Starting with Dapper Labs: How to Become the Most Influential NFT Developer

image description

Roham Gharegozlou/Founder, Dapper LabsPublished in Fast Company MagazineThe World's Most Innovative Companies 2022Among them, NFT developer Dapper Labs became the only encrypted project shortlisted and ranked first among the most innovative game companies. At the same time, "Fast Company" magazine released a review of Dapper LabsIn-depth interview

The article analyzes the company's vision for the development of historical relics, and the following is Chain Catcher's translation of the article:

The Peninsula Hotel in Beverly Hills has long been a luxury hotspot for Hollywood upstarts who strike movie deals on single malt whiskey. On a chilly January afternoon in Los Angeles, most of the people in the hotel rooftop café were wearing puffy jackets under the heater lamps. Not Roham Gharegozlou, the co-founder and CEO of Dapper Labs (the company behind CryptoKitties and NBA Top Shot), who was wearing a light-colored hoodie and jeans. The Iranian-born Vancouver resident was here amid the COVID surge for the same reason as everyone else: he was looking for talent, anyone interested in creating new, exciting blockchain applications for the masses.“In Silicon Valley, everyone is working for these big Web 2.0 platforms like Facebook. Here, no one is really happy with the way things are. So the vision of a new way of doing things is inspiring,” he said. said laughingly. "”

We give power back to creators. That's the mission, that's why I'm here.Creators are attracted to Dapper because of its reputation for disrupting the complex and intimidating world of Web3 (the broad definition of building the next phase of the Internet, based on the principles of decentralization and ownership). The company that makes and sells NFTs created NBA Top Shot — virtual trading cards featuring basketball video highlights — and helped turn 2021 into the year of NFTs.

Dapper, which earned $100 million from NBA Top Shot last year, introduced millions to the idea of ​​collecting scarce digital assets.

The company's early success was a product of Gharegozlou's foresight and patient approach in an otherwise frenetic industry. Conversations with the NBA began in 2018 and were finalized a year later. Top Shot will not open to the public until October 2020. During that time, Dapper was building its Flow blockchain to process transactions quickly, and its own crypto wallet to facilitate credit card payments, something it had never done before. When Top Shot finally launches, even the non-crypto crowd will be able to use NFTs. “Two years ago, you thought you needed a Ph.D. in physics to figure out how to create wallets and buy NFTs,” said Chris Jacquemin, head of digital strategy at talent agency WME. “Dapper has successfully crossed NFTs into the lexicon.”

In what is now crypto basics, when CryptoKitties was launched by Gharegozlou's former Dapper crypto firm Axiom Zen in 2017, it crashed the ethereum network. It turns out that a game that allows users to buy, trade, and "breed" NFT cats cannot scale quickly without congesting the platform. To make matters worse, while the game's popularity drives revenue -- it made $40 million in its first year, and a cat sells for $170,000 -- the complexities of cryptocurrencies are far from real. The number of people involved is negligible. "We're seeing a conversion rate close to 2 percent from clicking 'I want this cat' to being able to buy the cat," said Mik Naayem, Dapper's co-founder and chief commercial officer.Based on CryptoKitties, Gharegozlou and company could easily cash out through an initial coin offering (ICO), which Naayem said was beyond everyone's imagination. Instead, in 2018, Dapper Labs was formed with a mission to build not only NFT games and apps, but blockchain tools as well. All of this will be built on the premise that it will be easier to use than existing applications and platforms. Leading the technology behind the scenes is Dapper's CTO Dieter Shirley, a chatty, goateed engineer who

He first coined the term "non-fungible" token and wrote the ERC-721 protocol, which became the standard contract for NFTs. This effectively makes Dapper the birthplace of the NFT movement.

There's nothing intuitive about the timing of NBA Top Shots. Back in 2018, cryptocurrencies entered a so-called "winter" as ICO scams and a sharp drop in bitcoin's price sapped its mainstream appeal. “Four years ago, when Roham gave a TED talk on NFTs, the concept was crazy to everyone else,” said a16z partner Chris Dixon. The company has supported Dapper since 2018. "I think people sometimes underestimate the vision that Roham has," he said.

Longtime digital innovator Trevor McFedries founded the tokenized community Friends With Benefits in 2020 and sold his other startup, Brud, to Dapper in 2021. “His thinking was that most things in life are irreplaceable,” McFedries said. “Roham saw that and stuck with it through the winter and the capital flight.”Meanwhile, negotiations with the NBA have dragged on for a year, with both sides trying to marry one of the world's most iconic and protected brands to the NBA in a variety of ways and open it up to anyone on the street. Someone above can effectively own a piece of it, but is incongruous in many ways.This slow pace is also due to Dapper's thoughtful approach to the product. It never rushes to market in order to profit from a trend.

Market research and data collection has always been in the spotlight.

What brought the two parties together was their shared belief in making Top Shot easy to use. "Our main concern is making sure the product is accessible," said Adrienne O'Keefe, vice president of global partnerships and media for the NBA. To that end, the words "blockchain" and "NFT" didn't appear in any of the onboarding steps initially. Dapper launched the Dapper Wallet, which allows people to buy NFTs with their credit cards.

