William Leonard
W3 Studio is a nonprofit venture studio launching in Atlanta, in their ultimate aim is to equip underrepresented founders building and web3 with non-dilutive capital. With funding from corporate partners and sponsors, W3 Studio, unlike most venture studios, will provide equity-free grants of up to $200,000 for founders going through their two-year program. Today I’m joined by Brian Zwerner, who is the founder of W3 studio. Brian and I will discuss more about the early execution of the W3 studio idea. Unique ways that he in the team are helping support founders outside of the capital, and his ultimate vision for W3 Studios impact on not only underrepresented founders building in Web3 but the city of Atlanta as a whole. Brian, thanks for joining me today.
Brian Zwerner
William, thanks for having me. A lot of fun and looking forward to talking.
William Leonard
There is a ton of positive momentum coming out of W3 Studio right now. I’m excited that you’re here to really unpack it all with us. Let’s dive right in. Tell us more about W3 Studio. Give us maybe a 60-second overview of what it is. And then I want to dive into more of your background and experiences as the president and leader of W3 now.
Brian Zwerner
Sounds great. So W3 Studio is a nonprofit set up here in Atlanta, Georgia, a not-for-profit corporation. We’ve applied for our 501(c)(3) status and it’s just going to take a few months before the IRS goes around stamping that application. We are going to raise funds from corporate partners, and donations from corporations, and we’re going to sell digital membership passes as NFTs to individuals that want to support our mission. Our mission is to back diverse founders here in Atlanta, initially defined as founders that are black, Latinx, or women who are building in Web3, thus the W3 Studio name, and we’re gonna back them at the absolute earliest of the idea stage. An idea on a napkin, I think I kind of want to build something in this area, we’re going to replace the friends and family capital round with $200,000 per founding team and grant, nondilutive grant cash. We’re going to surround them in a big loving bear hug with amazing resources to get their business off the ground. We’re going to help them build and co-create with them from the earliest of the idea stage in this new venture Studio. So that is W3 Studio in 60 seconds or less.
William Leonard
I love it. So really working with founders at the earliest possible stage, napkins, just an idea that’s a figment of the imagination, Web3 diverse founders, and we’re going to really unpack that a bit more as the conversation evolves. But tell us more about your background, Brian. I know you’ve been a fixture in the Atlanta startup ecosystem for some time. Educate our audience on your experiences that led you up to being the president of W3 Studio now.
Brian Zwerner
You bet. So I spent 20 years in more traditional capital markets, sales and trading, and investment in big banks. Started in the United States and Charlotte, New York, and Chicago over to London for a while back to the United States to Charlotte and then moved down here to Atlanta in 2008. Worked at a boutique investment bank here in those same areas for a few years, but caught the startup bug a bit late in life. 2014 left that world after a 20-year career and started a FinTech-enabled healthcare small business lender. We lent money to doctors and dentists and home health care agencies and things like that. Had some modest success with that entity. We sold it to a strategic controlling interest to a larger finance company. Three years later, in 2017. had high school-aged kids at that point, played a lot of sports, started a passion project, and the youth in high school sports base called Sportal. Super fun, we had some tech products for these sports markets, working with sports teams, and then we built out a media company covering high school sports here in Georgia. Super duper fun business. Absolutely terrible business model. We pivoted four, maybe five times depending on how you count it. Everything we did had bad unit economics. All of the people in the community loved what we did, no one wanted to pay for it. Shut that business down at the end of 2018. But through that, I met a bunch of former NFL players that were helping me with the work we were doing in high school football there in Sportal. My business partner for the last four years came out of that this fellow named Andre Fluellen, who played in the NFL for eight seasons and was our color commentator for high school football broadcasts around Atlanta back in the fall of 2018. He had the idea for what became this networking group, Beyond The Game Network, to bring together athletes with people in the business and finance, and tech scene in Atlanta. Just got a business networking with an angel group. Venture syndicate stamped on top of it. We’ve since invested in 23 startups around the country and here in Atlanta, in sports and in digital media and video gaming and sports gambling and in fitness and health and wellness. All areas we’re having athletes can help. We’ve got 31 former pro athletes in Beyond The Game Network that help out our portfolio companies. That’s kind of what we’ve been doing before we kind of realized the need for W3 Studios. I can dig into more detail on all that or we can go from there. You tell me where you want to go next.
