OpenSea CEO Devin Finzer sees more opportunities for NFT use cases to grow | Chain Reaction Podcast

Key Takeaways

hi everyone it's Jacqueline melanic welcome to chain reaction a show that unpacks and Dives deep into the latest trends drama and news breaking things down block by block for the crypto curious this year we're doing monthly series diving into different topics and themes in crypto and to start things off this month we're focusing on nfts I'm interviewing some of the biggest nft players and Founders about how they've weathered the booms and bus in the sector what they're focused on and what could be next for the industry hope you enjoy today's guest is Devin finser the CEO of nft marketplace openc Devon co-founded openc in 2017 and it quickly climbed to be one of the most well-known and well-funded nft marketplaces two years ago it raised $300 million in a series C round at a $ 13.3 billion post money valuation bringing its total Capital raise to over $400 million some of its investors include firms like Andre and Horwitz and Paradigm as well as celebrities like Kevin Durant and Ashton Kutcher despite the nft Market's trading volume falling from all-time highs in late 2021 early 2022 openc is still pushing forward even though other marketplaces like magic Eden has popped up and challenged their dominance but as the tides change pun intended we're interested in hearing what the company has been up to and how it's mapping out its road ahead with that said Devon welcome to the show thank you so much for having me yeah and before we get to everything nft related we like to start by asking our guests can you tell me about one of the most interesting people you've met in the past 12 months in crypto and what did you learn from them oh man that's a good question I won't give a specific name but I think one sort of category of person and individual is just the luxury brand the head of luxury brand sort of Dipping their toe in the nft space I've been having some meeting with with various Brands this is this is kind of um top of Mind recently and it's just interesting kind of the whole spectrum of things that you can do in the luxury space we tend to sort of think of the physical world of luxury but there's this whole kind of digital universe that is really just starting to be explored but it's impressive what some of these Brands like um lvmh for example have started doing with nfts and I think the general theme that I think just sort of dominates the nft space is that well certainly the market has changed a lot The Innovation and the amount of activity just on the ground floor of people building stuff you know everyone from smaller web 3 creators to midsize gaming projects to bigger Brands The Innovation just continues to be really strong so I always feel like every time I meet a partner who's coming in from outside of crypto and into the nft space I'm just kind of Blown Away by just the level of awareness and education and sort of thoughtfulness that these bigger partners are are bringing to the space especially as it compares to a year or two ago when people were just first kind of wrapping their head around it I'm glad you brought that up because I actually have a question on that later but before we get into that I want to dial back to like day one of openc as I mentioned you launched it years ago back when nfts weren't really a big deal like at all I don't know if you felt differently I'm sure there were crypto kitties and crypto punks and things like that in the air but it was really tiny so I guess the question I have for you is like what did you see then that made you want to start openc yeah and I think it's a great point because it's certainly true that nfts were really tiny back when we started in late 2017 and really just the first use cases were coming about I would actually say that the market is still really early right in terms of what we saw back then we were really excited about NFS as this highly generic technology that could be used to represent any digital item that could be an item inside of a game it could be a piece of digital art it could be an event ticket it could be a domain name it could even be a digital representation of a physical item and so we really from the beginning we saw this as more than just Collectibles and profile pictures actually in the beginning we didn't even really think that profile pictures would be a thing it was sort of a brand new market that kind of emerged organically but we always had this really big vision of like nfts can represent all sorts of different things and it's funny that as you fast forward to 2023 and 2024 while we've seen this explosion in the nft market particularly in 2021 with profile pictures and art and all these exciting you know sort early use cases we still have so much further to go in terms of representing all of the kind of wide array of things that nfts can represent and gaming is an example of a category that's still really early to answer your question more directly what we saw was this really powerful basic primitive and all of these different use cases that could be represented and that just got us really excited and technologists and startup Founders are always a little more willing to kind of play around with the early toys even if they haven't gotten Mass adoption yet I think that's kind of what makes Founders unique is that they tend to be really early into markets and certainly we were really early into open se but we were just so inspired by the opportunity and kind of the Innovation that was happening in the space that we ended up continuing to build from 2017 2018 2019 2020 and then finally into 2021 when we really saw the rocket ship growth of the space do you think open C followed the initial Vision that you guys had for all the opportunities here or has it kind of shifted into more focus on those like pfp aspects like you mentioned I would say we've actually really stuck to the original vision and I think that's a unique thing among startups it's not always the best approach Ro but it has been for us and you know we haven't built a lot of features that only apply to the sort of collectible pfp Art Market we have built some but a lot of the features that we build we view as these more generic building blocks that work across all sorts of different use cases and even though some of those use cases