Maybe all of us missed the point.

In February of 2020, in a game between the Los Angeles Lakers and the Houston Rockets, LeBron James sprinted down the court for a breakaway dunk. This wasn’t just any dunk. He threw down a reverse windmill that was eerily similar to a dunk by Kobe Bryant – nearly 20 years before – who wore the same gold jersey. This was just a month after Kobe died. It became known as the “tribute dunk.”

This article is part of CoinDesk’s Most Influential 2021 list. Panter Xhita’s portrait of Roham Gharegozlou is available at SuperRare, with 15% of the sale going to charity.

The Tribute Dunk became a valuable asset. Memorialized as an NBA Top Shot in April of 2021, the “moment” sold for a record $387,000. The press (myself included) focused on what seemed like a sky-high price for something that only sort of existed.

But the insiders noticed something else. “The press kept focusing on the big six-figure sales, but that’s not how we win,” says Dieter Shirley, chief technology officer of Dapper Labs, the company that created Top Shot. “The number I was proudest of is that we had 400,000 people on our site at the same time.”

Shirley and Roham Gharegozlou, the co-founder and CEO of Dapper, didn’t care about the frothy sales – they cared about the mainstream adoption. And the number of users grew. It grew and grew and grew. NBA fans, players and even GMs became obsessed with Top Shot. Just ask the Pelicans’ Josh Hart, who logs on multiple times a day to check the prices (“My screen time is way up because of Top Shot,” he told The Verge); or the Kings’ Tyrese Haliburton, who loves tweeting about his Moments (“My bucket on Top Shot over $1000😭😭 I was about to buy it the other day for like 400 smh”); or Rudy Gobert, who once dunked on Hart and said as trash-talk, “that would make a nice Top Shot moment.”

And as the number of users grew, the number that mattered most was not $100,000 or $387,000 but something in the millions or even the billions. Over 1.2 million people have used Top Shop, making it one of the most broadly used applications in the history of crypto.

That could be just the beginning. “Revolutionizing the sports fan experience is a $100 billion opportunity,” said Gharegozlou, as “the experience of being a sports fan hasn’t yet been digitized.”

Dapper has started that digitization for sports. And since its partners now range from Warner Music Group to Dr. Seuss, the entire world could be next.

But it started with cats.

It was the summer of 2017. Gharegozlou was then the co-founder and CEO of Axiom Zen, a Vancouver, British Columbia-based venture studio that describes itself as “a startup that builds startups.” The business made money. Gharegozlou focused on emerging tech like Augmented Reality (AR), Virtual Reality (VR) and blockchain – and eventually built products used by clients like Adobe and Google.

Gharegozlou sensed that blockchain had potential, but he wasn’t sure how to tap it. He hoped that blockchain could eliminate the “platform risk” that troubled potential clients of Axiom Zen. “[Some] people didn’t want to build on us because they said, ‘This is my proprietary information, and we don’t want to rely upon you,” Gharegozlou said. That wasn’t just a problem with Axiom Zen; that was the problem with all third-party platforms. Data could be stolen. Application programming interfaces (APIs) could change or break.

For example, one of Gharegozlou’s projects was a collaboration tool called Zen Hub, which was built on GitHub. “Every time they changed their API, things broke within our product,” said Gharegozlou. “We felt platform risk in a very visceral way.”

The LeBron dunks might be the sizzle, but for Gharegozlou, the decentralized and open potential of blockchain is the steak. “That, to me, is crypto,” he said, adding that crypto isn’t just “tokens and collectibles … It’s a new kind of computer. For the first time, it’s software that is permanent, software that’s trustworthy, software that can exist outside of the control of their creator.”

That sentiment is not what sets Gharegozlou apart. Many people in crypto saw the same appeal. But it was Gharegozlou’s idea to illustrate this with something concrete, something fun, something even goofy. As far back as 2014, Gharegozlou wanted to build something on top of bitcoin. Then one of his lieutenants at Axiom, Dieter Shirley, spotted the answer in Ethereum. (Shirley, a former Apple engineer with a pointy beard on his chin, wasn’t too interested in the financial use cases of bitcoin, but when he discovered the smart contracts of Ethereum he thought, “Okay, this is getting exciting now.”)

