How Magic Eden CEO Jack Lu grew to $182.3M revenue and 900K customers in 2024.

hey folks my guest today is jack lew after monitoring the crypto space and recognizing its potential particularly on solana jack took the leap of starting out at ftx one of the industry's leading exchanges where he worked within partnerships and corporate development following this he decided to fill the gap in the market for a community focused interactive nft ecosystem and marketplace and launched magic eden which is witnessed one of the fastest paces of growth in crypto jack you're ready to take us to the top absolutely all right fastest pace is a big statement i have to ask you to back that up with data what do you mean fastest by what by what metric yeah absolutely uh well first of all thanks thanks to time for having me nathan um well we started magic eden seven months ago uh in that time we've become the second largest nft marketplace in the world so this month where we're about to trade around four or five four to five hundred million dollars of nfts um on our marketplace and we're the fastest marketplace to reach uh cumulatively a billion dollars in gmb uh traded so we did that in around four or five months that's amazing cool there's guys there's the data no beating around the bush it's right there so so so real quick uh jack put this on a timeline for me when do you write the first line of code for magikeeden uh that was around late september yeah september or so so just last year i mean we were talking like like eight months ago yeah that's right that's right wow we launched a site in 14 days actually so the first one was really sticky taped together to dare i say but uh you know we we we launched fast and let the market tell us what we were doing right and what we're doing wrong and and how you said you you hit one billion in cumulative nft sold on your platform in january in february uh i don't remember the exact month but it was around that that's right yeah okay uh that's amazing and so what what enabled you to grow so quickly right obviously you ran bd at a massive exchange maybe there's some connections there that help you grow but what was the credit to that original mousetrap and the growth yeah absolutely so i think there were a couple of things um well number one you know i have to definitely give credit to the timing right of the market so uh you know q1 q2 last year was when ethereum nfts really took off and really caught the cultural zeitgeist right with peoples bayc and so on but q3 there was a huge boon of interest in solana the blockchain that we're built on as well as the nft activity there so we caught that timing really well and broke that tailwind um but separate to that i think within the company itself the main point that really helped us grow i think was the the skill set of the founding team so we've got four founders myself uh our cto his name is sid my my our chief operating officer his name is joshua and our chief engineer his name is joji or rex uh and i really felt like the four of us came with a good synergies of skill sets that allowed us to build something really fast and have really good intuition about what was the right things to build so the key there were two of us came from crypto exchanges so i came from ftx and our chief operating officer officer georgian came from coinbase and dydx which is a you know one of the largest d5 exchanges and then my two technical co-founders came from ubereats so they came from really big consumer marketplaces and if you step back and think about it the nft marketplace the business model is really like a crypto exchange right um but the features the software that you build looks really like a consumer marketplace i just felt like we had some really natural intuition about what were the right things to build this makes tons of sense now were you very diplomatic about equity at the beginning everyone gets 25 or how'd you guys think about that obviously maybe maybe there's even an equity question is this all built in like a dow or central treasury or something like that no it's a it's a it's an equity thing pretty vanilla but yeah like uh equal split you know i think oh wow you did equal absolutely you know equal partners in this we could have done it without um uh we could have done it without each other oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're gonna get a different valuation a vc is gonna pay a different valuation private equity firm is different if you're gonna do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 to their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're 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just people are going to hear these numbers and be a little bit in disbelief so i want to try and break it down to like lego blocks right where you've now built this masterpiece the first lego the first nft store on your platform what was it how much did it sell for and how did you help that buyer or seller do you remember oh two hours i can't remember i'm embarrassed to say but we've got like almost 10 000 collections uh now listed on magic so i can't remember although i do remember one of the earliest um one of the earliest collections this must be in you know the first 10 or something was called cyber trolls and um our team we were trying to bd the artist to list their collection with magic eden but then uh the the creator of that collection turned you know turned to turn the conversation around and started showing himself to us and saying yo you know i actually