Uruit’s Guide to Web3 Product Management
Unless you’ve been living under a rock, you probably have heard of Web3.
Web3 is widely hailed as the future of the internet, and Web3 applications have taken the web by storm. How many times do you hear or read about crypto, NFT, or DEFI, in a day? You probably see these topics on your timeline several times a day!
That’s the power of Web3.
Web3 has proven to be an unstoppable force in the digital products domain. This new technology is creating a new iteration of digital products that prioritize creating value for users over generating revenue.
But what exactly is Web3, and how does it differ from Web2? Most importantly, how does Web3 pave the way for product managers? We’ll try to answer all these questions in this guide. But first, a quick crash course on Web3.
What Is Web3
Web3 is the new iteration of the internet based on blockchains, which encompasses many concepts, including decentralization and token-based economics.
Web3 revolves around blockchain and decentralization.
The use of blockchain is an essential requirement in web3 applications, but the amount of decentralization between apps can vary greatly.
Just as databases power the ordinary apps you use daily, blockchain powers decentralized apps and the web. But unlike databases, blockchains aren’t unilaterally controlled by anyone, which helps control user data from exploitation.
A decentralization application is an app that can run autonomously, typically through smart contracts that run blockchain or other distributed ledger systems.
They are like regular apps and offer similar functionalities, the only difference being that they run on a peer-to-peer network.
The idea behind decentralized applications is simple.
Instead of using a centralized server to manage users’ data, a decentralized application runs on a peer-to-peer network that distributes the data across all nodes in the network. This means there are no central servers where hackers can infiltrate and steal your app data.
Despite having varying degrees of decentralization, these apps have one thing in common; users need a form of blockchain-based tokens—such as cryptocurrency or NFT to interact with them.
A Brief History of Web1, Web2, and Web3
Before we delve into Web3 product management, let’s briefly go over how the internet grew over the years. From Web1 to Web3, the way the web and computer systems have evolved over the years reveals an unprecedented change in functionalities over time.
Here’s how the web has evolved over time.
Coined by Tim Bernes-Lee in 1989, Web1 is the first version or stage of the world wide web evolution. Web1 is also called read-only web because it lacked the social participation the internet of today is known for.
Web1 was characterized by static web pages with content connected by hyperlinks. Technically, this version of the web was for people looking for information and data. Only a handful of people created and owned this content.
After Web1 came Web2, which fixed most of the problems that plagued web1.
Also known as the social web, web2 not only centers around creating content but also sharing and interacting with content on the web.
While web1 focuses on creating content on static pages, web2 is all about improving the user experience. User-generated content (UGC), such as YouTube videos, images, podcasts, RSS feeds, and social media profiles, are easy to create and share with your audience, thanks to web2’s interactive nature.
However, unlike web1, which was open-source, web2 is a closed system, and its platforms are centralized. This means to use the web, you have to abide by the rules of the platform, giving companies like Google enormous power over the web.
Web3 isn’t a concept. It’s already here and is poised as the future of the internet.
Decentralization and blockchain are the hallmarks of web3.0.
Blockchain, which is decentralized, has been gaining traction by the day and is already making waves in the tech world.
Proponents of this iteration believe it will give the user more control over their data, shifting it away from large corporations like Google. As the most advanced iteration, web3 leverages artificial intelligence and machine learning to create intelligent, fully autonomous internet that understands content as humans do.
Web3 iteration is represented by blockchain, NFTs, and AR cloud. Trending technologies in the world today, such as the Metaverse, are powered by blockchain technology and showcase the power of web3 in all its glory.
The Art of Web3 Product Management
Web3 product management isn’t much different from web2.
Product managers are still expected to work on products to improve user needs and drive business income. However, web3 does have some peculiarities that affect the product management function.
- Product Management Isn’t Critical in the Early Stages
Most cryptocurrency projects can operate smoothly without a PM in the early stages.
The earlier stages usually focus more on designing crypto incentives and building core product infrastructure—roles that may not require a product manager’s input.
The product manager, however, may be required to define a product vision. Though not involved in the actual development work, the PM may be tasked to create a vision that allows the team to take a top-down approach to the product’s development.
The need for a PM also becomes vital once the project has reached a considerable user base and may benefit from a PM’s knowledge of the market. At this stage, things like a product roadmap, which requires the guidance of a PM, become paramount.
