Web3 Product Management

05/19/2024
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Product Management has matured, changed, and diversified in its function and role.

It's become an industry in and of itself to just define what it is.

I wish the depth to which content is now available were available when I first stepped into it. At the time, it was much more "requirements and specifications" driven, and in that regard, seemingly dry and unappealing.

Perhaps those in the know early in the rise of the Internet saw the real opportunity; and I believe the Internet elevated the role of Product Managers.

In the past, other factors drove business value for technology companies. Engineering and sales were likely the two things that made the difference, which is why much of the technology from that earlier era was not particularly user friendly.

It didn't matter.

Infrastructure, including networking equipment, needed to compete on bits and bytes, speeds and feeds.

Applications needed to meet the business goals of buyers.

Sales and distribution channels determined winners.

But the Internet and cloud changes things. Now the actual users of the products mattered.

Siebel CRM vs Salesforce.com -- the entire user experience became an important decision-point, tipping the scales heavily in favor of Salesforce.com.

Compare typical networking companies to Ubiquiti -- even something that is intended to be used by networking engineers who have a high tolerance and comfort for complicated -- show the power of a well-thought experience.

App Stores, Product Hunt, SDRs, Content Marketing -- these were new, lower-cost channels that put the product squarely in front of users and buyers. The sales methodology became less important (not unimportant, but less important) in the buying and retention experience. Instead, the actual Product mattered.

Great Product-first CEOs demonstrated the market returns over Sales-led CEOs in publicly traded companies.

In some ways, this same narrative and evolution is taking place again in web3.

The origins were technical.

More compelling solutions to known technical issues were built. Engineers built for engineers.

BD and Community managers introduced the sales and marketing motion to gain traction and early users.

Many products were a hit because the underlying product had the right fit and UX for the initial set of users.

These emerged directly from technology or from taking known web2 interfaces, experiences, jobs to be done, and sticking them on top of crypto rails or crypto assets. Decentralized exchanges, for example, didn't have to explore and discover new products; it took a known product, centralized exchange, and build it for crypto.

It is possible that a large swath of products may follow suit: take what was in web2 and port onto web3 infrastructure.

A similar migration occurred for the initial internet. Mail order catalogs, for example, could easily come on as online versions of those catalogs. That yielded some benefits without real innovation.

But it was when the product changed -- personalization, e-commerce, social reviews -- that unlocked much bigger companies. The technology created new products that created massive wealth.

Those who leveraged the advantage of the Internet reaped huge rewards.

Those advantages tended to be product-led.

ebay, Facebook, Salesforce.com, Stubhub, Uber, Airbnb, Domo, AWS -- all of these identified a specific user problem and constructed a product which leveraged the changes in the Internet.

Were there some big companies that took off largely by remaining engineering led solutions that just solved known engineering problems at scale. Sure. Eventually these likely needed product thinking (or had founders who were very strong a product).

Twilio, for example, looks like an infrastructure solution via APIs. But the founder, I believe, applied a product hat in terms of thinking through disruption, UX, business model, and use cases to attack what ended up being a massive market.

Value creation will never go out of fashion, no matter the technology.

So then what will differentiate web3 PM versus traditional PM?

I think the skills are largely the same. The surface area and levers probably have changed.

So, Users -- understanding users and their goals really matters.

But there are many engineering properties which are pushed out as User properties that Users, currently, don't care about; but they are so prevalent as an ethos, that the PM must still contend with them (depending on the level of product thinking within their ecosystem).

For example, "decentralization" is pushed as a value. But if a PM doesn't have a good framework, sensibility and an ability to navigate and shape the internal narrative, it can be an idea maze of its own. (What does Decentralization mean and why is it important?)

Some people lean on decentralization as resisting censorship. Some feel it means performance and resilience advantages. Others feels it removes developer platform risk. Even parsing those definitions is important for the PM to eventually wade in (this is dependent on the ecosystem's culture -- The Truth Flees Incongruence).

The second area for PMs will be in incentive design. This is likely an area which will shift and evolve; but the protocol or ecosystem which has a product-centric approach to the incentive design will have an advantage over the systems-first approach.

But the product manager must be versed in being able to engage at this level and, ultimately, through the timeless skills of influence and alignment building, steer the business to the best outcome.

Web3 PM, for many projects, means entering a space with strongly entrenched "anti-user bias" -- which is a strong word on purpose to express a truth. Building what is efficient or makes sense without an in-depth understanding and appreciation of users is a prominent if not predominant ethos. And this is a natural evolution.

I'd argue that, given web3 gives incentives and ownership, it's more important than ever for someone with the empathy to grasp the full dimension of users to drive the outcomes and design considerations.

Given that much of the technology is open source and the value capture on the technical stack is fluid, product thinking at the value flow, ecosystem, and flywheel level matters more than in web2. And these could be potential skills in web2 -- it's just that successful companies could succeed without them.

Third area is the design of the narrative. Often this is akin to the product marketing, but I think for web3 products, the narrative design matters. First, the early users, crypto native, are primarily here for the existing narrative. So building and connecting upon this will be valuable.

The second is that onboarding new users to a potentially new paradigm will need a level of awareness and cognitive alignment the can bring them along. Shouting "we're web3" just doesn't work as a customer acquisition strategy.

In some ways, one doesn't need an actual person who is Product Manager.

If the culture is sufficiently user centric and can live in this realm 24/7, then building and selling could result in a winning product. This depends on leadership skills, ethos, as well as the domain.

For example, Farcaster has been founded by someone who is empathetic to the different user personas. He's thinking about it and experimenting with it in a field that is ripe for disruption because of the dominant players' oversight of what could matter.

In this case, web3 brings properties which align naturally with solving real problems; and the degree to which those properties are part of the product is determined by user needs, not by an ideology which users don't care about.

So let's consider the traditional skills for standard issue PM: