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Farokh Sarmad thinks a lot about history and his place in it.
“I feel like I’m living in a history book,” the 28 year-old said recently, eyes wide, hair flowing to his shoulders like Jesus. “I know that one day they're going to write about us and what we did.”
The “us” is Rug Radio, a decentralized content platform that dreams of upending everything. “Media by the people, for the people,” its website proclaims.
That actually understates the vastness of what, exactly, Farokh and Rug Radio are trying to do: harness Web3 tools to build a sustainable, better business model for people who work in art, video, writing, and podcasting, not to mention any other sector that derives its value from distributing the works of a few to the many.
While “tokens” might be a dirty word to some onlookers, tokenomics is at the heart of what Rug Radio is building: a reward token (RUG) that accrues to active listeners and viewers; a governance token (RDAO) that lets community members have a say in the platform’s direction via a DAO; and NFTs that undergird it all by offering aesthetic and economic connection to the Rug brand.
Rug Radio aspires to use these tools to create an alternative to the uneasy deal that currently benefits social media platforms like Facebook, Instagram, Twitter, and Substack at the expense of users and content creators.
Those are big plans, and Rug has attracted advertisers ranging from fashion brands Lacoste and Givenchy to crypto mainstays like Ledger and Uniswap.
But right now, it’s just a podcasting platform. And it revolves around one face: Farokh’s.
‘Massive aspirations’ and a Clubhouse epiphany
Farokh (in Web3 circles he’s become a single-name figure, like Vitalik or Cobie) was raised in Paris by a single mother who fled Iran’s 1979 revolution. He spent his early childhood in France, then Montreal, dreaming and hustling. He hawked lemonade in the summer, then Pokemon cards, then designer jeans.
He found his calling on social media. First it was on Tumblr, depicting larger-than-life fantasies of designer cars, beaches, and models under the alias “Mr. Goodlife.” Then it was on Instagram, splintering that persona into a suite of luxury lifestyle pages. By the end of his teenage years, Farokh had amassed millions of followers.
But he wasn’t sure yet what to do with them. He dragged his feet into law school at the University of Montreal at the behest of his no-nonsense mother. He got a side job selling luxury student housing to McGill students, which he had a knack for—until he got fired for smoking weed with clients, and resolved never to work for a boss again.
Meanwhile, in the dead of night from his mother’s basement, he attempted to take his most valuable asset—his followers—and spin it into a living. He approached brands and got them to write checks for proposed sponsorship deals; he did the same for other influencers he took under his wing as a consultant.
Soon, Farokh says, he was netting hundreds of thousands a dollars a month; he even recruited his mother, who had believed for a brief period that her son had become a cocaine dealer. He dropped out of law school, financially secure but still restless.
The pieces started clicking in December 2020, in the depths of the Covid-19 pandemic, when Farokh hopped onto the audio app Clubhouse. He had found his next platform: “Tumblr was like, woah. Instagram was like, wow. Clubhouse was like, holy FUCK,” he says.
He quickly became one of the new app’s biggest stars, hosting shows about social media and marketing, and interviewing businesspeople and celebrities.
Crypto wasn’t even on his radar yet.
One night, Farokh was hosting a rowdy Clubhouse conversation, half a bottle of gin and a few spliffs deep. NFTs came up, a topic Farokh knew almost nothing about; Logan Paul entered the room, and soon, dozens of the budding ecosystem’s biggest names joined too: ThankYouX, Fewocious, Tommy Kimmelman, Fvckrender, Greg Mike, Lady PheOnix, John Legere of T-Mobile, to name a few.
The conversation stirred an awakening.
“I immediately got it. I immediately fucking got it. It was so weird. It just clicked,” Farokh says. “You’re telling me a community member who has a large following can build a life for himself within a space that values art and community building, and can give back at the same time? Bingo. My life’s mission.”
Farokh shut down his social media consultancy and pivoted to NFTs and Web3.