The company may also want to launch new projects, which would be difficult for developers to oversee. In this case, a PM can come into the picture and provide the needed coordination while ensuring the project objectives are met.
Additionally, the PM plays a critical role in the growth and optimization of the product. They conduct market research from time to time and collect user feedback to determine the user needs and what can be improved to make the product better. The PM then works with the development team to ensure the product meets the desired outcome.
- Speed of Iteration Beats Quality of Iteration
In web2, product managers capitalize on the project’s vision and long-term strategies.
While adopting a strategic approach is great, Web3 prioritizes rapid execution over planning and strategizing. Simply put, speed of iteration precedes everything else in Web3.
For example, a web2 PM might be asked to develop a product vision or mission statement.
In Web3, chances of being asked to do that are quite low. That’s because, in Web3, the product’s vision is usually a part of the project’s whitepaper and is written by people with technical knowledge of the protocol—not product managers.
- Web3 Product Managers Wear Many Hats
Big tech companies usually split the product management role into various functions to enhance efficiency. Typically, such companies will have tasks such as research, UI/UX design, QA testing, and product marketing coordinated by different people.
Because Web3 companies often start with small teams, the entire project work falls on the PM’s shoulders. On a typical day, the PM may have to:
- Analyze user reviews by scanning through Reddit and various crypto communities
- Coordinate audits
- Coordinate product research
- Work with developers to create effective crypto incentives
Under typical organizations, these roles would be divided. For instance, smart contract audits would fall under the QA manager’s purview, while user reviews may be assigned to a product development manager.
- User Security Is Paramount
Prioritizing user safety takes precedence in Web3.
In Web3, users interact with decentralized apps using wallets. These wallets hold valuable assets like crypto or NFTS hence the need to ensure top-notch security.
Earlier this year, a phishing attack was launched on one of the biggest NFT marketplaces, OpenSea, resulting in investors losing a staggering $1.7 million to cyber criminals. The chances of such scenarios happening on a Web2 marketplace, like Shopify, are low since the apps don’t store your funds or give access to it.
Web3 product managers need knowledge of the platform they’re working with, including its technical infrastructure, to know where to audit and provide users with a safe experience.
- Market Research Is Complicated
In a Web2 startup, product managers will conduct A/B testing and basic research to determine the viability of a product.
But Web3 is a bit more complicated.
Due to the absence of A/B tests and industry benchmarks to determine quality, product managers often experience challenges conducting market research. They may have to rely on analytics tools to understand metrics like floor prices (for NFTs), wallet activity, total locked value (TLV), and more.
- Slower Product Development Lifecycle
In a conventional software development environment, products can always be improved after launch. However, this is not the case with Web3.
The improved security provided by blockchain stems from how the technology works.
The data stored on the blockchain is often unalterable, meaning users can’t alter or update the products after launch. Because of this, developers usually allocate longer periods of testing and refining the product before deployment.
You also have to prepare audits in advance to fix bugs early because it might be impossible to do so after launch.
What Is a Web3 Product Manager
A web 3 PM is responsible for the success of communities rather than just growth.
Many product managers develop communication, negotiation, and networking skills at larger organizations where they may need to work with different stakeholders. This makes communication and persuasion the core skills for Web2 PMs.
However, those skills don’t matter much in Web3.
Web3 PM is more focused on execution and community development—like signing up big partners or getting tons of crypto users on Twitter. A big part of this is considering the go-to-market strategy, which includes aligning not only with Marketing teams but also with tasks that have to do with support, data, and launching.
To achieve that, Web3 product managers must think about community engagement, growth marketing, fund security, user privacy security, and token economics.
Skills a Web3 PM Should Possess
The tasks Web3 PMs perform largely differ from those of Web2 managers.
As such, Web3 product managers need to have some skills unique to their roles. Web3 PMs should possess the following skills.
- Research and Analytical Skills
Web3 product managers should exude pro-level research skills.
Unlike Web2 organizations, where PM roles can be split and assigned to researchers, UX designers, and data scientists, Web3 managers shoulder the entire docket.
And because Web3 is nascent, PMs have to do everything to gather data, even using unorthodox means. This may include listening to the community of Discord, Twitter Crypto, etc.
Most importantly, they must be knowledgeable about the market and the blockchain infrastructure. This way, they’ll be able to run some on-chain analysis using tools like Dune Analytics to gain more insights about the products.
