OpenSea founder: We can survive the winter safely

Original title: "What Every Crypto Buyer Should Know About OpenSea, The King Of The NFT Market"

Original author: Jeff Kauflin

Original compilation: 0x13, Rhythm BlockBeats< /blockquote>

OpenSea is the absolute leader in the NFT trading platform today. They have survived the cold winter, defeated one competitor after another, and firmly sit on the throne. Since January, the monthly transaction volume has gradually declined, but it also occupies 90% of the entire NFT market.

From the monthly transaction volume of a few thousand dollars at the beginning of the establishment to billions of dollars today, the valuation has grown from the initial $1.8 million to today's 10 billion U.S. dollars, now that we are amazed at OpenSea's top day and its opportunity, have you ever wondered what kind of ups and downs they have experienced before they grow into today's industry leader? This article, written by Forbes author Jeff Kauflin, tells the story behind OpenSea's two founders, Finzer and Atallah, when they founded OpenSea. Rhythm BlockBeats translated the full text as follows.

For general start-ups, it is very important to focus on a certain subdivision track, but the founders of OpenSea have established a business such as There are various NFT platforms such as art, music, game assets, etc., and it has developed very well in these aspects. Today, the founders of OpenSea are millionaires and may soon be billionaires, but at the same time they have other worries: competitors, fraudsters, and the next crypto bear market.

In March 2020, at the onset of the global COVID-19 pandemic, Devin Finzer and Alex Atallah had a phone call to cheer each other up. They are the founders of OpenSea. There are only 5 people in the OpenSea team. Users can create, buy and sell various non-homogeneous warrants (NFT) on this platform. People use NFT to track unique digital assets such as art and music. Ownership on the ledger of the blockchain.

However, OpenSea has only captured 4,000 active users in the 26 months since its launch, and the monthly transaction volume is only 1.1 million US dollars. Earning a 2.5 percent commission on sales, that means OpenSea makes a measly $28,000 a month. The NFT market at the time was “dead,” said Atallah, OpenSea’s CTO. He finished a teleconference in the basement of his parents' house in Colorado. Due to the epidemic, New York was closed at the time, and he could only go home and work. What makes them even more disturbed is that Rare Bits, which is a competitor of OpenSea and has more funds than OpenSea, announced its closure not long ago. So OpenSea's founders set a goal to fight back: to double their business by the end of the year. Soon, this goal was achieved in September.

Year of the NFT: Co-founders Alex Atallah (left) and Devin Finzer's new SoHo office at OpenSea. Launched in 2018, the company is on track to generate more than $300 million in revenue this year, and it's under $1 million in 2020.

Finally, in February 2021, the NFT market woke up from hibernation, and then went completely crazy. In July, OpenSea’s deal value reached $350 million, and it was also the same month that OpenSea closed a $100 million venture capital round at a $1.5 billion valuation, led by a16z. In August, as the NFT craze reached its peak driven by market FOMO sentiment, OpenSea's transaction volume surged tenfold, exceeding $3.4 billion, while OpenSea's monthly expenditure cost was less than $5 million. In August alone, OpenSea harvested $85 million profit. Although transaction volume has since dropped back to around $2 billion per month, OpenSea is now sitting on 1.8 million active users and is the overlord of the NFT market. Currently, OpenSea has 70 employees and continues to expand, and is in urgent need of customer service representatives.

Recently, there was news that the valuation of OpenSea's new round of venture capital may reach $10 billion. According to this calculation, the 31-year-old CEO Finzer and the 29-year-old CTO Atallah, who each hold a 19% stake in OpenSea, are about to be upgraded from millionaires to billionaires.

Still, Atallah remained unassuming as he chatted with others at a Times Square restaurant in New York in November, sitting on a 32-foot-tall Liberty Next to the goddess statue, but this goddess is holding a cocktail instead of a torch. He was there with a few thousand people for the third NFT.NYC, where young fanatics wore Bored Ape Yacht Club hoodies at the hotel, a nod to BAYC, holders of the BAYC NFT Think of it as a social club rather than just a collectible or an investment.

Arguably, humility was the key to Finzer and Atallah's success. Some advisors have urged them to focus on one NFT niche, such as art, games or music. But they ended up building OpenSea today because they didn't think they had enough judgment to foresee which types of NFTs would become popular in the future.

