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Peter Bauman: Hello everyone, and welcome to this Le Random podcast. I'm your host, Peter Bauman, the Editor-in-Chief at Le Random. And today we are continuing our slightly more sporadic now Friday episodes as companions to our Monday editorials. And this episode is super interesting.
It confronts the current state of the digital art market, specifically whether we're experiencing something structural or whether this is the typical market ups and downs. In September 2024, Sotheby's dissolved its digital art team. And a year later, Christie's followed suit. Then platforms started falling in quick succession with Nifty Gateway, KnownOrigin, MakersPlace, and recently Rodeo announced it was closing and Foundation was changing hands.
And I'm very lucky today to be joined by two people who lived this turmoil firsthand. That is Kayvon Tehranian, the CEO and cofounder of Foundation and Rodeo, and also Sebastian Sanchez, formerly Christie's manager of digital art sales, and now an independent advisor and curator. We dig into where growth actually stalled, what they think was structural versus maybe market forces, which expectations were achieved, and what they believe crucially can endure. So I'm really excited for this conversation. I learned a lot and I think you will too. So let's begin.
Well, yeah, I think we can go ahead and get started. So again, thank you both for joining. And the news over the last few weeks is that Foundation is transferring ownership and Rodeo is shutting down. And then back in September, Christie's dissolved its digital art department. Yeah, what are your perspectives on just the general climate? And to what extent do you think these things are isolated incidents or symptoms of the same thing?
Sebastian Sanchez: At least from a Christie's perspective, 2021 and part of 2022 saw so much money come in that was just bonkers. And then a lot of investment was made because of this money coming in. And I think right at the end of 2021, 2022, which is when I joined, up until 2025, that return on investment was just not where they wanted it to be.
So at least, again, from a Christie's perspective, there was a department, so to speak, where there were resources allocated. So there was a marketing person, there were tech people, there were designers who all sort of funneled into this department. And it just didn't make sense for the revenue that we were bringing in. So what they did was kind of just dissolve that and bring it into contemporary art. Whether I agree with that or not is a different discussion. And whether I think that's a, it was sort of like a moment where they did fire the people that kept me as a specialist.
But yeah, I think it's all symptoms of the same thing. I think it's all hope and following these cycles of just ups and downs in the market, and people get a lot of money, and then they invest a lot, and then it goes down, and then they aren't getting what they invest. So I think it's a similar pattern, no matter what part of the industry you're in.
Kayvon Tehranian: I believe the question is, is it symptomatic of the same thing? I mean, I believe that people were needing business models that work, and none of these business models are working. So I imagine it's the same across the board. I don't see any one particular player figuring it out, and others not, and there just being difference. It's just there was a large business at one point, we had a large business at one point, and those businesses have really basically failed to sustain. That's basically true across the board, irrespective of strategy.
I mean, in Blackdove's case, who we've sold to, I think they're just really applying a very different strategy. They're really focused on the digital display aspect of the business, and the marketplace, and the NFT kind of form factor of, whether or not it is an NFT is very sort of downstream of installability. So I think that a big part of that is installing these digital displays in people's homes and in locations, and they're focused there. I'm optimistic that that can make a difference.
But I mean, I think the market that appeared in 2021 is largely gone. And all of these entities require businesses to really run and operate and pay their staff. And those businesses just largely don't exist anymore.
Sebastian Sanchez: For me, I come from a more art world side versus a platform side. For me, my background is in galleries and working with artists and selling art or buying art or whatever, very specifically art-oriented. You're seeing across the traditional art world really, really big, high-profile closures of galleries. Our space is no different.
I think it could be because of the distribution potential, but at the end of the day, art is a huge niche, and to create massive businesses on selling art in one year is kind of, I don't know, you need to, it's really a reputational thing. It's relationship building. It's really starting from the ground up versus, I don't know, I'm not sure how I feel about raising money to have an art-selling business. I think you sell art. If you can't sell art, you're not going to get any returns. I think it's kind of simple in that way.
But then there is also the broader NFT space, which includes collectibles, includes music, includes a lot of different things. So yeah, I think there's kind of two conversations that can happen from that.
Kayvon Tehranian: Yeah, and on my end, I'm very distinct from Sebastian. I don't come from the art world, don't have an art world background, actually had no intention of being in the art world. This was really built as a technology platform. This was well before there was all of this demand and interest. And our vision was very much trying to offer new avenues similar to tech platforms, but with different sort of rails and monetization patterns for the people kind of creating the media that goes into it.