- Marketing Skills
A Web3 PM is also a product marketer.
Marketing skills allow them to widen product reach and create awareness.
A Web3 PM may have to write a blog post, optimize it for SEO, and make the memes and virality happen on social media. Additionally, they’re responsible for identifying key growth areas in your business and developing a product growth and optimization strategy.
Web3 tasks are usually new and complex, requiring one person to do everything. From research to marketing to business development initiatives, a Web3 PM’s plate is always full.
- Ability to Understand Users without Concrete Data
The ethos surrounding decentralization limits one’s ability to use tools like Google Analytics to understand users. Moreover, in Web3, users can take their info at any time and use different wallets that can’t easily be linked to anything, despite blockchain transparency.
Without this data, it can be difficult to know how people are interacting with your product and whether you’ve achieved a product-market fit.
To that end, Web3 PMs must rely on qualitative data like user feedback, network-wide information like floor prices and TVL, and other information like wallets that swapped tokens or deposited tokens to understand users.
- Community Engagement Skills
The core of Web3 PM’s duties is community engagement.
As such, Web3 community managers should possess community engagement skills.
Discussions about digital products often happen in Discord, Crypto Twitter, and Reddit. This requires community managers to be effective at community engagement rather than being analytical behind closed doors.
Keep in mind that Web3 PMs are responsible for the success of communities rather than increasing acquisition or revenue. Therefore, strong community engagement skills are critical in this role.
How Product Managers Should Prepare for Web3
Now we know what Web3 is and the core skills product managers need to excel in this role.
But how should they prepare for Web3?
One thing is certain; whatever Web3 brings, it’ll work alongside Web2 rather than replacing it. So, Web3 will not require a new breed of professionals to take on the new roles. Some skills required in Web3, like marketing, research, and analytical skills, are also critical in Web2 projects.
However, Web2 or new managers need to prepare themselves for Web3 to advance their knowledge of blockchain and decentralized applications. This way, they will gain insights into some tenets of Web3 that are critical for PMs’ roles.
For example, advancing their knowledge of areas like NFT floor prices, total locked value (TLV), and community management can help to better prepare them for the Web3 PM’s role. Apart from staying informed, future product managers will need to stay agile.
Benefits of Becoming a Web3 Product Manager
Web3 is a promising career path for those interested in product management. Here are the pros of becoming a Web3 PM.
Web3 is new, and many would say it’s still in the nascent stage. By becoming a Web3 PM, you get to grow in an industry that is poised for the future.
There’s so much going on now in the field of blockchains and NFT.
You get to learn everything trending, including NFTs and Metaverse, and broaden your knowledge about how these trends are changing the face of retail and the world at large.
Use All Parts of Your Brain
Unlike in Web2, where you can split tasks and assign them to different professionals, Web3 lets you handle everything. From research to community engagement to meme posting and growth hacking—Web3 lets you do them all.
Last but not least, Web3 is fun. You can post memes on Twitter, write blog posts, learn new metrics, and do much more. PMs in Web 2 can suffer from the monotony of doing the same tasks repeatedly. But Web3 is fun and less formal.
Much like anything else in life, Web3 does have its fair share of drawbacks. Here are some cons of being a Web3 PM
You Start Again
Most of the tasks you’ll perform in Web3 are completely alien to you. As such, you may have to start again, no matter how experienced you are.
You’re not as Important
The product management role is critical for the success of any organization or platform in Web2. But in Web3, everything revolves around development. Engineers, developers, community leaders—these people are more important than you.
Immutability and Data
Data drives decisions in Web2.
While data plays an equal role in Web3, acquiring it isn’t easy. As mentioned, you’ll, in most cases, extract information from qualitative sources due to a lack of concrete data.
Web 3 revolves around blockchain and decentralization.
As the most advanced iteration of the world wide web, web3 leverages AI and machine learning to create intelligent, fully autonomous internet that understands content as humans do. Trending technologies, such as the Metaverse, run on this technology and showcase the power of web3 in all its glory.
Product management in Web3 is also more advanced and significantly differs from product management in Web2. To succeed in Web3, product managers must possess unique skills, such as community engagement skills, analytical skills, and the ability to understand users.
Want to get started with Web3? Uruit is your best product development partner. Check out our Web3 services to learn how we can help you reach your goals.