Aside from "casting a wide net," Finzer said OpenSea got where it is today simply because it was "in the right place at the right time" , and actively listen to user suggestions to understand what they want. This platform can track NFTs on Ethereum and other chains. It needs to be purchased with cryptocurrencies. Sellers can choose to auction or sell at a fixed price. Artists can earn royalties after each resale of their works. Ultimately, Finzer realized that the NFT ownership verification model could work for anything from concert tickets to real estate, he just wasn't sure when it would catch on. "I'm always in awe of the future," he said.

Despite its unexpected success, OpenSea also faces huge and diverse risks: fraudsters, the collapse of the NFT market, and new competition. In October, Coinbase, the largest U.S. crypto trading platform and the earliest investor in OpenSea, announced that it would launch its own NFT P2P trading platform. With more than 2.5 million people on Coinbase's waiting list in just a few weeks, CEO Brian Armstrong predicted that the new business "could be as big or even bigger than its core business, which is cryptocurrency trading. "

Stephen Curry in August Bought this Boring Ape (#7990) NFT for $180,000. He's not the only celebrity with an ape, Jimmy Fallon and Mark Cuban both have their own.

OpenSea's open, censorship-free approach certainly increases the risk of counterfeiting and fraud, just like Amazon and eBay. For example, scammers can copy someone else's artwork and sell it as an NFT on OpenSea. Finzer said the site is working on a way to automatically identify fakes and has people on staff to investigate suspicious listings. Likewise, people can cause a lot of trouble for OpenSea. In September, Finzer asked OpenSea’s product director to resign because Twitter users found that he had repeatedly engaged in “rat warehouse” operations with the director, meaning that he bought an NFT in advance before promoting it on the OpenSea homepage to arbitrage.

Although the founders of OpenSea have always maintained humility, they also have great ambitions. Finzer, who grew up in the Bay Area with a doctor mother and a software engineer father, says he was "devastated" after being rejected by Harvard, Stanford, Princeton and Yale (he ultimately chose Brown). After a brief stint as a software engineer at Pinterest, he founded his first startup, Claimdog, in 2015 and sold it to Credit Karma a year later.

Atallah, born in Colorado to Iranian immigrant parents, began building spreadsheets as a child to visually compare various attributes of birds. He was a programmer after graduating from Stanford University before working with Finzer. In January 2018, they joined the Y Combinator startup accelerator with the idea of paying users cryptocurrency to share their Wi-Fi hotspots. Back then, CryptoKitties, cartoonish virtual cats whose ownership records were digitally inscribed on the ethereum blockchain, had firmly captured the public imagination. “This is the first time that people who don’t really care about Crypto have this much interest, rather than just making money on the hype. I think it’s really cool,” Atallah said. They immediately launched OpenSea and moved the company to New York.

Like their "predecessors" Beanie Babies, time has proven that CryptoKitties are not great investment-grade collectibles, and their supply is too large, diluting large most value. After the boom in early 2018, the NFT and Crypto markets went into hibernation again.

The market has recovered in early 2021, but this is not due to OpenSea. Quite the contrary, platforms like the billionaire Winklevoss brothers’ Nifty Gateway attract attention with carefully curated, high-quality artwork. In March, Christie's auctioned off digital artist Beeple's NFT work "Everydays: The First 5000 Days" for $69 million, the third-highest price ever paid for a work by a living artist.

With the jaw-dropping prices of NFT auctions, more and more ordinary people also want to become creators, collectors or investors, and start using OpenSea, because of its ethos that anyone can be an artist, built-in aftermarket, and convenient features. For example, OpenSea has a handy screening system so users can find NFTs with the rarest (and theoretically most valuable) attributes (like only 46 Bored Apes with golden fur, and they all cost a lot). When a new NFT is created and recorded on Ethereum, the site automatically generates a webpage displaying it, which is a great feature because NFTs become a status symbol, people share their OpenSea pages, and Their Twitter profile picture changes to an NFT they own. “It became a cycle, driven by envy and desire,” said Richard Chen, a partner at venture capital firm 1Confirmation and an early investor in OpenSea. “OpenSea has a firm grip on the market.”

27-year-old Dani Ni, a former fashion designer living in Georgia, turned her $17,000 investment into NFTs like World of Women $715,000. AJ, a 37-year-old former gaming company CEO from North Carolina, turned his less than $10,000 investment in NFTs into a $1.3 million digital asset. He recently convinced his brother, a gastroenterologist by profession, to start buying NFTs. His older brother hooked up with several other friends. “They basically turn on their phones after their colonoscopy to see if there’s a new NFT for sale,” AJ said.

Sounds like a bubble, indeed. This is also the question they will face: what will you do if the NFT bubble bursts? "We've got enough supplies ready to get us through the winter safely," Finzer said.

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