🎙 86 - OpenSea & The Business of NFTs | Devin Finzer

welcome to bankless where we explore the frontier of internet money and internet finance this is how to get started how to get better and how to front run the opportunity this is ryan sean adams i'm here with david hoffman and we're here to help you become more bankless david great episode today with i i guess maybe the unicorn of the year that's devin fisner he's not the unit finster he's not the unicorn of course his company is that's open c uh what do we cover here a little bit of everything going from the complete history of the genesis of

open sea to where we are today also talking about devin's perception as to why nfts blew up at all in 2020 and and 2021 why is society ready for them in today's age what's the appropriate context we also talk about the insider trading which devin uh corrected that term to be something else we talked about that whole debacle and but you really use that as a jumping off point to talk about the nature of openc as a company rather than something like uniswap or

ave or compound which is a decentralized app on ethereum we talked about that spectrum and also asked is openc going to go the whole like committed centralized company route or going to go down the defy application route i asked him the question uh what's more likely an ipo or a retroactive airdrop and so stay tuned for his non-answer there and uh all in all just had a fantastic time had a pretty punchy short conversation with devin fincher ceo of openc yeah absolutely we asked him a

question can nfts really get any bigger are we at the peak so stay tuned for the answer on on that question too and i guess my takeaway from from the conversation with devin is like he he's a really cool guy like he's uh a humble builder right so even when we asked about like how come open c is blowing away everybody else and it really is from a marketplace perspectives absolutely dominating um he pivoted to like here's some things that we're not doing that great you know like here's some improvement areas and uh i i guess

that's kind of what it takes to build a company like open c in this environment we also asked him near the end about his nft collection what what does the ceo of a multi-billion dollar nft company actually own in uh in their portfolio so uh stay tuned for the answer to that as well guys we're excited to get into the conversation with devin but before we do we need to thank the sponsors that made this episode possible bankless is proud to be supported by uniswap uniswap is a new paradigm in

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make sure proof of stake stays as decentralized as possible and is committed to decentralizing its own validating network to eventually become a completely permissionless protocol so if you want to stake your eath tara or soul and get liquidity on your steak go to lydo.fi to get started bankless nation we are super excited to introduce you to our next guest he's had a tremendous year fantastic year it's been a huge year for nfts but he caught the original nft bug back in 2017 when the world didn't know what an nft

even was he applied to y combinator at that time where he began working at openc devin finzer is now the co-founder and ceo of course at openc devon it's been i think last time we talked to you it was march before all of this craziness how you doing now man doing well thanks for having me back on i've been i'm a huge fan of the show as you know i've been listening to all the episodes so it's been a great way to keep track of all the goings ons uh as someone who tends to be somewhat heads

down and company building mode so going well though well welcome to the mutual admiration club because i buy all of my nfts on openc it's a fantastic platform and um it's absolutely blown up this year we're going to talk a bit more about in what way openc is blown up but first we got to talk about nfts writ large last time in march it was just like the very beginning of kind of an nft craze if you will or maybe sort of it was ebbing down but nfts over the course of this year have absolutely

exploded onto the scene and i know you've got a great vantage point on this because you live and breathe this stuff but like why did nfts blow up this year why now well as i always like to say i think it was just like the accumulation of a lot of things over a long period of time but uh i know that's not the you know exciting answer that people want to hear but i i do think you know if you zoom out that what's really interesting is just like it's this whole kind of cultural movement around crypto

that has really driven this wave which is actually not what we expected like early on in our like journey at opencv we thought maybe like sort of mainstream gamers would sort of like come on and like you know people would build these like crypto games that would bring people from outside of crypto and you know there's definitely been some of that but it seems to be more driven by this like cultural movement from really like crypto native people who are now realizing that like there's all sorts of like interesting social and cultural

interactions that they can have through nfts like cryptic monks and board api club and whatnot um so that seems to be it just seems to be kind of the accumulation of a giant movement and nfts playing this critical like you know cultural role inside of that movement um and you know certainly like just all of the building and all the smoothening out of the user experience which is still obviously very rough has just helped grease that flywheel bring more people into crypto and i think it's just the