But what should they build on top of Ethereum? What would make sense? The team brainstormed for a month. They thought about real estate. They thought about insurance. They thought about mining. Not bitcoin mining – but “actual digging-in-the-ground mining,” said Shirley, as most mining companies don’t own the equipment, which means that cash needs to be locked up in escrow. But none of these solutions felt right. One day, as they left yet another fruitless brainstorming meeting, Shirley’s coworker, Mack Flavelle, turned to him and said, “We need to put cats on the blockchain.”

“What does that even mean?”

“I don’t know,” said Flavelle. “But we should figure this out.”

Gharegozlou soon gave the green light to a team of four people to spend a summer working on the wacky project of creating fake internet cats. The team included Kim Cope and Layne Lafrance, who remembers quitting her job in Hong Kong to join Axiom, fly to Vancouver, and on her very first day they sat her down and said, “We think we’re going to put cats on the blockchain.”

“100%,” Lafrance immediately replied. “We need to put cats on the blockchain.”

She’s kind of joking but kind of not. No one had really tried something like that. Gharegozlou, who has a Master of Science degree from Stanford in biological sciences, liked the idea of grounding blockchain in something that “we as biological beings understand.” A “distributed ledger” is boring. Cats are fun. Perhaps it’s not a coincidence that two of the biggest crypto projects to jump into the mainstream, dogecoin and CryptoKitties, are based on dogs and cats.

“We believe that blockchain is the future – but blockchain is about as approachable as a bunch of ones and zeroes,” the CryptoKitties manifesto said at the time. “We’re not trying to build the future. We’re trying to have fun with it. The future is meow.”

Over the summer of 2017, Shirley, Lafrance, Cope and the team raced to bring the alpha version to ETHWaterloo, a hackathon in Canada. The product was crude. It had a “really ugly front-end,” remembers Gharegozlou. They found a bunch of Pokemon cards, put pictures of cats on them, and handed them out to the geeks at the hackathon, saying, “Hey, these are cat collectibles. This is Pokemon, but for cats.”

A subtle but crucial point: Dapper’s alpha version was on the testnet, meaning no money was involved. It didn’t cost anything to buy the cats. People couldn’t get rich off it. “There was no upside,” said Gharegozlou. “Those assets would never become valuable.”

None of that mattered. Or maybe it did, in the sense that what happened next was even more amazing – the hackathon loved these ugly cats. “It was wildfire,” said Gharegozlou, who, after studying the initial user data, immediately doubled the team from six to 12. Days later he bumped it to 18. They sprinted towards a public launch on Thanksgiving 2017.

And then they broke Ethereum. CryptoKitties went viral so fast that Ethereum traffic spiked by sixfold, the network clogged, users grumbled. The “genesis cat” sold for $113,000, which now looks like a … bargain? These splashy sales were mocked, and not everyone got it. “So now we have people using ether, an asset with arguably little tangible utility – to purchase an asset with unarguably zero tangible utility,” wrote TechCrunch at the time. “Welcome to the internet in 2017.”

CryptoKitties taught Dapper three lessons. First, and on the most obvious level, Ethereum was unable to scale “at the order of magnitude that was needed for mass adoption,” says Lafrance, who, in a detail so on-the-nose it almost feels staged, has a kitten on her lap during our Zoom call. (Lafrance still owns the very first CryptoKitty from the testnet days. The cat’s name is “The First.”)

The second lesson was more subtle, and possibly more important. Onboarding was a nightmare. “Asking people to upload their passport to try anything for the first time is just way too big of a barrier,” says Lafrance.

You had to open an account on Coinbase, and Coinbase could take a week to approve your account. Then you need to get a Chrome extension wallet from something called MetaMask. “Most people who do not work in this space do not know what a Chrome extension is,” says Cope. “It was just way too much friction for people,” and that’s before they considered something like Ethereum gas.

