The gamble of the founder of Opensea: from a five-person team to a billionaire

The gamble of the founder of Opensea: from a five-person team to a billionaire

Let anyone be an NFT artist.

At the beginning of the new year of 2022, the first good news for the crypto industry is Opensea. The king of the NFT market announced on January 5 that it has completed a Series C financing of up to 300 million US dollars, and its valuation has soared to 13 billion US dollars. , The joint lead investors of this round of financing are Paradigm and hedge fund Coatue Management, and the participating investors include the crypto and Web3 investment funds founded by former a16z partner Kathryn Haun.

From a small startup company to a unicorn with a valuation of more than $10 billion, OpenSea only took four years.

Survive the epidemic and win the market after a difficult start

OpenSea was established on November 20, 2017. The two co-founders are Devin Finzer and Alex Atallah. They received seed round financing from the well-known venture capital incubator Y Combinator in 2018, but soon ushered in a long crypto bear market. In November 2019, they raised $2.1 million in investment from Animoca Brands and passed that difficult time smoothly. Frankly speaking, the road between Devin Finzer and Alex Atallah has not been smooth.

Start-up companies should be specialized in the development of a certain technology, but the founders of OpenSea create and trade various NFTs by creating an open market. These NFTs include art, music, and games. Now they have become millionaires through the market and are about to enter the billionaire club, but they are currently facing other concerns, such as pressure from competitors, threats from fraudsters, and the next cryptocurrency collapse.

In March 2020, the new crown virus epidemic spread globally. For OpenSea, which had only five employees at the time, it was an extremely severe test. OpenSea is a platform that allows users to freely create, buy and sell various NFTs. However, after 26 months of going online, they have only gained 4,000 active users with a monthly transaction volume of 1.1 million US dollars. Calculating a 2.5% sales commission, their monthly income is only a negligible US$28,000. On the other hand, the NFT market at the time had a “lifeless feeling”. Alex Atallah, then CTO of OpenSea, recalled that he could only talk to Devin Finzer in the basement of his parents’ house every day, because the entire New York City was closed. Up. What’s more worrying is that OpenSea’s biggest competitor at the time, Rare Bits, did not survive and declared bankruptcy. You must know that Rare Bits had sufficient funds. Devin Finzer and Alex Atallah felt that the situation was serious and decided to set a seemingly The impossible goal: double the performance by the end of 2020!

Perhaps it was God’s arrangement that the goals of Devin Finzer and Alex Atallah were fulfilled ahead of schedule in September 2020.

In February 2021, the NFT market woke up from hibernation and then became more and more crazy. In July 2021, the NFT transaction volume on the OpenSea platform reached USD 350 million. In the same month, in a round of financing led by well-known venture capital Andreessen Horowitz, OpenSea raised US$100 million in venture capital at a valuation of US$1.5 billion. In August 2021, with the upsurge in the industry and the market flooded with “fear of missing out” investment sentiment, the NFT market reached a climax, and OpenSea’s transaction volume soared 10 times to US$3.4 billion-and in just one month Nie received $85 million in commissions, and their expenses at the time were less than $5 million, so it is not an exaggeration to say “a big profit”. Although OpenSea’s trading volume has since dropped to around US$2 billion per month, in addition, the platform has firmly dominated the market and has 1.8 million active users.

Now, OpenSea has more than 70 employees and is still looking for more people, including urgently needed customer service representatives.

Since 32-year-old Devin Finzer and 30-year-old Alex Atallah each own 19% of OpenSea, after the latest financing is completed, they have become undisputed billionaires.

However, Devin Finzer and Alex Atallah were not dazzled by the victory because their personalities have always been very low-key and calm.

Clear strategy and dare to take risks

Let’s take the time back to November 2020. In a restaurant in New York’s New Margaritaville Resort Times Square, Alex Atallah sits next to a 32-foot-tall replica of the Statue of Liberty. Unlike the real Statue of Liberty, this replica is not holding a torch, but a cocktail. Alex Atallah is sitting there because he was invited to attend the third annual NFT.NYC conference, which attracted 5,500 registrants, of which 3,000 were on the waiting list. Young NFT enthusiasts wore a sweatshirt printed with Bored Ape Yacht Club and wandered in the hotel-to express their tribute to the NFT based on the image of ape. Frankly speaking, NFT has become more than just collectibles or investment items, but has become a social tool.

You may think that low-key humility is the key to the success of Devin Finzer and Alex Atallah, but in fact, the two have very firm entrepreneurial strategies and determination.

In fact, some business consultants have suggested or even urged them to specialize in certain sub-fields of NFT, such as art, games or music, but they chose to create a non-categorized NFT trading platform because they thought they did not have enough Foresight to predict which type of NFT will become popular.

Devin Finzer explained that in addition to casting the net, another reason for OpenSea to flourish is that it “appeared in the right place at the right time.” More importantly, they are willing to listen to users. The platform tracks NFTs on Ethereum and other blockchains. All purchases are made in encrypted mode. Sellers can choose a fixed price or auction format. Artists can set the percentage of commission for each NFT resale. Ultimately, Devin Finzer believes that the NFT ownership verification model is applicable to everything from concert tickets to real estate, he is just not sure when it will succeed. “My view of the future has always been very gloomy”-Devin Finzer said.

