Whatever this is, this web3 product manager role is not a product manager

Jason Shah wrote a guest post recently for Lenny Rachitsky’s newsletter, “A Product Manager’s Guide to web3”, which describes how product management differs in web3 companies. He notes that joining a web3 company can be “an opaque process and a risky decision”. I’d add “ethically challenging and morally grey” to that description.

In this article #

• Introduction
• What we mean by web3
• Put your pitchforks down, please
• “You keep using that word, I do not think it means what you think it means.”
• Just another tech bubble
• Bored Apes and Beanie Babies
• A crypto gold rush
• This all smells a bit growth hacking-y
• Dealing with uncertainty
• Relying on intuition
• ‘Pump and dump’ isn’t in our job description
• Community engagement
• Final thoughts
• Further reading

What we mean by web3

Everyone is still a little vague on what they mean by web3. The confusion partly comes from its seeming conflation with a very separate concept of Tim Berners-Lee’s vision of a “semantic web”, which he later described as Web 3.0 — following on from Web 1.0 (worldwide web, e-commerce) and Web 2.0 (social media). A semantic web is one where all information on the internet is both machine-readable and machine-understandable.

“I have a dream for the Web [in which computers] become capable of analyzing all the data on the Web – the content, links, and transactions between people and computers. A “Semantic Web”, which makes this possible, has yet to emerge, but when it does, the day-to-day mechanisms of trade, bureaucracy and our daily lives will be handled by machines talking to machines. The “intelligent agents” people have touted for ages will finally materialize.”

Weaving the Web, Tim Berners-Lee with Mark Fischetti

So for the purposes of this article (which in a few years’ time will probably date it terribly) let’s define web3 as being the space resulting from the confluence of decentralised finance (DeFi) technologies such as blockchain, cryptocurrency, and non-fungible tokens (NFTs), combined with self-sovereign identity (a decentralised approach to verifying an individual’s digital identity).

Put your pitchforks down, please

Do I think every company working with decentralised or other web3 technologies is unethical? No, I don’t, so please put your pitchforks down.

Just as we did with Web 1.0 and Web 2.0, we’ll get through the chaos of the initial gold rush, and the companies truly providing value to their users will be the ones that eventually win out. I’m naïvely optimistic like that.

However, in the rush to capitalise on this emerging opportunity, not every company is keeping their users’ needs front and centre. Shah’s article seems to encourage this shift away from ethical consideration of user needs, which I consider to be at odds with what a product manager does, and so is why I wanted to write this response.

“You keep using that word. I do not think it means what you think it means.”

Shah is of course entitled to his opinion, and I don’t dispute that he has more experience than most in companies focused on cryptocurrency and NFTs. I think his article is problematic because his description of the role of a product manager in a web3 company is unrecognisable.

He may well be describing a role that truly is in demand for web3 companies, but what he’s describing isn’t a product manager. And for that matter, I’d argue he has a pretty skewed view of what a Web 2.0 product manager is as well.

Don’t get me wrong, as a profession, we’ve spent the last twenty-plus years figuring out what our role is meant to be. We’re still continually discussing how the role is evolving, and the grey areas where aspects of our role intersect with other roles. But even in this debate, there are some fundamental ethical and moral principles we stick to.

My concern is that an article like Shah’s, particularly when distributed to thousands of people in Lenny’s influential newsletter, is going to mislead people into thinking product management is something it’s not.

I’ve written this article to respond to Shah’s points and highlight where I feel his description of product management is veering off-track.

Just another tech bubble

Before we start, allow me to lay my cards and biases out on the table. I’m sceptical of web3 because I’m yet to see the concept escape its initial hype cycle and reality distortion field. It’s early days, but in my view web3 has yet to deliver anything of tangible human value beyond making a minority of people rich at the expense of a majority of greedy fools hoping to get rich quick.