A Web3 media startup is born
Rug Radio launched on January 11, 2022. Farokh chose the name as a cheeky reference to being “rug pulled” in crypto—it’s also, as he revealed in October at Camp Decrypt in Napa, CA, a winking allusion to his Persian heritage, and, on top of it all, a metaphor for what the company seeks to become: the tasteful foundation of a decentralized media ecosystem, the thing that “ties the room together.”
Rug launched with a series of Genesis NFTs—the basis of Rug’s token ecosystem. There are 20,000 Genesis NFTs (the art is crypto-themed carpets, naturally), and each produces for its holder anywhere from five to eleven RUG tokens daily—the ecosystem’s reward token—based on the NFT’s rarity. RUG tokens currently trade for about $.06 apiece on secondary markets.
RUG is the ecosystem’s currency, deeply intertwined with Rug Radio’s content creation process.
So, what’s the content? Farokh insists that part doesn’t matter so much. He sees Rug Radio more as a technology company proving the viability of Web3 infrastructure than as a media company. Rug Radio shows don’t need to focus on NFTs or crypto; Farokh believes the model could work for any type of media seeking an audience.
“It could be a cooking show, for all I know,” he says.
But every one of Rug Radio’s 30 podcasts—each personally invited by Rug Radio’s core team onto the platform—deal exclusively with Web3 topics, particularly NFTs. Dwarfing all other shows in popularity is Farokh’s own program, “GM Web3,” an interview show co-hosted with NFT influencers OSF and Mando. “GM Web3” averages 2,000 daily listeners, with spikes up to 15,000 for major guests (typically, NFT creators peddling their projects).
After Rug Radio’s rewards program is fully up and running, RUG tokens will be doled out to creators for making content, and to audience members for consuming that content.
“This [system] is great for the company, great for the community, and great for the creator,” says ArtemysiaX, the head of Rug Radio’s rewards program. “On Instagram, you can create all the content you want, but you don’t get paid anything.”
Naturally the company makes no promises about the future value of RUG tokens; indeed, Rug Radio’s official line is that the purpose of RUG is to redeem gifts and goodies in the yet-to-debut Rug Radio store. These might include NFTs from partner projects, allowlist spots, or perhaps even a coffee with Farokh.
But wait, there’s more: RUG tokens can also be swapped (once you amass 1,800 of them) for one RDAO token. That’s a voting token used to govern RugDAO, Rug Radio’s decentralized, oversight council.
In theory, any avid podcast listener or article writer can amass enough RUG tokens, forgo their economic (or pseudo-economic) benefits, and swap them to have a say in the long-term direction of Rug Radio. While RDAO holders can vote on proposals like approving a lump-sum budget for paying Rug Radio staff members and acquiring content, Rug Radio’s core team—Farokh, plus a few key founders and advisors—determines the nitty gritty of that budget: salaries for Farokh, his advisors, and the company’s 15 employees; and which content creators should be paid to join the ecosystem.
Rug Radio’s first budget, announced in late August, is forecasting $1 million in revenue for a six-month period ending next month. Farokh and the company’s inner circle see these six months as a crucial opportunity to prove the viability of Rug’s “participate to earn to govern” revenue model, and to succeed where so many Web3 startups have failed: turning lofty ideals into tangible results.
One third of the company’s projected revenue is supposed to come from taking 15% of creators’ sponsorship deals, and Rug is on track to meet those forecasts. Farokh’s show was the only one generating sponsorship revenue until November, when “Rekt Radio” (a show Farokh does not co-host) landed its first. An additional 10% of revenue is coming from Genesis NFT royalties.
Where will the rest come from?
For months, Rug Radio’s budget listed only the line “Secret Art Project” as responsible for 60% of the company’s anticipated income. In early December, at Art Basel, that classified enterprise was unmasked: a collection of profile picture NFTs titled “Faces of Web3,” in collaboration with NFT artist Cory Van Lew, who has previously collaborated on NFT collections with celebrities like Mike Tyson and Jake Paul.