accumulation of a lot of things at the end well that's a super interesting observation that you just made i want to dig into that for a second so like i like you i thought the interest in nfts would come sort of externally right so like gaming was a huge thing but but you're saying a lot of this has been driven by sort of crypto if you will exporting its culture to mainstream and mainstream being like oh that's cool i'm getting one i want in on crypto culture you're saying it was sort of the reverse of what we all thought yeah and i think like i mean in fact we

probably should have known that right because that's sort of how the internet worked not that i was like part of their like a little bit like i can't i'm just sort of going off of like you know my personal experience and what other people tell me but like you know my senses is kind of a similar phenomenon where like there are these people who are just like super early and internet adopters and there was all this like cool stuff you could do on the internet and it sort of like spread from that as opposed to like you know existing incumbent industries like moving people over right it was more

this internet culture that emerged and then like you know people dipped their toe and once they dipped their toe they were kind of addicted to it so i think it's a similar pattern where it actually turns out like most of the stuff tends to be grassroots at the end of the day even though it's kind of hard to maybe imagine that uh early on so way back when devin when you were building open c at a y combinator and i thought it was an interesting fact to learn that when you actually applied to y combinator it was not to build open c it was to build something

else and then you pivoted during your time at y combinator to build out open c it kind of feels like a change of major uh for a y combinator um so when you were uh choosing to uh build out open c what were you envisioning the future of the nft market would look like and then how closely did we actually get there or what what surprised you along the way yeah well i think i mean my my style and like i think a healthy attitude sometimes can be to not have

sort of too many like preconceived notions of what the future is going to look like and focus a little more on just like what are you curious and excited about in the here and now that was our mentality was just like there's a lot of people building cool nft stuff like there's definitely momentum it's not clear exactly what's going to happen we can sort of like prognosticate different ideas and like you know kind of make some forecasts but generally speaking it was more driven by like there's an exciting product

we wanted to build and let's just go and kind of experiment um but i do think um we're still very excited about the future of like gaming nfts uh as as a big use case i mean axi has really proven that out and i think the interesting thing is that if you look at the development cycle of games they tend to be a bit longer than you know your typical like collectible or art project so i think i'm still really bullish on like you know game companies seeing what axi and other companies have done like taking a few

more iterations and you know really pushing things forward but just taking a little bit longer but being really big at the other day i think gaming could just be huge because there's that utility and sort of native digital uh analog to kind of the existing gaming world so you know i could still see that metaverse vision being driven by these these gaming projects in addition to kind of the collectibles but really you know overall i think it's just like more diversity of nfts all sorts of

experiments is such a broad technology that at the end of the day i think it's gonna be a lot of things so devin some people um aren't sure about all of that right so some people maybe we'll call them the haters out there they think that uh nfts have peaked right maybe we're witnessing the peak i mean openc is doing like billions a month in volume how much bigger could the nft market get they get they ask and uh they say well it's it's maybe it's a bubble i'm gonna ask you the same question like do you think the nft market can actually get bigger than

it is right now oh yeah certainly yeah i think like at some point you kind of achieve you know the level of escape velocity and i obviously think we have a i mean it's early days we have a long way to go and so this isn't sort of a statement that should be taken as like pompousness or like feeling like we've already made it or something but i i do think we've made it sort of past the point where matt where we have to sort of like try to you know correct the naysayers it's like why i spend mental energy like telling people why it's going to be big

when you can just sort of like point to you know what has happened and say like it's pretty clear and if you don't see that then that's fine like we don't have to justify ourselves anymore yeah yeah you don't really need to justify your team do you guys think like the right click save uh tribe is like it's sorry guys case closed exactly yeah i mean i think it was it was it was like sort of an interesting jumping-off point for maybe like an intellectual discussion but like at this point you know it's been discussed and like you know we can kind of move on to like

