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OpenSea founder: We can survive the cold winter safely

OpenSea is the absolute leader in the NFT trading platform today. They survived the cold winter, defeated one after another, and firmly seated on the throne. Although the monthly transaction volume has gradually declined since August, they also occupy the entire NFT market. % Share.

From the beginning of its establishment, the monthly transaction volume has reached several thousand US dollars to the current billions of US dollars. The valuation has increased from the initial 1.8 million US dollars to the current 10 billion US dollars. Have you ever wondered what ups and downs they went through before they grew into today’s industry leaders? This article is written by Jeff Kauflin, author of Forbes, and tells the story behind the two founders of OpenSea, Finzer and Atallah, when they founded OpenSea. Rhythm BlockBeats translates the full text as follows.

For general start-ups, it is important to focus on a certain segment of the track, but the founder of OpenSea has established a platform that can trade a variety of NFTs such as art, music, and game assets. Development in these areas is very good. Today, the founders of OpenSea have become millionaires, and may soon become billionaires, but at the same time, they have other concerns: competitors, fraudsters and the next Crypto bear market.

In March 2020, at the beginning of the global pandemic of the new crown epidemic, Devin Finzer and Alex Atallah made a phone call and cheered 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 NFTs to track unique digital assets such as art and music. Ownership on the ledger of the blockchain.

However, OpenSea has only captured 4000 active users during the 26 months of its launch, and the monthly transaction volume is only 1.1 million US dollars. OpenSea can only get 2.5% of the sales commission from it, which means OpenSea’s monthly revenue Only a mere $28,000. The NFT market at the time was “dead,” said Atallah, CTO of OpenSea. 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 to work. What makes them more disturbed is that Rare Bits announced its bankruptcy not long ago. It is a competitor of OpenSea and has more funds than OpenSea. So the founders of OpenSea set a goal to fight back: to double their business before the end of the year. Soon, this goal was achieved in September.

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Year of the NFT: Co-founders Alex Atallah (left) and Devin Finzer at OpenSea’s new SoHo office. The company was launched in 2018, and this year’s revenue is expected to exceed 300 million US dollars, while its 2020 revenue is less than 1 million US dollars.

Finally, in February 2021, the NFT market woke up from hibernation, and then went into madness. In July, OpenSea’s transaction volume reached US$350 million. It was also this month that OpenSea completed a US$100 million venture capital investment at a valuation of US$1.5 billion, led by a16z. In August, as the NFT craze reached its peak driven by the market’s FOMO sentiment, OpenSea’s transaction volume surged tenfold, breaking through US$3.4 billion, and OpenSea’s monthly expenditure cost was less than US$5 million. In August alone, OpenSea had a reward. A profit of $85 million. Although the transaction volume since then has dropped to around US$2 billion per month, OpenSea now has 1.8 million active users and is the dominant player in the NFT market. At present, OpenSea has 70 employees and is still expanding its enrollment. It is in urgent need of customer service representatives.

Recently, it was reported that the valuation of OpenSea’s new round of venture capital may reach US$10 billion. Calculating this way, 31-year-old CEO Finzer and 29-year-old CTO Atallah, each holding 19% of OpenSea’s shares, are about to upgrade from millionaire to billionaire.

Despite this, Atallah remained humble when chatting with others in a restaurant in Times Square in New York in November. He sat next to a 32-foot-tall Statue of Liberty, but the goddess held a cocktail instead of a torch. There he participated in the third NFT.NYC with thousands of people there. Young enthusiasts wore hoodies with Bored Ape Yacht Club printed on the hotel to revel in the hotel. This is a tribute to BAYC, holders of BAYC NFT Think of it as a social club, not just a collection or investment.

It can be said that humility is the key to the success of Finzer and Atallah. Some consultants have urged them to focus on an NFT market segment, such as art, games or music. But they eventually established OpenSea today because they thought they did not have enough judgment to predict which type of NFT would become popular in the future.

Finzer said that in addition to “casting the net”, OpenSea’s achievements today are simply because it “appears in the right place at the right time” and actively listens to users’ suggestions to understand what they really want. This platform can track NFTs on Ethereum and other chains. It needs to be purchased with cryptocurrency. Sellers can choose to auction or sell at a fixed price. Artists can earn royalties after each resale of their works. In the end, Finzer realized that the NFT ownership verification model is applicable to everything from concert tickets to real estate. He just wasn’t sure when these would be noticed. “I have always been in awe of the future,” he said.