The announcement had a lot in common with past Rug Radio successes, in that it appeared centered more on the cult following of Farokh himself (336,000 followers on Twitter), than it did on the structural potential of Rug Radio as a whole.
— Farokh (@farokh) December 1, 2022
Farokh’s web3-native audience of loyalists—many of the same people who lined up to buy Rug Radio Genesis NFTs, who participate in RugDAO, and who tune into Farokh’s show daily for tips on buying NFTs—jumped on news of the collection’s release.
But “Faces of Web3” looks a lot more like a standard, hyped PFP drop than the unleashing of a revolutionary, democratized business model.
Farokh admits that Rug Radio depends right now on his own personal following. But he believes that his creation will soon outgrow him.
“I’ve built a really big brand, and right now you need that nucleus,” Farokh says. “But my goal is to slowly, slowly fade away, and just become another network participant.”
How can you not love this guy…
(We are not responsible for what you do with your Farokh doll. Burning, sexual intent, voodoo, idolizing. Are not covered under any warranty) pic.twitter.com/qSfOVRaUki
— El Rick Rubin Ross 💧💧💧 (@redbeardnft) December 19, 2022
As Farokh's fame has grown, it has naturally created some vocal critics. In late November, a former Rug Radio employee alleged that on multiple occasions, Farokh shilled NFT projects for payment, and manipulated his influence on the NFT ecosystem to boost the value of certain projects for personal financial gain.
Rug Radio responded by denying that payments were ever made to Farokh by his guests in secret, as the company’s wallets are public, and framed the accusations as retaliation by a disgruntled ex-employee the company claims was fired with cause.
At the same time, the company conceded that Farokh has in the past been paid to host at least one Twitter Space promoting an NFT project, and has had financial stake in multiple projects or ecosystems promoted on his show. The platform committed to disclosing such financial relationships between guests and hosts in the future.
Farokh gives no time of day to any accusation that his decision-making is driven by self-interest. “That shit is funny to me,” he said when pressed on the matter on Decrypt’s gm podcast.
Rug Radio’s leadership is emphatic that the company is much bigger than past failed experiments in Web3, many of which leaned on the swinging pendulum of market speculation and the endorsements of celebrity influencers.
Loxley Fernandes, a DAO specialist recently appointed Rug Radio’s co-CEO alongside Farokh, says Rug Radio is different because it leverages Web3 as a set of tools to propel forward a different business model—media—instead of making Web3 some sort of vague end in itself.
“There’s a lot of abstraction [in Web3], a lot of wish lists. But there's not a clear path for most of these organizations to profitability and sustainability,” Fernandes says. “With Rug Radio… it’s a traditional media business, where we’re not having to reinvent the wheel.”
Rug Radio’s current revenue streams look anything but traditional; the company has yet to prove it can make decentralized media consumption and distribution profitable.
But within the insular walls of Web3, industry leaders are hailing the platform as the next big thing.
“The current model for how media is structured is ripe for disruption,” says Matt Miller, an investment analyst at Web3 incubator and investment firm Metaversal. His firm bought over $100,000 worth of Rug Radio Genesis NFTs. “Farokh is the first one to really take a swing at building a truly decentralized media brand.”
In late December, dominant Web3 incubator Consensys Mesh announced it had purchased 207 Rug Radio Genesis NFTs, making it a major supporter of the platform.
ConsenSys founder and Ethereum co-founder Joe Lubin joined Farokh on “GM Web3” that morning. “What you’re doing is brilliant,” Lubin said. “What you’re doing is the future.”
For so long, Farokh yearned for a way to put his mark on the world. He’s now convinced Rug Radio is that calling.
“You're gonna look back in thirty, fifty years, and say, fuck, this changed the course of media,” he says in earnest. “Hopefully they teach about it in school.”
Farokh’s current grip on Web3-native discourse is undeniable. But his continued dependence on that niche ecosystem begs a question: can Rug Radio grow bigger than Web3, and bigger than its charismatic founder?
The answer to that question will determine Rug Radio’s fate.