Source: Zhirenshe

Author: Jason Shah (Alchemy Product Lead)

Last month, their company announced a $200 million funding round, with a post-money valuation of $10 billion. Before joining Alchemy, Jason Shah worked at Airbnb, Amazon, and Microsoft's Yammer, so as a PM who has successfully transitioned from Web2 to Web3, his sensitivity and insights into industry changes are worth our reference.

The article will start with the core concepts of Web3, introduce the skills that Web3 PMs need to master, and how to enter Web3. Now, let's get into the main content :)

Recently, I often hear this question: I have been a PM in the internet industry for several years, and now I want to enter Web3. What are the differences between being a PM in a Web3 startup team and in Web2? What is the best way to enter Web3?

Indeed, as you can see, Web3 is exploding, and everyone is talking about NFTs and DeFi. In 2021, investments and job postings in Web3 grew by over 400%, and this data and perception make us feel that change is happening. In this article, I will explain three core concepts.

First, the unique attributes of Web3 PMs;

Second, the advantages and disadvantages of being a PM in Web3;

Third, how PMs can transition to Web3.

The Differences of Being a PM in a Web3 Startup Team

Web3 PMs are still cross-functional leaders driving project progress, but product management in Web3 differs in the following three ways:

First, mastering a more flexible and rich skill set. Web3 PMs not only need to find product-market fit (PMF) but also need to understand incentive mechanisms, build communities, and find collaborative support. This requires you to master a richer skill set and have the ability to learn quickly.

Second, leaning more towards intuition rather than science. Because the audience for Web3 is still not large, it may be difficult to conduct accurate A/B testing or collect user data. Therefore, this requires you to rely more on intuition and have the ability to make decisions in an ambiguous environment.

Third, being more open and inclusive. Decision discussions in Web3 often happen on Discord, Twitter, and public Snapshot proposals. This also requires PMs to participate in the community more frequently, rather than purely analyzing and working behind closed doors.

# PMs Are Still Not Very Common in Web3

Most Web3 projects have succeeded without PMs.

• Creating a DeFi protocol? You need a protocol expert.
• Building a community for an NFT project? Hire a community manager with 50,000 Twitter followers who understands memes.
• Need to write smart contracts? Solidity or Rust developers can help.

The most important things that Web3 teams need are often not closely related to product managers.

The Ethereum Foundation has 97 employees managing a $500 billion Layer 1 protocol, and they have basically no PMs. Leading NFT projects like World of Women have artists, charity heads, and legal advisors, but no PMs.

When creating a DeFi protocol or running an NFT project, teams mainly need a developer, a community manager, and a protocol designer (for DeFi) or an artist (for NFTs).

PMs have had 20 years to prove their value and have secured a place in tech companies as leaders in executing company vision or functionality, but the current Web3 industry is not like that. When I discussed roles with over 20 Web3 teams in 2021, nearly half of them did not understand what a PM does.

# PMs Are Not So Necessary in the 0-1 Stage of Web3

In Web2, it is crucial for founders or early PMs to decide what to build and how to build it, which helps achieve product-market fit.

In Web3, the product experience may be less important compared to attributes like token incentives (Staking and AMMs), trading pairs (DEX), artwork (NFTs), network design (L1s/L2s), transaction speed (L1s/L2s), and security (L1s/L2s).

Take Ethereum Name Service (ENS) as an example; compared to building complex blockchain infrastructure or creating DAO governance, registering a domain name website and frontend interface is relatively simple for developers.

The 0-1 phase in Web3 is more about technical infrastructure, cryptoeconomics, and/or online communities to find product-market fit. Therefore, PMs in Web3 are often better suited for the 1-10 phase rather than the 0-1 phase.

# PMs in Web3 Need Different Core Skills

"Upstream and downstream coordination" or "persuading others with your influence" may be common skills for many PMs in large companies, but Web3 PMs focus more on execution and community operations, such as gaining a large number of anonymous users through Twitter.

In Web2, due to professional reasons, I was hesitant to tweet too much. But now, if I don't tweet frequently, I become untrustworthy. Creating a viral meme is more important than writing a good email. This is because in the frenzied online world, gaining positive attention is more valuable than spending time on "alignment."

Since there is almost no career ladder or performance evaluation in Web3, teams can focus more purely on making projects successful rather than on other things like "office politics."

# When Do Web3 Startups Generally Hire PMs?

In summary, there are several situations in Web3 startups that create a demand for PMs.