are still more in their infancy we think that eventually they'll it's really the approach of kind of letting a thousand flowers bloom and letting some of these earlier use cases experiment with the platform and see how they can take off so we've really I'd say that we sort of started with this belief that nfts would be super General and super generic and every single feature we build is either a generic horizontal building block or it's something that can at least be used across a couple of different verticals and so you know particularly over the next year we'll be building more and more of these vertical specific use cases but we tend to build them in a pretty generic way that will be usable across a bunch of different applications you talked about event tickets before and some of these things that you just mentioned I'm curious what are the expansion efforts going forward where does open C see the future for its core product categories yeah so a couple different areas the first is gaming is an area we've always been really excited about really from day one if you remember back to 2017 the first use case as you mentioned was crypto Kites and it was a game and from there the web 3 gaming Community was really small but it was sort of the most passionate group of folks who were interested in kind of pushing the space forward now gaming has grown to be huge there's been billions of dollars invested in web 3 gaming and a lot of the sort of Investments that were made in 2020 2021 are just starting to come to market and just starting to kind of actually find product Market fit with real users so that's an area where we're really excited we've been involved everywhere from just supporting new primary launches for games with our primary drops product to building out some of these sort of utility oriented features like the ability to redeem an nft on openc and then just all the kind of generic building blocks like onboarding and user experience that benefit the gaming industry so I'd highlight that as one of our bigger bets and then you know things like physical items represent nfts I could go on and on about as well but there's a whole sort of host of other things that we're excited about but I'd highight gaming as as a really big one so do you think gaming will be the big nft driver for 2024 I think that is a really good shot yeah I mean the interesting thing about gaming is that it doesn't necessarily always show up in the volume numbers because sort of inherently a game economy does thrive on having Gamers being able to come in and buy something for $1 or $2 and so it's not necessarily going to have sort of the flashy effect that maybe a profile picture project selling for thousands of dollars each might have and so sometimes it actually flies a little under the radar it also takes a while for games to develop and find a really good fit with their audience so I see it as more of this kind of it's less of that hype cycle based Trend and more just the gradual development of the space and the maturation of the types of games and if you look at like a snapshot of the types of gameplay experiences that can have in web 3 today versus just last year it's like it's night and day so i' in some ways I'd argue it's already kind of driving web 3 adoption it's just maybe not as sort of visible as other use cases for nfts yeah I agree with that we've had guests on in the past who have talked about web 3 gaming and how it's kind of like either baked in and like you don't even realize it's a blockchainbased game or web 3 game whatever you want to call it or it's like very prominent in your face you know you're using like a web 3 Game Y and I I think to your point that that these things will take time because it's not easy to make a game unless it's like something like not Angry Birds the one with the you know what I'm talking about the little p Flappy Birds yes exactly but great game yeah I I think I definitely agree with you on that point you've been in this space for longer than I have longer than a lot of people I'm curious what do you think has been the biggest surprise for you being in the nft ecosystem after the boom maybe after the boom well I think I think one you know surprise was post nft boom you did see some larger companies sort of move on from the space for sure but generally I would say that even the bigger Brands who you might expect to be sort of fair weather friends of nfts continue to and I think the ones that are most dedicated and most interested in space just continue to build things so you know I think whenever there's a hype cycle in crypto you have a rush of people who get really excited about it because maybe the price is moving up or like you know they hear about it from their friends or whatever and then as the market kind of cools down you have a lot of those people leave I think what's really captivating about nfts is in contrast to some of the other areas of crypto where it really is purely about financial services and speculation and prices and all those sorts of things with nfts the technology itself is just so invigorating and so exciting that when you sort of join the space and get interested in it for the first time you tend to stick around for the sort of long-term opportunity in the technology and that was actually kind of what my story as well and maybe at a smaller scale I I got interested in crypto because a lot of my friends were talking about it and it was true that the price of ethereum and price of Bitcoin was going up so it's like okay what you know what's going on here but then as I read the ethereum white paper and particularly as I learned about use cases like nfts I was like okay this is interesting purely from a societal technological like Trend and I think I've been pleasantly surprised at the degree to which that has resonated with companies building in the space from the really small startup to the larger like brands that you know are maybe a little more traditional and way more conservative I I could partially agree with you on that I think you know nfts have that speculative nature some people really buy into them because they want to like you know make the next board ape Yacht Club buy and then there's also people who end up becoming the quote unquote community members which is kind of like a joke that you bought something you thought it was going to do well