Gharegozlou calls the credit card decision "stakes." The real heart of Top Shot is the experience of opening a video card pack and enjoying its contents. Dapper is obsessed with improving the experience. In the process of buying NBA Top Shot video packs, the company created an exhilarating, even joyful feeling, very similar to the fun of ripping open a pack of trading cards (no "blockchain" and "NFT" in sight) ). Dapper is also learning from a generation of digital natives like YouTube and TikTok influencers who wow fans by unboxing makeup or toys. "We looked at where people spend their time," Gharegozlou said. They noted the popularity of watching users unlock extra player and football kits in games like FIFA Ultimate Team,By the time the Top Shot closed beta was released in May 2020, the world had been turned upside down by the COVID-19 pandemic and the NBA had suspended its season. Gharegozlou calls this period his "darkest hour". By October, when it opened the beta to everyone, the league was gearing up for a new season starting in December. The combination of home audiences and NBA excitement led to a surge in interest in Top Shot.Registrations jumped from 4,000 to 400,000 by January 2021, putting Dapper into insane scale mode.

“We had one person for customer support and one person for authentication,” Gharegozlou said. “We had to scale the team 100 times.”

The NFT craze has officially begun. In March, a Beeple artwork fetched $69 million at a Christie's auction. In August, the LeBron James Moment sold for $387,600. Things are leveling off, though, as new products centered around avatars (Bored Ape Yacht Club) and games (Axie Infinity) enter a more saturated market.

According to Messari analyst Mason Nystrom, sales of Top Shot Moments on the secondary market soared to about $200 million per month in February and March 2021 before dropping to $20 million to $200 million per month by the end of the year. between $40 million. "It's nothing, considering they charge royalties," he said. (Dapper takes a 5 percent fee from secondary sales, which it splits with the NBA and the Players Association.)

Unlike other popular NFT projects, Dapper has partnered with beloved brands like the NBA, making Top Shot an evergreen prospect. As the 2021-2022 NBA season heats up, used NFT sales jumped 72% in the first three weeks of January, in part due to Kevin Durant's new ad campaign, according to analyst CryptoSlam. A mobile app will launch later this year, and Dapper and the NBA are working to add more game-like and fantasy sports elements. "We're going to start promoting Top Shot more aggressively as a web experience," Gharegozlou said. "Through players and influencers, through paid media, through doing more TV. We want to build a lot of products and go mainstream before mobile apps."

Top Shot's success has led to deals with other premier sports entertainment partners such as the NFL, La Liga and UFC. Last fall, La Liga's popular Real Madrid football club released an enhanced ticketing experience on the Flow blockchain, and Top Shot-like platform UFC Strike launched in January. These are just some of the experiences Dapper aims to achieve.

After the CryptoKitties debacle, Dapper decided to build its own blockchain, which would solve the problems it had with Ethereum. Gharegozlou originally called it "Bamboo," renaming the platform Flow while meditating. "It's a concept in flux—connecting with creators in different ways," he said.The main difference between Flow and Ethereum is that Flow has lower transaction costs and can process more transactions: 1,000 TPS, compared to Ethereum's 13 to 15.In other words, Flow can handle projects that go viral. It also has a simpler, more developer-friendly programming language and can support non-cryptocurrency transactions.

Despite being a newer platform, Flow has fewer established resources and tools for developers.

In addition to sports-related collectibles experiences running on Flow, Gharegozlou wants to have separate worlds — metaverses like Matrix World that already exist on Flow, and eventual games like Fortnite and Roblox, though these Neither popular games have crossed over to the blockchain, nor have deals with Dapper been made. Additionally, he wants Dapper to be home to decentralized autonomous organizations (DAOs), community groups that allow members to contribute their expertise and vote on their collective actions.

In October, Dapper secured $250 million in new funding to buy startup Brud from McFedries, best known for AI-generated social media influencer Lil Miquela, and Gharegozlou put him in charge of a new division of the company, saying As Dapper Collectives, we are committed to popularizing DAO. In Web3, DAOs operate primarily as investment clubs. (The DAO, most famously, tried to buy a copy of the US Constitution last November.) But Gharegozlou has a broader view. He sees them as "a group of strangers who are able to express themselves and direct the flow of anything: money, storytelling, in-game action."

McFedries' first move was to create a decentralized version of what Brud's creative team did to Lil Miquela; on Flow, Lil Miquela can now be mentored by her fans. "Imagine being able to walk into Disney and have your voice heard," he said. "So, if you say, 'I'm actually good at marketing. I want to go to a marketing meeting and say, you know what? You should do X, Y, and Z.' With a DAO, you can effectively do that."

Gharegozlou also said that Dapper is experimenting with a DAO on Top Shot, where a group of users can vote on things they want to buy together, and that “many of our ecosystem projects are already trying out different ideas,” he said. "Maybe this will be our first thing that goes viral like CryptoKitties."All these efforts are not just for the growth of Flow, but for the entire blockchain market. As Gharegozlou co-founder Naayem puts it,Top Shot might not be "a complete, fully decentralized NFT," but it could get people farther and farther down that rabbit hole.

He continued: "We may not always be doing the most crypto-native stuff, but what we're trying to do is provide value to consumers in a way that they can understand, feel, and get more of a taste."

When I asked Gharegozlou about how big Dapper is, he said, “If you think about it, in the past few months alone, NFTs have traded at $25 billion,” he said, calmly taking a sip of his espresso . "It's bigger than trading cards. It's bigger than FIFA Ultimate Team. It's even bigger than the sneaker market (the secondary market for sneakers is about $20 billion). The product is starting to catch up and evolve . . . eventually , I think the target market is everyone with a mobile phone."

This will enable 3 billion people to use Dapper's blockchain. Will he see this happening anytime soon?