For this post looking at NFTs from a human perspective, we had a chat with Yuya Yoshida, the CEO of HARTi, a Japanese NFT infrastructure startup, who shared how he got involved in crypto and what he thinks will further propel this space.
First things first...
Who is Yuya anyway?
Yuya is the CEO of HARTi, and what you’d call a serial entrepreneur. He started his first company at 19 and has never worked in a traditional corporate environment. He describes himself as an artist at heart, which has a big influence on his business and the industry he’s in.
When he was 6 years old, Yuya started learning calligraphy and perfected his art enough to get a teacher's license. He also did exhibitions all over the world, including in Africa. For a while, he was focused on his career as an artist but eventually became interested in the intersection of art and business.
Back then (and still to this day), Japan’s art market pales in comparison to the size of its economy. During his studies of art management in London, he gained a better understanding of how art functioned as an industry and then took those insights back with him to Japan.
The beginning of HARTi and the transition to web3
HARTi didn’t start as a web3 company. Instead,it was, first and foremost, a startup in the art industry. In 2019, art started booming in Japan, with more contemporary artists gaining recognition abroad and Japanese exploring museums and galleries. During that time, Yuya was managing a gallery in Roppongi, connecting influencers with artworks. However, later that year, the impact of Covid hit galleries.
“I thought maybe we need more digital art and use digital media.”
Soon after, NFTs started trending, and along with that trend, Yuya decided to bring HARTi from the realm of physical art into the world of web3 and NFTs. He quickly realized that NFTs were still early but had a lot of potential. Yet they were held back by the fragmented user experience involving having to set up wallets, purchase cryptocurrencies, and connect to NFT marketplaces.
That’s why he built an app that would combine all of these points into one. With HARTi, users can purchase NFTs easily, combining an EVM wallet and marketplace in one. Additionally, the app includes social functions removing the need for a separate platform like Discord to host communities.
Since its launch, the app has captured 8000 users in Japan, making it the most popular NFT social platform in the country, and worked with countless enterprise customers, from IT companies to tourism agencies. HARTi also released its own NFT collection called “Friends in the Shallows”, exhibiting it together with 5 other artists in Shibuya.
Why Web3 and art?
Having worked in the art industry, Yuya is very aware of some of the challenges the industry is facing. He believes that in its current state, there aren’t the right incentives for art galleries and auction houses to change track, but web3 could pave the way for much-needed change.
Galleries aren’t just curators, but in their business model, close to brokers who initiate deals between sellers, and buyers of art, making it a fairly opaque market where publicly available pricing data is lacking. Additionally, traditional art markets haven’t really been open to the masses but very refined to high-net-worth individuals and institutions.
Web3 has the potential to open up the market to a broader audience, fostering diversity in taste, and thanks to data being stored publicly, provide transparency in pricing.
“The business model in traditional art markets is fixed and has been for decades. Profit margins can be low because, for galleries, the amount of commission they can take is limited. What’s worse, for artists, even when their work is auctioned for millions of dollars, they receive nothing - it’s not rare for auction houses to keep 100%.”
Recently, Sotheby’s, a renowned auction house has auctioned off NFT art remaining from the collection held by the now bankrupt crypto hedgefund 3 Arrows Capital (3AC), and unlike is the custom in their auctions otherwise, decided to honor royalty fees, kicking back thousands of dollars to the creators of arts.
Unfortunately, though, with NFT marketplaces focusing partly more on volume than quality art, royalties have become an optionality on platforms like Blur and Magic Eden. Yuya points out that “royalties are essential. It’s weird when an artist doesn’t receive anything from a work that they produced.” He also acknowledges that while royalties might be a business model for some, there are multiple ways for businesses to monetize. One he highlights is that artists could train AI on their style and use that to further monetize.
When it comes to art, he further thinks that pfps are about money and less about art. He goes as far as stating that they are purely governed by “Supply and Demand,” used to flex and not to be appreciated. As you can see, he uses a picture of himself in black and white in his Social Media Presence, not a pfp NFT.
Working in the Japanese Market
During his time running a startup in the Japanese market, Yuya has noticed a few things that make the market different from others. For one, he shares that, in general, Japanese companies are doing very well with their existing web2 schemes. For example, loyalty programs are a big market valued at 2.1 trillion yen in 2021 ($14.6 million) that continues to grow, without much reason for companies to change their current set-up.
That’s also why one of the most frequently asked questions Yuya is confronted with tends to be “Why NFTs?”
The way he responds depends. “It depends on the client. For some, I will highlight the potential efficiency gains they can achieve through automation using smart contracts and blockchain. For others, I might focus on how much data will be available to them without having to store it themselves as it’s all available on-chain and can be read.”
Interestingly, HARTi’s clients have mostly already gone through Proofs-of-Concept and are ready to embrace NFTs more deeply. Most startups only cover one aspect of NFTs, whereas HARTi covers them all, from distribution up to providing enterprises with a CRM.
Another interesting observation Yuya shared was that, in general, the Japanese market is unique, even differing from other Asian markets. Global crypto trends are usually not reflected in Japan or play out at different timelines. And while Japan is often seen as a great place for any NFT projects surrounding IP management, he caveats that, at the moment, the Japanese IP industry is huge and very strong. Consequently, web3 companies lack the leverage to get a seat at the table. Not even big marketplaces like Rakuten are able to get licenses easily. For now, wallet numbers are too small to make it attractive for huge IP holders.
Which brings us to the next question:
What’s missing?
According to Yuya, a few things could stir further adoption. Among them is a strong game coming out of Japan. He sees a lot of potentials, yet for now, it’s unclear which studio and chain will be able to succeed. Another point he brings up is that in Japan, the industry is very much full of geeks, and so is the marketing story.
“There aren’t a lot of ladies in the market; it’s all for and about geeks. I feel that we need greater diversity.”
Yuya further believes that there is still a lack of attractive content. Real Japanese artists focus very much on perfecting their craft and not so much on Marketing, explaining the Japanese art markets stand in the lower percentile. There are also no auction houses, so a lot of the infrastructure that could back up a greater digital art boom is still being built.
Reasons to be optimistic
Despite these challenges, he remains optimistic. HARTi has just recently entered a partnership with PARCO, a department store chain with stores all over Japan. As part of the partnership, HARTi is taking over the Purikura photo booths in these stores as a way to distribute NFTs and enable users to NFT their memories.
They even trained an AI in the style of Purikura, so anyone can use it to turn images into Purikura-style inside of the HARTi app, embracing users' curiosity and playfulness.
“I’m also very excited about generative AI. I just held a talk about it at a Tokyo university, and I think it could help us overcome the lack of attractive content. Obviously, in its current state, AI still feels flat on the information side, but pondering how it will evolve and how we can leverage it is exhilarating.”
The Japanese NFT scene is still small, but startups like HARTi are bridging the gap between enterprises and web3. With its unique culture around collectibles, as well as strong associations with innovation, fashion, and entertainment, there are reasons to be optimistic about how NFTs will evolve in Japan.
–
You can follow Yuya’s journey on his Twitter. And if you’re in Japan, don’t miss the opportunity to take a Purikura in a Parco store.