I mean, I think why you saw Foundation sell so many of these memes that were some of our highest price points was we were internet native. We were thinking about the internet. We were thinking about how the internet worked. I don't have any expertise or experience in how the art world works and wasn't thinking about how it works. These things came together, obviously, because of the money. Money speaks, and that's what happened in 2021. But I can't really speak to what's going on in the art world, although it sounds like from Sebastian, and what I've heard from others, it isn't going well in the broader context either.
But then I think from our standpoint is that our vision also just didn't manifest. I don't think that it was, it was exciting at one point that this kind of could be seen as the future of art and art sales. We really wanted to think of it as a way for creators on the internet just to build new fan bases and sort of new business models for how they're monetizing. That was our sort of vantage point.
And I think that's why you saw us iterate on the concept and produce things like Rodeo, which really just was a social network design. Right, because it wasn't so much like we're going to just be a gallery or take on the business model of the art world. From my understanding, the business of the art world is not thriving at the moment. So it's not something you're trying to, I think replicating it isn't the right mentality.
But then I think that with players such as ourselves, the reason we're trying to do a lot of things, and the reason we've had to really make changes, is just that this isn't proving to be true. At least in 2026. We'd run a bunch of different experiments. We built really good products in a bunch of different ways. And there is no business model that's really working right now.
Sebastian Sanchez: That's really interesting. Yeah, for me, I'm thinking about at least for digital art, digital culture, exactly as you're saying, bringing people, internet native. Part of working in this space is knowing culture, knowing tech, knowing sales, knowing marketing. And it's all kind of flattened out on this digital layer, which is really interesting, whereas I think in the past, at least again, from a more art world perspective, it's sort of broken out into different things. And yeah, it's just really interesting.
And I think collecting in general, whatever you're collecting, is also a niche. The masses don't collect things in a very targeted way where they're looking for something and buying it. So I don't know. I mean, maybe in the future things will change through distribution models and technology. And I think 2021 was like the beginning. So we'll see how it evolves, I think, in the coming years. But I would say 2021 was literally when awareness for digital collecting became a thing. So it makes sense that, what, four or five years later, it's not as robust as we want it to be. It takes a long time for these things to really find its use cases in culture. And also seeing this kind of institutional adoption four to five years later, that was always going to lag.
Peter Bauman: Yeah. So you're both kind of talking about how business models in the art world aren't working. So I was talking to somebody recently who has this background in fashion and now they're in art, and they were just talking about how fashion is leading art just culturally right now, because it has business models that work and the art world doesn't. And yet it just seems to be this structural problem.
And is there any way, I guess, Sebastian, how do you see any kind of way to solve this? I mean, you just sort of mentioned it with distribution models and how that might be changing. But do you see any other, do you want to add anything else?
Sebastian Sanchez: I'm just going to stick to art for this, because I think other forms of digital collecting haven't found, like their digital fashion, there's no real use case. I think it's a really interesting sector for sure. But people aren't dressing up their avatars in digital fashion. Again, I'm really interested and I have faith in that in the future, but we're nowhere close to that.
So for me, I'm sticking to an art perspective and digital art collecting. I think it's so much more of a niche than fashion. Fashion is physical, it's sensory, and then it's identity. So it's kind of like, I don't know, maybe the closest thing is CryptoPunks with identity, where you're representing yourself in some sort of digital object. But fashion has so much more of a broader reach. I don't think art and digital art collecting will ever, ever, ever really be as broad as that until we're in a completely digital world where all we do is present ourselves in digital forms. But then maybe even digital fashion may be more popular than a digital art piece.
So yeah, I think people have these expectations that there's going to be some massive influx of a million collectors and a million people who are coming in. And it's like, art is never, art is and has never been that. So I'm not sure what can tip that in the future. But just from what I know on history and where we've gone to, it's never been a mass thing.
Peter Bauman: Yeah, one thing I was talking about with this fashion person was about how the fashion world is generally better at marketing and communicating and world building, and they're able to build worlds, I guess, better than the art world and communicate with, yeah, I guess a broader market because of that. But yeah, I thought it was a really interesting comparison for someone who's been in both, and as an explanation as to why a lot of the art world complains that it maybe doesn't have the cultural clout that it used to.
