Joe: The key to understanding the $69 million NFT craze isn't in a high-tech lab in Silicon Valley. It's in a dusty box of 90s Beanie Babies in your parents' attic. And the story of why most of those are worthless today is the same reason most NFTs will be. Lewis: You're kidding me, right? Beanie Babies? The little floppy animals? You’re telling me that’s the secret to digital art that sells for more than a mansion? Come on. Joe: I am completely serious. That's the wild, and frankly brilliant, premise we're exploring today, pulled straight from The NFT Handbook by Matt Fortnow and QuHarrison Terry. Lewis: Okay, who are these guys? Are they just a couple of crypto bros who got lucky in the 2021 boom and decided to write a book about it? Joe: That's what you'd think, but their backgrounds are what make this so interesting. Matt Fortnow is an entertainment lawyer who has created official NFTs for huge names, like the Three Stooges. He understands the legal and IP side of value. Lewis: Alright, that's a bit more legit. What about the other guy? Joe: QuHarrison Terry is the head of growth marketing for Mark Cuban's entire venture capital firm. He advises hundreds of cutting-edge companies. These are not outsiders; they are insiders who wrote this incredibly accessible guide right at the peak of the NFT explosion, specifically to cut through the noise and explain the real mechanics of value. Lewis: Okay, so they have the credentials. But I'm still stuck on the Beanie Babies. Joe: And that's the perfect place to start. The authors argue that before you can ever understand digital value, you have to understand the very human, sometimes irrational, psychology of physical collecting.

Lewis: Alright, I'll bite. How on earth does a plush toy explain a multi-million dollar digital token? Lay it on me. Joe: The book tells the story of the Beanie Babies craze, and it is a masterclass in manufactured value. In the 90s, the founder, Ty Warner, did something genius. He deliberately created scarcity. He wouldn't sell to big chains like Walmart or Toys 'R' Us, only small, independent gift shops. Lewis: So you couldn't just go and grab one easily. You had to hunt for it. Joe: Exactly. The thrill of the hunt. Then, he'd randomly "retire" certain models without warning. Suddenly, a $5 toy like "Peanut the Royal Blue Elephant" was rumored to be worth thousands because they stopped making it. He even let misprints and faulty ones slip through, which, of course, became the rarest of all. Lewis: That is devious. He was basically creating collector's items out of thin air. Joe: He was. And the public went absolutely insane. The book mentions a security guard at a Hallmark store in West Virginia who was shot and killed in 1999 because a shipment of Beanie Babies was late and tensions boiled over. Lewis: Whoa. That's… that's unbelievable. Over stuffed animals? Joe: It gets crazier. There's a story of a divorcing couple who, when dividing their assets, fought more viciously over their Beanie Baby collection than anything else, believing it was their most valuable possession. The Financial Times called them "the dot-com stock of the soccer mom world." Lewis: That is a perfect description. It's a bubble fueled by pure belief and FOMO—the fear of missing out. I see the parallel now. It sounds exactly like the hype you see on Twitter when a new NFT project is about to drop. People aren't buying the art; they're buying the hype. Joe: That's the core insight. It was never about the plush toy. It was about the story of its scarcity. It was about owning something that others wanted but couldn't have. It’s a fundamental human driver. We are wired to value rarity. And NFTs, by their very nature, are technologically enforced rarity. A one-of-one NFT is the ultimate "retired" Beanie Baby. Lewis: Okay, that makes a terrifying amount of sense. The technology is new, but the psychology is ancient. But here's the thing, Joe. My parents' Beanie Babies are now worth exactly zero dollars. The bubble burst. So if NFTs are just digital Beanie Babies, isn't this whole thing destined to collapse? Joe: Ah, and that is the million-dollar question. And it brings us to the second, and far more important, idea from the book. Scarcity gets you in the door, but it doesn't keep you in the room. For that, you need something else entirely.

