Harrison Gwinnett was 22 when he left his first company, a spot-the-ball contest website that offered luxury watches as prizes. After successfully identifying a market niche, he would be expected to do something similar for a second venture. Instead, he has chosen to build a Web3 technology company from scratch. Catching up with him earlier this week, I was eager to talk about his motivations for entering a competitive and technology-driven industry that has not yet been fully defined.
A lot of money has been put into Web3 in recent years. According to management consultancy Bain & Company, companies in the sector have so far attracted investments of approx $91 billionwith most of that amount allocated since 2021. If all goes according to plan, a new generation of startups and scale-ups will co-create a new and decentralized internet that will allow consumers to manage their own data and access a wide range of services without recourse to big-tech intermediaries.
But what that means in practice is not entirely clear. What we know is this. The Web3 world will be built on blockchain technologies which in turn enable transaction models using tokens and cryptocurrencies. The so-called metaverse is also expected to play an important role, providing a means for all of us to interact 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 take a breather. Web3 is a work in progress. No one really knows what it will actually look like as it is still under development. And while investment peaked in 2021, it did decreasing since the second quarter of last year.
And maybe there is another question. With the likes of Meta spending billions on Metaverse and Web3 projects, is there actually room in this market for startups 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. A key area of development has been virtual avatars that can give users a consistent identity as they move between Web3 platforms.
Find the ball
So what is the appeal of Web3. Gwinnett has a somewhat unusual background for a tech entrepreneur. After leaving school with no qualifications, he spent some time working for law and finance firms before founding WatchLotto, the aforementioned competition website.
The venture was arguably based on an insightful idea, rather than state-of-the-art technology. As he explains, it grew out of a perceived gap in the market. “It filled a niche at the time,” he says.
While lottery-style contests were relatively common at the time, they usually offered cash prizes. “The only one that didn’t involve money was BOTB (Best of the Best), which gave away cars,” says Gwinnett.
Inspired by BOTP, Gwinnett thought he could do something with watches. The logic was that watches, like cars, were aspirational. In addition, there was a community of people who were true watch enthusiasts. “I thought we could build something with a sense of community,” he says.
After launching in 2016, the company focused on the UK and – as Gwinnett acknowledges – grew very slowly until Covid hit and people were trapped indoors. “That was when it started to snowball. After the lockdown we raised 1.2 million pounds and entered the global market,” he says.
In four years, traffic through the site grew from zero to an average of 185,000 users per month in 85 countries, a figure boosted by awareness of the FIFA 2020 football match sponsorship. When Gwinnett left, the company was worth £11 million.
But why in the choppy waters of Web3? Well, maybe it wasn’t a big piece?
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, Gwinnett, who ran Watchlotto, had seen firsthand how much data web companies collect when interacting with customers, especially when using social media channels. “We’ve collected an enormous amount of data,” he says. “The amount of personal information we had was insane.”
The decentralized web model seemed to provide consumers with a means for individuals to control their own data. Gwinnett founded Unus Labs to develop solutions. The core product is virtual versions that also provide a wallet to keep digital information in one place while managing an online identity across multiple platforms. At the same time, the company offers tokens for online purchases and access to virtual worlds.
That is the consumer-oriented mission, but there is of course also a commercial objective. Gwinnett sees it, the development of Web3-oriented technologies offers a company without – as he puts it – a ceiling.
But how easy is it for a startup to get to grips with this section on developing the Web3 marketplace? After all, the concept of avatars working across platforms isn’t new. For example, a few months ago I spoke with Sten Tamkivi of VC fund Plural about the potential of Web3 and its support for the game-focused avatar company Ready Player Me. The bet is that avatars will be big in the third-generation internet.
Gwinnett acknowledges the competition, but emphasizes the importance of execution. “Avatars are really hard to make if they have to look realistic,” he says. Equally important, the technology must work on multiple systems. By focusing early development on the avatar market, there is an opportunity to gain a strong foothold in the market.
Likewise, there are challenges, not least in finding software developers.
A long game
Gwinnett sees it as a long game. He says scaling up will take several years as the wider Web3 infrastructure is developed. During that period, the need for financing will escalate. According to Crunchbase, Unus Labs has raised £1 million so far. “Over the next two to three years we will be seeking around £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 competitor,” he says. That’s quite a bold statement, but he argues that startup companies have the luxury of being able to stay lean and focused. Larger 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 may be a greater unknown. As things stand, outside of the gaming market – where there is little hard evidence that online consumers will embrace the metaverse concept or more widespread 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 ways to carve out a niche within the Web3 universe as it becomes a mainstream reality.