strawberry. Strawberry found us, retweeted us, 4156 saw his tweet and tweeted about us, "Hey, this is how you enter Web3 from Legacy Brands. Look at this guy. No pomp, no shilling.". I'd never even heard these words before and they sounded like great ideas. But he was like, "This is how you do it. Just quietly, at reasonable prices, and just building quietly in the corner. No trying to grab eyeballs or anything.". And I thought, I'm grateful for that tweet because from that moment, we started connecting with just dozens and then hundreds of brilliant people. It was the first time that I actually made human connections using social media. Before, I thought it was just going to end up being this light thing that I was becoming less and less interested in as the years went on. And I just made a real connection with these people and I think that's what it really was. And I was very fortunate that a certain percentage of whatever we made immediately went back to us collecting. And I didn't even know that I was supposed to have bags or flip things or that I'd be reselling these things later. I was genuinely collecting and I still have the collection.

Nicholas: And when you talk about releasing stuff, this is the Bossy Bear collection?

David Horvath: We did, I think, less than 30 Bossy Bear pieces and then I said, "Okay, that's it.". And then we're never going to mint anything Bossy Bear again. We did a collection of 99 Ugly Doll pieces and then I said, "Okay, that's it. These 99 Ugly Doll pieces in this one collection and that's it.". We minted the very first CC0 character property on the blockchain, I believe. At least that's what everyone's telling me. That inspired, you know, Gremlin to do Toads and I think Nouns came before Toads. I can't quite recall. It was around the same time. But, you know, we even were experimenting and doing the polar opposite of what anyone would do in our business, right? Like throwing a character into the public domain like that, you know, in anticipation or in hopes that there really is going to be some sort of decentralized disruptor mechanism to not just our world, but everything from finance to just approach it in life and education. I was very hopeful. That has yet to come to fruition. But, you know, like, I don't know where you see him on your screen, but for me, the second row is the bonies. I became a huge fan of bonies, which is like a combination of taking some elements from Nouns and some elements from Toads and remixing it in their own brilliant way. And watching how Mumbot came up, you know, she would probably be the better go-to person for how to cultivate the right way to do things in this space when you're coming from another space. I do think I just kind of lucked out and tripped over everything.

Nicholas: It will be interesting to see because I don't see anyone really, well, not I don't see anyone, but people don't generally in the space have the patience for something like 20 years. It's been, what, 20 years since, even 22 years since Ubisoft?

David Horvath: Sure, yeah. Yeah. Well, there's another fellow in the audience there, Big Shot Toy Works, but they put Nouns Glasses in their name first. It looks like a Nouns monocle. But with the orange cap, is it? And the Nouns Glasses down there? I mean, that guy, Clem, came from my same universe. Like he, he was well into the designer toy world and helped many big designer toy companies. I mean, like, you know, I don't know which companies I'm allowed to say, but I mean, he facilitated a lot of what was going on in the designer toy world. And now, and now has Nouns minifigures, you know, headed, headed our way. Like, and they're, they're brilliant, right? So, I think it is possible to come from these, these previous movements and, and execute it in this one, but it's going to be very different in regards to how everybody pulls it off. I honestly think I just tripped over it.

Nicholas: So, so we talked a little bit about CCO and maybe changing the way that the character brand industry works. I'm curious, are you familiar with the Malady collection?

David Horvath: I've, once I realized what I thought they were, I stayed away, stayed away from clicking any further. But maybe it's not so bad as I thought.

Nicholas: It's unclear. Subjective. Maybe it's part of the performance.

David Horvath: with them. Like, I think I've learned how to spot them, sure.

Nicholas: Yeah, maybe it's unclear whether the controversy is part of the performance or not.

David Horvath: Sure.

Nicholas: That's up to the viewer, I suppose. But they do have this concept of network spirituality. that sort of permeates the collective of artists behind Malady, which I think, one way to explain part of their thinking is that they really feel that, for instance, Pepe belongs to the people at this point. And it's no longer, regardless of what the copyright situation is, Pepe has been appropriated by the Internet and by the people and it no longer belongs, it has transcended the ownership rights that any, that the original artist can claim to them, to the drawing and to the character. I'm curious if that has something to do with CC Zero, because one thing that's interesting when you look at nouns is that for all of the iconography, I mean, brilliant, the noggles are brilliant, iconograph, you know, element of iconography. But they really don't have very much in the way of character. Whereas Pepe does have character, it's often, he's kind of like a schlemiel kind of character. Sometimes he's, they're creepy scenarios. There's many different faces of Pepe, but like nouns as one of the more prominent CC Zero properties, as far as I've interacted with it, actually kind of lacks character in a lot of ways. I'm curious if you have thoughts about how CC Zero versus like the memetic appropriation that the Internet does to certain kinds of images. Is there something here to be learned for other projects going forward when they create some new IP, whether they, maybe the focus isn't necessarily on the licensing, but rather on how it's interpreted by the audience? Do you have any reflections on that?

David Horvath: Yeah. Well, the way I've always looked at nouns is sort of like the way I look at Dracula, where someone can take that source material, right, and then execute their version of it. I think that's when they come to life. Again, like Big Shot toy works with the minis. If you look at them, they are most certainly alive, right? And yet there's still what you would call nounish. There are many other projects where I think life has been breathed into them. We're even releasing nouns, plush and Sofubi figures made in our factory in Tokyo this July 14th at a fancy shop in Ginza in Tokyo. And I think those are pretty alive. I think that they're...

Nicholas: But you couldn't tell me like what the... You couldn't tell me what the personality is of any noun. I don't feel like any noun has a personality yet.

David Horvath: I think that it's... If there needs to be one, I think that they're so neutral that it's more projection. Like how some believe that Hello Kitty has no mouth so you project or how our ugly dolls had a flat mouth so you would kind of project right through them. So I don't know. I think that they're more of a... What I used to call the Nike swoosh of Web 3 than they are characters. They're sort of like... Nouns is more like a protocol with a character brand layer on top that might serve as sort of like a way to bring you over from across the room. Right? To then dig deeper and go down that rabbit hole. But I don't look at them as... But although... And then you look at some of the animations that have been done and they're very much alive. So I think it's up to the contributors and the users and the community to bring them to life in their way. I think that's the nature of nouns perhaps. And it'll mean something completely different to someone else. I think that's the CC0 component at work. In general, I haven't cooled on CC0 but I've become more concerned because a lot of new creators coming in are interpreting it as some sort of catchphrase or marketing move that they need to do to get some attention which is dangerous. I think it's so incompatible with those who dream to do a Dogman book or a SpongeBob show or a Hello Kitty brand. If your dream is to execute upon those things in the real world today, the CC0 approach is mostly incompatible. But then there's cases like nouns where it's the critical central part of what it is. So it's okay. So if you're creating something that's meant to exist in that state from the beginning, then it makes sense. But if you're starting with CC0 and yet you want to succeed as a character brand at the same time, that's going to be very tricky, I think. Because it's very hard to be Pepe on purpose, I think. You can create Pepe, but to create the scenario that we see unfolding even now with PepeCoin and every wave, there's all these funny images that keep re-emerging. Some of them are adorable.

