Harrison Gwinnett was 22 when he exited his first company, a spot-the-ball competition website offering luxury watches as prizes. Having successfully identified a market niche, he might have been expected to do something similar for a second venture. Instead he’s chosen to build a Web3 technology company from the ground up. When I caught up with him earlier this week, I was keen to talk about the his motivations for entering competitive and technology-driven sector that has yet to be fully defined.
A lot of money has been poured into Web3 over the past few years. According to management consultancy, Bain & Company, businesses in the sector have so far attracted investment of around $91 billion, with the bulk of that sum being allocated since 2021. If all goes according to plan, a new generation of startups and scaleups will collectively create a new and decentralized internet allowing consumers to control their own data and access a broad range of services without recourse to big-tech intermediaries.
But what that will mean in practice is not absolutely clear. What we know is this. The Web3 world will be built on blockchain technologies which will in turn enable transactional models utilizing tokens and cryptocurrencies. The so-called metaverse is also expected to play an important role, providing us all with a means to interact with each other through immersive worlds. In an ideal metaverse, these virtual spaces should be interoperable, rather than walled gardens.
It all sounds terribly exciting but let’s pause for breath. Web3 is a work in progress. Nobody really knows what it will actually look like because it’s still under development. And while investment spiked in 2021, it has been declining since the second quarter of last year.
And there is perhaps another question. With the likes of Meta spending billions on Metaverse and Web3 projects is there actually space in this market for startups that are starting their technology journeys from the ground up?
Gwinnett thinks so. He founded Unus Labs with the intention of creating an ecosystem for a decentralized internet. One key area of development has been virtual avatars that can provide users with a consistent identity as they move between Web3 platforms.
Spot The Ball
So what is the attraction of Web3. Gwinnett has a somewhat unusual background for a tech entrepreneur. Having left school without qualifications, he spent some time working for law and finance companies before founding WatchLotto, the aforesaid competition website.
The venture was arguably based on an insightful idea, rather than cutting edge tech. As he explains, it was born out of a perceived gap in the market. “It filled a niche at the time,” he says.
Although lottery-style competitions were relatively common at the time, they mostly offered cash prizes. “The only one not involving money was BOTB (Best of the Best), which gave away cars,” says Gwinnett.
Taking inspiration from BOTP, Gwinnett thought he could do something with watches. The logic was that watches, like cars, were aspirational. What’s more, there was a community of people who were genuine watch enthusiasts. “I thought we could build something with a community feel,” he says.
Following its launch in 2016, the company focused on the U.K. and grew – as Gwinnett acknowledges – very slowly until Covid hit and people were trapped indoors. “That was in it began to snowball. After lockdown we raised £1.2 million and went into the global market,” he says.
Over four years, traffic through the site grew from zero to an average of 185,000 users a month across 85 countries, a figure boosted by exposure on the FIFA 2020 football game football shirts sponsorship. When Gwinnett made exit, the company was worth £11 million.
But why into the choppy waters of Web3? Well, maybe it wasn’t a big stretch?
Gwinnett says it was partly a matter of exploring options that were already on his radar screen . “I was already interested in blockchain and cryptocurrencies when I founded Watchlotto,” he says.
Meanwhile, running Watchlotto, Gwinnett had seen at first hand just how much data web ventures collect as they interact with customers, particularly if they are using social media channels. “We collected a huge amount of data,” he says. “The amount of personal information we had was insane.”
Without A Ceiling
The decentralized web model seemed to offer consumers a means for individuals to control their own data. Gwinnett set up Unus Labs to develop solutions. The core product is Virtual Versions that also provides a wallet for keeping digital information in one place while managing an online identity across multiple platforms. In tandem the company provides tokens for online purchases and access to virtual worlds.
That’s the consumer-facing mission, but there, of course, a commercial objective. Gwinnett sees it, the development of Web3-focused technologies offers a business without – as he puts it – a ceiling.
But just how easy is it for a startup gain traction in this section developing Web3 marketplace? After all, the concept of avatars that work across platforms is not new. For instance, a few months ago I spoke to Sten Tamkivi of VC fund Plural about the potential of Web3 and support of games-focused avatar company Ready Player Me. The guess is that avatars will be big in the third generation internet.
Gwinnett acknowledges the competition but stresses the importance of execution. “Avatars are very difficult to make if they are to look realistic,” he says. Equally important, the technology has to work across multiple systems. By focusing early development on the avatar market, there’s a chance to establish a strong position in the market.
By the same token, there are challenges, not least in terms of finding software developers.
A Long Game
Gwinnett sees it as a long game. He says scaling up will take several years while the wider Web3 infrastructure is being developed. During that period the requirement for funding will escalate. According to Crunchbase, Unus Labs has raised £1 million so far. “In the next two to three years we’ll be seeking about £5-10 million. After that, it could be hundreds of millions,” says Gwinnett.
The prize is to create an alternative to Meta’s vision of the Metaverse, building the ecosystem through partnerships. “I see Meta as our competition,” he says. That’s quite a brave statement, but he argues that startup companies have the luxury of being able to stay lean and focused. Bigger companies, he argues, often forget how to do that.
Web3 development is a highly competitive landscape and only time will reveal the winners and the losers. There is perhaps a bigger unknown. As things stand,outside the gaming market – where there is little firm evidence that online consumers will embrace either the metaverse concept or more widely Web3.
Meta’s Reality Labs has already poured billions into its own Metaverse, but that hasn’t stopped startup companies from experimenting with Web3. From online wearables and avatars to virtual concerts and 3D billboards, there are many routes to carve out a niche within the Web3 universe when it becomes a mainstream reality.