Get in the KNOW
on LA Startups & TechX
This is the web version of dot.LA’s daily newsletter. Sign up to get the latest news on Southern California’s tech, startup and venture capital scene.
Sedona Legge is a 5-foot-9 model with brown hair and blue eyes. She wears a size nine shoe. She has a 22-inch waist. And lately, she’s everywhere: on the cover of Los Angeles magazine, sitting next to Snoop Dogg in Gucci’s Love Parade ad campaign back in February. And as of this week, luxury brands will have the opportunity to choose whether they want to work with the real Legge or her photorealistic avatar.
Legge is one of 12 avatars debuted as part of Photogenics’ metaverse division — the Los Angeles based art-driven model agency founded by former model Nicole Bordeaux and Smashbox co-founders Dean and David Factor. Per their website, the Photogenics Metaverse Division is soon to be the beating heart of the agency. None of their avatar talent are purely computer-generated, as they note “Avatars have a voice, a unique style, a direction, and a personality stemming from the real world which will keep these ‘digital twins’ alive and evolving.”
The industry-wide push toward photorealistic avatars, virtual influencers and AI-generated human bodies to model clothing from fashion retailers has been slowly bubbling up ever since 2016 when Trevor McFedries co-founder of technology startup Brud created Lil Miquela—a CGI teenage Instagram model from Downey, California. Since then Lil Miquela has been featured with every celebrity from Bella Hadid to Millie Bobby Brown. She appeared on the cover of Highsnobiety in April 2018.
For luxury brands specifically, the introduction of photorealistic avatars means they won’t have to spend so much of their budget on advertising. According to Gartner — the world's leading information technology research and advisory company — luxury brands in 2021 spent roughly 33 percent of advertising cost on digital marketing. That number is likely to increase as Gen Z and millennial luxury purchases outpace spending by Gen X and baby boomers.
In China, synthesized humans are already a booming industry. According to data from iiMedia Research, China’s virtual idol industry was worth $487 million in 2020, an increase of 70 per cent year-on-year, and is forecast to top $875.9 million in 2021. To that end, in April, we reported that virtual avatar startup Genies announced a $150 million Series C funding round led by Silicon Valley private equity firm Silver Lake. And according to one estimate, the virtual human market size in China may reach $42.4 billion by 2030.
For ecommerce companies who spend around 3% to 5% of their annual gross merchandise value on photoshoots, avatars provide a novel solution to ballooning costs. ZMO.ai—a China-based startup that creates AI-generated human bodies to model clothing from fashion retailers—aims to bring that figure down to 1 percent, according to co-founder Roger Yin.
So how might working with a photorealistic avatar of a high-fashion model work?
Per our own reporting on Genies, creators will have “full ownership and commercialization rights” of their Genie avatar creations, according to the company, and collects a 5 percent transaction fee each time an avatar NFT is sold. But photorealistic avatars are a bit of a different beast.
According to Vogue, brands would pay to license out the avatar models for metaverse campaigns for a given period of time. “Photogenics transfers an NFT with a built-in burn period, at the end of which the proof of license expires,” per their report. “The client license agreement specifies rates and usage, however, Photogenics has not disclosed how profits will be split, or how models will be paid, only that the division is a partnership between all parties and may depend on the project.”
As for what this spells for the models themselves, it’s tough to say. Photogenics told Forbes that, “Avatar remuneration rates are similar to those of IRL models depending on the project and usage.” But of course there’s little stopping brands from creating or requesting synthetic, photorealistic avatars based on a confluence of varying human personalities that require no such profit share with IRL models. Lil Miquela is, after all, not based on any one specific human being. In other words, as is the case with so much metaverse accoutrement, the only way to know what this brave new world of photorealistic avatars has in store, is to just wait and see.— Andrew Fiouzi
The sponsor of today's newsletter is Fenwick, one of the world's top law firms focused on technology and life sciences, including leading games, digital media, entertainment, blockchain and NFT practices. Attorneys in Fenwick’s Santa Monica office and nationwide represent more than 1,000 greater Los Angeles-based startups, established companies and venture capital investors in corporate, IP, litigation, regulatory and tax matters.
Why Celebrities' NFTs Are Getting Them in Trouble
In early August, consumer watchdog group Truth in Advertising (TINA) sent letters to a diverse group of A-listers, putting them on notice for not disclosing their financial connection to the NFT projects they were promoting.