Nicholas: It was done on purpose.

David Horvath: That's what you do wrong.

Nicholas: Even in that case, it wasn't really done on purpose.

David Horvath: Sure.

Nicholas: Yeah. I'm trying to think if people have achieved, managed to achieve that on purpose, I guess there's a whole field of study of icons and the sort of refining of ideas into easily reproduced images.

David Horvath: Absolutely.

Nicholas: There's a deep story there. While we're talking about nouns, you remind me of while I was in China, or I was in Japan and Hong Kong and Taiwan, I saw tons of Bear Bricks. Do you know this brand?

David Horvath: Yes. When we had our Ugly Dog Bear Bricks came out back then, those were sort of like the Academy Award of character creators. So if you're a character creator and it's like 1999 to like 2018, maybe 2014, to then be invited by Medicom to have your brand or your character or whatever it is turned into a Bear Brick was like... It really is like being called to be nominated for an Academy Award.

Nicholas: Wow.

David Horvath: And it was make or break for many. Depending on the timing and to what degree you got that level of endorsement. Some creators, they just made some Bear Bricks and it helped, right? I mean, they helped us tremendously. It was insane, right? And some more so, like that early cause collaboration with the bus stops that Akashi did through Medicom and opening a store together, right, of all things. I think that, you know, the degree of acknowledgement from Medicom to turn yourself into a Bear Brick. Now, in Korea, and I'm sure elsewhere, there are like these oversized sort of like design things you put in your cool apartment or at home. Like they're a decor sort of thing.

Nicholas: Yeah. I honestly can't understand the aesthetics of Bear Bricks. It perplexes me. That it's popular. But there's something, it reminds me a little bit of NFTs in that way where if you become, especially in the trading part of a bull market in NFTs, at least as we experienced in the last few years, spending too much time concerned with your own subjective aesthetic estimation of something is not necessarily informative for how the market will react to its introduction. So maybe my aesthetic judgment of Bear Bricks is not that relevant, obviously.

David Horvath: I think that Bear Bricks became Bear Bricks because of where they were found. Certainly it was the timing, but definitely where they were found. The founder of Medicom who makes Bear Bricks, Akashi, is really in tune with places that are meaningful to people. I mean, this guy, he knew exactly, right? And it's not so cold calculated. Like he's so in love with that system that I think it just resonated as being genuine all the time. And it was like the first 40 people that understood why he was calling it Kubrick's, right? First, before Bear Bricks, there were these human versions called the Kubrick's and it was named after the filmmaker. And he picked these really bizarre, there were these weird choices that he made in the very early days like of what character brands to execute as Kubrick's. Like the Blair Witch one, but then Tron, but then Stanley Kubrick films and then Cause as like the first wave. And then those were replaced very quickly with Bear Bricks. And the choices were so interesting and specific. It would be like, here's the Mr. Spock one, but also in the assortment is this graffiti artist from Nakameguro who only 140 people know about, right? And so that guy would be freaked out and that would be featured in Brutus and Popeye Magazine which was like the offline version of Hypebeast at the time. And they truly became one with culture where it had a healthy balance of mainstream and then creators that only the inner tribe members understood. And then a few in that in-between area. and he just really nailed it for a prolonged period of time and became a staple of the designer toy movement. But more than that was, that's kind of partially how I stumbled upon the idea that there are places that hold meaning for people. But his execution, ability to identify these places and when to do it was just, I was just always in awe of it. So they might look funny if you're finding them just randomly out of context. Now, if you walk down to the wrong gallery across from the big convention in Taipei and there's just places in the window and you're looking at them that way in that context and thinking, I don't know, I don't get what the big deal is. But having found them in those specific places and seeing those creators and that he could identify those people that early on, I think that's what freaked everybody out.

Nicholas: It's interesting to go back to what you were saying quite a while ago about people misinterpreting your motivations for not going to Walmart as being not wanting too much exposure. In a way, actually, I think maybe there is something to not achieving too much exposure or being in Walmart being sort of when you've tapped out all the value and the rest of the possibilities for your brand because I did experience it seeing kind of like a bare bricks store in Hong Kong on some random street in like the luxury district and then again, seeing a store, I think at the Hong Kong airport or at least like a co-branded thing and a special feature in another store or something like that. And it reminded me of, I also, while I was in Hong Kong, I went to the top of Victoria Peak on the gondola thing, or not the gondola thing, the train that takes you up the hill. And at the very top of the hill, it's like you go or mountain, I guess you get into this big kind of complex and you take all these escalators up and it's like at the very top of the mountain, there's like a Burger King and some kind of like pizza place. And it just reminded me how parts of Asia, like there seems to be some kind of like evolution of a culture towards like a mall culture, like luxury mall culture, which doesn't speak to me personally at all, but does seem to have some kind of resonance in my experience in China, Hong Kong, and to a lesser extent in Japan. Did you have any sense of like a difference between East and West values with regards to like these luxury malls?

David Horvath: I think the luxury malls were a great place to catch eyeballs of, like you'd get, that's where a lot of the tourism would occur, right? You'd get a lot of, not mass tourism, like mass tourism is they go to just like the place in the guidebooks, but like maybe you'd get some kids from South Korea visiting Japan who are aware of the Kubrick world or of these things, right? That they would kind of choose places that they've always wanted to visit that they know from the hype beasts or from, you know, from some version of that. So we would try to, you know, at least be discovered in some of these places, right? Yeah, I think that the malls are very interesting. They present an opportunity for you to be found in that life, right? What's the name of the newest one? And which, like Parko is the default or the Seibu department store or Marui. I'm sorry, Marui. Maybe that's falling out of favor. There's another one now that's suddenly popped up above Tokyo station. I can never remember the name, but I walked in there in October and they had like some new character brand like right there in the window. And I think just being found in those places, you know, again, it's like us being found in Giant Robot. They're going to these luxury malls because it's a opportunity to be found in a certain context, you know, and in juxtaposition to other things that are there. And then by association, you kind of get subconsciously wrapped together with those things. To me, that's why I always focus on those malls, South Korea.

Nicholas: What is it about like approximately middle-aged Japanese woman that makes that demographic such a tastemaker in your business?

David Horvath: It's so funny. I've never been able to solve or tried to really needed to figure out why. But I mean, those kids lined up outside Supreme five years ago, you know, on Avenue A or whatever it was. Really, they're there because of the, you know, the choices of, you know, an office executive from a young girl working in Yokohama somewhere, right? They think it's because of what's going on in the last five years. But really, it's from the interest level of an entirely different ecosystem, you know, five years before that. Also, I think it's just the, you know, it's an opportunity to create consumer products that are meaningful in people's lives, right? And if you look at the types of products that are offered, you know, in Japan and in South Korea, but especially in Japan, I look at like the Moomin brand, like from, you know, those were like the, from the Nordics. Those were like comics from the 40s. And yet now, they're a major competitor for Hello Kitty and they're selling hand towels and, you know, I don't know, just every, things that are useful, right? Handbags and jewelry and whatnot. And I think there's just a greater opportunity to create really great consumer products that don't feel like you're just trying to shill a bunch of crap, you know, to certain demographics. And the kids have zero interest in it. So why bother? Like kids don't want anything to do with character brands, right?