and then you just become a Community member and as you mentioned with the brand aspect we've seen social media platforms like Instagram commit to nfts then decommit we've seen other web 2 firms launch nft collections then do nothing after but then we've also seen ones that are like extremely committed like you said yeah so I guess on that front what needs to happen to keep these Brands and industries and also just like retail investors in engaged in the long term and not just seeing this as a fad yeah I think one thing where it's been a mixed bag we've both made a lot of progress but we still have a lot of room to grow is making web 3 as accessible to regular users as the rest of the web and the rest of e-commerce and what I like to kind of call the the Holy Grail of web 3 or or nfts or crypto which is like getting the same onboarding experience the same smoothness of user experience that you know you certainly can get if you go fullon web 2 and you just have like credit cards and like you know you sort of fake the nft experience all custody those sorts of things but that real amazing user onboarding experience combined with the benefits and core native value propositions of web 3 which is like interoperability across different platforms the ability to own an item and you know resell it on a third party Marketplace ownership of your own data like all those sorts of things so I think the opportunity for the space from our lens is building a feature set that allows people to get into web 3 both really easily but also in a way that they can experience the benefits that was not true in 2021 it really was the case that in order to participate you had to sort of level up your expertise and download metamask or download your own wallet figure out how to get crypto into it figure how transactions work all those things and as we build during the sort of nft bar market now the infrastructure is at a place and actually one thing I didn't mention was just transaction costs right like to buy an nft on eive yeah it is still expensive on ethereum but we have Layer Two Solutions now which reduce that cost significantly so point being what I think I think one of the building blocks that needs to really mature and it's sort of our core focus of the company is again getting that Holy Grail where we have really amazing user onboarding experience and user experience generally combined with the sort of power of web 3 and the interoperability and you know Marketplace activity associated with it there was actually something that someone said to me recently where developers are building now for users and use cases as opposed to like blockchains and I feel like it kind of applies to that for sure I'm curious on that front we kind of talked a little bit about like speculation and everything how much does nft sales volume have an impact on your business and like how do you navigate that if it is substantial yeah I mean it certainly has an impact on the revenue of the business and the and the business model but it isn't something that we are laser focused on I would say what we're laser focused on is really core product improvements we really do view this space as early and as such so many of the things that we get to build are you know if you work at a traditional tech company you're like tweaking the text on a landing page AG or you're like AB testing you know a different sign up flow or something like that for us we're literally like going from like you got to download metamask and and have a seed phrase to okay you can actually just sign up with an email and actually make a purchase right so we're we're making those like really big step function product improvements and so we're less like okay we need to do this because it's going to like change our volume numbers or something like that if there were things that we could do that that were kind of like that it would I'd say it' be a different type of business and then the other thing that we really focus on is just as opposed to just volumes how are users engaging and are users going from signing up to transacting are users coming back and using the product are users buying interesting new nfts and how much Innovation is there at the product development phase for projects right like are the games getting better are the art projects getting more interesting are new brands coming in all of those signals I think are actually healthier things to look at than just did the price of for AP go up you know and then that sort of led to higher volumes for the company I think accessibility is definitely something people look for especially new entrance to the web 3 world y I know for people in my life that are not in crypto if they had to download a metamask wallet and send crypto to it just to buy an nft I think I'd lose them at the first word metamask like we wouldn't even get to step two or three you know and now the fact that you could just go and buy it makes it extremely more accessible and I think that's something that some platforms don't have so on that note how does open C compete with other nft marketplaces to stand out whether it's through accessibility new offerings features products like we talked about earlier and kind of like remain competitive to have that market share and trading volume because you want people to use openc you know like totally so I think a couple things one is we've built enough services on openc that our platform really can be a One-Stop destination One-Stop shop for all of your sort of nft use cases we've made significant improvements in accessibility around the wallet layer and just user onboarding I think openc is kind of the best place to start for new users also just on the user education front so articles about learning about what nfts are and like what are the use cases all those sorts of things so it's a great place to start and then it's also a really great place to build out both your sort of portfolio of your inventory as a user and also if you're a project you're sort of One-Stop shop for what we call Open Seas Studio which is the ability to go create a contract create nfts create a drop and do a primary launch on open c as well as have the secondary Marketplace on openc the other thing that I would highlight here is we've made a lot of Investments over the years in trust and safety so a big problem in the nft space is people will