• When engineers become inefficient. When the engineering team has grown too large to prioritize and self-coordinate projects, the addition of a PM can improve efficiency (for example, in cases where multiple Layer 1 protocols and EVM solutions are running in parallel).
• When the product experience is complex and difficult for users to understand. For example, SkyMavis's play-to-earn game Axie Infinity.
• When activities that a single expert cannot complete require a versatile PM to handle. For example, a versatile PM can help with marketing, growth, business development, and community work.

What is a Web3 PM?

A simple definition of a Web3 PM is: Web3 PMs are responsible for the success of the community, not just user growth.

Investing genuine effort in maintaining the community is more important than those numbers.

We have seen that in the past 10 years of Web2, a company's North Star metric has often been more important than community interests (for example, internet-addicted teenagers, low-income rideshare drivers, local restaurants trapped by high platform fees). In Web3, if you do not manage the community well, it will be difficult to succeed.

So how do you make the community successful? To do this, Web3 PMs must think about protocol design, token economics, user privacy and security, fund security, growth marketing, community engagement, and more about the interconnection of people, technology, and the value of Web3 products. Below, we further address this question.

Ten Truths of Web3 Product Management

1. You Must Prioritize Execution Over Vision/Strategy

The PM profession in Web2 requires having a long-term vision and developing detailed strategies to achieve OKRs. Indeed, execution is necessary, but when a person transitions from a junior PM to a product leader, execution is not the most recognized quality.

But this is not the case in Web3; I have not seen any PM's vision document. The vision exists in the white papers of technical architects because they understand cryptography and sharding technology better.

Web3 requires PMs to focus more on execution: quickly finalize specifications with developers, carefully QA, and establish a smart contract audit, promote on Twitter until the product is launched, and repeat this process.

Web3 is developing rapidly, with new protocols launched every day, and concepts like bonding curves and OHM forks emerging continuously. Therefore, the current vision and strategy may quickly become outdated. However, over time, this situation may change, and as the field matures, the product vision will become more competitive. But currently, Web3 PMs should spend 95% of their time on execution and 5% on vision, rather than 70% on execution and 30% on vision.

Web3 PMs emphasize building, marketing, and iterating rather than planning, managing, and measuring. Given the speed of Web3, prioritizing execution based on the right principles will be more likely to succeed.

2. You Must Conduct User Research, Business Exploration, and Marketing Yourself

As Web2 matured, the PM role became very segmented, including: user researchers, UX designers, data scientists, QA testers, product marketing managers, social media managers, etc.

Because Web3 is so new, the talent market in the 2020s is scarce, and Web3 teams mostly lack the traditional organizational structure of Web2 companies, so PMs have to do everything themselves:

• Listening to the community's voice on Discord and Twitter (user researcher);
• Running on-chain analyses using tools like Dune Analytics (data analyst);
• Outlining the user experience of token swaps and liquidity incentives proposed by AMMs (designer and technical lead);
• Establishing partnerships with stablecoin protocols (BD manager);
• Writing blog posts (product marketing manager);
• Posting memes on Twitter (social media manager).

3. You Must Focus on Perfecting Details Rather Than Expanding Features

Web3 products do not need to increase engagement by adding more features.

The Web3 model does not rely on advertising or converting free users into paying SaaS users, which essentially incentivizes Web2 PMs to focus on getting people to use a product widely rather than simply benefiting users from the product.

What determines the success of a Web3 project is the quality of the artwork of collectibles like Bored Ape Yacht Club, the convenience of DAO setups, or the liquidity on DEXs.

For Layer 1 projects like Cosmos that involve native staking, details like annual percentage yield (APY) or lock-up periods for tokens are important to users.

4. You Must Understand Your Users, Even If You Don’t Have Their Email Addresses

In Web3, users can take their data with them at any time and use multiple wallets. Although the blockchain is transparent, these wallets cannot be easily linked, and the decentralized spirit limits the ability to use tools like Google Analytics, Mixpanel, or Amplitude.

Without this data, it is difficult to know how people are using your product and whether your product meets market demand.

Therefore, you must rely on qualitative information, such as user feedback, the floor price of NFTs, and the distribution of holders to understand your users.

Additionally, many products guide and incentivize the community by providing native tokens, either through liquidity provider incentives to inject capital into DeFi protocols or by airdropping tokens for free to early supporters, like LooksRare ($LOOKS) giving tokens to many OpenSea users to attract them to their platform.