Text Messages Just Saved Californians From Rolling Blackouts
Yesterday millions Californians received an emergency alert asking them to conserve power as the electric grid teetered on edge of collapse. Miraculously, it worked.
SoLa and Riot Games Open New Center in South LA's 'Tech Desert'
Sponsored by Riot Games, SoLa Impact’s Tech and Entrepreneurship Center opens it doors in South Central,
Listen Up: OpenView’s Blake Bartlett on 'Product-Led Growth'
On this episode of the LA Venture podcast, OpenView Venture Capital's Blake Barlett talks about exploring his passions and building companies in the “end user age.”
What We’re Reading...
-- Kim Kardashian has entered the VC space, partnering with Carlyle veteran Jay Sammons on a new private equity firm SKKY Partners. Kris Jenner is also a partner at the firm because why not.
-In a win for privacy advocates, Ring is bringing end-to-end encryption to its video recording service, preventing the police from using your doorbell as a surveillance cam.
-Gwen Stefani's GXVE Beauty brand is now also a "proprietary digital platform" with an Ambassador program offering "discovery and financial incentives" for influencers.
How Are We Doing? We're working to make the newsletter more informative, with deeper analysis and more news about L.A.'s tech and startup scene. Let us know what you think in our survey, or email us!
- NFT Show 'The R3al Metaverse' Launches Via Invisible Universe ... ›
- Metaverse - dot.LA ›
- Los Angeles' Guide to the Metaverse - dot.LA ›
- UCLA's MNN Project Is Rapidly Advancing AI As We Know It - dot.LA ›
- Will American Investors Be China’s Answer to OpenAI? - dot.LA ›
'It Is Scarce and Available to All': How Brud Is Using the Blockchain to Transform Storytelling
Lil Miquela, the computer-generated virtual influencer designed and operated by L.A.-based Brud, dropped her third in a series of five NFTs last week.
The five-part "Venus" series is the latest step in Brud's mission to create not just a new type of media company, but also to build what many technologists consider the next iteration of the internet.
Brud (rhymes with 'spud') was co-founded in 2014 by Trevor McFedries, who considers himself a creative entrepreneur. A former professional DJ and longtime computer coder, before launching Brud he was an early hire at Spotify, where he was brought in to bridge the gap between technologists and creatives. McFedries has since built Brud into a company of about 35 employees with a valuation around $144 million.
"Non-fungible tokens" are certificates of ownership that use blockchain to verify the provenance and ownership of digital assets, including artworks, songs and video clips. For the "Venus" series, each token is tied to an underlying digital artwork that can exist as a standalone piece or as part of a collection that will roll out over the next several months.
Lil Miquela is a new sort of media property.
Just as NFTs are a new type of asset, Miquela is a new sort of media property. She is a 19-year-old, socially conscious and perpetually hip animated character who inhabits the internet and straddles the line between fiction and reality. She interacts with her millions of fans from China to Brazil via social media comments and posts, peddles products and never gets tired.
Critics have derided Miquela and other virtual influencers for perpetuating unrealistic standards of beauty and coolness, for potentially stealing jobs from real humans and for injecting uncertainty into what is and isn't true on the internet. Yet to her fans and creators, she is a racially ambiguous champion of progressive causes that impact the real world.
Miquela's creators hope to use her power to set the tone of how the internet evolves. They envision a next-generation, decentralized web, of which NFTs are an early example.
Called Web 3.0, it relies on digital cryptography to take control of data – and the ability to profit from it, whether via service fees, ads or otherwise – away from gatekeepers like Facebook, Visa and Amazon, and transfer it to automated systems that, in an ideal state, are perfectly trustworthy and safe.
Through technology like blockchain, Web 3.0 proponents like McFedries see a future where people own and control their data and digital identities.
Backed with ever smarter AI, McFedries imagines an internet that offers highly personalized experiences and melds digital and physical worlds, such as how NFTs bolster the real-world value generation of digital goods.
dot.LA spoke with McFedries and his chief content officer, Nicole de Ayora, who leads the Miquela NFT project, about how the "Venus" series fits into Brud's larger mission, their vision for enabling Web 3.0 and how their flagship character fits into that future.
This interview has been edited for clarity and brevity.
Brud founder Trevor McFedries (R) and Chief Creative Officer Nicole de Ayora.
dot.LA: How would you explain Lil' Miquela in simple terms?
