Gaming and the Sneakerworld

Ryan David Mullins is founder and CEO of Aglet, a location-based commerce platform for virtual and physical goods starting with sneakers.
Aglet Briefing Post

We are not a game studio and we are not even really a game company. Aglet is in a new category: game commerce.

We appeal to Gen Z , the Roblox generation of 13–22-year-olds. The distinction between the real world and the virtual world does not exist for them. In fact, the name of my company isn’t actually Aglet – it’s Onlife. The idea is that you don’t live online, you don’t live offline: you live onlife. Gen Z are already living in this onlife world and for them gaming is not an escape. Life is just game or non-game. These digital natives are growing up learning how to become an adult, learning how to connect with people, learning how to express themselves and now learning how to purchase things, online. Their lives, experiences and the things they use in virtual worlds are real to them.

Because these virtual worlds have become like social networks, we see exactly the same consumer and signalling behaviours in them as we see in the real world. Aglet encompasses those behaviours and is built around items that are desirable. Much of that desirability is down to scarcity and, in this case, it’s all about sneakers.

 

High foot-traffic

The sneaker industry is a USD50 billion market but there’s a secondary market that is worth about USD10 billion. Brands release limited editions of around 10,000 units of a particular sneaker but because of the scarcity anyone lucky enough to get a pair can sell it on for five to 10 times the retail price. For example, let’s say Jordan is releasing a limited edition – you can easily have around 5 million sneaker fans globally competing at the release time to buy a pair and, of course, most will be unsuccessful. So now, people are using software bots to try to secure these sneakers and the market has escalated and become so crazy that there are now bots to get the sneaker bots. 

»The sneaker community seems like a niche but in fact it’s massive and stretches across the globe«

The sneaker is a representation of values and an expression of who you are. The sneaker community seems like a niche but in fact it’s massive and stretches across the globe. Having said that, the way the community has developed has flatlined a little bit because it has become so transactional. Aglet is designed to be like the CPR that brings that flat line up again and offers a new experience of it using games.

The generation of sneaker fans aged 13 to 22 don’t often have the capital to invest in this real-world market but Aglet has created an in-between world that uses location-based mechanics, a bit like Pokémon GO. When these players walk around in the real world, their physical activity is converted into an in-game currency called Aglet and the more they walk the more Aglet they earn. They can then you can go into the sneaker shop in this virtual world and buy virtual sneakers.

Some sneakers are better than others and lower-level sneakers will, just like in real life, start to get dirty and wear out, earning fewer Aglet. So, using our map in the game, players must walk to certain stations in real life and when they check in their sneakers are cleaned and repaired. They can also go to locations to unlock a treasure that might be special sneakers or even win physical sneakers. 

With Aglet we have gone a step further and built a portal between virtual goods and virtual assets that exist in a game world into the real world by offering actual physical commerce. In this way Aglet is a location-based commerce platform for virtual and physical goods. This is exciting for brands, because whether you are New Balance or an up-and-coming brand you can put a virtual pop-up shop in our game. Players can walk to that virtual pop-up shop and buy virtual items, but they could also buy physical real items.

A brand can also release a product first virtually in our game to quantify demand before it's manufactured and released in real life. The most popular sneaker right now in our game is our own sneaker – the Aglet 1 and that will be released in the real world in April. Through the data in our game we were able to find out the best-selling sneakers and what their properties were. We used this data to create this high probability best seller and we were right. A manufacturer reached out to us and we’re going to make the Aglet 1 for real. This could be the future of manufacturing.

We are monetising the game in other ways. The first is through the Aglet currency. Players earn Aglet by walking around but there are some ‘holy grail’ sneakers that cost Gold Aglet, which is real money that is paid for as an in-app purchase. Some players have already spent USD25,000 in the game just collecting these virtual sneakers.

The second way, which we will unlock this year, is brand partnerships where we will build personalised retail experiences. We’re also doing ‘seasons’ which will be sponsored by different brands. These will run for several weeks at a time and the only way players can get the items that are released in that season is by paying to participate.

The nature of the game means that we generate a huge amount of spatial data. While that’s not revenue based, most of the value of our company will probably be in our spatial data.

Grounded in gaming

Aglet is my third start-up and it brings all my previous companies together into one company. Everything I’ve tried to do in the past has been about what I call the Prometheus Principle: taking the technologies, tools and opportunities that only a few have access to and democratising them and then creating the platform where the democratisation of those tools can flourish and grow.

I’m also very passionate about gaming. My philosophy is that everything is a game. That’s not to say that things are silly or not important. It’s just that there are rules or laws that govern any kind of interaction or exchange and participants in that and certain outcomes that we are trying to achieve.

I’ve also been collecting sneakers since I was 10 years old and been trading and reselling them for a very long time. I probably have over 400 pairs. I worked at Adidas for three years as director of future trends, which was like entrepreneur in residence. Basically I tried to help them build new businesses within the business.

 

How we managed in the pandemic

We released the game literally as the pandemic started to explode. Many thought we were crazy launching a location-based game during a pandemic. In fact, because people were so desperate to get out for a walk each day our game became their escape and so we had some good growth. One aspect that we had underestimated was the mental and physical health benefits of the game. Who would have thought that virtual sneakers would get kids off their sofas and enjoying some exercise by moving around in the real world. In fact, we are making mental and physical health for kids one of our core brand pillars. 

»Who would have thought that virtual sneakers would get kids off their sofas and enjoying some exercise by moving around in the real world«

Before Covid our plan was to move to Los Angeles, which is where I’m from. We found a place, devised the launch strategy, had partnerships with brands and then all that suddenly disappeared. But we learned that we don't need an office. We just made sure that we hired self-starters. We basically follow the sun: we have people in New Zealand, Australia, Poland, Germany, UK, New York, Chicago and Los Angeles thereby offering 24-hour coverage and support to our players.

For the wider world, Covid has been like a time machine: it has thrown us five years into the future. It has also brought back the concept of metaverse from the mid-90s because we’re now interacting in virtual meetings on Zoom. However, once the world gets back to quasi-normal we might see a reversal and brands could step up and think ‘how do we make reality fun?’ Events and retail will then need to be reimagined.

 

Ready to run

For Aglet we have some fun plans for the future. We have a huge product roadmap for this year to make the game even more game-like. This includes releasing audio in the game. In particular, we want to partner with the US National Basketball Association so that players will be able to hang out around a basketball stadium and unlock the audio of the match. They will also be able to go to a location and unlock music from an artist that has a partnership with, for example, Adidas.

We have just released real-world weather integration so now, when you wake up, you will get a notification from us, say, that it’s going to rain that day. And if you put on weather appropriate sneakers in the game – we are doing a brand partnership with Gore-Tex – it will boost the amount of Aglet that you win. 

We’re also expanding beyond sneakers into fashion and apparel such as hoodies, jeans, jackets, hats and jewellery. Then we will be augmenting the game map to make our locations much more dynamic.

 

A platform for growth

We have now over 100,000 players, but about 15,000 are active on a weekly basis. All of this has grown organically via word of mouth and we have spent hardly any money on customer acquisition. And we’re still only on iOS – we have not released on Android yet.

Further down the line, Aglet will be a more general retail-type experience and more accessible to consumers who are not fanatical sneaker collectors. In a way, it could be similar to the path of YouTube which started as an outlet for a bunch of kids and then became a global sensation. Where Aglet gets really interesting is when it becomes a platform where anyone can come on to it and design or build a business.


Learn more: 
www.aglet.app



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