“You need to check this out!”
Seconds later, the first chords of the Rolling Stones’ “Start Me Up” were blasting. The windowpanes were rattling. Little things that are usually found on desks were vibrating in a corner office in Manhattan’s SoHo neighborhood. It was 10:35 a.m. on a summer Monday morning.
Joseph Einhorn, CEO of Fancy, was showing me his favorite gadget. It was a Cotodama Lyric Speaker, about the size of an attaché case and mostly glass. It was shocking the glass wasn’t breaking even though my eardrums were on the verge of doing so. Then, as Sir Mick’s voice began to shout the first verse, the song’s lyrics appeared on the device’s glass in a style reminiscent of CeeLo Green’s “F—k You” video (NSFW) from 2010. It was captivating.
Einhorn wanted me to see this speaker because he views it—and its maker, Jin Saito—as the epitome of what Fancy is about.
“This is an incredibly creative guy who has come up with a concept that we had never seen before,” said Einhorn. “He builds these products by hand. They’re gorgeous. They’re functional. They’re somewhat portable. And it seems like consumers love it.”
Oh, and Einhorn sells them for $4,500 a pop on his website.
Fancy caters to the big luxury spender and now they want to make easier for more crypto millionaires to cash out some of their winnings consuming, well, fancy stuff.
The site, which has been bitcoin-enabled since 2013, will soon be adding Bitcoin Cash—the cryptocurrency that forked off of Bitcoin last year—now that Fancy has gone from Coinbase to BitPay as their crypto payments processor.
In the past five years, Fancy has done about 1,000 bitcoin transactions averaging $1,000 each, so it has seen about $1 million in revenue in the form of bitcoin.
Back in May, Coinbase deprecated its Coinbase Merchant Tools product in favor of its newer Coinbase Commerce platform. “They stopped doing the instant conversion to U.S. dollars and that is a requirement for us operating a marketplace,” said Einhorn. “We’re not in a position to speculate on behalf of our merchants with their payouts.”
In other words, Fancy may allow crypto transactions but they’re not HODLers. Instead, they convert immediate to dollars. Einhorn said he doesn’t regret keeping the bitcoins they accepted when it traded below $300. “We’re big fans of it and early adopters of it but we’re just operating a store.”
What evolved into Fancy began the same month as Bitcoin, January 2009. At the time, said Einhorn, their goal was an ambitious one—to create a massive database of all the products in the world. That pursuit didn’t last long as the company pivoted to developing a social network built around merchandise (the site’s aesthetic borrows liberally from Facebook). From there, they added e-commerce to their features. However, getting a warehouse, stocking it, and then shipping to customers turned out to be bad economics “so we switched to a marketplace model,” Einhorn said.
Thus, Fancy no longer holds inventory. Instead, their flagship site a platform for sellers and it powers the ecommerce for sites like Gear.com. It also offers an affiliate marketplace for its customers to sell selected products from other Fancy partners.
When asked if that improved revenue, Einhorn responded, “We improved our margins and we diversified where we get our revenue.”
The switch to BitPay has so far only taken place on Fancy’s main site and its app, though Einhorn anticipates its partners will be crypto-enabled soon and that it will be the start of more cryptocurrency applications. He said he hopes to use crypto to reward affiliates with coins instead of dollars. Einhorn also said an upcoming bricks-and-mortar Fancy shop in downtown Manhattan will feature a crypto ATM for customers who want to make purchases with something other than a credit card.
Given the price points of some of Fancy’s products—$22,000 Hermès Kelly bags and $12,500 floating volleyball courts, for instance—using crypto to pay isn’t a far-fetched idea. After all, credit card fees add up.
But it wasn’t always smooth sailing for customers using their Coinbase wallets, claimed Einhorn.
“We dealt with transactions being flagged as fraud that weren’t. We dealt with transactions that were too large or weren’t working out with Coinbase,” he said. “If you sell a bag for $30,000 in bitcoin, and that’s more than Coinbase’s weekly limit that they can cash people out at, it starts creating problems.”
According to Einhorn, Fancy’s deal with BitPay lets customers purchase using their bitcoin or Bitcoin Cash limited only by what’s in their wallet.
Making Bitcoin Cash Fancy’s second accepted cryptocurrency was more than just about its availability on BitPay, insisted Einhorn, though admitted that may have been part of it. He also sees something in common with the coin’s creators and advocates, controversial though they may be.
“When you read about their hope for Bitcoin Cash,” said Einhorn, “it sounds pretty similar our hopes and other people’s hopes about frictionless commerce and a world empowering not only consumers but vendors to conduct transactions in the most efficient way possible. On the surface, we think there’s an alignment philosophically with Bitcoin Cash.”
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