What's the Point of Sneaker NFTs? Endstate Has the Answer

Stephanie Howard has been designing sneakers for over 25 years, long before the existence of social media, and certainly before the concept of digital ownership was dreamt up. She was particularly busy creating some of the most loved sneakers of the ‘90s and early ‘00s, like the New Balance 850 and Reebok Trail DMX6. The original Air Max Verona – one of Nike’s first women-specific running initiatives – is another one of the many iconic models to her name.

After pushing the boundaries of sneaker design, Howard shifted her focus beyond footwear – first to hockey gear, and then to consumer goods – before founding the award-winning design and innovation studio, How and Why.

Howard’s illustrious career is testament to her insatiable curiosity for all facets of design, and a deep-seated desire to continually better it. It’s this visionary way of thinking that sparked her curiosity in Web 3.0 and led her to her latest endeavor, Endstate. Co-founded with Bennett Collen, an NFT pioneer and professor of Blockchain and Cryptocurrency at Boston College, Endstate is rethinking sneaker ownership by marrying physical and digital products. Their goal is to partner with collaborators from all fields to co-create a physical sneaker and twin NFT. Drop 0 was released at the end of 2021 and all of the 100 pairs sold out immediately.

As one of the most important sneaker experts of our generation, Howard has played an integral role in forming how our sneakers look, which is why her leap into the metaverse piques our curiosity. To learn more, we called up the industry veteran to talk about Endstate, avatars, and the future of footwear.

When did you see the opportunity for Endstate?

In October 2020, I participated in a webinar with the authors of the bookSneaker Law, where we discussed the business of sneakers and how designers and collaborators are compensated for their work. In those conversations, I noted how contracts don't often include compensation for the reissue of a design. Similarly, success on the secondary market is never rewarded to the initial creators, and resale is such a big part of sneakers today.

At the time, I didn't know anything about NFTs or how they offered solutions to these issues. But then, my co-founder Bennett Collen, who had seen the webinar, reached out to connect. He had founded a company that pioneered the use of smart contracts and NFTs, to represent trademark rights. He saw the value that NFTs could bring to sneakers by providing a way for creators and athletes who collaborate to receive value for every sale and every subsequent resale. We started meeting weekly, and in May 2021, we each jumped in full-time to start Endstate.

What's the vision behind Endstate?

Artists, creators, and athletes are looking to engage their audience beyond the confines of social media and their fans are eager to engage with them in more meaningful ways than just likes and comments. So we asked, "What if these creators could engage through the most coveted product category there is?" In today's culture, for many people, that's sneakers. Combined with the utility of NFTs, sneakers are the perfect medium for creators to build deeper connections with their audience. What we're doing is working with creators and athletes who have powerful stories to tell, and bringing them to life through both a physical sneaker and a digital twin. There is also a charitable component to every drop where a portion of the proceeds will be donated to an organization of the collaborators’ choosing.

Why pair NFTs with physical products?

By tethering NFTs to physical sneakers, NFT owners have a permanent immutable certificate of ownership for their sneakers. That's a new layer of authenticity for sneaker owners. It contains all of the relevant information about the pair. And that's just the beginning.

Endstate NFTs will have integrations so that they can be worn in the metaverse and in gaming environments. In addition, owning one unlocks unique rights based on the collaborator that we're working with and what their interests and ideas are. So they can grant access to the collaborators through exclusive Discord channels, or they could invite the NFT holders to in-person events, or to products not offered on the open market. Communities of fans and supporters can come together through the shared ownership of these unique drops.

What we're creating is less of a brand-to-consumer relationship and more of a shared community engagement with each collaboration. That's what got me excited. I've been doing design in sneakers for a long time and working on innovation, which often has to do with manufacturing, but this was just a whole other realm of innovation in terms of creating community engagement and not just a physical product.

Were there discussions of only doing NFTs?

From the start, we were definitely pairing digital and physical. We think that a lot of creators and athletes would like to be involved in designing their own signature sneakers and have them to wear in real life as well as online. It's such a coveted space. Until now, access to building sneakers has been exclusive to a very small tier of people at the legacy brands. I have so much love for the design and development process, but I also know how complex it is to build these physical products, so it's a great way for me to share my knowledge and skills with a variety of creators. We all value our time and interactions in the physical world as well as digital spaces, so we felt it was important to make products ownable in both.

