web2 vs web3 - the user versus the community

TL;DR

• In web3, the idea of a community supersedes notions of the user as the persona to build around

• This is because web3 is built on decentralisation, which has co-ordinated group behaviours at its heart

• Those working in network effect spaces in web2 must also consider this notion

• Where web3 differs from these web2 network effect products, though, is how community versus user presents in requirements for strong product development

• In both, alignment of incentives and virality are key concepts

• But in web3, inclusivity and platforming are equally as important

I’ve done some building in the web3 space, and I think there’s one interesting distinction between web3 development and web2 development, with perhaps the exception of web2 teams working on products with network effects. This is the phenomenon of the community versus the user in macro decision making.

Some housekeeping. What do I mean by products with network effects? Products where, as the number of users grow, the relative value as well as the nominal value of the product grows with it. For example, if 10 people use my social media app, it’s not going to give me much hope of finding someone I know on there, and is therefore of relatively low value to me. If 10,000 people were using my social media app, the chances of me finding someone I know on there are inherently far greater and therefore the app is of more relative value to me. This phenomenon, of more users making something more valuable for each user, is known as the network effect.

And what do I mean by macro decisions? Decisions in product are, generally speaking, either micro or macro. Micro decisions could be something like the layout of a page, or whether something is a button or a slider. Macro decisions, on the other hand, are decisions about the nature of the product itself, decisions that define the offering we make to the market. Macro decisions could be concerned with questions such as “do we pursue photo AND video sharing?”, or “Do we believe 25-39 year olds will use this application?’. Put simply, micro decisions are decisions about how to implement, macro decisions are decisions about what to implement.

Putting network effect focused products aside, web2 products primarily have to concern themselves with the user. And why not? User-centricity is, perhaps, the most frequently present characteristic in good product teams. This has much to owe to the rise of the lean agile approach to developing software, which places the user at the centre of the development lifecycle around which all else resolves. Decisions at the macro scale (and often the micro scale!) see pretty much all roads of enquiry begin and end with the user - you build what users are asking for or what you postulate with good reasoning that they would value, and you define success by just how much value you ended up providing them with. For the most part, take care of the user and you take care of the product. Simple.

In network effect focused products, you add to this the idea of the user base as a whole, and consider the mass effects of individual changes in behaviour. The network effect can experience diminishing returns (see: Facebook), but for all networked effect focused products at earlier stages than Facebook, the North Star metric is customer acquisition. The more users you have, the better the product is. In the abstract, it’s that simple. This means that macro decision making comes with an extra layer of thinking - what is best for the community? This question asks not just what some subset of users would enjoy, but a more utilitarian approach that seeks to provide the greatest value to the greatest number, which ultimately is whatever will encourage the most people to join. All roads lead to community.

In web3 development, notions of community go even further. In fact, they’re often so powerful that almost all else is abandoned in pursuit of enriching the community - they are the primary driver in macro decision making. This is because decentralised protocols have community at their core. How do we remove the need for a trusted third party to validate a transaction between two parties? Decentralised protocols say “we place our trust in hundreds, if not thousands, who we each incentivise to behave with integrity”. In Proof of Stake blockchains this is particularly clear. There is this idea of integrity being assured because a users stake in the protocols means they are incentivised to see it succeed which is at the core of ideas around community in web3. There are by definition multiple validators and multiple stakes. We all can own a piece of the success. And even with application layer tech being built on top of blockchains, these core tenets of community pull through strongly. The community is like the famous “twelfth man” in Sports. They’re not on the pitch with you, but the success doesn’t happen without them. The same could be said of the network effect based web2 products, but the strength of the dynamic in web3 necessitates platforming the community.

Transparency is key, inclusivity is key. In web3, you build not just for the community, but also with the community.