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Conversation with OpenSEA Founders: The founding of OpenSEA and the future of NFT

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OpenSea co-founder Devin Finzer talks about his journey building OpenSea, funding tips, advice for founders, and the future of NFT.

原文标题：《对话 OpenSea 创始人：OpenSea 的建立与 NFT 的未来》

原文来源： Zachery Lim

原文编译：深潮 TechFlow

Devin Finzer launched the NFT marketplace OpenSea in 2017, when it started to attract attention as an early NFT (Non-fungible Token) project.

At the time of the CryptoKitties craze, people spent over $1 million to buy virtual cats on the Ethereum blockchain.

Today, NFT has seen rapid growth led by major items such as NBA Top Shot, CryptoPunks and Decentraland, most notably involving collectibles, virtual real estate and digital art.

In 2021, NFT has really taken off, and OpenSea's GMV (gross merchandise sold in the market) has grown from $8 million in January to $150 million in March!

Recently, Devin participated in an insightful fireside chat where he discussed his journey building OpenSea, funding tips, advice to founders, and the future of NFT.

Q: Can you tell us about your journey from starting blockchain to starting OpenSea?

Devin:In 2017, I started to get really interested in cryptocurrencies. I used to watch Bitcoin on the periphery, but in 2017, I went down the rabbit hole to learn the underlying technology behind it.

At some point, I realized that I wanted to tie my career to it, and it was a question of what I wanted to do. NFT caught my eye as I began to learn about the interesting case of cryptocurrencies.

The CryptoKitties project is a very interesting example of this, where people spend hundreds of thousands of dollars to buy CryptoKitties, and it creates a kind of technology culture. I was very interested in this untapped field of cryptocurrencies, and when people talk about cryptocurrencies, it's all about finance and money, but there hasn't been a lot of exploration into other applications of blockchain, and I became interested in how NFT could offer this new and unique asset class.

I came up with a rough idea and applied to YCombinator for a program centered on using blockchain to share WiFi bandwidth. After we got into YC, we built OpenSea instead.

Q: What is OpenSEA?

Devin:OpenSea is a decentralized NFT marketplace. It's like an eBay for NFT, where you can buy, sell, auction, etc. We are also an NFT explorer, and you can find any NFT on Ethereum and several other blockchains on our platform. You can also query the history of each NFT, including where it came from, where it was sold, etc.

Q: What was your early experience building OpenSea? What challenges do you face when not many people know about NFT?

Devin: In the beginning, we were in an experimental phase, we had early competitors, but really, we were more focused on how we could grow the whole market, rather than winning a given market. I think we've found the right market for our product, but it's a very small audience. Our users are very enthusiastic, but not many users or people know about encryption technology.

Still, it's very exciting, and that's what keeps us going. We're fascinated by what people are doing, and we're happy to work on it, even if we're frustrated by the slow growth. In the early days, we were doing 1 to 2 million GMVs per month, but when we were doing that, the user experience was terrible. Part of it is our problem, and part of it is the blockchain system's problem. There's still a lot of friction in cryptocurrency, but it's getting better as people innovate in the space.

As you get deeper into cryptocurrencies, you start to understand that this space is never going to be closed. I never wanted to do anything else, because I believe this is the next paradigm shift in technology. Besides, it is always so exciting because we have so many ways to improve the products. But if we're looking for more immediate, high-growth startups, that's going to be a problem. There was a company that was a direct competitor, and then they went out of business. Over the past six months, this has surprised us. We didn't expect this kind of momentum from NFT. It's very exciting, but now there are more people looking at this area and the pressure is on us.

Q: On your website, OpenSea lists $354 million in transactions, NFT has 50 million, more than 150,000 users, and only 19 employees. When did OpenSea take off and add employees?

Devin:We were a seven-person team for a good part of 2020. Then in August 2020, we started to see exciting growth. We traded about $1 million in GMV in August, $8 million in January, $95 million in February, and $150 million in March. All of a sudden, our company entered a completely different phase. We began to face the technical challenges of scaling the site and supporting so many new users -- especially when our product was so crude. Right now, we're putting a lot of effort into building a good team.

Q: These hires are largely due to a new round of financing led by A16Z. Can you talk a little bit about how this round of financing came about?