On a similar route, I wonder if you can both talk about, maybe Kayvon, yeah, where the growth stalled and what the friction was. I mean, do you think, obviously there might not be one answer, but do you think that friction was crypto? Do you think it was the work itself not connecting with collectors? I mean, do you think it was something else? Where do you kind of see maybe the key junctures and the turning points?
Kayvon Tehranian: I think people probably misinterpreted what happened in 2021. The money obviously was very front and center. Most of that money and capital was speculative in nature, and it was mostly stemming from the actual crypto industry itself. And I don't think it was collectors and it was not this traditional, again, I have no real background stemming from the art world, so I really don't want to speak about it in any detail, that's not my background, but that certainly was not part of our strategy. There was no aspect of that that drove any of our sort of metrics. We were always really building in a very internet native way.
And then I think we obviously just were very part of the sort of crypto industry as a whole, and the crypto industry had a lot of changes. Certain headlines dominated, and there was a lot of sort of crypto native wealth that was excited to kind of play with this idea of digital art. I think it was very internet native, it was very crypto native. That was where the origin of the culture and the money was. And then obviously that attracted all sorts of actors. I think the crypto industry had fun with that. It was like, great, come and play in our playground.
But the idea that this was sustainable, that these figures were compounding and that the demand was truly there for art collecting or participating in something that resembled the art world, I think was very much not true. And then I think what you saw was the demand for that basically start to collapse, in the sense that it was a speculative cycle. Once that was true and you don't have demand, you just have a glut of supply. And then that supply kind of basically competed with each other for years into the wake of the boom, to the point where you've reached now where I think everyone's just kind of capitulated.
Right, it's like there is no demand. The demand is very small. That demand can support very few people. And so the market is just kind of, you don't have a lot. All the actors that kind of came pouring in to try to capitalize on what happened ended up not having business models and not having real businesses to run. And I think that's the current state of the industry now.
I think there's opportunity here where I do think digital art and NFTs are correct. That is how you should build a digital art industry. But it needs to kind of be brought and built up now from scratch, through participants that are kind of committed and dedicated and wanting to solve digital art problems. And so for example, why we did the Blackdove transaction is I think they are going and solving one of the big problems, which is, if you look behind me, what do people do with art? They put it in their houses. They want to cohabitate with the art, and that's how they value it and how society recognizes it.
We at one point thought that you could power these things just on the internet alone, on screens, in our kind of normal day-to-day internet activities. And I don't think that's still true. Right, you've seen the demand for that basically kind of go to zero. So I think you've got to kind of try to rebuild the industry up from scratch, and really do it in a way that's high integrity and long-term focused.
Sebastian Sanchez: Yeah, I agree with everything Kayvon said. I think we're still grappling with the sort of connection to the crypto industry. In one way I think it's good, because it brought on a whole culture, it brought on a whole art, lots of subjects for art, including lots of Beeple works, which are very notable. It brought on a whole new wave of collectors who maybe were not digital art or maybe were not art collectors before, and then became digital art collectors.
I agree that it's still speculative. It's still very closely linked to speculation, for better or worse. I think this is sort of the first time in history where art and finance are flattened on one layer, where the trading and the market is sort of literally coded into the artwork, for a lot of the cases. So it's a whole new, it's like tech and culture and finance mixed, which we've never seen before. So there has not been a right or wrong way to do this. I think it's sort of a trial and error, and I agree with Kayvon, it does require new or existing people to really steward it forward with real belief and a long-term vision.
My role now as an art advisor for a major digital art collection, and curator for the collection and manager of the collection, is to really invest and support artists, institutions, platforms that are trying exactly as Kayvon said, with a long-term vision, who will last, who will stand the test of time. We never know. I mean, it's kind of the same with all contemporary art. You never know who's going to really break through and who's going to become culturally relevant. But it's been kind of long enough.
I mean, I entered the digital art space, crypto art space, with generative art in mind in 2018. So I've seen a lot, a lot of movement since. I mean, I was selling Tyler Hobbs prints for $700 just like seven years ago. And now this guy is selling for hundreds of thousands of dollars, about millions, major auction houses. So I've seen a lot. And I do fully believe in this space.
