On Wednesday, Yuga Labs CEO Daniel Alegre was pushed out as CEO. Cofounder Greg Solano, commonly referred to by the moniker, Gargamel (or Garga), took back control of the company known for stewarding NFT collections including the Bored Ape Yacht Club and CryptoPunks.
The decision comes in the wake of mounting concerns from so-called Ape holders over the state of the business, the company’s acquisition of another NFT purveyor, Proof Collective, and a changing company culture. Yuga Labs has not yet responded to Fast Company’s requests for comment, but a February 17 virtual town hall on X (formerly Twitter), where Alegre tried to assuage Ape holders’ concerns, offers some insight into the company’s growing pains.
Yuga Labs, which started as a project between a couple of Infinite Jest-loving literary bros, took off during the pandemic and achieved a $4 billion valuation in 2022. Cofounders Solano and Wylie Aronow as well as former CEO Nicole Muniz stepped back voluntarily, and Yuga eventually brought in Alegre, a Google and Activision alum, to build out a sustainable—and profitable—business. But Alegre’s buttoned-up persona never quite jelled with the initial freewheeling behind BAYC. (For example, a number of people celebrated during the town hall, when the number of participants hit 690.)
When news broke of Alegre’s ouster, the response on X was overwhelmingly positive. “The degens are in control again!” read one celebratory tweet from a Bored Ape NFT holder. Another compared Solano to visionary Apple founder Steve Jobs. “With all respect to Daniel, he was just too corporate to head up Yuga,” read yet another. “We need the rockstars as CEOs.”
As CEO, Solano faces an uphill battle. The town hall laid bare the company’s struggles to build the Otherside metaverse it has been teasing for years and to find a solid revenue strategy. Amid widespread layoffs in the tech sector, Yuga shed some employees in October. Investor and consumer enthusiasm around the once-red-hot NFT-and-metaverse sector has largely cooled, with companies including Meta choosing to focus on the technology potential of generative AI instead. Here’s what we learned.
Playing Games
Yuga Labs has been promising for well over a year to release its interoperable gaming metaverse, Otherside. But to date, it’s only released a series of demos. Hiring a former Activision executive like Alegre seemed like a step toward getting the project off the ground.
But in the town hall hosted on X Spaces (for which nearly 700 people dialed in), Alegre gave an update that the release would be stalled in large part because the technology behind Otherside is not up to snuff. “When I first joined the company about nine months ago, I realized that we had a bad underlying strategy for the platform, to be completely honest,” he said. “It may seem slow-going to some of you, but the reality is, that in just a matter of months, we have been retooling Otherside from the ground up.
Alegre also acknowledged the disappointing performance of some of the recently released games by Yuga. Alegre said that the company planned to create more like Dookey Dash, a simple (and odorous) NFT-gated arcade-style affair. “Games will be less resource intensive,” he said at the town hall, “more casual and fun with their own web3 degen twist that sets us apart.”
Alegre added that he wanted Yuga’s games to “live independently and be engaged with independently from BAYC.” In other words, he wanted these games to become widely popular, and to make money. That, at least, seemed to be something he and Solano agreed upon: In his CEO takeover tweet, Solano said Yuga’s gaming strategy was “all about opening the funnel and flooding our ecosystem with millions of new users.”
Proof negative
The catalyst for the BAYC community’s growing frustrations came last week when Yuga Labs acquired Proof Collective, owners of NFT collection, Moonbirds, in an all-stock deal.
Proof’s flagship NFTs, Moonbirds, are a series of pixelated owls. At the peak of 2022’s crypto craze, the cheapest Moonbird cost $115,000. Today, that floor price is $3,000. When the acquisition was announced, Alegre told Fast Company that the acquisition deal had been hammered out with Proof founder Kevin Rose in the span of three months. Several callers expressed unhappiness or suspicion of Rose, who is leaving Proof Collective and taking an advisory role in the integration; others questioned the relevance or significance of the deal. “It feels that there’s a disconnect between Yuga’s CEO and the community and the overall web3 space,” one Ape holder said on X.
In the X town hall, Alegre also tried to head off questions about insider trading around the deal. “There were a number of questions that came up about the timing of the proof announcement and fluctuations that happened in trading on Moonbirds in particular leading up to it,” he said, alluding to trades that seemed to anticipate the acquisition. Meanwhile, the NFT sector has long been rife with insider trading allegations. In 2023, an ex-OpenSea manager was convicted of the crime in what prosecutors called the first insider trading case involving digital assets, brought by the Justice Department.
Commerce and corporatization
During the town hall, Alegre said that his office was “stuffed full of Bored Ape merch. I am surrounded by ape creations like watches, coloring books, a little whisky, tequila, jackets, caps, neon signs, toy figurines,” he said. Not long after, Alegre brought up corporate partnerships with companies like BMW and said that BAYC members would have “special groundbreaking privileges” with some brands. For some on the call, that latter statement seemed a little too corporate, and a perfect encapsulation for all the skepticism around his tenure: To the NFT-heads, he’s just not that cool.
And yet, if the company ever hopes to justify its $4 billion valuation, it may well need a guy with a JD/MBA from Harvard.
At one point in the town hall, Alegre compared working at Yuga Labs to his work on YouTube after it was acquired by Google. “YouTube was a platform for funny cat videos and videos of kids,” he said. “But what YouTube ended up becoming was this entire platform where creators and influencers came together and new business models started evolving.”
It’s worth noting that YouTube mostly makes money by serving users ads and offering a premium-tier subscription model—not through any kind of innovative business strategy. It’s hard to see a community obsessed with the number 69 getting excited about that kind of leader or that kind of transformation.
Now that Solano has taken back the reins, the future of Yuga Labs is unclear. Can the company become a gaming juggernaut while retaining its degen culture? Will NFTs ever live up to their original hype? Can Bored Apes ever become culturally ubiquitous? So far, Solano has said he is committed to “unshackling” the BAYC team from Yuga in order to “create the space for the magic and crazy shit we used to get up to.” What exactly that means is, for now at least, anyone’s guess.
