With a valuation of 7.6 billion USD and named the most innovative company in the world in 2022, how did Dapper Labs achieve this?

Author: MetaverseHub

According to the latest analyst data from the overseas platform NonFungible.com, the total transaction volume of NFTs worldwide exceeded $18 billion in 2021, compared to only $82 million in 2020. This means that the NFT market expanded over 200 times in the past year, a rare data growth across various industries over the past year.

At the end of last year, the well-known media outlet Reuters released the 12 hottest terms in the tech circle for 2021, among which NFT, along with Metaverse, Web3, and semiconductor factories, became representative of the tech industry in the past year. This also reflects the explosive growth of NFTs over the past year.

Of course, when we mention NFTs, we might also think of American artist Beeple, NBA Top Shot, CryptoPunk, and "Bored Apes." These all highlight the rapid growth NFTs experienced in the past year, and among these representatives, the most surprising is the tremendous commercial success of NBA Top Shot.

From the data of the beta version of NBA Top Shot, the user retention rate reached 90%. In just one year since its launch, it has generated nearly $1 billion in fan economy revenue and has over 1.5 million users, 80% of whom are mainstream users who had never interacted with blockchain before.

For this reason, the well-known cutting-edge business media Fast Company announced that Dapper Labs, the developer of NBA Top Shot, was the only crypto company to make the list of the most innovative companies in the world for 2022, ranking first among the most innovative gaming companies. After completing last year's financing, its valuation reached $7.6 billion, making it a well-deserved global unicorn company.

So, what kind of company is Dapper Labs? Why has it suddenly become one of the most innovative companies in the world? What led to the creation of NBA Top Shot, such a representative collectible game, and where does its team come from?

The Growth History of Dapper Labs

Founded in February 2018, Dapper Labs aims to help 1 billion users understand blockchain and experience the advantages of decentralization in a simpler and more engaging way. In just a few years, it has created the world's first blockchain game, CryptoKitties, and the wildly popular NBA Top Shot, even pioneering a new model for the commercialization of NFTs.

Looking back at the development journey of Dapper Labs, each new project has set new records. Similarly, Dapper Labs' achievements in the blockchain field are evident, leading to the saying, "Dapper Labs products are guaranteed to be high quality," becoming popular in the community. So how did Dapper Labs come into existence?

The Years of Dapper Labs and Its Founders

The Dapper Labs team is co-led by Roham Gharegozlou, Dieter Shirley, and Mikhael Naayem. Roham Gharegozlou was born in Iran and started engaging with the internet and building websites in high school. After graduating from Stanford University, he founded a studio called Axiom Zen in 2012, focusing on mainstream applications for new platforms and emerging technologies.

Initially, this studio did not engage in blockchain and crypto-related businesses. In 2013, Roham Gharegozlou met Dieter Shirley, who had served as the development director at Atimi Software and a senior software engineer at Apple. Having read the Bitcoin white paper, he mined his first Bitcoin using his home computer.

It was at this time that Roham Gharegozlou learned about the crypto industry and was attracted by the charm of blockchain. Axiom Zen gradually ventured into blockchain and artificial intelligence, and the studio won a grand prize at the Money 20/20 hackathon in Las Vegas in 2014.

Mikhael Naayem was a high school classmate of Roham Gharegozlou in Paris. When Roham Gharegozlou approached Mikhael Naayem to discuss the world of blockchain, he had just sold his mobile game platform-as-a-service startup to Animoca Brands. Mikhael Naayem then realized that this technology could grant people ownership, rights, and freedom.

After multiple requests from Roham Gharegozlou, Mikhael Naayem moved to Canada.

In 2017, Dieter Shirley proposed the ERC-721 token standard. Prior to this, CryptoPunks had also explored non-fungible tokens, but they merely modified the ERC-20 standard.

It can be said that the ERC-721 token standard made a crucial contribution to the entire team. At the same time, the Ethereum-based project CryptoKitties was launched, which caused congestion on the Ethereum network upon its release, and the term "NFT" was officially introduced.

CryptoKitties became a sensation, but Dapper Labs' exploration in the crypto field did not stop. The congestion caused by CryptoKitties on Ethereum exposed its scalability flaws, leading to a sharp decline after its initial popularity.