“I think this is sort of the first time in history where art and finance are flattened on one layer, where the trading and the market is sort of literally coded into the artwork, for a lot of the cases.” — Sebastian Sanchez 16:58
I think the market and speculation is our biggest enemy. From within, we're sort of biting ourselves in the foot. Sometimes it is what it is. I think with institutions adopting it, I mean, we've seen some of the major institutions around the world show this art, display this art, contextualize this art, pick artists that have been around for a long time, and we're here for the long term. And not just even, even artists are actors to have come in. There's a million artists who have come in, made a ton of money and also left. So it's not just the collectors or the founders. I would say a lot of artists aren't, maybe aren't long-term digital art artists, I don't know. But yeah, those are some of my thoughts.
Peter Bauman: Yeah, I'm curious, and maybe we can just go straight into this, but this is to Sebastian. So Sotheby's made a similar cut to their digital section in 2024. And yeah, do you have any insight as to why the auction houses are pulling away at a time when it seems like fairs now with Art Basel and the institutions, museums, are leaning in more? Is it just that it took them a few years, for the institutions, after the NFT boom to actually fit programming? And is their interest actually sustainable? You know, net art kind of went through similar cycles of institutional interest, and then that eventually waned. So yeah, I guess, do you have any insight into that?
Sebastian Sanchez: Yeah, I think for me, when I was at Christie's for three years, manager of digital art sales, so literally this was my bread and butter within the auction house context, my biggest competition was the open decentralized marketplace. There is no case for, there is no case, what does Christie's really add from a secondary market perspective to this space? It doesn't really add anything. I mean, it's so much easier for me as a collector to know who the other collectors are, know who the artists are, go directly to them and not have to pay any premiums or do anything.
So for me, I was always trying to find a value add that Christie's could add, which was marketing, exhibitions, institutionalization, visibility. Obviously we had the name. Everything we did got a ton of press. Yeah, so for me, that was my biggest challenge. And I assume that is sort of a, that not, I assume, I know that that is probably the reason why they sort of shut down these departments.
From a more departmental perspective, it was because Sotheby's and Christie's are secondary marketplaces. They don't sell, they don't work with artists. Artists hate auction houses. Like they do not fuck with them at all. Excuse my language. So for us, we actually changed that. We were the only department in Christie's who were working directly with artists to premiere primary works, which in the digital art space, I think the most exciting stuff is happening in the primary market, not really the secondary market. The secondary market, you have like five artists like XCOPY or whatever that are selling, and it's exciting because it's a lot of money and there's trading. But in reality, the real magic is happening in the primary market. So we were at a full disadvantage and we had to completely think outside the box from what came before us. And we were completely operating on our own.
So to answer your question directly, in general, I think the value prop for a traditional auction house and digital art doesn't make sense yet. Potentially in the future, as the space evolves and works get harder. And for example, the major collection that I work for, maybe in the future we may want to sell the entire collection. And doing that through an auction house is probably a better route than just listing everything on OpenSea, because you have marketing, you have storytelling, you have KYC, a lot of it is AML, money laundering and things that more robust institutions, including private collections, require.
So I think I do believe in the future, whether it's Christie's or Sotheby's or Phillips or any major auction house, or a new one that is more internet native, I think that there is a value add. I just think right now it's like everything's happening on the primary market and it's just new releases and everyone's trying to keep up with that.
“The secondary market, you have like five artists like XCOPY or whatever that are selling, and it's exciting because it's a lot of money and there's trading. But in reality, the real magic is happening in the primary market.” — Sebastian Sanchez 21:05
Kayvon Tehranian: My two points are, I think people need to really understand these things through business lenses. These things don't operate, the decisions are actually fairly clear in my opinion. I don't know why it's always been speculative, why these things happen. If it doesn't make business sense you cannot run a business on it. It is not going to continue unless someone cares to run a business at a loss for some indefinite period of time. That's very rare in this world. And these decisions make sense. What is there if the market is shrinking? These are premium services that are being sort of sold in these contexts.
And then I think, yeah, the competition from the sort of decentralized, the people that are really passionate, the people that are still really here, are very much here for ethos. That ethos I think is very much in contrast to what happens in the sort of existing markets and industries. They want to be empowered, they want self-custody, they want disintermediation, they want direct relationships. And that's also what the technology wants. It's kind of how the technology is constructed, right? It's empowering people to transact on their own behalf.
And it's obviously why I think Foundation took off, right? We were able to host multimillion dollar auctions. We hosted many, many of these. People kept on thinking that we were doing it. We were not. We designed a platform, and the platform was capable of doing this with just the technology. Obviously we would do some aspects of community management and curation and all these things, but that was not the driver. The driver was the technology itself and the kind of market opportunity at the time. These things wind down for business reasons.