want to work for you guys because you guys have something really special going on we hired him his name is igor he was our first bd guy and he was just the killer like absolutely um integral to the you know the founding story and the early success of maji eden so so is that what you're doing you're almost like you're almost like sotheby's you're actually spending all your time recruiting artists effectively uh yeah so we've got two main business lines we've got uh a business line called launch pad where we help artists launch their nfts for the first time and that is absolutely what you know as you described it's very much like artist outreach right and then we have a another business which is called secondary uh secondary trading so this is where the art is already in the hands of holders and they're trading back and forth it's more like a craigslist kind of thing um that that piece of it is much more about being in touch with the collector community and you know uh marketing to them and incentivizing them to come to magic mm-hmm and if you obviously you have 100 of revenue right what percent is launch pad versus secondary trading it's around um launchpad is a little more spiky i would say it's around 2080 so or 30 70 so 20 launch pad 80 secondaries or sometimes it goes up to 37 yeah yep so and just to i guess just to go back to volume you quoted 400 million that was 400 million in gmv last month in april yeah and what do you think you'll do this month this month has started off pretty strong actually so i think we're already at um [Music] well where are we right now uh i i don't know the numbers of the top of my head but the samantha started pretty strong as well so uh probably something similar yeah okay so so i mean that's what i'm trying to get a sense are you going from like 200 million in ngm to 400 million to 800 million you're doubling every month or is it more like you know 20 growth per month yeah so right now where um see our platform is built on the solana blockchain uh we've been consistently around 90 to 95 market share of the solana blockchain of all nfts traded on solana for the past two three months or so so we're really breaching at the edges of what the total market is escalada so right now uh market growth or gmv trading volume is actually more of a function of um uh solana yeah exactly or the functional solata right yeah so i mean are you and motorcycles are you involved deeply with the the core salon team i mean if they grow you grow yeah that's right yeah that's right so salon adventure solana foundation we've been um in contact with from day one effectively and you know very uh uh you know uh feel very privileged for them to happen out uh as an investor in our serie day as well so our last round so we've worked with them very closely hand in hand okay yeah let's talk about funding so so when was a series a closed uh february oh this year okay and how much how much was it we raised 27 billion okay 27. and how do you value a thing like this i mean in traditional sas you're serious that you're selling 10 to 15 percent were you sort of in that same range okay got it so i mean we're talking then what like like a 220 pre-money valuation something like that something that oh yeah we'll talk yeah that's right okay okay great so teach me here because i'm a sas guy right how does a marketplace like this get valued right with with traditional equity investors yeah i mean it's uh it gets valued um very similarly to marketplace businesses we're revenue generative so we take the clip of the gmv the transaction total transaction amount that goes through the marketplace uh so right now we click two percent of uh the the transaction volume um yeah so and within you know effectively revenue generative from day one so um pretty much i think you take jack you take two percent of all revenue through the platform okay so if we take can we i mean can we take 400 million last month times two percent yeah made eight million yeah so you did eight million dollars last last month in revenue yeah i'm missing something i mean that puts you at like almost 100 million dollar run rate you're only getting valued at 2x uh well yeah we raised the last round uh when we were around 30 marker share so we like signed the term sheet around november it was just a bit of a long closing process oh my gosh i would think that our valuation is like significantly higher now do they not i mean as you i mean it takes two three four months to do obviously go through diligence was there not a period where you're going guys our monthly growth has been incredible i i'm not going to back out of the term sheet because i'm a good guy but is there any chance you can give us a little higher evaluation to minimize dilution uh so i think like though i think that's like um yeah that was those like a bunch of stuff that happened like in the middle but uh we didn't have that conversation though we're very grateful for the for the yeah this is okay but my i am getting my numbers right you valued basically 2x when you closed um you're about to break a 100 million dollar run right you're right at like 220 200. yeah around feb around feb we weren't doing 8 million so i think last month we were doing 8 million uh okay around feb maybe we're doing for 4 million oh so you're like growing i mean this is like an extreme growth story yeah like you're doubling every like two months or something like that i see fascinating okay god that makes sense now is this the only capital you've raised yes that's correct okay