more interesting things right well let's talk about something that's super interesting and that's uh open seeing the numbers you guys are putting up there so i i mentioned um you know billions in in uh volume per month we could get exact on that 3.4 billion in gross merchandise volume uh in in august i think you're on track september just finished out so over 3 billion again in september so it's not it's not really decreasing very much at all and just to give folks some context

right well you mentioned the the internet the original internet right so like you go back and you look at the web to marketplace companies uh this is more volume than most all of almost all of maybe the very popular web 2 companies it's more than etsy for example i think you guys are creeping up towards ebay type numbers um tell us about that like how is it possible that openc has found itself at the center of this nft mania and this nft boom

yeah well i think it's i mean i i think it's just very interesting to see that you know there's this sort of mechanic where like you know you can have a very interesting business and sort of level of uh you know sort of traditional marketplace uh traction on still a very early community with a very kind of early product and i think it's just a testament to sort of how much room there is to grow right we

are really still serving the crypto community and the people who use open c for the most part are not like necessarily crossing over directly in den of teas they're usually like having to go through a lot of the traditional like crypto hurdles um so i think it's it's pretty you know exciting that we're able to have you know volume numbers that look similar to more mainstream marketplaces in a brand new space and it's just a testament to kind of how exciting crypto as a whole is going to be and i i do

think that we're witnessing i mean we've we've been witnessing this over and over again but each cycle or each sort of movement within crypto kind of becomes it becomes clearer and clearer that this is like a giant trend not sort of like a mini trend within um within tech credits this i think crypto is the big paradigm shift that you know a lot of people have been looking for uh for a long time of course openc isn't the only nft

marketplace that exists out there there are there are plenty other marketplaces where you can browse nfts and purchase nfts but openc is really the platform that seems to have captured the bulk of the energy when it comes to this nft mania nft phenomenon nft hype what what about openc made it be the standout clear winner in the last few months of nft market volume well what's the what features and designs about the open c platform really made it the the winner that we all know

yeah well the first thing i'd say is like we're really trying to improve our platform like we you know um we were sort of in the right place at the right time we had a great feature set we have you know people on our team we're always really listening to what customers want and trying to build the right features for users so i think that's been really important but i do think at the same time you know we've gotten some push from the community that we can do a lot better on a lot of different angles and so i want to start by just saying that we're trying to improve and so i don't think you know

i'm always hesitant to talk about what we're doing well because we have so much room to grow um but i do think you know the things that we did well you know we just sort of like continued to uh figure out like what was important to people when they were browsing and filtering and discovering nfts right like you know traits are really important for nfts to be able to have a sidebar where you can like dig in and like easily filter search performance of the site which is something we're still working on is really important so something we take really seriously

different mechanics so auction mechanics bidding bundles private listings all these things just like sort of the full suite of um buying and selling and then you know gradually making the user experience easier for people so supporting all the different wallets just being very kind of friendly with the ecosystem as opposed to trying to build all of the things ourselves has been important for any web 3 company i think it's really important to like figure out what your focus is and not kind of

necessarily try to like take everyone else's territory but be really you know friendly and um and play into the ecosystem and we all know that communities are the lifeblood of almost everything in crypto companies applications tokens doesn't matter your community is everything and so having a company that listens to the community is really really important and so devon i'm going to ask you kind of an unfair question uh is it intimidating to seemingly have like an entire nft bull market on your shoulders

well yeah or well i think um you know i i definitely don't want to give the impression that like openc is like the one company you know moving this thing forward it is interesting that like we have been um such a dominant force in terms of like market share and all these things um and certainly it's a big responsibility to the like to make sure that the product is as good as possible like fix these

burning issues and we really are trying as hard as we can to kind of like scale the team and you know we're like a very small team when we start happening six or seven people now we're about 45 people um but like wait you guys were six or seven people when like this year about a year ago or about six or seven people yeah six or seven people a year ago now 45 and uh yeah so a very small team that had to sustain this growth yeah yeah so we're really yeah and i think for anyone who's like frustrated