And then I just think this desire for institutions is kind of consistently overstated. It's been this talking point for years. I've never seen it do any sort of, I've never seen it actually drive outcomes. It's a lagging indicator. It's a post facto thing. So I just don't, I don't, there's an obsession with them, and I don't, I think it's misplaced.
Sebastian Sanchez: What type of institutions are you talking about?
Kayvon Tehranian: I don't know. I mean, I started when this whole industry was largely irrelevant, and certainly institutions were not what instigated the rise. And then I think they were kind of used as the savior, right? So I don't know, it's museums, traditional players. This is my own experience, so again, I'm not from this world, and Sebastian, this is the first time we're meeting, so I think it's important to just kind of establish our world views.
But I've just never really seen an institution drive the industry to a new height, right? It's never been something that's reversed trend lines that already existed. I think there was obviously this sort of innovation moment in 2021. Obviously the Beeple sale was a huge part of those headlines, and institutions have a role to play, but the industry really followed its own, it was its own thing with its own sort of driving forces. And then I think there was a desire from some aspect of the industry to kind of see it institutionalized, and maybe that was to stabilize it or bring more credibility. But I think there were many attempts at that and it didn't really cause any change in the industry dynamics. So the conclusion I draw is that it just isn't, it hasn't been a driving factor.
Sebastian Sanchez: Yeah, I think from my perspective on that, I just think it is now. So it's kind of like, and maybe that's a really interesting point, where new institutions are needed, new museums are needed that operate at the speed and capacity that this new culture operates at.
But from my viewpoint, because I was sitting in the post-war and contemporary art department, which is Warhols and whatever, everything, all Picasso, all the conversations around me are, okay, this artist is having a solo institutional show at this museum. And then those are like most of the works that are in the sale, and those works do go higher. Maybe that is also the form of speculation, maybe at a slower pace, and maybe after the fact the artist market could tank once that sort of hype and speculation is done.
But I would say, for me, museums definitely, they're not a direct correlation to the market. They're not at all. So I think that that's, for me, something I've learned. It's never, oh, this is happening, oh, okay, so now the artist is suddenly incredible, and then that's it, they're incredible forever. It's either ups and downs or it's way more long term. Sometimes these shows move on for years and years and they travel for three years, and then maybe then there's some effect. So yeah, there's not one right answer, and it's all different perspectives, as you said, and we come from completely different backgrounds. It's just like a where you're sitting and what viewpoint you're looking at it from.
Kayvon Tehranian: Yeah, I just think the speed expectations and that reality is very, very different for traditional art world, traditional cultural institutions, and then this new form. I mean, I'm friendly with the curator at MoMA who's a digital art curator, and she's like, they're putting on shows in like nine months for their big LED wall, and it's like that's the fastest they've ever worked in their entire life. And they don't even know how to process the artist, understand their technology, actually translate that into a public facing thing. This is completely unheard of for them. And it's just crazy to hear.
Sebastian Sanchez: I don't know, part of my job also is to work with museums and institutions to help place or lend works for upcoming exhibitions, and we're talking about 2028. We're not, 2026 is like, oh, there's zero way that there's anything happening now. So just the time frame I think is really that main difference, in my opinion.
Kayvon Tehranian: Yeah, I mean, the other thing I would just share, again, this is my own experience, is in our history operating, institutions played zero role. And if anything, the people that were participating in our context were incredibly anti-institution. They were in fact sort of really excited about what was being built because of its ability to undermine and challenge what was happening in these traditional contexts, right?
So if you look at really what all the high price point sales that we did, and who was participating on both sides of the market, it was people that felt either not represented in the market or represented in these contexts. They wanted to kind of overthrow it, right? And I think crypto has a very strong sort of anti-establishment worldview, at least when we were getting started and running the platform. So that's been my experience.
I think these two worlds do live pretty far apart. They've started to kind of talk to each other, and there's been some degree of kind of co-understanding, but it hasn't produced any real outcomes. Whatever we went through in these kind of previous waves wasn't driven by that. If anything, it was driven by a desire to, I think, again, this wasn't our vantage point, but I could just see the people that were participating. I think they were excited about undermining these institutions.