And the third lesson: “People were excited about the prospect of digital assets and what this meant, but they didn’t know how to apply it to their lives,” says Lafrance. Cats are cute…to a point. Especially for those outside the crypto-verse, most people didn’t really give a damn.

Dapper would need something else to truly connect. Something more personal. Something that people already knew and loved. Something with existing IP.

Something with alley-oops, dunks, no-look passes, and 2 billion fans worldwide.

Before Gharegozlou wooed the NBA, he had always been a builder of what he calls “scrappy little things,” and that started in childhood. He was born in Tehran, his family moved to Dubai when he was six, then to Paris for high school, then to Stanford for college. “I never lived in the same place for more than six years,” says Gharegozlou, who speaks English, French, Farsi, and conversational Italian and Spanish. (I speak only conversational English.)

All the moving around meant he had to constantly leave his friends behind. He was bored. “I was like, let me go on the internet and see who’s there.” At age 11 he launched his first online business, way back in the mid-90s, in the early days of AOL and Instant Messenger and “you’ve got mail.”

The kid slapped together a site that shared information on dogs. (He had an Irish Setter and used that as inspiration.) He added affiliate links to an up-and-coming site called “It was the early days and there was so little content,” says Gharegozlou, who now has salt-and-pepper stubble and thick black hair. The kid went to Yahoo and submitted the dog page on the “Pets” section; usually they’d approve it, and because there was so little competition “it would be in the Top 10.”

His parents didn’t totally get it. “My dad barged into my room and said, ‘What are you doing? You’re still on the internet? How are you ever going to make money off this?’” Roham says that his father is a self-made man who “came from nothing” and dropped out at 14 to sell chewing gum on the side of the street to support his family. The elder Gharegozlou grew that into a catering business, then a successful import/export business, and Roham says he owes his work ethic to his father. “He just kept grinding.”

So 11-year-old Roham kept grinding by creating web pages for dogs, birds, cats (early foreshadowing of CryptoKitties), and even sites on places – Dubai, Iran, Paris. “Nobody knew I was in middle-school,” Gharegozlou says. “It was the internet.”

These early hustles, eventually, would lead him to launching Axiom, where he hired Shirley and grew the team that would evolve into Dapper. Soon the shift would be formalized. After the explosion of CryptoKitties, Gharegozlou was emboldened to take 50 of the 100 Axiom employees and spin it off as Dapper Labs, focusing only on blockchain. “We literally bet the business on crypto,” says Gharegozlou. “It was a big, big bet.” This baffled his colleagues. “For most of the last three or four years, my friends have been calling me telling me, ‘Hey, you’re working on this NFT thing? What’s wrong?’”

Dapper Labs was formed in March of 2018. In April they began courting the NBA, a partnership that Gharegozlou viewed as plausible for at least three reasons: the league’s younger fans gravitate towards highlights, trading cards were blowing up (and unlike physical cards, the smart contracts of Top Shots give the league a cut of secondary sales), and the NBA owners, widely praised as being “forward looking,” had already embraced gaming.

“The NBA, the NBA players, and the NBA owners are very savvy with this stuff,” says Gharegozlou. “They see the gamer mindset of digital assets, and that people are already spending close to $100 billion every year.”

It took Gharegozlou’s team over a year to close the deal with the NBA, but he says most of that time was answering the legal and operational questions. From a customer and fan perspective, “it was a slam dunk from the first day.”

The concept is one thing. But delivering it was something else. Shirley, Lafrance, Cope – now some of the only “NFT veterans” on the planet – knew they had to conquer those two crucial lessons they learned from CryptoKitties: 1) make it scale; 2) make it easy.

To tackle the first problem, Shirley knew he was out of the Ethereum business. They hunted for an alternative. Shirley’s team read over 100 white papers. They talked to 20 teams of possible Ethereum alternatives. “But no one was building a blockchain with an eye for creating high-quality, consumer-facing applications,” says Shirley.