McFedries: Miquela is a cartoon character that young people have fallen in love with, not on television, but on social media.
And how would you explain what Brud is in simple terms?
McFedries: I would say Brud is a modern Disney or Marvel that tells stories, not on television, but rather primarily on social media.
What about Web 3?
McFedries: Web 3 is the next evolution of the internet, which tries to recreate a relationship that improves on both the television era, and the early internet era, by saying, 'We're going to enable fans of media to both individually own that media, and be able to access all of the media that's created.' So it is scarce, and available to all, as crazy as that sounds.
How does this NFT series fit into your guys' vision of what Lil Miquela represents in terms of this evolution of media?
de Ayora: We wanted to use this special edition NFT series to explore the larger themes of Brud and Miquela. At our core we're a studio that entertains people through transformative and futuristic storytelling. We build story worlds that fit between reality and fiction, with the mission to develop narratives that allow Miquela to connect meaningfully with her global audience. We want to build radical and accessible entertainment for new generations, and what that means is looking at innovative models for connection and community and what those will look like in the future. Our belief is that creator and fan will be much more intertwined and NFTs and community ownership of the NFTs are the first step towards something that's more meaningful. This drop is a way of developing bonds through this community via that ownership, and a stronger bond between Miquela and fans.
Who are the people working behind the scenes on Lil Miquela?
McFedries: A ragtag collective of engineers, artists, philosophers, storytellers and other folks that want to realize this dream.
Where do you see this headed?
McFedries: Our dream has always been to tell stories that can captivate people globally, and nudge them into being more empathetic or tolerant people. Miquela's journey is really one of otherness. Even in the stories we've told so far, we've built a community of people who have found an ally and an inspiration in Miquela that's encouraged them to continue to be different and to, kind of, accept and embrace who they are. I think our journey with this next evolution is to say, 'Hey, here's an opportunity to take what we've done and grow [it] bigger and better, introduce more characters, and continue to share stories that are both entertaining, but also really fulfilling.' That's really the dream.
What's your opinion of the biggest obstacles to more widespread utility of blockchain and the value it enables?
McFedries: We've spent a lot of time on the network layer, really carving out a technology that will allow applications to be built, and we're just seeing the first applications built on top of blockchain. Not that long ago, all you could really do is speculate, and then DeFi [decentralized finance] introduced the ability to do financial things, but finance isn't that intriguing for most of the world. The ability to create and access media on chain is really intriguing and it's opened things up quite a bit. I think as you see more applications, you're going to see more people interfacing with blockchains and Web 3.
de Ayora: What we've seen happen within digital art over the last three months is a great example of that. Places like Foundation and Zora began to really elevate the conversation of how artists could benefit within the NFT and blockchain space. And then the dialogue exploded. As we start to see more and more applications within the space that are relevant to the communities that we live within, whether that's the millennial creator community, or the music community, with platforms like Audius, we'll begin to find more and more of an audience and people adopting the systems. Usability is a factor, but I think it's really more just use cases and applications.
With this NFT series, what would you consider a success?
de Ayora: One is that we're able to show off the incredible work of the team that supports Miquela, so that people are able to see their talent and their creative vision beyond Miquela's day-to-day life and output. The second is that we're able to show how Miquela's story is greater than what they're seeing in her day-to-day life. Miquela and her journey as a robot in our world has a lot of allegorical qualities that could potentially create a lot of introspection or thought that happens beyond people's interaction with her content. I'm hoping that this series creates a lot of curiosity and wonder around these existential themes. And the third part is that I hope that people see that Brud and our team are entering into the NFT and crypto space thoughtfully, that we're creating a foundation for our company within blockchain that is meaningful and is driven by our community and our connection with our community more than driven by quick cash wins. We want to use NFTs in this space to transform storytelling, and to continue to create meaningful paths forward for those who are already a part of Miquela's fandom but also people that are just being introduced to her for the first time.
What are you excited to work on next?
McFedries: There's an opportunity to create new governance models for creating media that would enable both the creators and the fans to not have to live in silos, as they have in the past, but kind of live in a more synergistic, collaborative way. Often you have creative or media companies mining data or talking to fans trying to figure out what they want, but there's a world where you can bring them into the fray and really make them a part of the universe that you're creating. I think that's what we're going to explore with the DAO [distributed autonomous organization] model and some of these things we're exploring with Web 3.