Considering user experience and the long-term development of the team, Roham Gharegozlou and his team decided to establish a new company and build their own public chain—Flow Network.

The "Cheat Code" Birth of Dapper Labs

The Flow chain, with its excellent user experience and a fast, decentralized, and eco-friendly blockchain, not only solved throughput and cost issues but also addressed usability, gradually entering the public eye.

Dapper Labs' original intention in creating the Flow public chain was to build it as a platform specifically for high-performance DApps and games, allowing not only decentralized games but also various forms of NFTs to develop their ecosystems within the Flow ecosystem.

David Pakman, a partner at venture capital firm Venrock, described Flow as follows: decentralized games and crypto collectibles have different scalability requirements for blockchains, and sharding cannot solve this problem. Therefore, Dapper Labs created Flow, hoping to expand the user base of decentralized games to tens of millions.

It is precisely because Flow possesses characteristics that differ from other public chains that many investment companies and institutions have recognized Flow's potential in the blockchain field, leading to substantial investments that provide significant support for Flow's development.

At that time, CryptoKitties raised $12 million in its first round of venture capital financing, while Dapper Labs was a new company established after CryptoKitties separated from Axiom Zen. Since its establishment, Dapper Labs has completed 11 rounds of financing. We can take a look at Dapper Labs' financing situation in detail through a table.

Data source: crunchbase

It can be seen that Dapper Labs has rich development experience and undeniable capabilities, which is why it has received investments from various institutions in the sports and entertainment sectors.

Although Dapper Labs has bet on time to build a new generation of blockchain, its rapid rise can already be seen from its short development history.

What Popular Products Has Dapper Labs Developed?

In December 2020, Dapper Labs' founder and CEO Roham Gharegozlou stated in a speech titled "Why Are NBA, UFC, and Ubisoft Embracing Blockchain?" that only fun things can drive the popularization of blockchain technology.

Gharegozlou believes that usability and scalability are essential foundations for the development of the blockchain ecosystem, and the audience of the ecosystem is also crucial.

Based on this, Dapper Labs has never stopped its steps. They have formed strong alliances with many well-known institutions such as the NBA, the Ultimate Fighting Championship (UFC), Warner Music Group, La Liga, and the National Football League (NFL), and have collaborated with publicly listed gaming companies like SUMO, Ubisoft, and Animoca to develop a series of popular products.

When it comes to Dapper Labs' products, the most well-known is probably CryptoKitties. CryptoKitties is the world's first blockchain game, currently boasting over 130,000 users and 2.01 million CryptoKitties.

CryptoKitties once caused a surge in Ethereum gas fees and solidified Gharegozlou's determination to create an entirely new blockchain.

In May 2019, Dapper Labs launched the Ethereum-based game CheezeWizards, creating the first battle royale-style blockchain game and pioneering a new style of blockchain gaming.

In October 2020, Dapper Labs officially launched the Flow blockchain, which had been under construction since 2018. Currently, the Flow chain has over 1,000 projects in preparation, making it a fast, decentralized, and developer-friendly blockchain.

Alongside the launch of the Flow chain, Dapper Labs also released the public beta version of NBA Top Shot, igniting enthusiasm for NFTs across the internet. Fans can collect iconic moments of NBA superstars and gain ownership, fulfilling the long-standing wish of NBA loyal fans. Currently, the total transaction volume of NBA Top Shot has surpassed $1 billion, with total sales exceeding 11 million transactions.

Subsequently, Dapper Labs launched its decentralized application Dapper Wallets, aiming to create a trusted gateway to the digital world and support users in purchasing and storing digital assets. Its vision is to provide everything needed for successful construction in the metaverse. Currently, Dapper Wallets has over 2 million users and has processed over 20 million transactions.

In October 2021, Flow integrated Filecoin storage services to achieve a more decentralized vision for NFTs, ensuring that NFT holders and issuers can "safely use NFTs anywhere."

At the same time, Dapper Labs also partnered with the NFL to launch an American football NFT marketplace equivalent to NBA Top Shot on Flow. NFL ALL DAY officially launched at the end of the Super Bowl in February 2022, quickly generating $15 million in sales.