The plan was to use a pre-existing blockchain solution. That’s what they wanted to do. “I remember promising Roham, we’re not going to build a blockchain,” Lafrance says. “Everyone’s building a blockchain. We swear we’ll figure out something else.”

Then they built their own blockchain. They built FLOW.

FLOW is designed to be fast, scalable, and cheap. To do this, they reimagined the role of the blockchain “nodes.” In Ethereum and other blockchains, every node is constantly validating the integrity of the system. FLOW splits the nodes into four specialized jobs: Collector Nodes, Execution Nodes, Verifier Nodes, and Consensus Nodes. This makes it dramatically faster.

Critics of FLOW say it is too centralized, but Dapper says its team now controls less than one third of the nodes, and that the system was built for the larger community. “FLOW is not just for us,’ says Shirley. “What I don’t think people realize is that FLOW is a completely re-architected blockchain, and the whole reason we built it was we want other people to build on top of it.”

That’s starting to happen. There are now 5,000 developers building on FLOW, according to Dapper, creating projects such as Rarible, Ballerz, and Blockletes. Method Man, the hip-hop artist who is also a comic book mega-geek, is using FLOW to launch a NFT-fueled “comic universe” called Tical World.

As for the costs? As of this writing, the average gas fee of Ethereum is $128. The gas fee on FLOW is less than a penny.

# Real Life and digital life

FLOW solved the problem of scaling. But what about its other big learning from CryptoKitties, the headache of onboarding?

Gharegozlou faced a decision. At this point in 2018, the conventional wisdom – and really the entire ethos of crypto – was that projects should take a “non-custodial” approach to receiving payments. Users should retain the full power of their wallet and their private keys: “Not your keys, not your cheese.”

Dapper went the other way.

“What does this need to look and feel like?” Cope and her team asked. “At the end of the day, it needs to be an experience that’s similar to what they have already.” That meant online shopping. That meant e-commerce. Less Mt. Gox, more Apple. “Over time we can teach you and we can get you into crypto,…but if I shove that in your face to start, I’ve already lost you,” says Cope, who’s now the Dapper Platform Product Lead.

Seed phrases? Gone. Credit cards? Accepted. (Dapper also offers a cryptocurrency and non-custodial way to buy and store NFTs; most people don’t use it.)

I started my stop-watch before buying my first Top Shot. It took only 2 minutes and 45 seconds to go from nothing – no account – to opening my first pack. This includes the time I spent selecting my favorite team (Houston Rockets), entering my payment options (credit card), and enabling 2-factor authentication. It was nearly as smooth as buying something on Amazon. My starter pack cost $9.85.

The pack itself is inviting, with a little animation that jiggles, beckoning you to open it. Music plays in the background. Then you choose 3 cards to open – almost like how you scratch off a lottery ticket. I first opened a dunk by Andrew Wiggins, then a layup by Fecund Campazzo, and finally a dunk by Kelly Oldnyk.

Every step of this UI was meticulously engineered. To get inspiration during the design process, the Product Lead of Top Shot, Arthur Camara, and his team went on a buying spree of collectibles: baseball cards, Pokemon cards, even Tazos collectibles. In their Vancouver offices, they took turns opening the packs and soaking in the user experience. They watched unboxing videos on YouTube. They knew CryptoKitties had no “wow” moment of discovery. They would fix that.

For example, when you open up certain packs of Top Shot cards, when the moments are still sealed, a “shadow” appears over the most precious mystery card. “Users love that,” says Camara, and this detail was inspired by how when you open a pack of old-school trading cards, and you see that one of them has a different color foil, you save that one for last. The same thing happens with Top Shot. After extensive testing, Dapper found that users – just like in the offline world of baseball cards – saved that special shadow as something to savor.

Crypto purists might blanch at the custodial approach, but Spencer Dinwiddie, a point guard now averaging 14 points and five assists a game for the Washington Wizards, says that its ease of use is a big reason for the blazing fast adoption. Dapper merged high-end tech with the lure of professional sports “in a way that didn’t trigger a massive consumer behavioral shift,” Dinwiddie wrote me over email, adding that, “While blockchain is new to most, gaming is something that has played a role in all of our lives for centuries.”