I was equally sceptical at the outset of Web 1.0 (worldwide web, e-commerce) and Web 2.0 (social media) because I felt at those times that we hadn’t fully grasped the effect these new technologies would have on our social lives and ways of doing business. Right now, I feel the same way about web3. And as I did before, I’m going to wait for the gold rush fever to subside, the bubble to burst, and the key players and technologies to emerge. Then I’ll review my opinion.

Bored Apes and Beanie Babies

Without doubt, there are and will be some positive applications of decentralised technologies. But there will also be a ton of ill-conceived dross to plough through before we find them. If peak Web 2.0 was the internet-connected fridge, peak web3 will probably be a blockchain-enabled Roomba. ¹

However, there’s a stark difference between benign but pointless products and scams masquerading as legitimate companies. My overriding impression is that many current DeFi companies exist solely to make an unscrupulous minority rich at the expense of a foolish, misled, or simply greedy majority.

In his article, Shah uses a Bored Ape Yacht Club avatar as a tongue-in-cheek way to highlight how different a web3 product manager is. The Bored Ape Yacht Club (BAYC) has become the poster child for NFT art sales.

On Last Week Tonight in 2018, John Oliver explained the Bitcoin cryptocurrency by analogy to a $15,000 Beanie Baby advertised on Etsy: rare and collectible items can attain a value far beyond the materials they’re made with because people ascribe value to them. You could say exactly the same thing about Da Vinci’s Mona Lisa or Shakespeare’s First Folio.

“BAYC is a collection of 10,000 Bored Ape NFTs—unique digital collectibles living on the Ethereum blockchain.”

“Each Bored Ape is unique and programmatically generated from over 170 possible traits, including expression, headwear, clothing, and more. All apes are dope, but some are rarer than others.”

Homepage, Bored Ape Yacht Club, retrieved 3 April 2022

Bored Ape Yacht Club is a limited (= artificially scarce) collection of procedurally-generated digital artworks that lack the human touch in their creation — truly their NFTs are Beanie Babies for tech bros. At least Mike Winkelmann a.k.a. Beeple actually created by hand each of the 5000 unique digital artworks he sold as a collection for over $69 million.

It’s somewhat ironic, then, that BAYC has spawned disreputable copycats fighting among themselves to replicate BAYC’s financial success through overt plagiarism.

“A pair of non-fungible token projects are testing the boundary between plagiarism and parody. Digital marketplace OpenSea has banned the PHAYC and Phunky Ape Yacht Club (or PAYC) collections, both of which are based on the same gimmick: selling NFTs with mirrored but otherwise identical versions of high-priced Bored Ape Yacht Club avatars. Now the dueling projects are selling their apes while dodging bans from other marketplaces, becoming the latest example of how the NFT world handles copied art.

“Bored Ape Yacht Club (or BAYC) NFTs are some of the most expensive crypto art assets — they recently overtook CryptoPunks as the highest-priced NFT avatars with the cheapest available ape selling for $217,000. Like other avatars, though, anybody can technically copy or modify the associated ape picture. So PAYC and PHAYC simply flip the right-facing BAYC avatars to face left, associate them with cryptocurrency tokens, and resell them.”

“Two NFT copycats are fighting over which is the real fake Bored Ape Yacht Club”, Adi Robertson, The Verge, 30 December 2021, retrieved 3 April 2022

Does a mirror image parody of a computer-generated BAYC avatar have value? Only if we ascribe it value. But then perhaps we’re ascribing value not so much to the copied avatar, but to the artistic statement it’s making.

Maybe it’s a bit like how Banksy’s Girl with Balloon increased in value from £1 million to £18.5 million after Banksy triggered it to destroy itself immediately after auction using a shredder hidden in the bulky picture frame. The shredding stopped halfway (unintentionally, it would seem), but the performance art stunt created a new and unique artwork, which came to be known as Love is in the Bin.

Or more likely these Bored Ape imitators are simply rip-off artists trying to scam a quick buck from the unwise.