Despite its success, OpenSea still faces huge and diverse risks, such as fraud, another NFT market crash, and other market competition.

In October 2021, Coinbase, the original investor of OpenSea, the largest cryptocurrency trading platform in the United States, announced that it would launch its own NFT P2P market. Within a few weeks, the waiting list for the Coinbase NFT platform attracted 2.5 million registrations, and Coinbase CEO Brian Armstrong predicted that the new NFT business “may be as large as its core crypto trading business, or even more. Big”.

OpenSea’s open market strategy exacerbated the risks of counterfeiting, scams and fraud-similar situations also appeared in early Internet markets, such as Amazon and eBay. For example, scammers can copy images of other people’s works of art and sell them on OpenSea as NFT. Devin Finzer said that OpenSea is working on a method to automatically identify counterfeit products and has hired a moderator who is responsible for investigating suspicious products. But despite this, there will still be problems with human participation-in September 2021, Devin Finzer ordered the resignation of the OpenSea product director because Twitter users discovered that shortly before some NFTs appeared on the OpenSea homepage, a crypto wallet related to the executive These NFTs are being purchased-in other words, he obtained these NFTs before OpenSea launched related products.

The hero does not ask for the source

Although the impression is very humble, the ambitions of the two co-founders of OpenSea are not low. Devin Finzer grew up in the Bay Area. His mother is a doctor, and his father is a software engineer. He once felt that he was rejected by famous universities such as Harvard, Stanford, Princeton and Yale (Devin Finzer chose Brown University). After working as a software engineer at Pinterest for a while, Devin Finzer co-founded his first startup Claimdog in 2015 with others, and sold it to Credit Karma a year later.

Alex Atallah was born in Colorado. His father was a Colombian immigrant and his mother was an American. At a very young age, he could compare the attributes of objects, such as birds and browsers, by making spreadsheets. After graduating from Stanford University, Alex Atallah worked as a programmer for a period of time and then met Devin Finzer.

In January 2018, the two entered Y Combinator, a startup incubator. Their startup project at the time was to let users pay cryptocurrency to share Wi-Fi hotspots. However, at that time, a popular crypto game attracted the attention of two people. This game is the originator of NFT and the chain game “cryptokitties” Cryptokitties. Alex Atallah recalled, “Cryptocats allowed people who don’t really care about cryptocurrencies to become interested in the crypto industry for the first time. I think it’s really amazing.” So the two quickly shifted their business focus to OpenSea. And moved the company to New York.

However, like Beanie Babies, Cryptokitties proved to be short-lived in the end. Due to the oversupply, most “cryptokitties” Cryptokitties are not worth much. After a brief spike in prices in early 2018, people’s interest in cryptocurrencies and NFTs has quieted down.

In fact, it was not OpenSea that awakened the NFT market in early 2021, but the Nifty Gateway launched by the brothers of billionaires Cameron Winklevoss and Tyler Winklevoss. This platform attracts people’s attention with carefully curated high-quality artworks. In March 2021, Christie’s auction house sold the digital artist Beeple’s NFT work “everyday: the First 5000 Days” for a high price of US$69 million, which is also the third most expensive living artist’s work.

As the price of NFT becomes more and more eye-popping, ordinary people also want to take a share of it and become NFT creators, collectors or speculators, so they turn to OpenSea because the concept of OpenSea fits their expectations very well, namely:

Let anyone be an NFT artist.

On the other hand, OpenSea also has a built-in secondary market and an easy-to-use interface. For example, the OpenSea website has an advanced screening system that makes it easy for users to find the NFT with the rarest attributes (and theoretically the most valuable). ——For example, only 46 Bored Apes NFTs have pure golden fur, so their premium is very high. When a new NFT is created and recorded on Ethereum, the website will automatically generate a web page displaying it-this is a great feature because NFT has become a status symbol and people can share their OpenSea page and change their Twitter avatar to the NFT they own.

Richard Chen, a partner of venture capital firm 1confirmation and an early investor in OpenSea, explained: “Driven by envy and desire, the NFT market has become a closed loop of feedback, and OpenSea has indeed captured this market.”

The 27-year-old Dani is a former fashion designer living in Georgia. She has turned a $17,000 investment in Women’s World and other NFTs into a $715,000 investment portfolio.

The 37-year-old former gaming company CEO AJ from North Carolina invested less than $10,000 in NFT, and now values ​​his digital assets at $1.3 million. AJ also persuaded his brother, a gastroenterologist, to start buying NFT, and then the brother turned to persuade his good friend to join OpenSea. AJ said, “Now, my brother almost does a colonoscopy while taking out his mobile phone to see if there is a new NFT release.”

Does NFT sound like a bubble market? Well, this actually raises another question: how will OpenSea respond when the bubble bursts? Devin Finzer replied calmly:

We have made a lot of buffer preparations, even if the market conditions deteriorate, we can survive the cold winter smoothly.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/the-gamble-of-the-founder-of-opensea-from-a-five-person-team-to-a-billionaire/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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