William Leonard
This is super helpful to paint the prior picture of the experiences now. You met Andre and some of the guys over at Beyond The Game Network started investing in Atlanta and really across the country as well. Studios aren’t a new concept but you’re here in Atlanta now with W3 Studio, specifically focused on Web3 founders. Why does this focus on Web3?
Brian Zwerner
We first got our exposure to Web3, or I first got my exposure to Web3 crypto. My red pill moment, was before NBA Top Shot launched. Andre and I were out with a fella from the sports industry. He had a cousin who played in the NFL. He was down here in Atlanta, he had played college football, and we were all out together and he was telling us that he’d seen an opportunity to invest in this company doing digital highlights for the NBA. I don’t think he used the word blockchain, NFT, or crypto. All we heard was digital highlight cards and trading cards for the NBA. It hadn’t even been announced yet. Nobody I think heard about Dapper Labs except really serious crypto-native people. We said we’re in man. Put us down. He said, well, we’re gonna get an allocation in this round. We’re gonna syndicate out a piece of it. I said, put us in for 100 grand. And unfortunately, that was the Series A round of Dapper Labs. They were radically oversubscribed, the guy that we were partnered with, got his allocation cut back and we never got a piece of the deal. Fast forward a few months later, the end of 2021 or the beginning of 2022, NBA Top Shot goes live, hyper viral, with millions of users and a billion in sales. Man, oh, man, did we ever miss a good one, William. It was tough, but it opened our eyes to the possibility. We started talking to some of the athletes. You know, shortly after that in spring, Patrick Mahomes and Rob Gronkowski, both brought NFT collections to their fans and sold $2-3 million each. We really started getting deep into the pool then, really researching and seeing what was going on what was happening in the NFT marketplace. We started working on an NF T program that was going to be for NFL Hall of Famers because the current players are covered under the Players Association Agreement with the league and Dapper so we were going to work with retired players who are not covered under that. Then the market turned a little softer in sports NFTs, we backed off of that, but man, we were red-pilled. We were in. About half of our 23 portfolio companies have some type of Web3 component to them. Crypto, tokens, NFTs, Dows, Metaverse, and something like that. I spend about half of my time there. It has been a big focus of mine for the last almost two years now. And I just believe it’s the next generation of the internet. It’s where the internet is going.
William Leonard
You all began to solidify this thesis around Web3. Tell us a little bit more about how the idea for W3 Studio was ultimately born and executed initially.