Nicholas: Do you have a sense of why, like, are these Japanese women hype beasts? Or like, do they, do you have a sense of how they think about their own consuming behavior? Is it just, it's cool, it makes them look cool or it makes them look younger, makes them look richer, or is it about predicting what's next in New York? Do you have a sense?

David Horvath: That is a very interesting question. I've never bothered to try to figure out why versus just observing what's actually happening. Yeah, I don't know why. And I don't know if there's such a big deal to it. It doesn't feel very hype beast to me, really. I mean, you can seek that out as well. There are certain neighborhoods where, you know, like the human made store and these places where you go in there and there's like five sweaters in this giant open white space, right? But those stores exist because they want to be, you know, those are there to be discovered by people visiting from elsewhere, right? And it's this whole system. But in general, I think it's just, you know, people going to work and on the way home from work, they get out and they have dinner at the train station, which usually there's a mall up above it. And it's just an opportunity for these things to be discovered. And they offer a, you know, kind of an escape, you know, from whatever it is. I really haven't looked into the why. I just keep going back to check to see if it's still true. Maybe that's what's more important.

Nicholas: I wonder if it has something to do with being fashion forward without putting one's body on display to be like, to take Snoopy out of peanuts and to elevate Snoopy as the thing to have emblazoned on other articles or other objects, like as you say, useful objects. I wonder if it's a way to be fashionable without wearing something more revealing or maybe that you have to pull off. Whereas Snoopy on a, you know, a little clutch or something, you don't really have to pull it off, but it is cool or different or fashion forward. I wonder, who knows.

David Horvath: Yeah, that's interesting. Yeah, I've probably not put enough thought into why it's working. All I know is that when I stopped trying to sell plush dolls in certain territories and changed to just offering almost the exact same thing, but smaller, that you could put a train pass in there. Those suddenly started doing fantastically well. Or when I started to focus more on like, you know, really high quality tote bags and just try to focus on things that might be useful, right? And at the same time, perhaps be what someone consider simple and of high quality and made of, you know, good materials. And in combination with being found in certain places that seem to serve as stomping grounds for people in general, then it might not be anything more than that. The way, why do comic book shop patrons keep going into the neighborhood comic book store? Right? They like to read comics, but then they're picking out t-shirts and they're picking up doodads and figural things. And, you know, it's more, this is the place that speaks to them. And this is who they are. And this is my place, as I like to say that my son says it's not.

Nicholas: That reminds me of the podcast in YouTube or any of these, what I think of as habitual media. I think people often start watching and become subscribed to a channel and a creator because they have some interest in the content, but ultimately the relationship lasts because they develop a parasocial relationship with the familiarity and the comfort

David Horvath: of

Nicholas: sort of basking in the glow of that person's creation and their voice or whatever kind of creativity they express through these media. So maybe it's not, the entry point may be one thing, but the actual reason that they stay is maybe something different. I was looking yesterday at, you know, Samsung a few years ago put out this Siri equivalent Samsung AI and they came out with a 3D animated character and an ad campaign around it. They called her Sam. And she looked kind of like the mom in the Incredibles, roughly, maybe a little like pitched younger a little bit. And she became an object of sexual fetishization across the internet. And I'll leave it to the audience to Google Samsung girl rule 34. I'm curious, a lot of what we talk about and a lot of the work that you've done and a lot of what I see in terms of characters are targeted towards this like preschool age demographic. And it makes it to me that the natural reason is like that Aristotle thing about, you know, give me a child until he's seven and I'll give you the man or the adult. and just getting into a person's mind when they're young enough, when they're not cynical, maybe is a decent place to start. But I wonder if this like Samsung rule 34 thing, obviously it kind of blew up in their faces and it blew up too big and I think ruined the character for them. But is it possible to do spicier characters that are really pitched towards adults or have some more gritty character traits that would not play with a young audience at all, but could become, you know, genuine, maybe spawn is one that comes to mind in this kind of field.

David Horvath: Yeah, I think Samsung got that from just looking at too many SK Telecom phone stores and how they had, who's the K-pop singer that they had? like a kind of, to me, a nightmare, but my brother-in-law didn't agree that it was as tacky, but like a lot, I don't know. Yeah, there was like a phase everyone went through where they would put actresses or singers on like soju bottles and it could have been that. I mean, if you go to Japan, the DoCoMo equivalent is a RAM. Like when you have your phone, like if you buy a Sony phone and Xperia and you turn it on, there's a little cartoon butler. It's like a sheep. It has nothing to do with the company and it's never been their mascot or anything. It's just like this weird choice and then there he is. They got rid of him too, but for like 10 years, if you bought a Sony phone or any DoCoMo device other than iPhone and had a creepy sheep walking around, that would just like help you, guide you through your phone experience. So it's beyond me how some of these choices are made, whether it's the Samsung route or the complete opposite of some kind of goat guy. Yeah, it's a mystery. There was some other Wi-Fi service that used just like a Fuji mountain and a mushroom or something, but they were all blue. That was so weird. I don't know. It's hard to know what was behind.

Nicholas: Do you know that Twitter account @MondoMascots? I'm a big fan. It's like pictures of mascots from all over Japan for the many, you know, like the sewage from Kyoto as a mascot or whatever.

David Horvath: Oh, yeah. This is how you can easily misinterpret Japan as being so overly crowded. When it comes to characters, how in the world are you supposed to stand out if this is how it is, right? Like everything has a character, right? Like you said, the medical mascots and not just the Sato elephants, but like just, jeez, like everything. Like the Apple company has a guy walking around in a costume with a weird top hat. It can be overwhelming. If you're scrolling through that, you're thinking, "How am I supposed to launch anything here?". Like it won't even be seen. But there are these places where, I mean, that's an adorable website, by the way. Now I'm looking through it. Yeah, it's great.

Nicholas: It's great. But do you think it's possible to have spicier characters, to have characters that are pitched towards adults or have more gritty character traits?

David Horvath: Yeah. I don't know. I don't know if... I've never felt that that was something that... It just never came up in my mind. It's funny. Twitter has a great way of detecting when I'm about to sandpaper your ears in a totally new rant.

Nicholas: The meaning of life is.

David Horvath: Honestly, it's never come up for me. I remember being at a GameStop when the Wind Waker Zelda came out and there was a guy in there who was physically and very upset because he thought Zelda was supposed to be cool and be violent and bloody and all that. You know, a little more edgy. And I've always gravitated more towards the Wind Waker version for some reason. Now we've got the... I know the new one everyone's in love with where you just keep walking forever. I forgot what it's called. Maybe that's a happy medium between the two. I don't know. It's never really come up. I mean, if that becomes... I think that comes up more when you go to like Mandarake, the used toy store and you get off at the elevator at the anime floor. Maybe then you'll find the edgy stuff as far as you're willing to go with it.