with their platform yeah we are trying to improve it uh and it's been really just like a challenge of how quickly can you scale you know not breaking all the kind of cultural things that make the company work well so yeah we're um really trying our best uh and uh it is a big it is a big burden or not but a big responsibility for sure i want to peel back some of the layers there because you guys have gotten absolutely just flushed with users over the last few months or so only in such a

short amount of time right so what are these users telling you both the new users the old users like what are the most commonly requested features what are the most commonly like surface complaints like what what do the pro what do what do the users demand in 2021 when it comes to openc and nfts yeah i think um you know trust and safety is a big one we're investing in so ensuring that like when you find something on openc it is like the sort of verified version of what you're looking for and it's not you know

anyone can create an nft now so that means that you can create a fee that resembles a legitimate one so just figuring out how we deal with that problem in like more creative ways you're curating for quality and filtering out like yeah and stuff like that exactly so just doing a better job of like manual curation algorithmic curation ensuring that the best content gets filtered to the top right it seems like a almost like a google type job that like the thing that google did for the web was like just curate links for us right help us search things um yeah

that's kind of what you're talking about right yeah no exactly i think i think there's a lot of like interesting analogs there here we're dealing with like sort of more structured data whereas like web pages are just this giant like html thing so it's a little bit of a different problem um but yeah and certainly similar um and then you know there's also the external challenges right where like people are getting you know scammed or fished on discord or whatnot so dealing with those sorts of challenges um you know now they're actually a really interesting one that's

popping up that we're working on is like you know now nft's almost become this like free messaging platform like you have your openc account with like your stuff in it and anyone can send an nft to you without you needing to accept the nft and so now people are sending especially on polygon they send people this maybe you guys have experienced it these spam nfts and so giving users greater control over their profile and like what kind of bids they see what kind of stuff they see there like those sorts of um

challenges are another one that is a big pinpoint and then i think the one that's maybe not spoken about as much by the like more vociferous members of the cryptic community but is a big pain is just people who are trying to get in and like have to go through you know get crypto somehow and then get it into the mess you know the traditional like crypto onboarding challenges hit us pretty hard as well uh definitely do you find um users uh complaining about gas fees like to gas

fees does that become your problem like so i've been personally shocked at myself because like uh you guys know me on bagless i do not like to spend eth that's a thing i do not like to do yeah and i found myself on open speed see and i'm like i'm like spending 100 or more right like like to mince something david's like those are rookie numbers i'm surprised that um i it's been surprising for me to see the amount of demand for nfts and how uh nft like

purchasers and users are willing to spend massive amounts of money to uh to do things in this field yeah i'm curious your thoughts on all of that i guess yeah kind of a growing concern do you think it's a show of maybe of strength of nfts that that people are it's got product market fit people are willing to just to go to these lengths to mint them what's your take yeah well no i mean i think it's a very strong indicator of like product market fit the fact that like people are paying hundreds of dollars like i don't even

list their first you know there's a setup process on opencv to pay gasty and like that often costs a lot of money and just like people going through that demonstrates that there's so much strong demand here um i do think like you know to your question of like you know having to use eth right you can have like a process where you like restock up on each every type but often times like you know you don't think you don't necessarily think to do that um but yeah i think like the barriers to entry

are so high and the fact that people are like you know doing it is just such an indicator that there's so much potential um i mean on polygon for example like that sort of a testing ground and there's you know some of these other layer ones and all these other things are like kind of testing grounds for what it looks like when you're when users don't have to worry about that for example on polygon we pay gas fees which is kind of nice the challenge is that you you do run into like the gas fee is almost this kind of like interesting and

inefficient spam production system right i guess that's kind of what it's for right but it has like these sort of like it does it in a really weird way i guess um and you don't have that on some of the polygons so then you sort of have these different problems that come up when when the application is paying the gas um so i think application developers and users are going to try to figure out like what's the best way to provide a good onboarding but then also like have these checks and balances in place um