How do you think digital products will affect the traditional hierarchy that exists in the sneaker industry?

Physical sneakers are still complicated products to make in real life and require experience to design and build them. But digital-only sneakers can be created more freely and without some of the constraints of physical manufacturing like fit and comfort. I'm sure we'll see a lot of innovation and incredible sneaker designs from digital artists. And perhaps an explosion of digital-only footwear designers and brands. When it comes to the physical, there are still complexities to that. But even that is opening up.

Another advantage of this model is that it enables us to move at a speed I’ve never experienced before in the industry, allowing us to be really nimble and innovative. For example, we were able to immediately launch a “Ukraine Aid” drop to help during this tragic crisis. All profits are being donated to Direct Relief, one of the world’s largest distributors of donated medical supplies working directly with Ukrainians. Everything will be on chain and publicly auditable for transparency.

Tell us about the Endstate sneaker?

I am especially excited about them because they're made to order in the US. After people buy the NFTs, there are redemption events – we're calling them “state change” events – which are when they order their shoe size, and then we make and deliver.

Manufacturing in the US is complex, but I've always wanted to push innovation here. Through my network, I was able to find people as enthusiastic about the potential of US. manufacturing as I was. We’ve made great strides in a short time frame towards our goal of using only local materials. Our soles are actually molded in Massachusetts. The uppers are knitted in California. The shoes are assembled in California.

What impact do you expect NFTs to have on sneaker collecting culture and then the value of sneakers?

Collectibles are a clean use case for NFTs. All the things that make collectibles valuable and fun, NFTs are able to articulate. So they ensure scarcity and you can see where they came from and you can track them over time. NFTs are the backbone of this new collectible economy, and sneakers fit so well into that paradigm. I'm not able to predict exactly how it will affect the value of sneakers themselves, but we can see the potential of how it will bring the sneaker collecting experience to the next level. What NFTs can unlock in terms of the experiences will be a whole new world for collectors.

It’s happening in the crypto space in general. There are people who are buying NFT artwork because they're fans of the work, then there are people who are buying because they're speculating on the value that will be created if they hold on to it for a while. So it's very similar to what's happening in sneaker collector culture.

What impact do you see NFTs having on the conversation around gendered footwear?

This evolution of digital product ownership should be genderless, right? The excitement that lies ahead of these technologies, bringing the world together in new ways should be shared by everyone. And in the metaverse specifically, people may not choose to have their gender represented by their avatar. So there are new conversations that will happen. The sneaker will have a design and cultural significance, but may not be gendered in the way we think about that now.

Certainly, the creators we will be collaborating with at Endstate will come from diverse backgrounds and all genders, and the designs will tell their stories and their fans will be diverse. It's the story that matters the most, in my opinion. The designs will be developed from the stories and the creators, and not specifically at a target market in the traditional sense because we aren’t relying on selling in a physical retail space. We will accommodate sizing for everyone. Great products are great products and they should be made for everyone who's excited about owning them.

It's still a very divisive topic. A lot of people think they’re a gimmick or that Web 3.0 isn’t the way forward.

The younger someone is, the less worried they are about it. I'm noticing that in conversations. There are so many people that feel negative about where social media is right now and how much that consumes people's lives. But in my own personal experience, social media has been this great connector. If we understand the power of these tools to connect us, then we can see the positive of where this can go. I'm an optimist, so I look at the benefits. For creators, Web 3.0 will open up many new opportunities for connecting with their audiences, controlling their own work, and receiving fair value for it. We are really in the pioneering stages of what this new technology can offer.

How do you see it evolving digital ownership in the coming years?

We talk about our brand as representing the future of product ownership because the “end state” of where all this is evolving is owning products in real life and in a digital environment. This decentralized online ecosystem that we've been talking about called Web 3.0 is built on top of blockchains and it's providing the infrastructure for ownership of digital assets that didn't exist before. The way the internet was before Web 3.0, only a few large companies owned assets, individuals couldn’t own anything. So to me, it's a really exciting time for creators and consumers alike, specifically those who are working in this space of NFTs.