Nicholas: I mean, there's Rick and Morty. I guess Rick is a kind of edgy character relative and now there's dolls and things.

David Horvath: Yeah, I think that that's more focused entertainment for people who are seeking out something specific. I've never really seen that crossover at scale into the lifestyle character space. I've seen... Is it Sony who tried to do it? There was like a virtual idol. they tried to push with the green hair. Something Miku or something like that that they gave a big push 10 years ago. But I've never really seen any of that crossover into the lifestyle character space. It's been dominated by characters like Snoopy or Rilakkuma or Miffy. Yeah, or Moomin. Moomin is as edgy as you get. I mean, if you look at Moomin, there's a little character named Little Mai who's like a very angry looking funny thing. That's about as... I mean, she bites people's ankles sometimes. That's about as dark as it gets.

Nicholas: I recall in Japan, there's like a old cartoon that's still on the TV with like a horny five-year-old, a Japanese friend described it to me as. It's like a tall guy and a little kid, but the little kid kind of looks a bit like an old man or something.

David Horvath: I've never come across that. When I get up, Anpanman is on and that's about it.

Nicholas: Yeah, and that's apparently one of the biggest IPs in the world, right? For something that's not known in the West very much at all.

David Horvath: Yeah, it's very much a preschool property. And funny, it doesn't really cross over into the lifestyle character space very much. But Anpanman is massive, absolutely huge. It's like their... Is it like their Mickey Mouse? It's hard to find an equivalent. It's like their Sesame Street, I could say. Perhaps it's just been on forever and it's just no stopping it.

Nicholas: But it's kind of like a Peppa Pig or even younger audience. I was visiting...

David Horvath: Yeah, it's more, it's quite Peppa Pig versus something like Snoopy that perhaps started as a children's property but has transcended to become that like what Pokemon's undergoing right now.

Nicholas: Right. So I wanted to ask you a little bit about that also, these things where they transcend the original medium and become a lifestyle brand. Is there anything to observe from that? or is it maybe premature for anyone who's actually working on characters to like worry about something?

David Horvath: I think watching it occur right now, I think that this Mario movie with Illumination was Nintendo's attempt to break away from the gravity of the console wars and to no longer be subject to the ebb and flow of software sales. Everyone wants to get into gaming and that's wonderful. if you're into gaming and you know how that should work. I don't know how... But a lot of these characters, I think a lot of these brands are trying to... I think that this was a very purposeful maneuver by Nintendo to sort of... Everyone will always seek out the latest Mario release and Mario Kart, et cetera. But I think that they have finally, we'll see, but maybe they've been successful at becoming more than that. The way Pokemon has, right? Where Pokemon was a game brand and now I think the gaming component and the card component is like less than... It's shrinking so fast that it's no longer... Maybe it was 8%, now it's down to 7% or something. And the cards are just 6% of their revenues and 90% of those are sold in the States. Pokemon, for me, is very similar to Sanrio where half the revenue is driven by plush. I think they're still in the middle of... They're still, maybe not in the middle of it, but they're still making that transition. But man, they are doing fantastically well with the consumer products that are geared for the same consumer who goes all in on something like Rilakkuma or Miffy or Hello Kitty. It's phenomenal.

Nicholas: So it's mostly a question of diversification for a brand that reaches a certain scale. They don't want to be stuck with a certain vertical that maybe if it experiences volatility, they'll suffer.

David Horvath: There's a certain leap that's made. It's funny. I was trying to backwards engineer Snoopy to find the moment that it was no longer about the Christmas special and the Hallmark stores. What was the thing that helped it leap over? It's very hard to find. It's a very gray area, I think, purposely so for a very long time. And Snoopy in the States is still very much understood as either something you see by accident on Apple TV or you catch the old Christmas special or you go to the Hallmark store. But now finally, you've got Super 7 doing these. They're action figures, right? But for me, it's the first bit that has crossed over from the Asian markets where Snoopy is very much a character brand for adults. Those pieces from Super 7, to me, are an effort to try to see if they might... I think in 10 years, we might see less... How Snoopy used to actually be more associated with Macy's somehow. I remember in the '80s...

Nicholas: Yeah, you're right.

David Horvath: It was classic Macy's, right? Or MetLife.

Nicholas: It's interesting how a single brand can have different associations in different markets. To me, Snoopy is a part of Peanuts, which is just a very morose comic. It's a very sad thing. But Snoopy, dissociated from it, is a delightful shape. What's the name of the bird? Is it Woody?

David Horvath: Woodstock, right?

Nicholas: Woodstock, yeah, Woodstock. I actually prefer them as a lifestyle brand because I always found the show kind of sad.

David Horvath: It's very funny. Yeah, you're absolutely right. But it is interesting how very little of the human characters... They pop up. They'll show up for sure in the cafes on ancillary use cases. But yeah, the focus definitely is on Snoopy. Actually, they've been trying to bring Woodstock more in the last, I'd say, four years or so. I see a lot more Woodstock.

Nicholas: Is that the one? Is it Snoopy also? that's in Starbucks?

David Horvath: Yes. Oh man, that was brilliant. Yeah, big fan of that program. Yeah, they did a Starbucks Peanuts collaboration and absolutely phenomenal. Like the plush that they did, the Snoopy plush from the Starbucks, I got a couple of them. It's like the best Snoopy plush I've ever seen. It's absolutely gorgeous. I think in the end, you're ending up paying like 70 bucks for it or something. It wasn't so bad in dollars. But man, just knocked it out of the park. I've never seen anything like it. They just went all in.

Nicholas: I'm curious because you're describing its physical properties with great admiration. Where do people like you congregate to tear these things apart and talk about it in a forum context? And then also, where do you... Is there a news source, like an aggregator for news about this industry that you look at?

David Horvath: I wish. So yeah, that's the thing, is that no one's really put any of this on paper. Like this website you just turned me on to, which is brilliant. There are these bits and pieces that you have to kind of find everywhere. But there's plenty of anime websites where you can find everything about it. There's like a Super Sentai Masked Rider that you can go down the rabbit hole. But here's what's going on in character culture from the independent creator to the very top Snoopy thing. There is no one that I've been able to find, at least not then explaining how to approach it and to thrive within it starting from zero. So that's what I'm trying to at least, as much time as I have to be able to do so, to offer a little bit of that on my sub stack. But even that's difficult. I've actually, in some rare cases, given physical tours. I took Clin down there on one. And like you were asking me, what is it about these women in this demographic that drive the multi-billions that push this industry forward? But the why, I could never explain, but I brought him and I've brought others with me physically through this system that we use. Like here, stand here and watch this. And I mean, Clin will tell you in his own words, but usually the response is, you've been telling me this and it sounds silly, but man, holy crap, looking at this, it's like you get chills. I get it now. Like this is something that's absolutely happening that you can't tell people about it. You can't tell them. You have to see it, but walking through it without being told first, you might miss it, right? But once you know what to look for, man, there's a connection. There is absolutely something happening that then I think it starts to, the ideas start to form. I can operate within this. This is an ecosystem. This is a thriving river of ideas that I can just build my own little boat and be a part of. It's very hard to explain. I'm trying the best I can on our sub-sack. It's the worst writing in the world.

