RTFKT is selling NFT cybersneakers to the metaverse: The company sells virtual sneakers for $90,000 a pop, attracting an $8.2 million investment round led by Andreesen Horowitz.

• Author: Alsever, Jennifer

THE COVID LOCKDOWN WAS GOOD to Chris Le. The Salt Lake City entrepreneur sat in his basement during those 2020 months, often wearing virtual reality goggles, building virtual products on his computer. A year later, he became a multi-millionaire selling shoes--without even a factory to make them.

The 32-year-old Utah native is one of a handful of pioneers of the burgeoning industry of non-fungible tokens, or NFTs. Pre-COVID, his startup RTFKT Studios (pronounced "artifact") landed a pre-seed investment of $1.5 million from digital asset merchant bank Galaxy Digital and San Francisco VC fund, GFR Fund.

Then during lockdown, he and his co-founders huddled over separate computers across the globe to build virtual sneakers that could be traded via NFTs. One founder, Benoit Pagotto, a UK branding consultant, worked from a shared 290-square-foot flat in Paris, while luxury fashion guru Steven Vasilev worked out of Mexico. Le huddled in his Salt Lake City basement.

By October 2020, RTFKT sold its first pair of cyber sneakers for 30 ether on the Ethereum network for the equivalent of $90,000--setting a record for the highest-paid digital fashion item. In April, the startup sold 600 NFTs of sneakers and sold out in just seven minutes--reaching a total revenue of $3.2 million.

MINTING NFTS FOR THE VIRTUAL WORLD

An NFT is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. Le makes it more concrete by explaining it this way: If your kid has ever asked you for your credit card to buy "skins" or decorative outfits for their avatar in the video game Fortnite, then you unknowingly bought NFTs.

These blockchain-based collectibles have exploded in the past couple of years--as people trade virtual goods, such as character skins for games, fashion, real estate, and art via NFTs, a market expected to grow to $190 billion by 2025.

It's not just RTFKT. Video game skins have proven to be one of the hottest collectibles in the virtual world--and sneakers are just as popular in the physical world. Le says he and his team simply merged the video game aesthetics with fashion and used NFTs to sell them--and as a result, ignited a flame. "It was all for fun," says Le. "I didn't know it would blow up that fast."

NFTs first emerged in 2017 when Canadian company Dapper Labs started CryptoKitties, a game in which people collected, bred, and traded goofy cartoon cats--at one point, one...