How $30 Plushy Penguins Helped An NFT Company Survive Crypto Winter

Move over Bored Apes. Thanks to a contract with Walmart to sell stuffed toy versions of its cute aquatic birds,The Igloo Co is home to the world’s hottest NFT collection.

By Maria Gracia Santillana Linares, Forbes Staff

Aisle 17 of the Walmart Supercenter in North Bergen, New Jersey is one of a half dozen devoted to the children’s toys and games. Christmas season has long passed, but there’s one item still flying off the shelves despite the fact that the birds depicted by the cartoonish plushies and plastic figurines inside the boxes, are incapable of flight. Adorable plushies, known as Pudgy Penguins, are selling fast at more than 3,000 Walmarts as well as on and Ebay. Polar Pete, for example, is an 8-inch yellow penguin, holding a carrot and wearing white pullover hat adorned with a polar bear’s face. Cowboy Carl, is a 4.5-inch penguin in black sunglasses and a tall cowboy hat, that looks like he’s ready to make friends.

The plushy penguins are actually physical versions of non-fungible tokens (NFTs), digital collectibles, that are now selling on crypto marketplaces for as much as $500,000 each. These cute toy counterparts to the virtual world collectibles, retail in stores for $8 to $30. They are a big reason why the upstart NFT brand Pudgy Penguins and the company that peddles them, Miami-based The Igloo Company are now thriving, while NFT stalwarts like Yuga Lab’s Bored Ape Yacht Club and Chiru Labs’ Azuki are languishing.

daily-cover-1x1-Luca Schnetzler-photo by Mary Beth Koeth for Forbes

In 2023 NFT trading volume plummeted more than 50% to $12.6 billion, according to Dapp Radar. Floor prices for profile-picture collections like the Bored Ape Yacht Club, Doodle and Azuki fell nearly 60%. The virtual world prices paid for Pudgy Penguins NFTs, by contrast, more than doubled. Today the total market value of Pudgy Penguin NFTs amounts to more than $400 million, and the cheapest virtual penguin sells for $45,000.

Launched in July 2021, Pudgy Penguins are the creation of four college friends who decided to get in on NFT mania. Just a few months after the graphic artist Beeple sold a collection of NFTs at Christie’s auction house for $69 million, the computer savvy quartet generated 8,888 Pudgy Penguins images, which were then minted as NFTs at a cost of about $0.03 cents each. Their collection sold out in 20 minutes for about $90 a piece, netting them more than $800,000. Unlike other popular NFT collections at the time whose avatars were often pixelated, edgy or even grotesque, Pudgy Penguins were characterized by their vibrant colors, small beaks, and adorable round faces.

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Pudgy Penguin’s were so successful that soon after the initial collection debuted its founders launched 22,222-edition of Lil Pudgy’s, smaller versions of the original collection. Their success was short-lived. NFT prices started declining with the crypto market at the end of 2021, and to make matters worse, the community of Pudgy Penguin owners became disillusioned with how the founding team was managing the collection. Led by University of Central Florida student Cole Villemain, the founding team had made grand promises about releasing a children’s book and a pudgy penguins game, with no timeline of when those would come to fruition. Their penguins were even briefly delisted by NFT marketplace OpenSea. It all came to a head when Villemain hinted at a big drop in December 2021: While many holders speculated that it would be the virtual game, they were disappointed to find out it was merely a fishing rod accessory for the penguins. By Christmas day 2021, Pudgy Penguin prices had dropped from a high of 2.7 eth (about $10,200) following its launch, to 0.55 eth, about $2,330 at the time.

“We were inexperienced college students,” says Villemain. “We couldn’t execute the things we wanted to do.”

Enter serial entrepreneur Luca Schnetzler, then a 23-year-old high school dropout known online as Luca Netz, who had developed a track record of helping influencers capitalize on their fame by selling branded merchandise, mainly t-shirts and hats. His clients have includedmusician Kendrick Lamar, influencer brothers Jake and Logan Paul and TikTok collective The Hype House, among others. Netz was also successful in getting influencers to sell costume jewelry he acquired on AliExpress. At 18, Netz claims he was already a self-made millionaire and in his early 20s he served as chief marketing officer at clothing company Von Dutch and NERF competitor Gelblaster.


The prices of Pudgy Penguin NFTs have increased nearly tenfold since March 2023, turning a $10,000 purchase into $105,000. Bitwise’s Blue-Chip NFT Index Fund of 10 top selling NFTs rose only 12%.

Netz saw big potential in the languishing Pudgy Penguin NFT brand. After buying his own Pudgy Penguin NFT, he immersed himself in the Pudgy Penguin online community and after months of negotiating a deal, bought copyright ownership and the initial creator addresses (where royalties accrued) of Pudgy Penguins for $2.5 million in April 2022. His strategy was straightforward: build trust with Penguin holders, follow through on some of the promised projects, like video games and books, and expand the businesses’ revenue streams, particularly in the physical world.