A crypto gold rush

The DeFi initiatives grabbing the headlines at the moment are just symptoms of another modern gold rush. People are rushing in to catch the wave of money they’ve seen the early adopters making. Snake oil salesmen offer false hope to the naïve. Copycats appropriate and sell other people’s ideas. Retail investors hope to be early enough to acquire a crypto asset they can later sell at a profit.

The reality is for most investors is that if they’re just getting in now, they’re probably already too late. Their valuable asset will likely lose its value once the bubble bursts, and the exorbitant sum they paid only will have served only to line someone else’s pockets.

We’ve been here before and I’m sure we’ll end up here again, whenever the next unsustainable hype cycle materialises.

This all smells a bit growth hacking-y

Shah starts off by describing three ways in which a web3 product manager is different. This is the first of them:

“web3 product management is … more versatile because to find product-market fit, PMs also own incentives, partnerships, and community. This requires a more flexible skill set and the ability to learn quickly.”

“A Product Manager’s Guide to web3”, Jason Shah, Lenny’s Newsletter, 15 February 2022, retrieved 15 February 2022

At face value, this sounds a little like growth hacking: artificially boosting user numbers of a product that has not yet achieved product-market fit (i.e. solves a valuable user problem).

Growth hacking became a thing because demonstrating user traction correlated strongly with securing institutional investment (it’s always about the money). In many cases, the user growth was unsustainable: when the incentive was taken away, the users would move elsewhere to something that better fits their needs (or offers a better incentive), because the product itself didn’t solve a problem valuable enough to retain its users.

The key difference with web3 is that a web3 company’s users are the investors. Once the company has secured their investment from the users buying the crypto asset (or made a healthy profit on the meme stock they’ve just pumped and dumped), who cares what happens to the users? The company’s already got their money.

As Shah is describing it, web3 seems to be subverting the concept of product-market fit from ‘solving a valuable, mass-market user problem’ to ‘give the product the appearance of monetary value now, or potentially in the future’.

“In web2, the founder or early product manager can be crucial in deciding what and how to build, which helps get to the holy grail of product-market fit. In web3 the product experience, such as features and perceptible user experience, doesn’t actually matter as much to the success of the project relative to the token incentives (Staking and AMMs), trading pairs (DEX), artwork (NFTs), network design (L1s/L2s), transaction speed (L1s/L2s), security (L1s/L2s), or other attributes. These are areas where PMs are secondary, if relevant at all.

“In the case of the Ethereum Name Service, the website and front-end interface to register a domain is fairly simple for a developer to do compared with building complex blockchain infrastructure or structuring DAO governance. Web3 0-1 is more about technical infrastructure, cryptoeconomics, and/or online community to find product-market fit. At this time, PMs in web3 are usually better for 1-10, not web3 0-1 when you are going from an idea to initial product-market fit.”

“A Product Manager’s Guide to web3”, Jason Shah, Lenny’s Newsletter

With that working definition of web3 product-market fit, it doesn’t matter any more if user growth is unsustainable. A company can just fire up and hype up another crypto investment vehicle to see how many more fools can be parted from their money.

Dealing with uncertainty

“It’s more art than science because there is very little user data and A/B testing given web3 values and the small user bases. This requires more intuition and the ability to make decisions in a very high-ambiguity environment.”

“A Product Manager’s Guide to web3”, Jason Shah, Lenny’s Newsletter

I do agree that product managers need to be creative in emerging markets where there’s minimal available research or precedent to aid their decision making. We often find ourselves asking questions that nobody has really considered, or trying to define and measure something that no-one in our organisation has ever attempted to quantify before.

In these situations of high uncertainty, ambiguity and minimal available data, the answer is not to chuck user research out of the window and put faith solely in intuition and gut feel.

Instead, we go and find answers to our questions. We try to gather some evidence that the assumed user problem exists and is worthwhile for us to attempt to solve. (We’re also way too early for A/B testing — we barely know what questions we should be asking at this stage. Other more appropriate user research techniques exist beyond the siren call of A/B testing.)