Although OpenSea has achieved unexpected success, it also faces huge and diverse risks: fraudsters, the collapse of the NFT market, and new competition. In October, Coinbase, the largest crypto trading platform in the United States and the earliest investor in OpenSea, announced that it would launch its own NFT P2P trading platform. In just a few weeks, Coinbase has more than 2.5 million people on the waiting list. CEO Brian Armstrong predicts that this new business “may be as big as its core business, the cryptocurrency trading business, or even bigger. “

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Stephen Curry bought this boring ape (#7990) NFT for $180,000 in August. He is not the only celebrity with apes, Jimmy Fallon and Mark Cuban both have their own apes.

OpenSea’s open, censorship-free approach undoubtedly increases the risk of counterfeiting and fraud, just like Amazon and eBay. For example, scammers can copy other people’s artwork and sell it as an NFT on OpenSea. Finzer said that the site is studying a method to automatically identify fakes, and has a dedicated person responsible for investigating suspicious products. Similarly, people will also bring a lot of trouble to OpenSea. In September, Finzer asked the product director of OpenSea to resign because Twitter users found that he had repeatedly conducted “mouse warehouse” operations with the director, meaning that he bought the NFT in advance before promoting it on the OpenSea homepage to arbitrage.

Although the founders of OpenSea have always remained humble, they also have great ambitions. Finzer grew up in the Bay Area. His mother was a doctor and his father was a software engineer. He said he was “suffered” after being rejected by Harvard, Stanford, Princeton and Yale (he eventually chose Brown University). After briefly serving as a Pinterest software engineer, he founded his first startup Claimdog in 2015 and sold it to Credit Karma a year later.

Atallah was born in Colorado. His parents were Iranian immigrants. When he was a child, he began to make spreadsheets to compare various attributes of birds visually. After graduating from Stanford University and before working with Finzer, he was a programmer. In January 2018, they joined the Y Combinator startup accelerator and proposed the idea of ​​paying users with cryptocurrency to share their Wi-Fi hotspots. At that time, CryptoKitties, a cartoon virtual kitty that digitally engraved ownership records on the Ethereum blockchain, firmly captured the imagination of the public. “This is the first time that people who don’t really care about Crypto have so much interest, not just hype for profit. I think it’s really great.” Atallah said. They immediately launched OpenSea and moved the company to New York.

Just like their “predecessors” Beanie Babies, time has proved that CryptoKitties are not excellent investment-grade collectibles. Its supply is too large, diluting most of its value. After the boom in early 2018, the NFT and Crypto markets went into hibernation again.

The market has recovered again in early 2021, but this is not the credit of OpenSea. On the contrary, platforms like Nifty Gateway of the billionaire Winklevoss brothers attract people’s attention with carefully selected high-quality artworks. In March, Christie’s auctioned the NFT work “Everydays: The First 5000 Days” by digital artist Beeple, which sold for US$69 million, the third highest price for a living artist’s work.

With the jaw-dropping price of NFT, more and more ordinary people also want to become creators, collectors or investors, and start to use OpenSea, because it has the spirit that anyone can become an artist, built-in second-level Market and convenient functions. For example, OpenSea has a convenient screening system, so users can find the NFT with the rarest (theoretically most valuable) attributes (for example, only 46 Bored Ape have golden fur, and they are all expensive). When a new NFT is created and recorded on Ethereum, the website will automatically generate a web page that displays it. This is a good feature, because NFT has become a status symbol, and people share their OpenSea page and will Their Twitter profile picture is changed to the NFT they own. “This has become a cycle, driven by envy and desire.” said Richard Chen, a partner of venture capital firm 1Confirmation and an early investor in OpenSea. “OpenSea has a firm grasp of this market.”

Dani Ni, 27, is a former fashion designer living in Georgia. Her US$17,000 investment in NFTs such as World of Women has turned into US$715,000. The 37-year-old AJ is a former CEO of a gaming company from North Carolina. His investment of less than US$10,000 in NFT has turned into a digital asset worth US$1.3 million. He recently persuaded his brother to be a gastroenterologist to start buying NFT. His elder brother got a few other friends. “They basically turn on their mobile phones after the colonoscopy to see if there is a new NFT on sale,” said AJ.

It sounds like a bubble, indeed. This is also the question they will face: if the NFT bubble bursts, what will you do? Finzer said: “We have prepared enough supplies to survive the cold winter safely.”

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