Dinwiddie (who launched his own crypto product, a social token product called Calaxy) loved the idea so much he became an investor. So did many of his peers. Dapper’s investors include not just the usual blockchain heavyweights like Andreessen Horowitz and Digital Currency Group (parent company of CoinDesk), but also Michael Jordan, Andre Iguodala and Kevin Durant. By one estimate, Jordan and Durant tripled their investment in five months.

Dapper has raised $605 million and now has 341 full-time employees, about a third of whom work on FLOW, a third on Dapper Wallet, and a third on its growing lineup of sports products…which now includes partnerships with the NFL, WNBA and UFC. They’re expanding into DAOs. They inked a partnership with LaLiga, the Spanish soccer league that includes blue chip clubs like Barcelona and Real Madrid. To give a sense of scale, those two clubs alone have 61 million followers on Twitter… more than the entire NBA’s 35 million.

Roham doesn’t consider Top Shot a finished product. The moments continue to evolve. Lafrance (who’s now the FLOW product lead) says the team is constantly exploring the relationship between the “digital world” and the “physical world.” In the future this could mean many things (i.e. the metaverse), but for now, they’re starting with Challenges that are pegged to real-life action in the NBA.

The day after Thanksgiving, for example, Top Shot issued a challenge: if you can assemble a “showcase” of six moments that include the top five rebounders from those day’s games, then you win another pack. Suddenly the way you watch the NBA changes. Imagine if you have a large collection of Top Shots that includes rebounding bigs like Clint Capela, Rudy Gobert and Nikola Jokic. On November 26, you’re gunning for your guys to finish in the top 5. It’s only a tiny hop from this to fantasy sports, a la Sorare. “The concept of creating a lineup, or creating a team…that’s something we actively explore,” Camara says. “I’m not saying we’re launching something tomorrow, but we actively explore those concepts.”

Reading between the lines (and this is just my inference), it sounds like the metaverse could be a big part of the roadmap. Lafrance concedes that “when we start dabbling in Metaverse topics,” this could enable a new relationship between creators and fans and enable what she calls a “Cambrian explosion” of entirely new business models.

I don’t totally know what that means. Then again, no one totally knew what Gharegozlou was up to when creating CryptoKitties or NBA Top Shot. Without letting the cat out of the bag, Gharegozlou says that Dapper is involved with the metaverse in two ways. “The metaverse today is primarily closed,” he says, referring to platforms like Oculus or Roblox. He wants Dapper to help crack it open. “Open assets can go anywhere, even into closed worlds,” says Gharegozlou. A Top Shot moment of Giannis Antetokounmpo can jump from Fortnite into The Sandbox.

The second way is more intriguing. Gharegozlou says that FLOW can be the “bottom platform for some of these worlds.” FLOW has proven it can handle scaling rigors of NFTs with ease….so why not let it power the metaverse? This could be quietly underway. The metaverse of Matrixworld, for example, launched a land sale in both Ethereum and FLOW.

It’s possible that years from now, Top Shot will be seen the same way that we now look at CryptoKitties: a small stepping stone to something grander, something more profound. Could Dapper’s real killer app not be Top Shot, but a metaverse-enabling FLOW? Just as CryptoKitties were a Trojan horse for the concept of NFTs, perhaps Top Shot will smuggle in a widespread adoption of a new virtual reality.

In the meantime, thanks to a product that brings a million-plus people joy (or at least amusement), you could make a credible case that Gharegozlou – and the team of Dapper – has done more to bring crypto to the mainstream than anyone since Satoshi Nakamoto.

Even if not everyone totally gets it.

Jeff Wilser is the author of 7 books including Alexander Hamilton’s Guide to Life, The Book of Joe: The Life, Wit, and (Sometimes Accidental) Wisdom of Joe Biden, and an Amazon Best Book of the Month in both Non-Fiction and Humor.

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