This story has been updated with a corrected title for Brud Chief Content Officer Nicole de Ayora.
- Jadu Aims to Kick Off a New Era of Artist-Fan Engagement ›
- Lil Miquela, Virtual Influencer, Releases More NFTs - dot.LA ›
- NFTs Rise, and What's Could Be Coming Next - dot.LA ›
- NFTs Are Being Used to Give TikTok Dancers Credit, Profit - dot.LA ›
- Virtual Influencer Lil' Miquela Will Be Controlled by Fans - dot.LA ›
- Disney Is Beefing Up its NFT Team - dot.LA ›
- New NFT Drop Features Travis Kalanick, Sundar Pichai, More - dot.LA ›
- UTA Explains Why It's Going Big on NFTs - dot.LA ›
Digital Avatar and Influencer Lil Miquela Releases a NFT Collection
The virtual influencer Miquela Sousa, aka Lil Miquela, whose rise has garnered equal parts uproar and admiration, continued her foray into NFTs on Wednesday with part two of a five-part series that promises to "tell a special story over time."
Brud, the L.A. startup behind Miquela and a handful of other characters with fully fledged digital identities across social media, is doing the free drop to hype up their superstar avatar and expand her narrative. An announcement from the company said the underlying artwork, called "Unseen by eyes but forged in stone," can exist as a standalone piece or as part of a collection that will roll out over the next several months.
Brud appears to be gamifying the collection of tokens to unlock a unique, surprise reward.
"This NFT is part of a larger series featuring Miquela," the company wrote in a Google doc linked in Miquela's tweet announcing the drop. "Each NFT in this series serves as a piece to a larger puzzle. Each piece will work together to tell a special story over time. The only way to access the story before anyone else is to own each NFT and connect them together along the way."
New NFT drops NOW! First 1500 people to reply to THIS TWEET with their wallet address will BE BLESSED and the FULL… https://t.co/7XZdblfZbd— lil miquela (@lil miquela) 1617814863
Users could claim one of the available 1,500 NFTs by replying to Lil Miquela's tweet with the address to their crypto wallet.
Brud, valued at $144 million, said it will deliver the tokens within 24 hours. Users had to agree to let the company contact them in the future for marketing purposes.
Within three hours the post had received nearly 4,000 comments and been retweeted over 1,600 times.
Upon validation of users' addresses, Miquela's Twitter would post a response.
"Obsessed with u, there's 1481 left!"
"We're making history, TYYY!! there's 1377 left!"
"We're making history, TYYY!! there's 1203 left!"
And so on.
Since debuting on Instagram in 2016, Lil Miquela has picked up three million followers and sponsorship deals from the likes of Supreme and Barney's. Her curated digital identity ostensibly makes her less of a risk than human influencers for brands.
Last year, the digital teenager was estimated to have earned more than $12 million. She's repped by CAA, alongside many real celebrities, and has appeared on a billboard in Times Square.
In November, Brud released her first NFT, tied to a digital artwork entitled "Rebirth of Venus" that sold via SuperRare for 159.5 Ether. At the time, that was worth about $82,000; Ether's value has since nearly quadrupled. The winning bidder of that token appears to be linked to crypto investment fund Divergence Ventures, based on the link in the buyer's SuperRare profile.
It has been a common refrain as NFTs have gone mainstream: the investor behind last month's headline-grabbing $69 million NFT tied to a digital artwork by Beeple also had a financial interest in propping up the legitimacy of cryptocurrency.
The latest Miquela offering is part of an ongoing spree of creative NFT offerings that provide buyers more than just a certificate of digital ownership tied to the blockchain. It also expands the storyline of a 19-year-old who blurs the lines between fantasy and reality as a racially ambiguous, socially conscious teenager.
- 'Owning Things Matters':NFTs Change the Game for Creators - dot.LA ›
- LA's Music-Tech Startups Are Poised to Reshape the Industry. - dot.LA ›
- Brud Founder Trevor McFedries on Lil Miquela and Artist NFTs - dot.LA ›
- OneOf Raises $63M for an Artist-Focused, Green NFT Platform - dot.LA ›
- Virtual Influencer Lil' Miquela Will Be Controlled by Fans - dot.LA ›
- DNABlock Raises $7M to Help Web3 Creators Mint NFT Avatars - dot.LA ›