Sebastian Sanchez: So I have a question for you, because you're speaking on this in the past tense. So obviously this happened, it didn't last obviously or whatever, it didn't prove the demand, so that intention didn't manifest into a lasting legacy. So what do you think? So then do you think that this sort of old world can provide the guardrails culturally for this to last? Or how do you feel about this, exactly what you're talking about, moving forward into the next few years?
Kayvon Tehranian: I don't know. And I think that's a good point, Sebastian, which is to say that that energy that existed didn't produce actually an enduring, I think, and that's often the case, being anti something is not sufficient to be an enduring institution itself. But I do think that sentiment was there and was part of the excitement.
And then I think the counterpoint is like, okay, cool, you do need these things. The reality though is I'm not seeing it, right? I think we're walking through the fact that you're talking about all these departments being ripped out. They're ripped out for economic reasons. They're lagging. They only can justify the investment once the sales are there.
I think in theory, I mean, this is perhaps why the market's in such a dire spot, is it's in no man's land, right? You have this sort of foment that happened obviously a few years back, and it was perhaps maybe anti-establishment or wanting to build new things. Very few of those turned out to be sustainable. And then you have the old guard, and in some ways I think they're not thriving either. And so the idea of going into a very technical, sort of unstable context is not appealing to them.
And so I think that just leaves you in the current reality, which is, we have this technology, there is this digital art ecosystem. It is real. All of this is real, but it is not clear who is going to build it into what it can be. And I can tell you right now, obviously I think there are people starting to do real IRL things. And this is where I've kind of netted out. It's very small. It's not operating at any sort of large scale. It's taking this digital realm and moving it IRL, moving it into homes, moving it into screens, moving it into galleries, moving it into, there's the new NODE exhibition space in Palo Alto.
One of my highlights was going to Paris when Bright Moments was still operating and able to kind of put on an IRL thing. These sort of beginnings of something that feels both professional and grounded in reality, not just reactionary and kind of stirred and sort of anti-establishment feelings. That feels right. It's just really early. It's very nascent. It's not operating at large scale. It's still very niche. And I don't think there's a business model still. None of these things are proven yet to be truly breakthrough business models. And until that's true, you really can't get the investment happening.
I think, Sebastian, I respond with, my position wasn't so anti-establishment. I just think that that's who was participating. And then I think you're right to call out that that energy was great, but it didn't last.
“All of this is real, but it is not clear who is going to build it into what it can be.” — Kayvon Tehranian 32:23
Peter Bauman: Yeah. And you brought up NODE. I mean, it was a direct response to kind of that attempt to undermine institutions, but also those different timescales that they operate on. Becky Kleiner and Micky Malka were looking to do a show and they were told, okay, the first time you can is 2028 or something. And now it's 2026 and they already have their own institution up. So yeah, we are starting to see this new generation, I think, of institution. NODE is definitely not the only one, but we are starting to see a response.
And yeah, I think it's also interesting that the art world does, just because it's more opaque and that's one of the features of it, it does a better job of kind of being able to mask over some of these times of turmoil, for itself and for its artists. And this space, you can always see a floor price. You can always see a crypto price. And so it's that transparency. I think a lot of people saw it as a strength, but it's also, yeah, it's a double-edged sword. It also shows you the realities in a very clear way.
Kayvon Tehranian: Yeah. I'm in the transparency camp, just to be clear. I think the fact that there is transparency now, I think it's creating clear decision-making. I think a lot of these decisions being made makes sense. I think the idea of deluding yourselves about the state of reality is not helpful, because I think people need to go do the work.
That's actually, it wasn't my dream to kind of hand off the platform to someone else, but that was the reality. I was just like, cool, I don't think we have the right strategy. And I think people need to really reconcile with these facts. I think the sooner they're doing that, the faster we get to a place where this works. Because NODE is probably, I think everyone seems to be in like a shared opinion, like, yeah, waiting for someone else to put on your exhibition in three to five years, that doesn't really understand the culture and doesn't understand it in a deep way, and probably can't even put on an exhibition that really does the sort of work justice, isn't the right next step, right?
So going and doing the hard thing of doing it yourself is the right move. And having that clarity is helpful. Similar to us, I think we really would have needed to get into the physical screen business. I think that's where we needed to go as a business. And we're not the right team. We don't have that expertise. We kind of stared at it as the logical conclusion. And then I think it made more sense to us to really say, okay, the actual marketplace needs to be run by a person that's truly actually solving the hardest, hardest problem, which is, where does this art live and how is it displayed? Right, because in your wallet is not doing enough.