so skip the pre-seed skip the seed oh no we've had a we've had a uh like a small uh seed as well yeah when was that oh that was around october okay so 500k oh two and a half sorry two and a half uh in uh in february of this year uh no sorry uh october last year two and a half mil seed round and then feb we closed the series eight oh i understand i understand got it and that valuation on the seed round what same like 10 cap 20 caps something like that yeah something that automatically yeah very interesting okay so how do you i mean if i'm a series a investor looking at this i'm going my gosh where is jack gonna grow this thing they already make up 95 to solana so you must be telling some massive growth story that does not have to do with solana moving forward uh yeah so there's a couple of things um i think in the nft market uh growth starts with growth starts with the creators growth doesn't necessarily start with a chain right it's the creators who create use cases for nftes and those use cases pull in new users chain is just a technology just like an operating system on which it lives we're very bullish on uh new categories so um the category that we have uh that we've built our business on that's kind of our bread and butter today is digital collectibles so like profile photos digital art and so on but the category that we're super bullish on going forward uh and we want to invest deeply in is gaming right in-game assets in-game purchases that's been a tried and tested business model for a decade for the gaming industry and users that are very tech savvy and and and and um uh uh you know would be open to much more uh open to adopting new technologies so for us we want to bet deep on serving game developers and solana as a chain um with some of its new like technical fancy technical properties of being super fast and cheap and so on is pretty adept at serving those use cases so even though we don't see that those uh gaming developers launching too many of those gaming developers launching their games now on solana we're betting on the future and we're very bullish for artists listening to people that don't understand nfts explain to me why okay bears is such a popular collection um yeah that's a really good question those uh well i'm a i'm an aussie and i i heard the founders of fellow aussies so definitely a little bit of aussie pride there as well yeah i mean just for my audience too to paint the picture here right so six thousand unique holders there's only ten thousand in supply there's thirteen hundred listed right now i guess for sale on magic eden right what part what makes a nft take off if is it more more unique holders just higher per unit sale price like what rarity what makes it work i think uh i think for okay bears it's really about community right it's about branding and community like um in some fundamental value like uh in some fundamental ways um collections like uh okay bears their profile photos right and in a way it's your uh internet version of i don't know like a rolex or something or like a nike bag it's your personal branding on the internet and what the okay best team did extraordinarily well was they did a lot of super organic grassroots community building to build interest in their project over six months there's a lot of nft projects which try to you know cut a lot of corners right basically they'll pay a bunch of influences get some juice up some marketing but there is no real organic interest from the from the community in the collection and i think what okay best did was just really pound the pavement and do the hard work and build out community and that strength really shows and you know in some ways that translates super well into their brand what does that mean i own ok bear number 4533 with honey dripping out of his mouth and one suspender on what do i get access to community wise are these people that i can go to a digital world somewhere url and talk to people in a chat room or is it a physical meetup in la i can only visit once a year like what is the community part yeah so i think for for okay bears they have a road map i i'm not super familiar with exactly the ins and outs just because um uh you know we serve so many creators um but like creators typically what i would say uh at a higher or in a more generalized level is they will um use the funds from the mint to then build some kind of virtual world or like internet gated experience and they would curate the the audience that is there right for that specific purpose and people who who go there will say hey like um you know i really like the vibe so i really like the experience you're creating another way of describing would be it's almost a little bit like an internet version of the exclusive club right and you really like the people that you hang out there and a lot of people who buy okay bears would be you know crypto influences or social leads or something like that in the crypto verse and generally it might be really hard to be able to have a conversation with them and talk about or have a common language with them or common topic but because you're bonded by this you know in some ways like an internet luxury purchase uh you know you can create that common language i mean this feels a lot like back when i used to play like uh like age of empires the conquerors edition and i was part of a clan right i go to okay bearers and i look at their blueprint and it's literally like looking at a blueprint there's the park the gallery the bear market the boutique the studio and if