but yeah i want to get your take on this because i think this is a big secular trend that we've just um entered into and this is like social social media platforms and web 2 now starting to come to web through uh we've seen glimmers of this with reddit right they're doing technical stuff but now we're seeing it with nfts and we're seeing it a big way so uh you know the the newsletter platform that we use on bank list is called sub stack right and we have been bet i've literally been begging them for the last two years to add eth as a payment option

right and pay by credit card would do something manual if they want to pay by crypto they still haven't done it yet okay but you know what we get as a release a couple weeks ago is like the ability to embed nfts from open seas in sub stack which is super cool and like they're a smaller platform they're not the only ones twitter now the ability to authenticate nfts as part of a twitter profile that's huge tick-tock now starting to experiment in in the space and what i've sort of seen devin is like there seem to

be almost three steps to this of web two entering web threes like step one they start experimenting they're minting something they got some content yeah that's what twitter's doing that's what uh sorry that's what tick tock's doing now but that's what twitter did a couple months ago and then they get into the we want to authenticate nfts on our platform that's where twitter is i expect that's where like the tick tocks of the world are going next i i expect they'll want to start like minting content maybe directly from uh their platforms but like tell us about this trend is this a big

deal for nfts and what does this mean for uh c yeah i think it's a huge deal i mean i think what's so cool about web3 and maybe what um is sometimes overlooked is it's in the same way you know the internet was sort of built on the fact that everyone had personal computers right that was like a sort of critical building block like web 3 is and then web 3 is built on all the kind of like information distribution infrastructure that was

like built through web too right like it's now nearly trivial to like contact anyone else in the world right through twitter or whatever social media thing and and just and spread information across the world and so um these when when you add the like this sort of new primitive on top of that those rails i think what we might see is just like way faster growth than maybe is expected and it's interesting because you know we had slow

growth for a really long time and then if you look at our trajectory it was like boom like unprecedented and i could see that same sort of like unprecedented or define the laws of physics level of like trajectory for crypto as a whole and not just speaking of nfts because we're not really dealing with hardware here we do have some like technical constraints on like underlying blockchain systems but the rails have already been built to like get this distributed globally that

um i could see things sort of like moving really quickly right and it's scary i think actually in some ways um but i think the to the question around like you know this web 2 web 3 thing i i think that's going to be one of the sort of i mean it might fizzle at first like you know maybe some of these early experiments won't you know like get crazy traction and people will kind of just be like okay but i think eventually that will be sort of what takes it to an even bigger level yeah this could accelerate quickly i'm

like i'm like um starting to realize that over the last you know a couple months but like how many uh how many people own nfts right now i've seen estimates where it's like i don't know two hundred thousand addresses maybe three hundred thousand that's higher than that because um i mean i think like let's say let's say you know it's it's in that range i don't know if it's over a million do you think devon yeah i don't want to give any exact numbers but like you know i would guess more in the millions so we're in that ballpark right high

hundreds of thousands maybe maybe a million maybe a bit more right but like how many daily active users or monthly active users does reddit have right you know 450 uh million right and like what's the i don't even know how many accounts does twitter have right hundreds of millions yet again and so web web 2 kind of adding this nft overlay is going to bring a tremendous amount of exposure to nfts and this thing could blow blow up really quickly

like it could accelerate we could be at the beginning of the nft acceleration even though it feels like to some like it's the top so yeah i double down on that like seeing web two platforms they're okay web 2 is adopting nfts in a way they've never adopted like cryptocurrencies and tokens right never not even close because i feel like they think they've already got the payment thing like figured out it's like it's okay yeah we

accept credit cards and that's good enough for a lot of people but like this nft thing it's new it doesn't exist you can't do this outside of web yeah i think it's a great point yeah it's like incremental technology is not gonna cause people to like change their road maps and like you know shift trajectory or shift prioritization but like brand new experiences that like are attracting you know millions of new users into these things even though it's

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