Before the launch of NFL ALL DAY, Dapper Labs collaborated with UFC to launch UFC Strike based on Flow, allowing fans to build their own digital profiles to collect NFTs and interact with their favorite UFC athletes.

In addition, Dapper Labs plans to launch an NFT platform to record iconic moments in collaboration with La Liga, which is worth our further attention and anticipation.

However, Dapper Labs' pace has not slowed down. Dapper Labs has partnered with NFT startup Genies to launch the NFT platform The Warehouse, and collaborated with Dr. Seuss Enterprises to launch "Seussibles!" NFTs, establishing a virtual headquarters in the metaverse project Matrix World. Such initiatives are numerous.

Many analysts have stated, "Perhaps Dapper Labs will become the Disney of Web3." The 21st century is a new era for creating IP, and perhaps Dapper Labs will bring us more surprises.

Why Can Dapper Labs Keep Breaking Out?

Is it because Dapper Labs has created a few successful games? Or has it built an advanced blockchain platform for the blockchain world? Or is it because it has explored some innovative business models? These reasons can be considered primary, but they may not be the whole story.

The real reason lies behind these reasons: the Dapper Labs team has always adhered to its original intention, moving towards the goal of "how to make blockchain better adopted by the mainstream."

Around this goal, we can better understand how Dapper Labs realizes its original intention from three directions: user experience, developer friendliness, and innovative business models.

User Experience

User experience is crucial for the widespread adoption of blockchain technology. When Dapper Labs' CryptoKitties became the first blockchain game to sweep the industry, the honor it brought did not make them overly proud; instead, they felt many issues from this experience, such as the limited performance of Ethereum itself and the high transfer fees.

For Dapper Labs, which aims to popularize blockchain technology among mainstream audiences, the current Ethereum, and even the future upgraded Ethereum 2.0, are not the platforms they desire. After exploring several emerging blockchain public chains, Dapper Labs still did not find a blockchain platform that met their vision.

Thus, to achieve a blockchain platform capable of supporting tens of millions of users, they innovatively launched a new high-performance public chain, Flow Network.

In Dapper Labs' understanding, to realize the popularization of blockchain, there must be a platform that supports consumer-grade applications and can accommodate applications at the million-user level. The user experience of these applications should not be significantly worse than that of existing internet applications, and any operations within should be as free or low-cost as possible, with users not needing to understand blockchain technology when using these applications.

Currently, most blockchain applications are aimed at people familiar with basic blockchain operations, but such individuals are only a minority within the vast user base, making it difficult to achieve mainstream adoption of blockchain technology.

Only when blockchain applications do not require understanding of blockchain technology, are easy to operate, and have low costs can they gain support from ordinary users who do not understand blockchain. This is precisely the goal of the Flow public chain launched by Dapper Labs.

Currently, there are multiple blockchain applications on the Flow chain that are practicing this goal, with NBA Top Shot being one of them. It quickly brought traditional NBA trading card users into the fold, allowing them to enjoy NBA Top Shot without understanding blockchain, thus providing a user experience similar to that of traditional internet products. This has enabled NBA Top Shot to quickly surpass 1 million users, generating over $100 million in revenue.

Developer Friendly

Developers have always been an essential cornerstone of ecosystem development, and the Dapper Labs team itself is also a developer of blockchain ecosystem applications, fully aware of the various difficulties and needs developers face during the development process.

Therefore, when Dapper Labs designed the Flow public chain, they considered how to launch a higher-performance, more user-friendly blockchain platform to meet user requirements on one hand, and on the other hand, how to make it easier for developers to develop, thereby promoting the birth of more blockchain use cases.

The Flow chain employs a new smart contract language called Cadence, fundamentally introducing new concepts and shifting the account implementation method from Ethereum's centralized ledger approach to Flow's distributed resource approach.

Compared to Ethereum's Solidity, smart contracts written in Flow's Cadence are more decentralized, enhancing security and supporting advanced use cases such as resource nesting and composition.

Additionally, the network design of the Flow chain is results-driven, featuring upgradable smart contracts that facilitate developers in iterating and upgrading applications. Flow also integrates built-in logging support into the Flow simulator, making it easier for developers to make further adjustments.

Multiple innovative technologies make Flow fast and convenient for development, gaining widespread recognition from developers.