Nicholas: - No, no, you've been doing a great job. I love it. And you've been very prolific as well. You've written so many articles. It's unbelievable. And the insights that you're sharing are very, very fresh. I want to ask you, I had two questions left. And then if anybody wants to ask a question, please feel free to request or DM me and I can ask your question. But two things. First of all, why are you sharing so much alpha, as we say in this part of Twitter?

David Horvath: - I totally miss it. Why am I?

Nicholas: - Yeah, what drives you to share these insights that are worth money, frankly?

David Horvath: - Yeah, it came from many places. It kind of all happened on one day. My kids are now very interested in doing this, at least for now, right? They're going to then go through a phase where they absolutely hate it again. But they started to ask questions. And I thought, well, I better leave a paper trail, right? I'm saying these things, but I kind of want to put it on paper. And I felt like there is no place where, at least what we're doing is on paper. And by the way, I've talked to many guys from Disney who are like, dude, I disagree with like 80% of what you put down and yet it works for you. So, you know, it's good putting it down on paper. So, and then hearing like the celebratory stuff over stuff like CAA or like big news, right? Like character brands that like the founders are amazed that they're getting attention from big things. And the holders are very excited by the big stuff. And I understand and it's romantic. And I, how could you not be excited? But I've, I felt like, yeah, but also I've been through that and I totally get it. Maybe I can explain in my own words how there might be a, there might be a better way. I just, I just see ways like this, this space is filled with so many potential character properties that could absolutely dethrone half of who's at the top right now, not in web three, but like in just out there everywhere. And there are so many talented people and so many excited and motivated people that want to support those talented people. And I feel like there's way too much opportunity beyond this little ecosystem, not little, but you know, like this, this like, and then I saw everyone in the designer toy world got distracted by it. And, and that, that they kind of dropped the ball. and I don't want to see that happen here because I just, I'm way too in love with this place. And in the designer toy movement, everyone's doing fantastically well. And then there was one comic-con where Disney and Nickelodeon and Cartoon Network came by, you know, the, the blue chips booths. And we, you know, we didn't say blue chips, but it's, it's funny. It really was like, we literally had our Yuga, our cool cats, our, you know, well, whoever. And they, they showed interest in, "Hey, we want to develop a show with you.". Or, "Hey, we want to, you know.". Nike went up to Michael Allen. Michael Allen went from making these brilliant figures to just being in awe that Nike knows he's alive, right? And so many of these brilliant creators just got distracted. And then they started to put their attention in developing shows and things that they weren't originally there to do. And so the movement died. And then Funko picked it up and was like, "I'll, I'll take it.". And then Funko brilliantly switched it where he would execute designer toys through licenses. And then, you know, Pop Mart took that ball and said, "Oh yeah, well, watch this. We're going to flip Mattel upside down.". So the, the actual, those who took the greatest advantage of the, that world that was being built was not, the, the originators didn't see it all the way through. They were just very distracted. And I, I wanted to see if I could make even the tiniest impact on, on any of these fantastic creators who, who might, who might be distracted by the incoming attention, which I can understand is, must be just incredibly romantic and hard to look away from.

Nicholas: Well, I think a lot of people, I mean, it's funny hearing you describe the tour you give in Japan or in Korea. And once you can see, once you can see the matrix, it feels like a place where you could make a living, not only financially, but also in terms of a work experience you can be proud of and enjoy. And I think a lot of people are drawn to NFTs in particular for the same reason, because it's a finally a way that you can sell digital art. That's not, you know, the collectors understand. There's actually, I was speaking last week with Ed Fornielis, who's a fine artist who's now the creator of Finelier, along with some other people. And he was describing, you know, so many, what I see is people on Twitter talking about really obsessed with like the next million users. I mean, everything, all the base marketing talks about this, all the polygon marketing talks about this, all the NFT collections are obsessed with making things credit card friendly and obscure all the NFTs. Don't call it NFTs, call it digital collectibles. Don't even call it collectibles, call it swoosh. And really, really focused on going as big as possible, as fast as possible. But I think what comes through in a lot of what you're saying is that those motivations, you're choosing a path. You're, if anything, you're choosing this sort of pump and dump seven year cycle or maybe even more compressed in crypto in general, if you're focused on getting as big as possible, as fast as possible. And that kind of precludes you from having a long lasting, in general, from having a long lasting association with your fans that can endure whatever short term changes there are in the market. Which is, I mean, and you've said it in other interviews too, I think it's fine. I agree with you. It's fine if people want to pump and dump, obviously don't do anything immoral, but if you want to create a collection and make a bunch of money and not have it matter or be remembered two years later, except maybe with anger, that's okay. That's something that's allowed to be done, but it's not as exciting as making characters. And that's really my last question for you, is inside of me, there is something that is inside of you too, I think, which is this fascination with creating characters that can then be expressed through all of the tentacles of the supply chain in a global fashion and integrated into people's lives, bringing them joy, things that they recognize, things that stir emotions within them. But I'm curious, what is it that makes people interested in making these characters? I'm sure it's different for everybody, but maybe you can speak to your experience, people you know. Why do we want to make characters that endure? Is it a search for immortality or something? Is it a fear of death? Or is it a desire to communicate with people or something else altogether?

David Horvath: - Yeah, I think you're on to, it could be any of those more. As far as, you know, there are a lot of technology companies who don't want to do anything character-based in this space. Like the next Atari and the next Nintendo is right around the corner and they should just pursue what they're doing and that maybe they're the ones who are, they don't want to call it NFTs or even digital collectibles, right? And for that purpose, you know, more power to them. You know, I would never say to the founders of Atari, "Hey, take it slow," right?

Nicholas: - Talk more about transistors, yeah.