Sebastian Sanchez: That's brilliant. Yeah, it's such an interesting conversation, because I actually agree with not waiting on institutions to get shit done. However, I still think that's really important. So I think it's firing on all cylinders. Exactly. I think everything we're talking about should be relevant and will all contribute to the advancement. Because I do think for me, a Beeple retrospective at MoMA is amazing for the culture. I also think a Beeple show at NODE this year is great for the culture as well. And both can be true.
I also think having art in wallets is incredible, but having a way to find art to live in your home is also incredible and much necessary. So for me, I mean, the biggest collectors of paintings in the world have pretty much 90% of their shit in warehouses. They don't see it. So it's the same thing as a wallet. It's there, it's somewhere, it's hidden. You're not living with it, but you can bring it out whenever you want. And I think that's great for a digital thing, but also, yeah, I agree.
Kind of the biggest thing since I joined this fucking space in 2018 is the display. And I'm kind of sick of paper prints that are in the actual digital objects. So I think we're really at this reckoning point, and maybe AI agents are going to save us, but who knows? I don't know. We'll see.
Kayvon Tehranian: That seems pretty speculative.
Sebastian Sanchez: Exactly.
Peter Bauman: Yeah. I think you're bringing up just how meaningless it is to criticize all institutions, because certainly some do play important roles, and on different time frames and different time scales.
And yeah, you mentioned being saved by AI agents. I actually kind of thought about that in terms of the future, what this future looks like, but maybe we can get to that at the very last question. But maybe the second to last question is what we think will endure. What are the big takeaways from both of your experiences? And I know we didn't get to so many maybe more specific questions, but yeah, what do you understand now about building for digital art that you didn't going in?
Sebastian Sanchez: For me, I think I have seen the artists that have started since 2018, 2017, when I was discovering them, they're still working today. They're the leading artists today and they're enduring. And since then their market has gone up, their visibility has gone up, their followers have gone up, their institutional presence has gone up. For me, I think that's a big takeaway.
And they're real artists with a real practice that is rooted before the crypto market, whatever, took over, an NFT market. So I think really rooted practices across the board, art, writing, exhibitions, people with just rooted practices and not just people coming in for the opportunity is what will endure.
Kayvon Tehranian: I mean, for me, the conclusion I've drawn is I think the digital art ecosystem was significantly furthered by the crypto industry. And the NFT sort of innovation is critical, I think, to creating an actual digital art market that's real. At the same time, the digital art market is something that has to stand on its own. It needs to be its own ecosystem. It has to have its own institutions and business models that are sustainable. And it cannot rely on the crypto industry or crypto sort of technology as the driver of its market. That's not real. That is not enduring. That's a different sort of community and different perspective.
And so I think there was a moment in time where they overlapped. I think that was very special. I'm very happy to have been part of that. But they are not the same thing. The Venn diagram is actually increasingly very small. And so I think that what you saw was a lot of reliance on the crypto industry to power the market, and that's just not a real, that's not where the demand is. There isn't a long-term focus on digital art within the crypto industry. I think the crypto industry is building sort of new financial rails in which to kind of conduct transactions. The cool thing is you can do digital art transactions on that. But I do not think that the crypto industry as an industry is the right kind of steward of the digital art market.
And so I think what you really need to see is digital art as an industry, as an ecosystem, stand up. Real players, real business models, real institutions. It's going to take a lot longer than people thought. But I think if you start from that perspective and do it right, you can end up somewhere that's real, as opposed to kind of what we had, which was an explosion of interest, most of it speculative, most of it unsustainable, and then everyone kind of crashing out and feeling disappointed and frustrated. So that experience I think just isn't going to replicate itself. No one's going to want to go through that again. And so we really need to build it back up step by step.
You're seeing the beginnings of that, I think. I think digital displays, I think exhibition gallery spaces. I think that these elements are the kind of missing pieces. I think they will take time. But then from that, you can actually then build this up. And NFTs will be the way that this works. That is a much better, it is the correct solution to the digital art market problem. That is still true. And that's kind of the thing we discovered and built around. But the business model and market aspects of it are just incredibly immature. Very small, and I think at best can support very few players at the moment.