Lewis: Okay, so if scarcity isn't enough to create lasting value, what is? What separates the fads from the revolutions? Joe: The book's answer is one word: utility. What does the thing do for you? And the best story they use to illustrate this has nothing to do with NFTs. It's about Google. Lewis: Google? How does that fit in? Joe: Most people don't realize this, but when Google was founded in 1998, it was the 24th search engine to enter the market. There were already 23 others, like AltaVista and Lycos. The space was crowded. Lewis: I barely even remember those names. Why did Google win so decisively when they were so late to the party? Joe: Because the other 23 search engines were basically Beanie Babies. They looked like they did something, but their utility was terrible. They ranked pages by just counting how many times a keyword appeared. So if you searched for "car," you'd get a page that just said "car car car car car" a million times. It was useless. Lewis: Right, I remember that. It was a mess of spam. Joe: Exactly. Then Larry Page and Sergey Brin came along. They had a theory that a better way to rank pages was by how many other credible pages linked to it. They called it PageRank. It was a measure of reputation and authority, not just keyword stuffing. It provided real utility: it gave you the right answer. Lewis: It actually worked. It solved the user's problem. Joe: Precisely. And the book points out they focused on perfecting this utility for two full years before they even considered monetization. They didn't launch AdWords to make money until 2000. They built the world's most useful tool first, and the value followed. Lewis: Okay, that's a fantastic business lesson. A better search engine is obviously useful. But I have to ask the question everyone is thinking: what is the 'utility' of a JPEG of a cartoon ape? It's not finding me the nearest pizza place. Joe: And that is the perfect skeptical question. This is where the book connects the Google blueprint to the NFT world, using the most famous example: the Bored Ape Yacht Club. The authors argue that the mistake people make is thinking the picture of the ape is the product. It's not. Lewis: Then what is it? Joe: It's the ticket. It's the membership card. Owning a Bored Ape NFT doesn't just give you a picture; it grants you access to an exclusive community. It gets you into private Discord channels with celebrities and entrepreneurs. It gets you invitations to exclusive parties in New York and Hong Kong. It gives you commercial rights to the art, so you can put your ape on a t-shirt or a coffee mug and sell it. It even airdrops you other valuable NFTs for free, like the Bored Ape Kennel Club or the Mutant Ape Serum. Lewis: Hold on. So the image is just the key that unlocks a door to a whole bunch of other stuff? Joe: Yes! That's the utility. It’s not about looking at the art; it’s about what owning the art allows you to do and where it allows you to go. The utility is access, status, and membership in a high-value social club. Lewis: Ah, okay, the lightbulb just went on. It's a digital country club. The membership fee is the price of the ape, and the ape itself is just the fancy blazer you have to wear to get past the bouncer. Joe: That's a perfect analogy. And that's why it has sustained its value far better than projects that were just pretty pictures with manufactured scarcity. It has the Google factor. It has utility.

Lewis: Wow. So when you put those two stories together—the Beanie Babies and Google—you get a really clear picture. It's like there are two different forces at play in any new market. Joe: That's the synthesis right there. The authors give us this powerful two-part filter. First, you have the Beanie Baby force. It's the raw, emotional, scarcity-driven hype. It's powerful, it can create bubbles, but it's often fleeting because it's based purely on the belief that someone else will pay more for it later. Lewis: The "greater fool" theory. Joe: Exactly. Then you have the Google force. This is the rational, long-term value that comes from actual, tangible utility. It solves a problem, provides a service, or grants access. It's what separates a temporary craze from a technology that fundamentally changes things. Lewis: And the most successful projects, like the Bored Ape Yacht Club, seem to harness both. They have the Beanie Baby scarcity and exclusivity, but they back it up with Google-like utility in the form of access and community. Joe: That's the magic formula. And the genius of The NFT Handbook isn't just that it teaches you how to mint an NFT. It's that it gives you this mental model to evaluate the future of any new thing, whether it's a crypto token, a new social media app, or the next AI startup. Lewis: That's incredibly useful. So what's the one simple question our listeners should ask themselves when they're trying to figure out if the next big thing is a revolution or a bubble? Joe: It's simple. Don't just ask, "Is it rare?" or "Is it popular?" Ask, "What can I do with it?" If the only answer you can come up with is, "I can sell it to someone else for more money," you are almost certainly holding a digital Beanie Baby. Lewis: But if it unlocks something—a community, a service, an experience, a better way of doing something—then you might just be looking at the next Google. Joe: That's the filter. It's about moving from speculation to application. Lewis: That is a powerful takeaway. It cuts right through the hype. We'd love to hear what you all think. What's the most 'Beanie Baby' versus 'Google' tech you've seen lately? Let us know on our socials, we're always curious to hear your examples. Joe: This is Aibrary, signing off.