5. You Must Design Your Product Around a Given L1/L2 Blockchain (like Ethereum or Solana)

Unlike Web2, Web3 products are not entirely controlled by your company or by closed platforms like iOS. Web3 products are largely constrained by the characteristics of the Layer 1/Layer 2 protocols they are built on, such as high-speed transactions on Solana or high gas fees on Ethereum Layer 1.

For example, if you are building an NFT marketplace for consumers in emerging markets with disposable income under $1, you might choose a low-cost blockchain like Solana or Avalanche, or a mobile-friendly protocol like Celo.

If using Ethereum Layer 1 protocols typically results in gas fees exceeding hundreds of dollars, your user base may not be able to accept it unless you use Layer 2 solutions like Polygon, Arbitrum, or Optimism. Your choice of supported chains will affect user decisions, project development time, and scalability.

Web3 PMs need to understand different blockchains so they can choose which chains to support and design accordingly, whereas in Web2, PMs rarely need to be involved in infrastructure decisions.

6. You Must Be Very Careful About What You Deploy in Smart Contracts

In Web3, if there is a bug, you cannot just do a quick patch. In blockchain, unless there is a proxy contract, the contract code is immutable. And once you really change the contract code, others will start to doubt the project.

This is different from Web2 code, where a bug can be directly fixed, or a database can be edited without affecting others.

So, in Web3, once there is a problem with the code or a security vulnerability, it can lead to irreparable massive economic losses because there is no centralized department to help you resolve the issue.

7. You Cannot Rely on Proprietary Code, Trade Secrets, and Data Moats as Your Competitive Advantage

In Web3, everything is open source and composable to prevent market monopolies.

Moreover, unlike the large and complex Web2 social networks or SaaS products, your user interface is visible to anyone and is usually not that complicated. This means anyone can fork your product and compete with you from both technical and product perspectives. Additionally, users can take their data and information with them at any time, so you do not have a significant competitive edge.

If all of Facebook's code were public and user data could be carried away, it is easy to imagine that many competitors would emerge.

Therefore, this means Web3 PMs must continuously provide value to end users with better products and stronger communities.

8. You Cannot Make All Product Decisions Unilaterally and May Not Be Able to Control Your Roadmap

User ownership of protocols or dapps means that the community is a participant in decision-making.

The community needs to be engaged and involved early on, rather than thinking about launching marketing campaigns afterward. In the community, generally, users hold tokens and have the right to vote on the future of the product, such as proposals for Ethereum Name Service (ENS) or the merger of Rari Capital and Fei Protocol. While not every decision requires community consent and approval, generally, you cannot make decisions solely based on your own ideas.

For example, Uniswap, one of the most popular DeFi protocols, requires community voting to deploy its protocol on Polygon. This proposal was submitted by Polygon in November 2021, influencing Uniswap's product roadmap thereafter.

9. You Must Prioritize User Safety, as Every Transaction Involves Funds

Web3 can be a scary place: imagine clicking a button in a Chrome extension and inadvertently transferring a $100,000 JPEG file to another wallet.

Therefore, in this space, security is paramount.

For example, PMs in NFT marketplaces like to guide users to "approve all permissions at once" in Metamask transactions to avoid needing to authorize repeatedly. While "repeated authorization" is cumbersome and incurs fees, the risk of "approving all permissions at once" is that if the platform has malicious intent or is hacked, users may end up transferring all their NFTs out of their wallets. This is an example of prioritizing security over user experience, as the risk is simply too high, even though it requires repeated authorization and incurs costs.

For Web2 marketplaces like eBay or Etsy, this may never be a consideration because the asset ownership model is different. Listing an item for sale does not put all your assets at risk, and there is always a centralized team to help you resolve the issue.

Additionally, in Web3, users cannot audit every smart contract, so it is crucial to represent your users and ensure that an application is safe and trustworthy, considering the stakes in every interaction. This is also why Twitter provides social proof when users cannot determine whether to trust your product.

10. Regulatory Issues Mostly Transition from Web2 to Web3

From China to India to Brazil, cryptocurrencies are a focus for every U.S. congressman.

Zuckerberg's defense of Libra in congressional hearings seemingly had little effect. The Infrastructure Bill passed in 2021, which included heavy tax and tracking requirements, directly impacts the entire crypto ecosystem.

The IRS, SEC, Commodity Futures Trading Commission, and other U.S. agencies have different regulations regarding crypto technology. Therefore, as a Web3 PM, you must pay more attention to these legal issues than most Web2 PMs to understand the constantly changing and uncertain legal environment in the Web3 space.

