Everybody wants a Killer Web3 product, but only some get it. Time after time I have seen startups get this wrong. Sometimes for obvious reasons, other times for non-obvious ones.
One of the key mistakes I have seen is treating building a Web3 product like a Web2 product. This is an obvious one. But, where does the difference lie?
Yes, a lot of traditional product principles still apply. I have also seen many traditional Web2.0 product leaders promote that Web3 is no different in the product game and the same key principles can be rinsed and repeated. I humbly disagree. This is true on the higher level but on a nuanced level, it’s not the same. This narrative only leads to disaster for startups in the long run.
In this series of Killer Web3 Products 🔪 I’ll try to outline some of the key Web3 insights I have picked up in the last decade as a user, builder, and advocate for the world of Web3.
Let’s dive in. In this first post, I will discuss what a Web3 PMF (Product market fit) looks like.
In traditional Web2 startups, we see two distinct metrics:
a) Growth as the metric for PMF (Product market fit) and b) Startups needing to monetize the growth aka their users.
In theory, the linear path looks like:
- You build out an initial prototype and get market feedback
- You iterate constantly to reach PMF (Product market fit)
- Once PMF is reached the growth of users is rapid. You raise VC moni.
- In exchange for the value of the product, users pay for the product
- The startup monopolizes a target market for sustainability
This narrative is different in the Web3 world. Mostly, because PMF (Product market fit) looks way different. In theory, the linear path in Web3 looks like this instead:
- You build out an initial prototype and get market feedback
- You offer incentives around the product to bootstrap its initial growth (with a token most of the time)
- You iterate the product with feedback from network participants or your current users (same as Web2)
- You reach Web3 PMF (Product market fit). This is the key differentiator because the metric for a Web3 PMF isn’t growth, it is network sufficiency.
- A Web3 PMF is reached when the network is self-sufficient. Is the network decentralized enough that if the creators vanish, the network will survive? If the answer is yes, you have reached Web3 product market fit.
- You and your users become participants in this network. In exchange for the value of the network, your users will invest their time, capital, and resources to grow it. You as a startup will do the same. The more value this network creates, the more growth you will see.
- This eventually translates into top market-cap coins
As a startup builds products in Web3, it is important to understand the distinction between Web2 and Web3 product development.
Web2 startups create value and users consume value. Whereas in Web3, both startups create and consume value as network participants.
TL’DR: Web3 PMF (Product market fit) is network self-sufficiency not growth.
Feel free to reach out to me on Linkedin or send an email to Leeraj42@gmail.com for collaboration and Web3 opportunities.
Are meme coins the perfect Web3 PMF?