have and this is a problem that was particularly difficult for us early on because we had so much of the sort of eyeball share of people coming to the space people would basically create an nft that looks visually identical to you know Bard ape or whatever it is and try to kind of pawn it off as a real thing so we've invested a lot in ensuring that any sort of fraudulent or problematic collections get automatically removed from the website so I think the combination of all of those things really make and see this kind of place where you can reliably come to the platform and kind of get all you need from it whether you're a firsttime user curious user or even more of an advanced user or you're a Creator or project that wants to go and launch you can rely on us for sort of the full spectrum of capabilities and functionality do you kind of see openc as a nft Marketplace for earlier crypto users or like the seasoned like experts or it's for everyone then I would say for everyone so we have both a platform the openc proper which is more dedicated to someone who's newer or curious or more of the collector type then we also have openc Pro which is dedicated to the more advanced user one thing that we'll be doing over the next couple months is unifying these platforms so that it's easier to move between the sort of collector experience and the advanced experience right now they're two separate platforms you can obviously connect both your wallet to either one but there's a little more discontinuity between moving from one to another so yeah I mean our goal I know that there's a lot of value in Focus as a startup and really targeting a specific user base but we really do think that nfts are early enough that we can service the full spectrum of users and obviously there are going to be people who want a certain type of UI that maybe isn't quite what open C is and those people you know there are other options but we really do want to provide a platform form that's generic enough that it'll appeal to the full spectrum of users yeah it's right you don't have to make everyone happy Devon exactly I think for the nft enthusiasts the people who are obsessed with nfts a lot of them are driven by like Community engagement and I know that another nft Marketplace over the summer maybe tensor launched a collection for users and then some crypto projects in general like airdrop tokens or collections to their community members is that something that open C would ever consider doing it's something we we could consider it's you know it's not in the works at the moment or we you know I can't disclose whether that's something that we're kind of actively working on or discussing internally but you know it's never out of the question and I think there are some interesting elements of sort of adding incentives for users in a sort of more cryptoeconomic native way I do think that some of the programs that have been launched by other competitors have sort of allowed ow them to build a user base that's a little more short-term oriented and is really there not necessarily just for the product but for for the incentives alone and um that can be problematic because those users don't necessarily have real loyalty and real stickiness with the product that you're building so of course those are things that we'd want to kind of keep take into account when we think about that how does open seat plan to create Customer Loyalty are there kind of rewards there to keep users coming back what does that kind of look like for you I personally think that one of the most important things is really building a great product and building for the long run because I think that users they come for the product experience initially right they're looking to fulfill some sort of task in our case you know they're looking to purchase an nft sell an nft create an nft whatever it is and then they stick around if the product continues to meet their needs and continues to sort of improve alongside the evolution of the space and if you look at and speaking just personally like the products that I'm most loyal to are the ones that you know I've used for a long time and every single thing that they ship just improves the product experience and is kind of either what I would expect them to do because it's fixing some broken issue or it's unexpected but I'm sort of happily surprised by whatever it was that they introduced right and and so I think the long-term approach to user loyalty is really continuing to build a strong product offering okay on that note we're going to take a quick break before we get into the rapid fire [Music] segment and we are back now it's time for our rapid fire segment where we asked Devon some quick questions and hopefully get some quick responses to start Devon what was the nft or nft project that you remember first getting you really excited about getting into this space definitely crypto kitties yeah I just thought it was really fun it was like the crypto kitties were really cute and uh I thought it was interesting do you own one uh yeah a bunch all right what are the three most surprising use cases you've seen for nfts if you had to list them software licenses was a really interesting one so basically the ability to own a piece of software and use that software as long as you own the nft super cool I think just seeing like crypto conference tickets catch on I think it's a really cool one because you already have people who are in crypto and it's a little easier than needing to kind of go directly to mainstream with mainstream concert tickets or Music Festival tickets so targeting crypto conferences I think is a really use cool use case and then the third one generative art I think is just really cool I mean we obviously have profile pictures and collectibles and all that stuff but there's just been so much interesting work being done on like using the attributes of the blockchain itself to generate unique art and it's something that has gotten the people who are deepest in the space really excited because it's kind of nerdy and fun and interesting yes or no do you think nfts need to be renamed to something else not at this point no how many nfts do you own oh man probably like a couple hundred or so but bunch of them are just me like fiddling around and testing stuff which one's your favorite o I do really I like my cool cat which is