Currently, thousands of developers are learning to use Flow's tools. Many universities are teaching students about Flow and the opportunities in blockchain, as well as various applications that can be built on it.

Even Ubisoft has praised the Flow chain, stating that Flow allows them to focus on the logic of DApps. This is also why the Flow chain's ecosystem is rapidly developing and continuously launching blockbuster projects.

Model Innovation

With a higher-performance platform and a more developer-friendly smart contract language and features, it seems that Dapper Labs is getting closer to their goal.

However, these advantages can only be considered as good "tools" in the saying "to do a good job, one must first sharpen one's tools." The real factor that has allowed Dapper Labs to advance steadily and approach their goal is their continuous exploration of new models.

Each new model's success inspires other blockchain application developers and leads the industry's development direction.

In 2017, Dapper Labs introduced the ERC721 standard and the world's first blockchain game, CryptoKitties. At a time when blockchain technology was only used for fungible tokens, Dapper Labs' series of innovations was like a nuclear bomb, shaking all participants in the industry.

Since then, the blockchain industry has entered the era of NFTs, and the currently thriving leading chain game project Axie Infinity has many references to CryptoKitties.

However, CryptoKitties also made Dapper Labs realize that such blockchain applications have a high threshold and can only attract those with a basic understanding of blockchain, making it difficult to achieve broader application.

Mainstream adoption of blockchain cannot be confined to the blockchain circle; the era needs leaders to break the deadlock. At this moment, Dapper Labs stepped up again, partnering with the NBA to launch NBA Top Shot, finally breaking the silence and bringing more possibilities to the industry.

Dapper Labs is extremely focused on game development, striving to create high-quality products that satisfy players. They have dedicated teams conducting market research to validate many ideas for market viability. Through such diligent exploration, Dapper Labs has discovered a new business model by collaborating with major IPs, integrating blockchain technology, and bringing some traditional mature business models (like real-world trading cards) onto the chain to explore new gameplay.

NBA Top Shot is a successful case; it not only changed the way fans interact with superstars and teams but also brought more business models and exploration directions to the fan economy, serving as a reference for other industries.

At the same time, in this process, Flow, as the blockchain technology platform supporting NBA Top Shot, only provides some blockchain features. The actual users do not need to know about the Flow chain, nor do they need to understand crypto or blockchain technology; they can directly purchase corresponding NFT items using credit cards or fiat currency without using crypto, and the user experience is not significantly different from that of general internet products.

It is precisely this alignment with the public's usage habits, without additional learning barriers, that allowed NBA Top Shot to quickly convert existing physical trading card users into its own users, successfully influencing those outside the blockchain circle and achieving widespread use of blockchain technology among ordinary users for the first time.

After this, Dapper Labs continued to apply this approach to more sports directions, such as UFC Strike, NFL ALL DAY, and the upcoming La Liga.

Dapper Labs is still writing its myth, not only validating the feasibility of this path but also proving that such innovative business models can be replicated, paving a broad avenue for future blockchain applications.

Postscript

As we stand at the crossroads of Web2 internet, some stories are filled with absurd comedy. Traditional internet giants face stagnating growth, frequent privacy legislation, and regulatory pressure, while business models and profit methods that have lingered for the past decade seem to be under severe scrutiny.

Therefore, the wave of Web3 is rising from the sea. Even though globalization faces challenges, technological development seems difficult to be significantly hindered, as smart resources will move in the direction of trends. This is why teams like Dapper Labs can stand out, as they are riding the crest of the next wave.

Although the team has already crafted globally recognized products like CryptoKitties and NBA Top Shot, as long as this innovative momentum continues, perhaps even more unexpected products will emerge.

As Dapper Labs' CEO Roham Gharegozlou said in an interview last year, "In the future, creators and developers can publish their works or code on an open-source platform, rather than being monopolized by large companies (like Facebook, Amazon, LinkedIn). We believe that eliminating these monopolies will greatly enhance the speed and diversity of technological innovation."

Perhaps the era we are currently facing is akin to Apple's classic "1984" advertisement released in 1984, where the innovator holding the hammer has appeared, and the next story is left to time.

"We are here to leave a mark on the world. We want to create a whole new concept like artists and poets." (Steve Jobs)