“Very few times in life, you have the ability to kinda shape the future,” says Netz, now 25. “This was my opportunity to do so.”

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One of the first things Netz did was to secure financing for his Pudgy Penguin reboot. He sought out venture funds, DMing crypto investors before eventually closing a $9 million seed round led by crypto venture firm 1kx Capital the week FTX collapsed in November 2022.

Strategically Netz decided that Pudgy Penguins would rely less on royalties than most NFT companies. One of the big draws for artists and companies like Yuga Labs that create NFT collections has always been the ability to collect a 5-10% cut of any secondary sale, meaning that the founders and creators received a constant revenue stream from the billions in trading activity. But this idealistic system has run into problems: Royalties are not automatically applied in the payments, so enforcing these fees fell to NFT marketplaces. As the crypto markets and NFT prices and volume fell in 2022, marketplaces began cutting fees to remain competitive. Royalties were the first thing to go.

Pudgy Penguins has only generated $8 million in royalties since inception according to crypto data research firm Nansen. “Royalties are not sustainable,” says Netz. “You can’t control ether prices and you can’t control whether marketplaces will enforce the royalties.” Since inception, Yuga Labs has generated $59 million from Bored Apes and Chiru Labs has made $43 million from its Azuki NFTs, but in the last year their royalties have fallen sharply.

Next, Netz went to work building up the Pudgy Penguin brand outside of NFT enclaves. By posting cute animations of colorful Pudgy Penguins experiencing everyday Gen Z hardships, like taking a good selfie or going through skincare routines, Pudgy Penguin NFT collection amassed a total of 1.3 million followers on Instagram and nearly nine million views on TikTok, where Netz was able to monetize the content as part of the platform’s Creator Fund.

Perhaps the most unexpected Netz innovation has been Pudgy Penguin’s presence on Giphy, a meme-making platform where brands can create short reaction clips sent via iMessage, WhatsApp and other texting platforms. Pudgy Penguin’s account has amassed 16.6 billion views, besting Disney’s 16 billion.

“The goal is to make pudgy the most recognizable brand in the world, how it does that doesn’t really matter,” says Peter Pan, partner at 1kx Capital, lead investor of The Igloo Company’s seed round.

Then came the retail push. Netz’s plan involved a full line of merch, from hats and pins and stickers to plushies and plastic figurines, and was able to partner with Israel’s PMI Toys for manufacturing and merchandising. In May 2023, its first drop of physical goods sold out in 48 hours through Amazon and brought in $500,000 in sales, according to the company. Then Netz was able to secure distribution in retailers like Five Below and Macy’s. Finally, in September 2023, Netz landed Walmart giving Pudgy Penguins a 2,000 plus store launch. To date the company has sold more than one million toys via its retail partners, generating $10 million in sales. Walmart has re-upped for another season, adding 1,100 more stores and Pudgy Penguins will be available at Target in April. According to Omer Dekel, CEO at Pudgy’s manufacturer, an exclusive of Pudge Penguins could soon be coming to Walgreens.

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As merchandise began flying off retail shelves, NFT prices have been soaring. Since the Walmart launch, the floor price of Pudgy Penguin NFTs has risen from 4.2 eth to a recent high of 20 eth, or roughly $58,000. All told, there have been more than $800 million in Pudgy Penguin NFT sales since Netz took over in 2022.

Says Juan Leon, senior crypto research analyst at Bitwise Investments of Pudgy’s, “They have been nothing short of a masterclass in brand building.”

One big driver behind Pudgy Penguin’s NFT successhas been its approach to sharing royalties from physical toys and plushies with current digital collectible owners.

Because the NFT holders actually own the intellectual property of their unique Pudgy Penguin, a royalty accrues to them based on the sales of associated physical versions of their non fungible token. In essence, Netz’ Igloo Company is licensing out the rights from the holders of the corresponding NFTs. As a result, lucky owners of popular Walmart Pudgy Penguins earn a 5% royalty on net revenues. Nearly 130 NFTs have been licensed for physical products so far.

In order to be licensed, Pudgy Penguin NFT holders submit their NFT to a pool of potential characters in the Igloo Company’s in-house Overpass IP platform. The company can then choose to use them for their next toy, book or even upcoming game. Take Pudgy Man Plushie, for example, a penguin wearing a superhero costume and reflective sunglasses. You can buy the toy on Pudgy Penguin’s website for $29.99 or at various other online toy merchants. In January someone paid $110,000 for its NFT and as a result, a small cut of the sales of this popular plushie will go to the new owner.

Netz’ real world royalty scheme for NFT owners isn’t the first. Bored Ape Yacht Club and Crypto Punk NFT holders have intellectual property rights to their images, giving owners the right to license them. A small number of products – including clothes, hot sauces and even cannabis companies have used Bored Ape and Crypto Punk imagery, but sales have been limited.

Luca Netz’ adorable penguins, however, appear to be a metaverse game changer. Proving that it’s not only possible to hug an NFT, but profitable as well.

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