Sam's sees early success in NFT presale

(via Jon Fisher, vicinft)

Sam’s Anchor Cafe, the bayside eatery that’s been serving up meals since 1920, is now serving up pieces of the blockchain to offer lifetime special-privilege memberships — making VIPs from NFTs.

The restaurant has sold more than 100 of its $2,000 apiece Sam’s Genesis NFTs, or nonfungible tokens, since launching its presale in May. Owners will get exclusive access to events and a planned concert series, line and reservation privileges, as well as gift cards and merchandise. Sam’s co-owner Conor Flaherty says he plans to announce the concert lineup in the coming weeks and to mint up to 244 of the unique tokens this summer.

NFTs are built using the same kind of programming as cryptocurrency, such as Bitcoin, and are essentially digital records “minted” on the blockchain, a decentralized ledger of digital transactions. But while both digital and analog currency are fungible, where the asset is divisible and non-unique, NFTs are like a deed of ownership to a one-of-a-kind item. They were invented in 2014, in part to financially support digital artists and grant them more control: Artists could sell a work to someone who could then prove they owned the original and not an identical digital copy, while built-in “smart contracts” can earn the artist a royalty on every resale.

For Sam’s, each NFT represents a specially drawn photo of “Sam” that features unique traits relating to the restaurant’s history, with each owner having access via their digital wallet. Sam was a real person, Sam Vella, a Prohibition-era bootlegger who put a wooden plank over a pair of sawhorses under a tent on the beach and called it a bar. By 1928, the native of Malta had replaced the tent with a speakeasy at 27 Main St. The digital Sam, by Potrero Hill hospitality designer Anthony Laurino, is a balding man in a Hawaiian shirt and suspenders, a caricature with the traits of the real Vella, Flaherty says. He’s occasionally accompanied by his dog, Fluffy.

“I have heard from people that his actual dog’s name was Fluffy, so we are keeping with that,” Flaherty says.

Tiburon resident Jon Fisher, chairman and CEO of ViciNFT, created the Sam’s Genesis NFT and is now partnering with Servino Ristorante, which is in the process of reopening at its original location on Ark Row and would use an NFT to grant access to exclusive wines.

Fisher says owners of Sam’s NFTs aren’t just buying an image but access to what its offers.

“This acts as a smart ticket,” he says. “Even an application on your phone doesn’t have some of the technology that allows Sam’s to use this in all these different ways.”

He says the NFT is a good way to facilitate authentication for special events, but more importantly it has more perks than an average membership or loyalty card would.

According to Fisher, a traditional membership card is not “smart” — you can’t program different capabilities into it, you can’t lend or resell it and you can’t airdrop additional capabilities. For airdropping, Sam’s will have the ability to remotely push perks to the digital wallets of its NFT owners, granting them additional privileges or giving them gift cards or access to merchandise.

The NFT holds is benefits in perpetuity for the owner, providing lifetime access to Sam’s offerings, with no need to renew or purchase a new NFT annually. It’s also transferable, so an owner can resell the membership in an NFT marketplace, and with exclusivity — only a limited number will be minted — Fisher says prices could soar on the secondary market. Though the artist, Laurino, was paid on a contract basis, the NFT’s smart contract does include a royalty for Sam’s, which will get 10 percent of every future resale.

“It is a one-of-a-kind artifact, but with all of the smart capabilities,” Fisher says. “It’s very smart, it’s very secure, it’s unique and it’s very transparent,” Fisher says.

He says if you look at NFTs that way, you’re able to see the value in them. Future uses could include home deeds to simplify and speed transactions, with ownership proof and changes built into the NFT, or other records requiring authentication, such as birth or marriage certificates, medical records or academic credentials.

But with the recent NFT market crash, there is a question as to how bright the future is. The NFT marketplace — which has included drawings of kittens and apes and clips from NBA games — turned speculative and exploded in 2021. Artist Mike Winkelmann, known as Beeple, sold the NFT for his digital-only “Everydays: the First 5000 days” through Christie’s auction house for a record $69.3 million that March. By January, global sales ultimately reached $12.6 billion before dropping 92 percent to about $1 billion in June, a 12-month low. The number of sales dropped the same percentage, from a daily average of 225,000 last September to about 19,000 in May.

The fall coincided with a crash in the cryptocurrency market, which lost about two-thirds of its value, or about $2 trillion.

“I’ve been doing this for 25 years. The dot-com crash, the Great Recession — I’ve never seen a crash this large and this forceful,” Fisher says. “That’s what happens sometimes in the early days of doing this stuff.”

Despite the crash, he says he’s optimistic and noted similarities to the dot-com bubble, caused by excessive speculation of internet-related companies in the late 1990s. Low interest rates had helped facilitate an increase in startups with the Nasdaq index rising 400 percent between 1995 and 2000, only to fall 78 percent from its peak.

“People were writing articles when that crashed saying it’s debatable how you’re going to make money on the internet,” he says, noting giants like Amazon, Google and eBay were able to find success as things stabilized. “The NFT is better access control, and as Sam’s processes become more valuable, people see the concerts, people see the off-menu items, then so do those NFTs become more valuable.”

For Sam’s and other small businesses like Servino, it can also represent an economic defense against what they’ve been through with the recent COVID-related economic recession.

“I watched how difficult it was for all of these guys to go through the pandemic, so it’s really cool that they can have a windfall for this,” Fisher says.

Servino plans to offer a $2,500 NFT for access to its cellar of exclusive wines, reservations for wine tastings, product launches and product-producer events.

“I’ve been observing the technology and how it can help small businesses expand their community and create opportunities that never existed before. We’ve always really wanted to have a wine club and membership and the NFT opportunity seemed to be the best way to marry the two,” says Natale Servino, who runs the family-owned restaurant with brother Vittorio.

Servino says they felt like their value proposition really lies in providing a community of food and wine lovers access to rare and allocated wine and food products.

“We felt that this platform is really a wonderful way to bring these like-minded people together and create this community,” he says.

The Servino wine collection is 40 years in the making, a collaboration with vendors and Italian purveyors. The collection is predominantly made up of Italian varietals that are produced in limited quantities. The collection includes Barolo, Brunello and Sangiovese from Tuscany, as well as varietals from Veneto, Sicily and beyond.

While California’s Wine Country is home to countless award-winning wines, there’s a uniqueness to Old World wines, those grown in Spain, Italy, France and Germany, Servino says. Typically, the vineyard sites are older and more historic, and winemakers work with older vines, plus the wine is made using a more traditional method that’s absent sophisticated technologies, Servino says.

For Flaherty at Sam’s, he says he was drawn toward launching an NFT because it provides a unique and innovative way to market to potentially new customers. And he says he wants to make sure he’s doing everything he can to help ensure Sam’s is around for another 100 years.

“I think it is important to push the envelope on tech like this, and I think it is important to do what we can to keep Sam’s going.”

Executive Editor Kevin Hessel contributed to this report. Reach Belvedere and public-safety reporter Katherine Martine at 415-944-4627.