Brian Zwerner
The Web3 thesis is easy. Web1 was reading on the internet and basic commerce, Amazon and things of that nature, Yahoo and AOL. Web2 was the social media network. The ability for people to create on the internet and Web3 is the ability to own things. 20 years ago, if you’d said, I don’t need that website thing, that’s not for my business. You either capitulated or you’re gone. If you tried to ignore social a decade ago, you might have got away with it for a few years, but you’ve either given in and you’re doing it now or you’re out of business. I think Web3, these are just a tools that are going to be used to bring your customers, your users, and your fans closer to your product, your business, and to your company. That’s kind of been a key belief of mine for now, quite a few years, I’ve been seeing these products. The idea for W3 Studio really came about back way back in 2019 when we first launched Beyond The Game. We started meeting people in the Atlanta tech ecosystem. And I challenge anybody listening to this podcast, to find a more diverse tech city than Atlanta. Everywhere I go, the diversity that you see in the rooms, the different types of people, different ethnicities, the amount of women involved in the tech scene here, I just think it’s unparalleled. When we first started Beyond The Game, we wanted to create a way to help those founders that we were seeing who were diverse. All of the athletes in our group are black or women or both. This was really important to me and to my partners, so we started a mentorship pre-accelerator program back in 2019 for diverse builders in Atlanta building in our sectors, entertainment, fitness, and sports-related areas. It was good and I think we helped. But ultimately, William, we just found that without the money to get those businesses started and really moving to build products to find your first customers, we weren’t able to deliver the value that these folks were looking for that we were trying to help. Early 2020, I remember Andre and I sit down after a bunch of meetings in Miami during the Superbowl week of January of 2020, and we said, it’s got to be a studio model. That’s the only way. We need to be able to take these founders in early and figure out how to fund them and give them the resources that they need to get live. That’s what they need. That’s what they want. We spent some time exploring the for-profit studio models, the traditional kind of venture-backed studios. And unfortunately, they just take so much of the equity from those founders because they need to because of the risk and the time and energy put in, the returns that are demanded by their for-profit investors, that they end up taking 20-30% sometimes 50% of the equity. William, that felt like payday lending to me. It felt wrong and didn’t feel like helping when you’re taking up to half the equity from these founders. It felt like taking advantage of people who were in a bad situation. That didn’t work for us after we spent a good year trying to figure a way to do that out and came to the conclusion that it had to be in a nonprofit. And then the last inspiration that came from Web3 as well, was seeing the way that Web3 communities had formed. Starting about a year ago, people come together through these Web3 communities built around NFTs and tokens to support causes that were important to them. It really started with ConstitutionDAO, a group of people who tried to buy a copy of the US Constitution a little less than a year ago but didn’t succeed, but it was amazing to see how that happened. And then we saw all these other cool things happen things like Krause House, a group of people that are trying to buy a stake in an NBA team. LinksDAO, a group of people that are going to buy a golf course, seed club, a group of people that are backing, early-stage crypto projects. We said wow if we put these two elements together of a nonprofit with a crypto or NFT community or Web3 community, man, we could smash these together, fund these founders in a way that’s not going to take their equity away from them and create something that really gives enduring value to those founders to the Atlanta community and really make a big difference.
William Leonard
You touched on something that you all saw as an early challenge for a lot of the founders that you are interacting with back in 2019. You were trying to help as best as you could, but ultimately, you found that these founders are really over-mentored and undercapitalized. That’s a very common saying when it comes to underrepresented founders in the startup and venture ecosystem. I think it’s novel that you’re all taking such a unique approach through the nonprofit model versus the for-profit model. Tell us more about the studio and how it works. How do you all find founders or do founders find you? What is the process of building going to be like, then you mentioned, they’re going to get some grant money. I think $200,000 in grant funding. That’s amazing. Tell us more about how this works.
Brian Zwerner
First and foremost what we found working with diverse founders is, a lot of times it didn’t go to the right schools with a history of having a lot of tech founders come out. They didn’t go work at Google and Facebook, which are newer entrants to Atlanta, but are finally here, which is awesome to see. But it’s just a lot less likely you’re gonna see people with those backgrounds. What that means is they just don’t have the right friends and family network to get that early capital raised. Now, it’s really easy, if you went to Stanford and worked at Facebook for four years to know the right people who can write $25-50,000 checks, hold on to people like that. That just wasn’t the case with the founders we were meeting especially diverse founders here in Atlanta. That was where we honed in on. And then the second thing that we saw, and it really came in the back half of 2020, as a lot of companies started to spin up different grant programs to support diverse founders, especially black founders in the back of 2020 was if you didn’t have the right network to raise that friends and family money, chances are you don’t have the right network to spend it either. You don’t know the technical dev shops, you don’t know the digital marketing agencies, and you don’t have the right lawyer contact or the right team in HR and Finance. What we found was a lot of companies were getting money, but they didn’t know where to spend it. They were getting ripped off. They were getting tucked into things that didn’t want or need. They’re paying the wrong people. Those were the two things we really keyed in on. We said we need to solve those two problems. Look, there are a lot of great accelerators out there and a lot of great grant programs like that, but most of them are looking for companies that are life, that have a product, that have at least a little bit of traction. We felt like that problem, it had some solutions. We wanted to say, all right, well, how do we help those founders that don’t have enough money to get the product live? Either are technical, don’t have the marketing skills, or a product and marketing people who don’t have the technical skills and need to fill that hole. That’s the hole we wanted to go after. Earliest of ideas days, as I said earlier, we want to co-create. We’re bringing together a team with a tremendous amount of experience in venture, startups, Web3, and elsewhere. We want to co-create with these founders, we want to help them find their ideas, and we want to help them to find those ideas that will help them build them and get them to market. We’re going to do that with $200,000 grants per founding team, which we think should, with all the extra resources we’re bringing, should be enough to get something live and start to prove out some type of the beginning is at least a product market fit.
