What if horses went to the Kentucky Derby as spectators to watch the humans race?
It's a silly notion, sure. But it quickly evolved into a concept that aims to merge the in-person tradition of the Kentucky Derby with the unestablished, and largely virtual, web3 world.
Party Horses LLC, a new Louisville company, will soon launch a collection of 10,000 non-fungible tokens (NFTs) that will have tangible, real-world benefits, such as access to rare bottles of bourbon and exclusive events. It's all part of a larger vision that aims to put Louisville on the map in the Wild West of web3 — a decentralized ecosystem powered by blockchain technology that is projected by its proponents to be the next evolution of the internet — and shift the conversation around NFTs from novelty to utility.
"The Derby is like a great moment of gravity for Kentucky," said Justin Delaney, co-founder and CEO of Party Horses. "It's a moment in time where everyone kind of looks to Kentucky, comes to Louisville and sees what it's all about.
"And for us, we felt like if we were going to bring DeFi [decentralized finance] into tradition and tradition into DeFi, it made sense to do it during the Derby when all eyes are on us to show that this can be a place of technology to show this could be a place where you can teach an old horse new tricks."
Serial entrepreneurs and an intrepid investor
Late last year, Delaney, founder of Menguin, was kicking around a handful of ideas after departing from his role as CEO of Buff City Soap. He used his longtime friend Chris Wiedmar, who was working on his own startup at the time, as a sounding board.
The duo kept coming back to cryptocurrency and web3, and Wiedmar quickly pulled Izaak Prats, a senior engineer at Facebook, into the conversation. They all got together for what was supposed to be an hour-long lunch at Drake's in St. Matthews and ended up talking for four hours.
"I think we all kind of looked at each other like, 'Hey, this is a talented team in our own regards. ... Let's put our heads together and see what we've got,'" Wiedmar said.
Meanwhile, Delaney was having conversations of his own with Brook Smith, an active investor in Louisville's startup ecosystem, and Zach Jenkins, a local designer and expert on non-fungible tokens.
Wait, what are NFTs? NFTs, or non-fungible tokens, are cryptographic assets that are stored on a blockchain and cannot be replicated, according to Investopedia. Unlike cryptocurrencies, which are fungible, NFTs cannot be traded or exchanged at equivalency. The most commonly found examples of NFTs are digital artwork, like Party Horses and CryptoPunk, but the technology has several use cases.
"Brook owns a lot of racehorses and we were like, 'That would be interesting to put racehorses on the blockchain and allow people to basically buy tokens in horses,'" Delaney said. "We sat down and we were talking about how to do that, and by the end of it, we decided we were going to do an NFT and throw a massive party at the Derby."
If you would have asked him last year, Smith would've told you that he was against investing in cryptocurrency or anything remotely web3 related. Now, he's the chairman of Party Horses, and has partnered with Delaney to purchase other NFTs via a fund called Party Horses Vault LLC.
"When [Delaney] started talking crypto, I was like, 'No f-ing way. I love you buddy, you're amazing, but I'm not going to do a crypto project with you,'" Smith said. "But as I started thinking about it and learning about it, I realized it is here to stay and it's still really early."
The fund has purchased about 50 NFTs for roughly $1 million so far, including a $319,000 fedora-wearing CryptoPunk, as well as a Bushido, created by Louisville artist and Coinbase illustrator Jeremy Booth. They are using the fund to build credibility in the marketplace, but the team has bigger plans for that digital art collection, too.
"One thing that I have said during the project, which is a mantra of mine, is, 'Be foolish,'" Smith said. "That doesn't mean reckless, but that means don't be afraid to look foolish because if you don't take the risk, you're never going to get anywhere."
Off to the races
The Party Horses team brought on Louisville artist Robby Davis to make the generative NFTs. Generative means that instead of designing 10,000 individual horses, Davis created 50 different attributes, like various hats, clothes and other accessories, that then get put through an algorithm to determine each horse's rarity.
Recognizing the lack of women in the NFT and web3 space, Party Horses also brought on Danish supermodel Helena Christensen, a former Victoria's Secret Angel and clothing designer, as head of empathy and human design. Notably, half of the NFT horses will have female traits and the other half will have male traits.
There are five different tiers of Party Horses based on rarity: Infield, Paddock, Backside, Turf Club and Trillionaire’s Row. Trillionaire's Row is obviously the rarest, with only 400 to 500 of the horses falling into that category. The Infield will have roughly 4,300 Party Horses.
In addition to the horses themselves, the team has created 2,000 "pre-game" NFTs based off drinks including: Lily, Champagne, Mint Julep, Neat and Old Fashioned. Those pre-game NFTs, which will launch in the coming weeks, will come with guaranteed access to purchase Party Horses before the public mint March 15.
Party Horses will initially debut at partyhorses.com, but will eventually be on secondary markets like OpenSea as well.
Delaney said the first 1,000 Party Horses buyers will get a bottle of bourbon, providing that they are over 21, and another 450 NFT holders will be invited to an exclusive Oaks Night event at the Ice House in downtown Louisville. The event, planned by Joey Wagner of J Wagner Group, promises big name artists as it looks to redefine the Derby party.
"The premise of this NFT is that it generates real world benefits periodically," Delaney said. "Next year for the Derby, the people have this horse will get invited to the party again, there will be new talent and they will get a new ticket distributed to them. That's kind of the plan is to have that long term vision — we'd like to do it for all kinds of events, like F1 [Formula One] events in Indianapolis or Super Bowl Sunday, and stuff like that, too."
There's also a philanthropic component to Party Horses. Smith said they are anticipating that the mint itself will generate anywhere between $500,000 and $1 million for nonprofits, plus added proceeds from royalty fees during trading.
"A considerable percentage of that royalty fee is going to be going to nonprofits for perpetuity because I think it's the right thing to do," Smith said.