Relying on intuition

So what about using intuition? Intuition doesn’t come out of nowhere. Daniel Kahneman, the Nobel Prize-winning behavioural psychologist, explains that expert intuition is effectively an advanced form of pattern matching, derived from years of learned experience:

According to Kahneman, who’s studied when one can trust intuition and when one cannot, there are three conditions that need to be met in order to trust one’s intuition.

The first is that there has to be some regularity in the world that someone can pick up and learn.

“So, chess players certainly have it. Married people certainly have it,” Kahneman explained.

However, he added, people who pick stocks in the stock market do not have it.

“Because, the stock market is not sufficiently regular to support developing that kind of expert intuition,” he explained.

The second condition for accurate intuition is “a lot of practice,” according to Kahneman.

And the third condition is immediate feedback. Kahneman said that “you have to know almost immediately whether you got it right or got it wrong.”

When those three kinds of conditions are satisfied, people develop expert intuition.

“But unless those three conditions are satisfied, the mere fact that you have an idea and nothing else comes to mind and you feel a great deal of confidence — absolutely does not guarantee accuracy,” he added.

“Daniel Kahneman: Your Intuition Is Wrong, Unless These 3 Conditions Are Met“, Emily Zulz, ThinkAdvisor, 16 November 2018, retrieved 3 April 2022

web3 fails to satisfy at least two of these conditions, so anyone claiming to be using their intuition or gut feel is basically just guessing. They might as well be driving blindfolded.

It’s easy to see why people are confusing blind luck for intuition. We saw in the pioneer years of Web 1.0 (late 1990s, early 2000s) that simply ‘being on the internet’ was enough to secure millions in investment.

Likewise, the gold rush of web3 means that pretty much anything will appear successful. It’s like a super-charged confirmation bias, which is creating the illusion that people’s intuition has somehow become more reliable than seeking hard evidence.

And just as with Web 1.0, as knowledge and understanding of web3 technologies become more commonplace, the bubble will burst and the snake oil salesmen will move onto the next big thing.

‘Pump and dump’ isn’t in our job description

Later on in Shah’s article he writes:

“Many PMs develop skills like “communication” and “influence” at larger organizations, or even startups where they need to work closely with founders and rally overworked teams. This makes sense because persuasion and coordination have been core to the web2 PM job. Those skills don’t matter as much here. Web3 PM is more focused on execution and community—like signing a big new protocol partner or getting tons of anon users via Twitter.

“In web2 I was afraid to tweet much, for professional consequences. Now I’d be untrustworthy if I didn’t tweet a lot. Making a viral meme is more important than writing a good email. That is because getting positive attention in the frenetic world of web3 is more valuable than “alignment.” There are almost no PM career ladders or performance reviews, so teams are purely focused on making a project successful, not politics.”

“A Product Manager’s Guide to web3”, Jason Shah, Lenny’s Newsletter (author’s original emphasis retained)

It’s possible I’ve misunderstood the author’s intent, but this reads very much like Shah is saying that the goal of a web3 product manager is to stoke hype and attract new investors to a meme stock or NFT drop.

He argues that skills like communication, influence, persuasion and coordination don’t matter in web3 because “execution and community” — in this case bringing in “tons of anon users” (= money) — is the main focus.

We can take a charitable view of what Shah’s saying here; perhaps there really is no scope for traditional product management in web3 because the product is already well defined, and all that’s left to do is generate leads and close deals. In which case Shah is describing something more like business development, sales and marketing, not product management. So let’s call it that instead.

Community engagement

“It’s more public in that discussions about decisions tend to happen in Discord, Crypto Twitter, and public Snapshot proposals. This creates more inclusiveness but also requires a PM to be effective at community engagement rather than purely analytical and influential behind closed doors.”

“Web3 PMs are responsible for the success of communities rather than increasing acquisition, engagement, or revenue. 

“Hearts over charts.”