my uh which is my Twitter profile picture all right we talked a little bit about web 3 gaming in the beginning which one is your favorite web3 game right now it's hard to pick a favorite but one of the ones that I'm really excited about and I think is is definitely pushing the space forward is parallel Alpha which is a you know trading card game it's space themed you know has elements of kind of magic that Gathering or Hearthstone but yeah I think the team and we've worked directly with them on some of their launches has just been iterating continually pushing the space forward and I think I think it's always this idea of could you sort of have the same open market and the same ownership rights that you have over a physical Black Lotus Magic the Gathering card that you can go and sell on eBay could you have that in the digital Trading Card World has always just been something that has really resonated with me and I think is going to continue being a really exciting idea for sure given that this is a tech crunch podcast I've got to ask you Devon is openc looking to raise additional Capital um not at the moment okay but when you guys do you you'll come to us right totally there we go all right kind of stepping out of Rapid Fire I would love to know to wrap things up what other core use cases for nfts do you think will be the most prominent in 2024 out of of all the ones that we've discussed yeah I mean I think gaming is the one that I'm most excited about the other one that I don't think we talked as much about which I would definitely highlight is the idea of physical items represented as nfts so the sort of way that this can work is if you look at existing marketplaces for rare physical sneakers they're actually quite vibrant right there's a whole community of people that like to sort of buy and sell those sorts of physical things and you know obviously we we talked a little bit about the luxury Market as well one of the really cool use cases for anes is you know you take a physical pair of sneakers you create an nft you can buy and sell that nft as many times as and it can move around from person to person before it's actually redeemed for the physical item and so we've been recently working with you know some platforms on partnering and doing more launches in the sort of physical digital collectible space I just think there's a lot more opportunity to explore and a lot more opportunity for growth there as well cool and then looking specifically at openc I asked about the future of the company's core product earlier on in the show but what would you say is your core mission that you want to have in 2024 and Beyond yeah I mean I think long-term our mission is really to Foster open Digital economies and so it's a very broad Vision but it does encapsulate the fact that we're really building nfts As and we're building infrastructure around NT is as a very generic building block for all sorts of different economies it's not just about art and profile pictures it's really about sort of representing all sorts of different things on chain you know all of the kind of use cases we mentioned today and then some things that we haven't even imagined yet and in that world of sort of free market open Digital economies you know it looks very different than the traditional web 2 economy where users come on to centralized platforms they sort of post data onto those platforms for free but then the platforms monetize them through advertising or other means but the data is always owned by the platform right in this new economy users have a lot more control over their data users have control over their nfts and their digital items and they can move between different marketplaces and platforms and ultimately we think that that's really good for users and it it enables brand new use cases that people haven't imagined it enables all sorts of in ation it enables new jobs in the future so you know nfts we really think of them as this kind of generic building block for whole brand new digital economies and I think we're we're still kind of at the beginning of that Trend yeah I love that I'm excited to see what comes of that on that note Devon can you leave us with a piece of advice maybe something you've carried with you throughout your time in crypto yeah I mean maybe advice for people who are exploring web 3 and crypto would be a to really go deep in the space make sure that you like you're not just sort of reading about nfts at a high level but you know you're actually going and like reading the code if you're technical or like obviously using the products and you know buying things and like trying them out and going into sort of the more maybe esoteric use cases but yeah just just the sort of depth if you if you just sort of read about it and you just like scratch the surface you don't necessarily get the kind of nuggets of wisdom that you get if you really go deep in the space and then the second piece of advice maybe for people who are either curious about crypto web 3 or who are already in the space is just yeah I think like thinking on long time Horizons so that's something that I I'm very proud of us doing at openc we started building really early on but we knew that you know people tend to overestimate how fast technology you know gets adopted but then they you know on the flip side they kind of underestimate how big those Trends can be right that's the sort of age-old quote so my advice would just be make sure that you're kind of operating and building on a long enough time Horizon that you can really be part of the you know the broader Trend I love that all right thanks Devon so much for coming on the show this has been fun awesome thanks so much we'll be back next week with conversations around what's going on in the wild world of web 3 with top players in the crypto ecosystem you can keep up with us on Spotify Apple music or your favorite pod platform And subscribe to our companion newsletter also called Chain Reaction links to the newsletter and stories we talked about can be found in our show notes and be sure to follow us at chain reaction on Twitter chain reaction is hosted by myself Jaclyn melanic and produced by Maggie stamitz with assistance from Yad karney and editing by Kell Bryce Durban is our illustrator and Henry picavet manages Tech crunch audio products thanks for listening in see you next time