Advantages and Disadvantages of Web3 PMs

For those who are low-key, open-minded, and curious, Web3 has great prospects worth exploring.

Advantages:

• Building the future. Web3 still has a lot of uncertainties, and uncertainty means more opportunities; perhaps you can design the next generation of the internet.
• Establishing influence. Web3 PMs are still rare, and what you do and how you do it is unique and can even have a significant impact.
• Becoming a versatile player. You will be involved in product, collaboration, meme creation, growth, and maintaining community stability.
• Learning every day. There is a lot happening at the intersection of computer science, economics, and sociology, requiring you to learn a lot of new things.
• Fun. Web3 is not as formal and serious; people enjoy playing with memes, and dramatic things can happen on Twitter, which is quite normal.

Disadvantages:

• Starting over. Do you think you understand PM? Web3 is so different that you must forget the rules you were familiar with, as they may not apply to Web3.
• 24/7: Web3 is non-stop, with builders worldwide, each with their understanding, and the speed of new iterations can be exhausting.
• Reducing ego; you are not that important. Engineers, community leaders, and artists—these people are all important.
• Data is not that important. Experiments and data are sometimes a PM's best friends, but that may not be the case in Web3.
• Everything can be financialized. Tokens, airdrops, and floor prices—all have a price.

The Best Ways to Enter Web3 Work

Web3 may seem strange and intimidating. Paying with magical internet tokens? The founder is an anonymous giraffe? What is all this?

But Web3 is at a unique moment, both risky and certain. This creates significant opportunities for enthusiastic PMs to rise, as there are not many speculators in this field yet. Here are my suggestions.

1. Learn

Read, Use, Build

Read: Carefully read the Bitcoin white paper. Watch Chris Dixon's "The Potential of Cryptocurrency." Follow influential accounts on Twitter to stay updated. In addition to these, you need to read the Bitcoin and Ethereum white papers thoroughly. Understand reports from research institutions like a16z, Bankless, The Defiant, and Unchained. Read books like "The Sovereign Individual," "The Infinite Machine," and "Cryptoassets" to understand cryptocurrency from a philosophical perspective.

Watch sci-fi cultural works like "Snow Crash," "Ready Player One," and "Dune." Check out recent notable interview videos, such as the EthCC4 conference (Vitalik's speech) and Tim Ferriss's interviews with Naval and Vitalik (March 2021), Nick Szabo (August 2017), Chris Dixon (Chris Dixon/Naval: The Wonders of Web3—October 2021), Balaji (November 2021), and Hosseeb's conversations with Layer 1 founders of Solana, Avalanche, and NEAR in 2022, as well as Brian Armstrong's interview with Bankless (November 2021).

Read everything written by Linda Xie and check out Preethi Kasireddy's Web3 guide or Web3 University. Follow prominent figures on Twitter and start posting your own views to learn in public.

Use: Buy some tokens through platforms like Coinbase, FTX, or Binance and send them to a Web3 wallet (like Metamask), stake (like stake.us), swap (like Uniswap), and participate in DeFi (like Compound); find NFTs you like, trade one or two on platforms like OpenSea, join the Discord of that NFT community, and engage in discussions; try using cross-chain bridges (like Synapse or Wormhole) to transfer some ETH to different chains or layers (like Polygon). You must experience it before you can create it.

Build: Try to do a project. Search and read contracts on Etherscan, mint an NFT. Join a DAO and start contributing to projects like Developer DAO or FWB. Try to create something, regardless of whether you are technical.

2. Search for Teams You Like

Search, Research, Explore

Search. Review top Web3 venture capital portfolios (a16z crypto, Pantera, Paradigm, Dragonfly Capital, Electric Capital, Fabric Ventures, Variant Fund), filter out respected teams, and look for areas of interest and tasks you think you are suited for. Make a list of what you like, what interests you, and what you need to learn.

Research. Browse project websites, study their published content, and check community forums (like Lido/staking) and Twitter.

Explore. Join the project's Discords to understand the project's development trends and community culture.

3. Join Them

Reach Out, Evaluate, and Join a Web3 Team

• Find a role that suits you. Determine what value you can provide based on the project's development direction and your skills.
• Be proactive. Send private messages to founders or core contributors to introduce yourself.
• Contact them and make a decision. Have conversations with more than five teams, evaluate them, and then make a decision, and enjoy.

Many teams may not even realize they need a PM. Start from their questions, goals, and community spirit to find the value you can provide, balancing interest and experience.

In summary: Web3 needs you, come join us.