Hey friend 👋,

Got good feedback on the new ‘FFF’ series - so we’ll keep it going as a weekly experiment (for now).

One thing I’ve always loved (but haven’t done enough of in this newsletter) is startup deep-dives. I love dissecting hyper-growth companies and finding out what makes them tick.

That being said - I came across an interesting thread on NFT marketplace history and thought I’d pick out a few startup growth lessons on OpenSea.

Note: This piece isn’t meant to be a ‘deep-dive’ per say, but just a few tactical lessons I think you’d find interesting.

Let’s get to it!

Three Lessons from OpenSea

🌪 Lesson #1: Stick or Twist?

Like most things in startup land, OpenSea was a pivot - the founders (Devin Finzer & Alex Atallah) went through Y Combinator (the creme de la creme of startup accelerators), with an idea for paying users crypto to share their Wi-Fi spots.

At the same time, CryptoKitties (the cartoonish virtual cats whose ownership records were digitally inscribed on the Ethereum blockchain) started to take off.

They spotted an opportunity to pivot and create OpenSea, the largest NFT marketplace. They noticed that users will want a buy-and-sell experience similar to what they get from platforms like eBay.

Lesson #1: Stay close to the ground, make a bet on where you see the world going and pivot decisively.

👷🏽‍♂️Lesson #2: Keep Goin’

So we covered the early years - they pivoted and everything turned out great, right?

Nope.

In a similar parallel to what’s happening now, the crypto industry went through a dry spell.

Up until October 2019, OpenSea’s monthly trade volume stayed close to $500,000.

At the height of the pandemic, OpenSea had just 4,000 users doing $1.1m in transactions a month, which translated to a paltry $28,000 in monthly revenue.

Quick side-note: I was reading that Devin and Alex had a gut-check conversation that ended up being a ride-or-die type of call (I imagine it to be as dramatic as a Fast-and-Furious intense driving scene), setting out a goal of doubling business by the end of the year.

Fast forward to January 2021, and OpenSea’s volume was $8 million - jump ahead a month, and it was $96 million. In August 2021, their volume increased from $300 million to $3 billion 🤯.

Lesson #2: It’s not easy to stay the course when you feel like you’re too early - even if you have long-term conviction. Resilience is key to get through tough times.

🔑 Lesson #3: Simplicity is key

From the onset, OpenSea decided to not build a niche NFT marketplace (e.g. some of their early advisors urged them to specialize on art, gaming or music) - and opted to build a category-agnostic platform. This aside, OpenSea has created a consistent user experience and spent time listening to users about what they want.

This includes things like:

• Tracking NFTs across blockchains (not just Ethereum)

• Sellers opting for a fixed-price or auction format

• Artists can set a % royalty of each resale price

Lesson #3: Listen to what users care about and keep iterating on your product, till luck meets you half way (Finzer admits they were ‘in the right place at the right time’ but I’d say they also had to get everything else right, in order to meet the tipping point).

That’s it! Hope you found these lessons useful and I’m keen to hear if you think they apply to what you’re working on.

🔗 Links Of The Week

🤖 Can GPT-3 Explain My Past & Tell My Future?

Dan feeds all his past journal entries to GPT-3 and asks questions like: “What is the author’s deepest unmet need?” or “What might the author need to learn in order to improve their life?” - where do I sign up to log every word I’ve written (or thrown away) for this newsletter?

👾 The State of Generative AI

I’m on GPT-3 overload right now, but this was a good summary of the image recognition, code, text and other examples (with use cases) that are available right now.

☕️ Getting grifted by a multi-billion $ co & sitting on 30k coffee bags

A pretty insane tale about a modest (!) coffee company working with a large distributor and getting screwed over - thank god for the internet to raise awareness about this.

Until next time 👋

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Fahim