David Horvath: - Yeah, yeah. But for those who are specifically interested in, you know, character, and you know, this came up earlier today in another discussion and I didn't have the answer either. It's, well, what do you do? Because what do we do about the holders? What do we do about the expectation of, you know, those who've already bought in? So there are still a lot of dynamics that I don't have the answer for, especially when it comes to holders. So my answer has always been, in general, maybe your holders would be very happy that this thing that they've bought into is thriving, right? And that's succeeding. And you're managing your Web3 component. You can pursue these other long-term avenues and you might not even have to tell them that you're doing it, right? Like, these are all things that you can pursue in addition to what you're doing in Web3. It doesn't mean that you're transitioning from being a Web3 brand to now joining the ranks of Hello Kitty. But why people would want to create characters? I don't know. I've rarely asked. Like, there's a friend of mine, Dihara. Be careful if you go to his website if you have kids in the room. He's a brilliant, he's more of a fine artist, right? Dihara, D-E-H-A-R-A. There's a lot of kind of like adult, in fact, some of his characters are literally like physical embodiments of living adult toys and things, especially these days. So I don't know, just careful if you have, you know, young people are just, anyone sensitive to such around. But he's a fine artist, but, well, he would do these shows in New York. That's how I found him in the late '90s. And he was always in these little funny galleries. And then I finally got to visit him in Japan. And I realized he wasn't a fine artist. He was a character brand. He would be at Loft department store doing live painting, they call it. It's always called live painting where he's doing paintings of his characters that he's usually executing through paper clay. And he's, I've always known him as this very quiet guy, but he's there screaming and he's got like half his clothes off. And hundreds and hundreds of mostly women in the like post-university age up to like 40 or 50 are all holding up their phones with his characters dangling from little like key chain things and doodads. And they've all got like his bags and I was absolutely just floored and blown away. And when I asked him, well, why do you, he's one of the few that I've asked, like why do you create characters? And he said, well, it's my feeling and self-expression and I'm just observing like a photographer. So like he had a whole series on drunken businessmen, you know, coming home after work and after going to Izakaya. So he did a whole series on this and he did a whole series on what's called the Jizu statues, Jizo, which are like the statues that you see on the side of the road and there's different themes like the ones that if a child passes, there's a certain type of statue or like just for whatever, you know, I don't want to get it wrong, so I won't say. But like he would bring all of these different components of the world around him to life through his own filter. So it sounded very much like a photographer or like a fine artist. But then every time I visit him, he's a character business powerhouse and it just blows me away the people who show up, his tribes. And then when he did a collaboration with Hello Kitty, he'll do like one collab every 15 years, you know, maximum. He did one with a major candy company and then he waited forever and then recently did a Hello Kitty one. And you see the reason for doing such a thing through him when you visit him live and he's got his tribes coming and then the Hello Kitty tribes show up. They might not have any idea who he is, but they were drawn by his take on Hello Kitty was a huge surprise to them. Right? It was to me. And I've seen, you know, there's a new Hello Kitty Sanrio collab with whoever every five weeks now, right? Or more often than that. But man, when his came out, everyone I knew was like, "Oh, holy crap.". And you literally see the two tribes show up and intermingle with each other. And to me, at that moment, when I saw him do his Hello Kitty, I thought that's why you do a brand collaboration. So that it's the bringing together of your tribes, which is why it's so important, I think, to be on equal footing. You know, in the beginning, Nike wants to collab. As soon as you pop up out of like, you know, what we call the culture attention membrane, they want to collab with you right away because they have to show their most devoted that they're still with it. That they know about the underground stuff before even their fans do, right? They have to prove this to themselves. Or else you think they have to. Right? So on one hand, you're contacted very early because you've broken through. It's a great signal that you have broken through. You've showed up on the mood boards. It's a tremendous accomplishment. But I think it's better to do these collaborations when you have an established tribe of some kind, of some size that you're comfortable with, where you feel like. then there's an opportunity to bring two tribes together and to make a larger one for both brands equally.

Nicholas: - So what I think I'm understanding from what you're saying is that it is, that creating characters is really a form of artistic expression where instead of holding the paintbrush or sewing the millionth edition of some plush, it's just a different form of artistic expression and the people who are drawn to it by and large are there because it is a form of expression that intrigues them. Is that sort of what you're saying?

David Horvath: - Yeah, I think so. I can take my best guess that that's what it is. It's funny. Yeah, I would say I'm the least successful out of all of the character creators that I've come to admire and gotten to know and am friendly with over the years. But it still works for me where we can do what we are doing. And if I really click through, it seems like our characters are quite meaningful for those who interact with them where they're expressing it on social media. It's the one way that social media has been useful for me is that I can check up on how we're doing. It's not about posting for us, but more taking a pulse. And it's very interesting to find a mom making a lunchbox with our characters brought to life through the rice ball things or to find somebody who has 18 of everything and there's thousands of things in that room. And I'm like, "Dang, I thought we had way more fans in this territory.". And now it's just like this one person. But the level of the meaning that you hold in others is very interesting. And then most of them are just, "Eh, cute bag.". Like I ask my wife all the time, "Why you buy the Moomin bags?". "Yeah, I just like it.".

Nicholas: - It reminds me, I went last week to a... I'm in Montreal, but there's a place run by people who I think are originally from China. And they have a cool space. It's called Tutu Space or Tutu Two Space, something like that. They do rug tufting guns. Have you seen this? Where you can create a rug with an electric gun, essentially. - It's cool. It's basically, it feeds yarn through and then through a canvas that you press the guns the end of the gun against the canvas. You pull the trigger, it shoots some yarn through and then it clips the yarn. So it's just like floating inside the canvas. You do this, you draw with it, basically. And then when you're finished, they put glue on the back of it and seal the edges, finish the edges of the rug. And you can do rugs. And often you can draw what you intend to, the pattern you intend to create, you draw and marker on the canvas before you start. And for many people, in fact, everybody there, except for my girlfriend and I, were doing drawings from their catalog of drawings, almost like a tattoo parlor. And there was a couple doing, the female partner was doing Takashi Murakami flower and her boyfriend or whatever was doing Pepe. And opposite them, there was another couple and they were doing, the guy was doing Hello Kitty and his partner was doing, she was wearing a very tight fitting outfit and like a very deliberately selected outfit. And her rug was just the Chanel C's. It was perfect for her. And yeah, something, I think what you're saying, that experience makes me think that these characters and these brands are, they can elicit emotions from people, but also they're a way, almost like sci-fi, they're a way for people or any kind of fiction, a way for people to make sense of the world and their position in it, what kind of aspirational character, or I mean, the Chanel one is the most obvious one where, why would you go, why would you go to, I mean, any of them really, why would you go to a place where you can make something custom and then choose to make something that you could have just bought, maybe because it's cheaper. I don't know, it wasn't really cheaper than buying the original, I imagine. But the brands like are so strong as maybe safe choices in that environment, but also maybe just things that they want to have at home that they, you know, you can't buy a shag rug, Chanel branded shag rug for your apartment. So it's interesting what role this plays in people's lives.

David Horvath: That is really interesting. Yeah. Maybe we need some of those rugs over here.

Nicholas: I think you need to get Bossy Bear into that catalog.

David Horvath: Well, that's the other thing that I, I don't think I've expressed it yet, but you know, I've already been asked by a few, hey, this makes no sense to me. You have a show on Nickelodeon, Nick Jr. and where's the stuff? I don't understand, right? And in fact, my answer is, oh, it's really important to not have stuff right now. Like this is not the time when you want anything out there. So not to be counterintuitive purposely, but that just to signal that there's so much to it and that on the surface, it seems like everything just, there's like the quest to be big. Like the thing with the rugs that you just described, that sounds like just really enjoyable and it's quite fascinating.