“We have seen the past 10 years of web2 demonstrate scenarios where the interests of the community (e.g. internet-addicted teenagers, underpaid ride-share drivers, local restaurants stuck with high platform fees) are deprioritized in favor of company-first north-star metrics. In web3, if the community—such as the NFT creators, liquidity providers, or software developers—is not successful, you are NGMI [Not Going to Make It]. Community first.”

“A Product Manager’s Guide to web3”, Jason Shah, Lenny’s Newsletter (author’s original emphasis retained)

Shah paints a picture of Web 2.0 product managers as deprioritising the needs of their community of users “in favour of company-first north-star metrics”. Perhaps his view of product management is skewed by his own experiences, but even a cursory check would reveal that he’s got this backwards.

Product management is primarily centred around the needs of users, and secondarily of the business. A successful (or at least self-sustaining) organisation needs to balance the needs of both groups, but it would definitely not survive without users of its products.

Let’s look at Shah’s definition of community:

the NFT creators = creators of the crypto asset, increasingly companies working at volume (like Yuga Labs, the company behind Bored Ape Yacht Club)

liquidity providers = decentralised exchange users who fund a liquidity pool with crypto assets they own (source)

software developers = members of the company establishing the crypto asset marketplace

This feels more like the definition of a marketplace, not a community. In a true community, everyone has a shared and aligned interest. A marketplace is (at least) two-sided, and each side has different interests: one side represents a demand for goods or services, the other side supplies to meet that demand.

The marketplace Shah is talking about has an effectively unlimited source of crypto assets, with their prices inflated by the guise of artificial scarcity, which a company then sells to a market of inexperienced and over-hyped retail investors, whose interests are currently unprotected by any significant form of financial regulation.

By and large, the creation of a marketplace such as this is designed to maximise the profits of the company minting or mining, then selling the crypto assets.

At no point is anyone considering the needs of the users (the retail investors), or whether it’s ethically the right thing to be doing.

By redefining community in this way, Shah is deliberately obscuring his own view that web3 product managers are only seemingly concerned with making money — while also taking a swipe at Web 2.0 product managers by saying that web3 product managers are more user-focused than their Web 2.0 counterparts.

This is disingenuous and misleading.

Final thoughts

It’s telling that Shah makes no mention in his article of a product manager’s ethical responsibilities, such as whether it’s right to be encouraging (likely inexperienced) retail investors to buy into something that bears more than a passing similarity to a Ponzi scheme.

Shah spends most of his article describing how the role of web3 product manager differs from a Web 2.0 product manager. I agree: the role he’s describing is different to what I would describe as product management. However, he also appears to have a limited understanding of what good product management should be, and this is problematic.

If this is what web3 is shaping up to be — make money by any means, ethics be damned — then I’m content to stay strictly Web 2.0 for now.

And Jason, if you ever read this, may I ask a favour? Please stop describing this web3 product manager role as a product manager. It’s not, and it’s making me feel dirty by association.

Further reading

“A Product Manager’s Guide to web3”, Jason Shah, Lenny’s Newsletter, 15 February 2022, retrieved 15 February 2022

“Web3 is going just great …and is definitely not an enormous grift that’s pouring lighter fluid on our already-smoldering planet.”, Molly White

Weaving the Web: The Original Design and Ultimate Destiny of the World Wide Web by Its Inventor, Tim Berners-Lee and Mark Fischetti

“Cryptocurrencies: Last Week Tonight with John Oliver“, 12 March 2018, HBO / YouTube

“Two NFT copycats are fighting over which is the real fake Bored Ape Yacht Club”, Adi Robertson, The Verge, 30 December 2021, retrieved 3 April 2022

“UX Research Cheat Sheet“, Susan Farrell, Nielsen Norman Group, 12 February 2017, retrieved 3 April 2022

“Daniel Kahneman: Your Intuition Is Wrong, Unless These 3 Conditions Are Met“, Emily Zulz, ThinkAdvisor, 16 November 2018, retrieved 3 April 2022

“Web3 ‘contains the seeds of a dystopian nightmare’ says analyst firm” , Simon Sharwood, The Register, 1 April 2022, retrieved 3 April 2022