So for now, we're in no man's land. It is no man's land from a high level perspective. When you talk about, let's get Christie's and Sotheby's and let's be in the headlines and let's be mainstream, it is like, no, it's no man's land. That's not happening anytime soon. If you are someone who is truly obsessed, truly dedicated, wants to run a two to three person operation, wants to run really bare metal to what is happening, I think it's possible. But yeah, any of these sort of leaps of logic where you're like, cool, let's build these bigger things and have returned to whatever was happening four or five years ago, I don't believe that. I don't have any reason to believe that can happen. And I wouldn't, anyone acting in the space should not be predicating their plans on that being true. And the crypto industry in general certainly does not care about this use case that passionately. It's not core to its business.
Peter Bauman: Yeah, I think it's a good point that there's a lot more to digital culture than blockchain culture, and sometimes that can be a bit myopic in this space.
And I also, maybe just the last question is, I wonder how close do you think this got to being sustainable? Like for Christie's, just about a year ago, you had that quite successful AI sale. And Rodeo and Foundation both at some points had, and still do have, really strong communities and supportive communities. Rodeo, just for example, I guess it was only around since, what was it, mid-2024. So its boom and peak was kind of just in the last, like, less than two years. So yeah, I guess how close was it ever to actually being sustainable? And then do you want to say anything about what you think the future looks like?
Kayvon Tehranian: Rodeo was not sustainable. I mean, it had one moment where it was sustainable, but it distinctly did not solve the problem we were trying to solve. If anything, it just had the same inflection point that prior platforms had, which is people come in, they want to kind of explore its full potential, they hammer it and then they leave. I mean, we basically had that experience all over again. We were distinctly not trying to do that. That is not sustainability. It's the opposite of sustainability.
So the fact that that kind of happened again, and then the second thing that I think was really interesting, which was the idea of the chain reaction, really told me that it wasn't real and there wasn't an opportunity. And that's actually why we had to make a decision to wind it down. Because the vision of it was, it was supposed to kind of grow in a compounding fashion. It was supposed to continue to kind of expand who was interested. And because it was easier to use, it was much more cost effective, it was much lighter weight, you could kind of cause that chain reaction to happen and it wouldn't stop.
The reality is, no, the same market structure showed up. It wasn't any different in terms of the number of people participating, and they had their interest there for some period of time. But then once that subsided, it kind of really went to a very low base. Now, yes, that user base is very real. We had a user base in the community that was using it up until the very last day. But it did not solve its fundamental problem, which was, it was designed to kind of massively expand who was participating. That didn't happen. So I would tell you that that's an experiment that didn't work, and tells me the industry is still not really growing. And there's not new people coming in that are really excited to kind of explore it.
Sebastian Sanchez: Yeah, I would say it's very similar. Christie's, I think the way it was structured when I joined, I was the first digital art hire technically for the department. It was designed to grow and it was designed to expand and it was designed to be a growth sector within the company. And it just kind of, we made the same revenue every year, which, I think after a few years they were like, okay, what are we doing here? And many times a lot of our projects had more expenses, because there was a lot more robust sort of installations. It's not just hanging a thing on the wall, and we have to do different deals because we're working with artists.
So yeah, I would say, just looking back, I think it was designed to be a growth sector and it wasn't. And what proved to be a growth sector was actually luxury, watches, handbags, the luxury sector, which is interesting.
It wasn't the right fit for me, so I chose to leave, which is a better position to be in. Obviously from a Christie's perspective, that's sort of it. And I think for the future, we'll see. I mean, I'm not sure. I think these sort of native institutions are really interesting. We'll see how they're popping up. I think, like I said earlier, it's sort of all of it happening, I think, is the best case scenario. And not just anti-establishment, not just institutional, not just this. It's very fluid by nature. So I think that the outputs and the market and everything, the culture, should really reflect that.
Peter Bauman: Yeah, I was just gonna, I wonder if in the future too, leaner models might be more sustainable. Leaner models that can leverage agents and Claude and things like that, where you don't need your team of five engineers, you can have maybe one and then a Claude subscription.
Okay, well, yeah, I mean, thank you guys both so much. We didn't get to some interesting questions, but that always kind of happens. But this still was great. I really enjoyed it. Thank you guys both so much.
Sebastian Sanchez: Thank you, Peter.
Kayvon Tehranian: You too. Stay in touch.
Peter Bauman: Yeah, guys, take care. Thanks.