Nicholas: Yeah, you should check it. It sounds like it's more of a Eastern concept to do a store like this. So maybe it's worth checking out to see. I think it is fascinating to see what rug, I mean, there were many Takashi Murakami flowers. There were, I think there were several Hello Kitties. There was, who's the anime character, the bald anime character? who, what is it? One Punch Man? Many of these different characters. I think it's interesting to see what resonates. But just to touch on what you just said, I think what comes to mind when you say that Disney people say you're crazy or that they completely disagree with you is I always had this story in mind that I think I learned of somehow through Steve Jobs. I don't remember exactly how, but that George Lucas had prepared for the launch of the original Star Wars film, the first one, that they would, they did like massive amounts of merchandising day and date with the launch of the film so that when the film dropped, his goal was to make, to create in people the sense that there was a cultural happening happening because everywhere they looked, there was Star Wars merchandise at the same time that the movie was dropping. Whereas your insight is quite the opposite. Maybe different time, different place. I wonder if you have any thoughts on that launch strategy.

David Horvath: Well, I think that if you have a film, and we've timed things like that differently. I think that a film, I don't know about now actually, but I think that even up to 2019, it did make sense to have things out there that you discover as you get out of the theater. because it's such a time oriented, like Star Wars comes out May 23rd, we need to have X, Y, Z out there. Although he goofed that up or someone did and there were no toys when the first Star Wars came out.

Nicholas: It was apocryphal, the version I heard.

David Horvath: They offered, it's a famous story now, but they couldn't have them ready on time so that you could buy a promissory, like a sheet of paper in a cardboard box that you pay for it now and then they would show up a little after Christmas.

Nicholas: I bet they're worth money now, the paper.

David Horvath: Oh, the early bird care. So there's a whole story to it. But it does make sense to me. And then it went overboard. In the '90s, there was the movie toy tie-in craze where, man, if you look at the action figure lines of the '90s, it was like The Shadow and Dick Tracy and Swamp Thing. There was an insane amount of toy tie-ins to movies. But for TV shows now, I don't want toys in the very beginning because in the very beginning, not enough kids might have seen your show yet. It feels like the awareness level is not there. Whereas the movie, everyone either goes or they doesn't. In our case, they didn't. But it's funny because our movie toys sold phenomenally well, except for a few SKUs that were very clearly from the film. But the Hasbro guys did such a great job with our movie toys, they treated it first as a-- well, also because they didn't have access to the material because it wasn't ready yet. So we ended up just making really great toys. And they designed these brilliant toys. So it was designed on a combination of design and play pattern first. So the toys did phenomenally well. Oh, well, so we had these figures called Surprise Disguise where they were the same tube figures that they used to-- for some reason, they were releasing Star Wars figures in clear plastic tubes that year. So they put us in the same tube. And when you open up the Ugly Doll figure, his outfits are hidden in these kind of like unboxing-- that was during the whole unboxing craze. So there is the unboxing surprise play mechanism and then there's dress-up play where you're opening components that then you can wrap on them like hats and stuff that they wear. And they all included stickers that you could collect and they included these funny tchotchkes that were like their sidekicks also. So in this little $6 price point figure, you got an unboxing experience, a dress-up play experience, and then just the action figure component, like the collector pattern, and in combination with the design. Those did phenomenally well. Then the giant walking and talking doll. that was clearly like you had to know the movie to understand it. That was terrible. That did horrible. So it just, for me, solidified the truth that toy brands live or die on play patterns, unless they're from movies. If you have a TV show, it's better to wait until at least 20% of Target and Walmart might know who you are before.

Nicholas: And that's because if the SKUs don't move off the shelves, they'll remove you from the shelves and return all of the merch and you'll be-- Oh, yeah.

David Horvath: Yeah, they're your best friend until something's not moving and then it's brutal from that point.

Nicholas: You want to wait until there's recognition amongst their clientele because you need them to move in the first or second week.

David Horvath: Sure. And this is where I then start deferring to my friends at Disney because they really do know. That's-- As someone on Twitter wrote to me like, "You're nonsense. You would never get a job at Disney.". I'm like, "Oh, I totally agree.". There is an entire science. Once the masses are in love with you, there is a beautiful science involved. The same way I'm talking about all these funny dynamics that happen from square zero to being the next Snoopy, there's an entirely different, you know, science behind taking something from everyone knows about you to taking the best care of that and propelling that, you know, into--

Nicholas: Zero to one versus one to many. We have Neanderthal-- Neanderthal from the audience. Did you have a question?

David Horvath: Yeah, I actually do. So my question-- I'm at work, so my bad. I just have a few questions, but I'll go back to listening. So my question is, can there be a middle ground? I think for Web 3, the biggest thing in Web 3 is that you get an opportunity to find your client, per se. I think that's kind of the biggest thing. I mean, here we are, strangers, most of us, at least, and we just get to congregate in real time, at least for these bigger NFTs. They get this community, and whether they actually fall in love with the IP or not, I mean, I guess the floor price tends to be the indicator for some of these projects, but nevertheless, it still gives an opportunity to, like, in hyperspace, get this community. And I mean, the higher the floor price, unfortunately, the more in love people are, whether they're in the project or not. So do you think that that might be one of the factors that may play into a role where we provide the middle ground, where you don't necessarily have to start zero-- like, as you do it, I guess, which seems to be, like, you're going to find your clients

Nicholas: as they

David Horvath: need to propagate slowly. And then a secondary question is, how would-- I know in October, you'd like to launch a secondary-- a new collection of our home tickets and new IPs, and I read in your sub-stack that there's a possibility it might not work. When would you know, like, oh, this doesn't work? Sorry that I'm asking two separate questions. No, that's great. Both questions are great. I hope I caught most of the first one, which I think my answer would be-- or this is what we did in the designer toy community, where, for me, the designer toy fans were kind of like Web3 holders. They were far more familiar with a certain narrow specific component of the ecosystem that we were emerging from, and we would treat that differently than the approach we would take when we were going into middle-of-America comic book shops and museum shops, where when we were-- So I think Web3 can maybe do the same, where you have an order of things for your holders, and you should do whatever it is that you've, you know, within SEC guidelines to, you know, to take care of them or to foster your community in that respect, as we did. We would do these funny things called "Ugly Con," where we would take over giant robot location in L.A. or New York, or we would go do it in Tokyo, and it was very specifically for the inner fans of that designer toy ecosystem. And then we would do, you know, things at a toy chain called Learning Express, where they were completely unaware of what the designer toy movement was, and they had no idea what a giant robot was or a kiddy robot was,

Nicholas: but that

David Horvath: they resonated with us in the context of how they found us in their ecosystem, right? So you can see these, like, holders, and then your efforts to reach the larger world can, in the beginning, almost be like separate efforts, and then I think over time, perhaps they'll meet in the middle. And as soon as the second one, yeah, I think it's really tough to, I get asked all the time, "How do I know if it's not working?". For us, we were very brutal. We just said, "Well, every time we dropped off 20 Ugly Dolls, they were gone in an afternoon.". So that's, for us, that was, like, everything that we do has to do that. I'm going to do a new character in October. I probably won't have any consumer products ready for it until well into the next year, just given how everything in our Japan factories and everything is very delayed. I think it's just catching up after COVID. But once we're ready, if I insert these things into our system, and if the system still works, but those are not working so well within it, I'll cut it quite quickly. I won't give it a second chance at all. It either works phenomenally well, or it doesn't, and we'll move on to the next one.