Devin:I would say that the A16Z combines the two worlds of traditional VC and crypto thinking, which is very attractive to us. I've always admired their views on cryptocurrencies, and it's not just a financial perspective. This is much broader than a purely financial point of view. Their thinking is broader, seeing cryptocurrency as a technological phenomenon that can truly affect everything on the Internet. We talked to A16Z about the business and they are excited about the growth we are seeing.

Q: Do you have any advice for early stage founders on how to raise money?

Devin:I started raising money without any experience, so hopefully that will help.

In-depth knowledge of financing. Some of the books I recommend are Venture Deals and Secrets of Sand Hill Road.

If you don't have good relationships, doing accelerators can be very helpful. At YC, they create an environment where a lot of investors are looking at you at the same time. Then you can build a market around your financing and drive the development of FOMO.

Investors who are former founders are important for operational advice. Founders of successful companies provide the most useful advice.

One mistake we made was to have too many investors involved. So, depending on your situation, be selective, don't just take the money, it's a good strategy to have investors who are deep in the field or people who use your product.

Q: What is your favorite NFT today? What do you hope people will do that no one has done yet?

Devin:My personal favorite is the virtual world project, where people own virtual land and can build projects on it. Not long ago, I wanted to buy some land and had no idea what land to buy, so I went to a virtual real estate agent who spent all day researching cryptocurrency real estate. To my surprise, there is this real economy, which I am very interested in. What I like is that this is a stealth peak into the meta-universe where you can own land and introduce other NFTs that are not affiliated with that land.

As for what I want people to do, I hope we can see more work on concert tickets. Now that there's Covid, it's not really popular, but tickets seem to be the natural choice for me. One of the biggest challenges for NFTs today is shifting their transaction costs. Once we reduce costs, we will expand the range of goods that can be traded.

Q: Can you talk about the challenges of transaction costs and areas that need to be improved?

Devin:One of the big challenges for Ethereum is that the transaction cost of buying NFT is around $50, and that's true whether you're buying $5 or $5,000 NFT. As you can imagine, this limits the types of NFT that can be sold. At OpenSea, we're about to launch some exciting things around supporting other blockchains and other ways to reduce the cost of high-volume transactions.

When it comes to general-purpose computing chains, the Ethereum blockchain is V0, and now there's a new version with a lot of improvements. If you go deep into the NFT space, the user experience around you feels like the early days of the Internet. With NFT, you first have to download MetaMask, then you have to get cryptocurrency on Coinbase, then you have to pay transaction costs, and then you may face transaction congestion. So there's a lot of room for improvement.

Q: Can NFT solve problems in physical space?

Devin:B: Sure. The model we've seen several projects take is to take a physical item and issue an NFT against it so that the NFT can move across the blockchain multiple times and the end buyer can redeem the item. Such a model allows people to tag items and create marketplaces without actually moving items.

Q: Many brands, like the NBA, are starting to build their own NFT market. What are your thoughts on the individual market? What do you see as OpenSea's role in the future?

Devin:Ultimately, we envision ourselves supporting content from all different blockchains, and in terms of other markets, we foresee a lot of new major markets in the future, where we thrive is the long tail of small games and projects that need a market. E-commerce is a good metaphor: there's an official Nike store, and then there's a thriving secondary ecosystem on eBay. I think there will always be these proprietary markets, but there is also a secondary market.

Q: How do you see the business model of cryptocurrencies?

Devin:It would be interesting to see if there is a business model for symbiosis across Spaces. One of the cool things about blockchain is that you can create incentives across the entire system through smart contracts. As a rough example, you could put something up for sale in one market, and the market would have a list of costs that would be broadcast in other markets. The market that meets the criteria gets a percentage, and the referrer gets a percentage, so you can create an incentive system that benefits all parties. I think there will be more of that in the future.

Q: What are your thoughts on working with OpenSea?

Devin:We have recently begun to delve into primary sales. We've partnered with the Golden State Warriors, Rob Gronkowski, Shawn Mendes and others to launch the NFT program.

Q: Where do you see OpenSea in 5-10 years?

Devin:We see the cryptocurrency situation as similar to the birth of the Internet, where there are a lot of opportunities. It's not as impressive as the Internet, but we see a lot of companies succeeding, so we want to play a big role in this new ecosystem. No one really knows what will be the most successful application for NFT, but we want to help it succeed. We see ourselves as a practical layer in this growing ecosystem and want to be a fertile ground for all of these potentially successful products.