i could click into any of these worlds i can see where this could i mean it basically becomes an online game it's the new version of rpg uh with the curated community is that a good analogy a little bit like that yeah a little bit yeah yeah interesting fascinating world okay this is exciting stuff so um some other quick metrics here before we wrap up what's the average sale price so 400 million last month what was the average sale price um i think my finance guy is gonna uh have to keep me honest but i think it's around two hundred to three hundred dollars okay guys so two to three volume yeah a lot of volume right so we can do 400 million right divided by 200 what is that like two million unique transactions something like that that's incredible okay and and are they are they all being bought by like the same buyers right one buyer owns a million or like how many buyers of the 400 million in gmv uh in general we see around 30 000 unique traders every day uh so it's still largely pretty distributed there is definitely some concentration effects like whales who buy a ton but in general when we've looked at snapshots of the data previously our our i'll collect the base is fairly distributed yeah there are some things i just don't know about i really know b2b sas i'm still new to crypto are there questions i should be asking here that i haven't i mean uh crypto so i mean nfts is pretty crazy it's a it's effectively a new media class right or a new asset class uh but two rolled up in one um i think in general we're also experimenting and thinking about uh where this thing could go in the future i would say it's pretty early days in in terms of this technology primitive um where i think all that to say is you know we're also thinking about some of these questions ourselves and trying to explore what the future is yeah if if caa comes and offers to buy you for a billion dollars do you sell no he says it very that is the right that is the model right like it would be one of these big record labels or a big gaming company or or a big like me someone that has connections to a lot of artists i mean that would be like if you were going to merge with someone or do a deal with somebody would be those kinds of groups right um [Music] i think philosophically we'll never merge right let's just use the word partner okay you're never gonna sell but if you're gonna partner that's who you'd be partnering with right yeah um the dna from magic eden is where we're crypto native so in the sense of we really want to experiment and explore the boundaries of this new technology and these new primitives and in that in that sense i think some more like we want to partner with folks who share our vision to want to basically also want to experiment and try out new things with this technology i think one aspect to this is definitely partners who are able to bring super valuable ip they are invaluable parts of the ecosystem but there is also you know other folks who are maybe uh more on like the technology side right more more or more on the software side who would really want to push the boundaries who might also have to fit that what's your total team size today full time well like 100 now 100 wow how many engineers oh around 40. any of your own artists do you launch your own collections just to be your own customer no we don't do that yeah okay do you have artists on your team that helps new artists launch yeah so on the business side we're proud to say around a third of our team are former nft artists or former nft collection creators um hire your customers right yeah exactly you want to have the lifeblood of the user in the company and i think that's um [Music] that was a really critical move for us and and like uh i think that's that's done wonders for the way that we develop product the way that we build new things jack on that note let's wrap up with the famous five number one favorite book that you read oh i'm a huge uh haruki murakami fan so i love wind up bird chronicles mind the bird chronicles good one number two is there a ceo you're following or studying uh well i used to work at ftx uh i think the founder there sam bakeman freed is a is an absolute monster so uh yeah but number five number three besides you're on what's your favorite online tool or online place to hang out uh telegram it's a must-have for crypto folks number four how many hours i sleep to eat every night oh six hours okay and what's your situation married single kids married no kids no kids how old are you uh 32 last question something you wish you knew when you were 20. oh um well when i was 20 i was in law school so i should have studied computer science i think skip loss to go to computer science instead guys magic eden dot io uh did over 400 million dollars of transaction volume uh in nfts on solana uh last month alone the average sale price they're about 200 or 300 bucks that means there's about two million unique transactions 30 000 unique traders per day they make a 2 cut on that 400 million so 8 million in revenue just last month that's up from 4 million earlier in january and february so growing very quickly just closed the 27 million series a it caught between a 200 and 300 million evaluation growing nicely with a team of 100 you know hiring their own customers to make sure they keep that lifeblood going to the company jack thanks for taking us to the top all right thank you so much nathan cheers one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on 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