Nicholas: - Awesome. Did that answer your question?

David Horvath: - Yeah, absolutely. I'm excited for October, just to see how it all plays out. I think anyone that I've showed this to that is one-of-one artist in particular. So I think they're all really excited. And I'd like to speak with you, actually more one-of-one artists, in a separate session, if you could. But I appreciate your time. So I'll just head back to listening. Thanks again. - Yeah, thank you for being here. - It was a long one. Thank you for having me in there.

Nicholas: - Yeah, definitely. One last question comes to mind off the back of that, which is, do you have any sense of the... One thing that seems very different between NFTs as we've experienced them so far and the collectibles industry, or things that have collectibles, like character brand industry, is that it seems to me that NFTs front load the idea that these things are collectible items that will be worth more in the future, whether or not they say so literally. Whereas in collectible items, it's not a necessary prerequisite that the thing increase in value. It may just be limited edition, and you had to be there. And some brands end up being worth something in the future. And now, I guess, in the post-Supreme era, lots of people aspirationally want to create their own Supreme or equivalent. So it is more in the water of people doing Shopify stores and stuff too, probably. But it seems like it's very important in the NFT space. And one element of that is that people feel like they can participate in the growth of a brand by owning the original set, or entities in the original set, NFTs in the original set. And that this is often kind of, in a magic trick sort of way, presented as if it's somehow tantamount to equity in the company that creates the thing, or maybe even retains ownership of the IP. Do you think that there is anything interesting in the idea of deliberately letting people participate in an early issuance of some, physical digital doesn't really matter, but that it somehow be a kind of proxy for equity in the project without actually being equity?

David Horvath: It's really interesting. As far as anticipating number go up, I think to, in the '80s, when all the comic book shops, and they probably still do, started offering those white little cardboard backings, and then every, I mean, there was a craze. There was a moment in, right, during like the Rob Liefeld days in the comics world where everyone was collecting variant covers and trying to anticipate, like they were literally putting these things in these cocoons to save for the day when these would all be worth a fortune. The action figure collectors were equally going as crazy, where in the '90s, they were just, they were keeping the shipping boxes that the stores would receive these things in, right? They were even keeping the exterior shipping cartons. Like how rare is that? That action figure may be rare, but hey, here's the carton that they all shipped in. Like it was going over the top. Well, it turns out that those are all outgassing and they're not worth anything because they're turning into some kind of toxic soup now. But there was that component, right, that they had in the back of their mind or at the front of their mind that there was going to be some sort of increase in potential value with some of these things. So they were just gonna buy all of it and see which one made the most. Maybe that came from the original 1977 Star Wars or '78 Star Wars figures going from $2 to $100, and that just freaked everybody out and thought it's gonna just keep going like that. One walk around Frankincense in Los Angeles, you'll see that not many of those action figures from the '90s made it to the high price points that everyone was dreaming of. But the tricky part is the second part of your question. where like equity, like the idea of buying into something and having equity in the property. Yeah, I don't know. I'm too afraid to go there like with our own work because I'm so deeply afraid of just getting in trouble. I'll do it totally wrong.

Nicholas: Sure, sure. But I mean, even just like releasing a collectible and then like that is explicitly not equity in the project. or even let's say an NFT that the IP is either CCO or you get no IP for owning the NFT, but it's just purely an NFT. Nevertheless, it does have a kind of, it shares the property of equity, not at all in terms of a contract or like how we test kind of stuff, but instead just, oh, I got an early end. If this brand becomes famous, then having the very first thing this brand ever put out is naturally going to appreciate and value if the brand succeeds long-term. It seems like there's some kind of consciousness of that in NFT releases. that isn't really easy to achieve if you're like making custom t-shirts on Shopify. It's harder for people to believe, I think, than in the NFT world where it's a little bit easier to think, oh, well, actually maybe this is the first Moonbird ever and that can increase as a collectible, not as equity, but as a kind of index of the value of the brand over time.

David Horvath: It could be, especially if the idea of digital collectibles really does take hold. I mean, to be able to say, it's like saying that you have those very first two Mickey and Minnie plush, the very first two consumer products of Mickey and Minnie ever, if you have those. But it goes beyond that because you have this sort of eternal proof which does not degrade that you were a part of that movement or that you were there. Or if you're collecting art, that you have these pieces that are very real and from this era. If in the future, this era is looked on as some sort of important stepping stone to whatever comes next, then I would imagine that some of the pieces from these last couple of years may very well be held in high regard. I think that that's very possible.

Nicholas: It's possible. It does seem, though, that if they're teasing it, that it seems even more unlikely that it'll ever happen.

David Horvath: Yeah, I know. As soon as someone says something, it means it's not gonna happen.

Nicholas: All right, David, thank you so much for this extensive conversation. This was really fascinating. And I've already gotten a few messages, people saying they really enjoyed listening and learning from your experience. If people are interested, obviously, they should check out your Substack on your profile on Twitter. Is there anything else that they should check out?

David Horvath: Substack is, yeah. I would say, yeah, I try to keep as much of it free as possible. Every new post that I put up, I don't move it into a paid deal for a couple days after. Well, if you read it in the first five minutes, I apologize, 'cause I'm narrating while I'm on my walk in the morning and I go back and edit it. So if you find it two hours later, it's in its best form, at least as best as it can be.

Nicholas: Yeah, it's a great repository of information.

David Horvath: Thank you very much for this interview. It was, I think, the best one I've ever had. Thank you.

Nicholas: Don't tell Mumbot that.

David Horvath: Mumbot, to me, was a conversation with a friend from the era that we both came from. And I feel like that was more like, let's tell everybody else how it was. We kind of came from the same place.

Nicholas: I definitely suggest that.

David Horvath: Whereas, you're a great interviewer. So thank you.

Nicholas: Thank you very much. You're a great guest. And I definitely suggest that Mumbot interview. It's very interesting to hear you talking to somebody who's also going through it, which is a kind of personal experience that's pretty unique. So thank you again, David. And thanks, everybody, for coming to listen. Next week, same time, same place, Friday, 5 p.m. Eastern Time. We'll be doing another episode. So please feel free to come through. And thanks again, David. Thanks, everybody.

David Horvath: Thanks very much. Thank you, everybody. Thanks for hanging in.

Nicholas: All right, see you. Hey, thanks for listening to this episode of Web3 Galaxy Brain. To keep up with everything Web3, follow me on Twitter, @Nicholas, with four leading ins. You can find links to the topics discussed on today's episode in the show notes. Podcast feed links are available at Web3GalaxyBrain.com. Web3 Galaxy Brain airs live most Friday afternoons at 5 p.m. Eastern Time, 2200 UTC, on Twitter Spaces. I look forward to seeing you there.

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