William Leonard
I agree. I mean, $200,000 in nondilutive capital, is a substantial amount of money to get started. How do founders apply for W3 Studio? How did they get discovered? What’s the process like?
Brian Zwerner
Right now there’s a founder interest form on our website, https://w3studio.us/, go on and find it and sign up. We’ve had dozens of founders sign up already, just to kind of stay in the know. We expect to open the applications up in the spring once we’ve hit our first funding metrics for the Studio. Just like startups, we got to raise our money. We’re just raising it in a nonprofit way. These are donations, this is not equity. No one owns this. This is a nonprofit, me and all the board members are prohibited from taking compensation through Georgia Nonprofit Corporation laws. This isn’t about rich people getting richer or even rich LPs getting richer. Founders can come on and apply on our website. We are confident that there are a lot of great founders, like I said, we found dozens without even really pushing yet. We’re sitting down with a team to try to figure out exactly what we’re looking for in founders, I’ve got some opinions on this, you are graciously part of our selection team. We’ve got yourself from Valor Ventures, someone from the Coinbase Venture Group, the Atlanta Hawk Venture team, and a couple of startup builders in our selection team. People who have built businesses, investing in businesses, and we’re finding those criteria, but I think they’re gonna kind of come around two big areas. First is, we want winners. What I mean by that is just a proven track record of kicking butt and winning. I don’t care if that’s being awesome in school, being great in your job, being a star athlete, the best musician, or a writer. I want to just know that the founders we bring into this program understand how hard it is to do something that’s difficult and be successful. Having the commitment to put in the effort, and to find the right help, I want to see those skills out of our founders. I want to see people that are serious about Web3. What I don’t want is somebody who says, oh, there’s a $200,000 grant, let me throw a token on my pitch deck and see if W3 Studio will fund me. People who really understand these markets that they’re going to be interested in getting into, that are participating in communities, they’re on Twitter spaces, in Discord, that owns some tokens and NFTs, participated in DAOs, doing things in the metaverse or building or tinkering in these areas, and who may have written some smart contracts. I want people that really believe in this technology as much as I and the rest of our team believe in it. Because otherwise, it’s not going to work.
William Leonard
You don’t want Web3 tourists at all. It’s common. You’ve seen it over the last couple of years when Web3 was a true buzzword a couple of years ago. Now, a lot of the Web3 “builders” in the Web3 space have now transitioned to the next bus.
Brian Zwerner
They’re all AI builders now. We don’t want that. I mean we define Web3 very, very broadly, anything from Metaverse and avatars and gaming to DeFi and TradFi and trading and tokens and DAOs and community building, B2B tools or SaaS tools or infrastructure tools, I mean, just as broadly as it can be defined, but we want to know that these what we think of as cutting edge tools are going to be used to build these businesses. And the other part of this is, while there’s been a lot of disruption in the crypto space, there are still tens of millions of dollars sitting out there in programs from the Web3 blockchains themselves, and the layer twos on top of those blockchains and the developer tools to incentivize people to build using their chains or their tools. Our belief, our hope, our expectation is that while we’re gonna give $200,000 grants, we’re very plugged into the rest of the ecosystem. We should be able to get tens of thousands or maybe even hundreds of thousands and additional nondilutive grant money by helping these founders to pick the right chains and tools to build using, which will further leverage our money, and give them even more runway to get their businesses live. We think that that’s an important thing. Even with all the disruption in the crypto market, that money is still out there for builders,
William Leonard
The capital will be a pivotal resource for the founders. But looking at the noncapital side of things, the intangible resources that you and the team are really going to provide the founders, can you give some examples there of how you’re going to help them build here in this space now?
Brian Zwerner
Absolutely. It’s gonna be a big loving bear hug. That’s how I describe it. We’re gonna give the founders whatever they’re missing. If they need technology development, we’ve got people with those skill sets, both as advisors and to bring in the right tech teams. We’ve got people with business and strategy and product backgrounds. We’ve got teams to help them with digital marketing or go to market on B2B sales. We’ve got people with a lot of experience that can be hired in those areas. I’m already building financial models and doing the QuickBooks for five startups today. I’ll do the next five, too. We want to make sure the founders can focus on their customers and on their products. We’re gonna fill all the gaps and some of that they’ll use their grant money to hire teams that we help identify for them and we help to negotiate good pricing. Some of that will be just using some of the great mentors and advisors that are part of our core program. I’ve been so excited by the outpouring of interest from people to help here. Everyone in Atlanta wants to see this tech ecosystem get bigger. I think we’ll be able to get just a tremendous amount of free help for these founders and put them around some great people to get them done. We’re gonna do this all over at a space here in Atlanta called the Atlanta Blockchain Center. It was opened a little less than a year ago in the Buckhead area, found by a fella named Marlon Williams. Marlon is on the board of directors of W3 Studio. We have a great relationship. That is our official, unofficial home. I live five minutes from the blockchain center. I can meet founders there every darn day if they want. They can work out of the co-working space there. They can be part of the events and things that are going on there. It’s a great resource for founders and a great reason that Atlanta has got a really big leg up in the Web3 race.
William Leonard
Shout out to Marlon and the whole team over at the Atlanta Blockchain Center. That’s been a crucial resource for really building up and serving as a center for a congregation for a lot of the Web3 evangelists and builders who are here in the city of Atlanta. Do you see Atlanta becoming a Web3 hub for founders now?
Brian Zwerner
We’ve got a really good opportunity here in Atlanta to be that hub. Atlanta has always been a strong development in the startup space, FinTech, and cybersecurity. Those are areas where we’ve seen some big companies come out, companies like Greenlight and Kabbage, and a number of mid to late-stage cybersecurity startups. Obviously, the big payments companies like Global payments and TCs here in Georgia, the big banks like Truist bank, and so on and so on. We’ve got a lot of the tech talent and building blocks for that to be the case. The Atlanta Blockchain Center is doing great things as we talked about. There was an amazing conference with a couple of 300 attendees set up by the Georgia Tech blockchain club called Web3 ATL that happened late last year, that I participated in, and the Atlanta Blockchain Center was a big part of. We’ve had a couple of big blockchain or crypto-related startups already here. Storj which is data storage online on the blockchain, Bitpay which is one of the more popular ways to enable credit cards on E-commerce, and a couple of cool startups; GigLabs and in the sports space and Players’ Lounge. I think there are pieces here. We still got a ways to go. Miami is a bigger splash city in that race for sure. Obviously, New York, LA, and San Francisco, but a lot of the pieces are here for Atlanta to be successful. We’re hoping that W3 Studio is gonna be a big part of that.
William Leonard
You’re right. The infrastructure is here. It’s continually being built. I think the Atlanta Blockchain Center was a tremendous addition to the momentum that the city is seeing from a blockchain Web3 perspective. You kind of talk about how Atlanta is on its way there to catching up to the cities and maybe even surpassing cities like Miami and New York when it comes to Web3. But what does success look like specifically for W3 Studio, when it comes to, hey, we’ve accomplished the mission that we initially set out back in 2019? This is how it was supposed to play out.
Brian Zwerner
Once we’re fully funded, we hope to be working with about four or five founders at a time. I think the founders will be in the program for about a year. The idea is it’s unbounded on time. It’s not a three-month accelerator, founders will be with us until they achieve liftoff and graduate. That would be defined as revenue sufficiency, to stand on their own and hire their own team and not need access to all of our mentors and advisors and resources or raising a venture-led seed, multi-million dollar seed round. Where a VC is going to take that board seat and provide the same kind of support that we would have been providing. If we do this right, we think we can find at least 50 founding teams over the next decade. What we’ve seen and there are just reams and reams of data on this is that diverse founders hire more diverse teams, right? That is a proven fact out there. Once some of these companies get big, they’re going to be staffed with a much more diverse workforce, especially building here in Atlanta. Some of them are going to exit, that’s going to create some diverse millionaires in the Atlanta tech ecosystem, that’s going to lead to new startups getting started, that’s going to lead to new angel investors, it’s going to lead to new VC funds popping up here. Success 5-10 years ou, that’s what that looks like. I think it can have a big impact on the Atlanta tech ecosystem. Even more broadly making Web3 more diverse, it’s still the early days of Web3, but if you look at the big winners in Web3 so far, Coinbase, OpenSea, Dapper Labs, and others. It’s all white dudes and Asian dudes, just like the rest of web one and web two. If we get on this now early like this, there’s a chance that Web3 could look different. We want to be a big part of that.
William Leonard
I love that. That is very well said, Brian. I think there’s a lot of momentum here in the city right now. W3 Studios capturing a lot of that momentum. I’m excited to see how the impact reverberated throughout the city of Atlanta. I think it’s only going to be a matter of time. So, Brian, I appreciate you joining me this afternoon. I look forward to seeing you more in person around town and watching how W3 Studio continues to evolve and impact underrepresented founders building in Web3.
Brian Zwerner
Excellent. Well, thank you, William, this has been a lot of fun. I’m grateful that you are helping us get the word out about W3 Studio. If you’re listening to this and you work at a big company that supports diversity in the tech ecosystem here in Atlanta, hit me up, reach out, and I’ll tell you how you can participate. But in a couple of weeks, we’ll be launching these digital membership passes where any individual can participate and support what we’re doing at a much lower price point and become part of our community. William, just thank you for being part of our early selection team and helping us to find these amazing founders. It’s gonna be a fun journey together.
William Leonard
I agree. Brian, what is the best way for founders to get in touch with you or find out more about W3 Studio online?
Brian Zwerner
You can go to our website https://w3studio.us/. We are on all the major social platforms, hit me up on LinkedIn. I’m very active there. I want to hear from everybody who has got something to say about what we’re trying to build here in Atlanta.
William Leonard
Awesome. Brian, thanks for your time. We’ll talk soon.
Lisa Calhoun
We’re thrilled to have you as an Atlanta Startup Podcast listener to help you get the most out of the experience. Let me invite you to three insider opportunities from our host Valor Ventures. First, want to be a guest on this amazing show. Reach out to our booking team at atlantastartuppodcast.com. Click on booking, It’s a no-brainer from there. Are you raising a seed round? Valor definitely wants to hear from you. Share your startup story at valor.vc/pitch. Are you a woman or minority-led startup valor sister program? The Startup Runway Foundation gives away grants to promising startups led by underrepresented founders. The mission of the Startup Runway Foundation is connecting underrepresented founders to their first investors. Startup runway finalists have raised over $40 million. See if you qualify for one of these amazing grants at startuprunway.org. You can also sign up for our next showcase for free there. Let me let you go today with a shout-out to Startup Runway presenting sponsor Cox Enterprises and to our founding partners, American Family Institute, Truist, Georgia Power, Avanta Ventures, and Innovators Legal. These great organizations make Startup Runway possible. Thanks for listening today and see you back next week.
