A Brief History
The Product Management function started at Proctor & Gamble in the early 1930s. At that time, product managers were known as “brand men” and their responsibility was to manage the brand — everything from customers to sales to pricing to promotions. The role was extremely broad, quite vague, and very much tied in with the marketing function.
Fast-forward about 90 years, to today, and we see how the function of Product Management has evolved, starting with old school tech giants like Hewlett Packard (who pioneered customer-centricity) to modern day tech giants like Facebook (who pioneered a new business model from customer-centricity). Product management continues to take on new meaning in each emerging technology sector, while maintaining a customer/user focus.
Crypto Product Management
One of the latest tech sectors that product management has permeated into is crypto. In this post, I’ll explain the role of a product manager in building the “right” features and how that process is directly tied to a company’s mission, goals & objectives. I’ll use the example of Facebook to illustrate how misaligned incentives in Web 2.0 companies have muddled users and customers, in turn molding the role of product manager. I’ll then explain how crypto companies are working to re-align incentives and how that too is molding the role of product manager.
Separately, I hope to get past the jargon and the buzz and get deeper into what it really means to be “a product owner,” and a “leader, not a boss.”
Building the “Right” Features and Web 2.0 Example: Facebook
Building the “right” feature is inevitably more an art than a science. How does a product manager know what the “right” features are?
At a very high-level, a feature is the “right” one if it is aligned with the company’s mission; and at a granular level, a feature is the “right” one if it is aligned with the company’s strategic goals & objectives. Let me illustrate with an example using Facebook.
According to the Facebook website, the mission of Facebook is “to give people the power to build community and bring the world closer together. People use Facebook to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.”
Let’s pretend you’re a new Product Manager at Facebook, responsible for the News Feed. You conduct user interviews and learn that users are frustrated with seeing the same friends in their news feed. Reflecting on the Facebook mission, it’s clear that this user concern is a roadblock to the mission, specifically the part about “stay[ing] connected with friends and family, to discover what’s going on in the world.” If users keep seeing the same friends & family in their news feed, they’re in a bubble… within their already bubble of a network… and needless to say, are not discovering the world, as per the Facebook mission.
As the Product Manager, you decide it could be valuable to add a feature allowing users to scroll through their friends’ list and select friends whom they want to see more often in their news feed. You’ve already figured out that this feature would be aligned with the company mission, but now you need to determine if it’s also aligned with Facebook’s strategic goals and objectives.
To answer that question, you need to get input from one of your stakeholders — the user data team — so you walk over to your colleague Matt’s office, and explain to him the problem and the feature you’re proposing.
Matt hears you out but ultimately explains that this feature is not viable because it’s not aligned with one of Facebook’s most important strategic goals and objectives: increase click-through rate on advertisements.
Matt explains that the friends which appear in your newsfeed are determined by an algorithm that factors in the number of times you’ve engaged with the person — things like how many times you clicked on their profile, how many likes you gave their posts, and how many of their friends profiles you clicked on after visiting your friend’s profile.
He goes on to explain the goal of the algorithm, which is to display only the friends with status updates that will make you more likely to click on an advertisement; because remember, for Facebook, the customer is the advertiser.
For instance, maybe your friend Sonia posts a lot of status updates about cooking food. Facebook records that information and adds it to your digital file cabinet. The news feed algorithm pulls from your digital file cabinet and spits out all of your friends who post a lot of status updates about cooking food. Sonia is one of them. After a week of seeing and liking a bunch of status updates from your friends who like cooking food, such as Sonia, you now see an advertisement for Blue Apron and think to yourself, “Hey! How did Facebook know I was just feeling bad that I don’t have the time to cook healthy meals like Sonia!”
“But, wait!” Matt tells you. “There may still be hope for your feature.”
He suggests that instead of adding a feature which allows users to select which friends they want to see, we can tinker with the friend recommendation feature and suggest that users add new friends who… post a lot about cooking, just like Sonia!
You feel that your hands are tied, so you agree.
And just like that, Facebook has socially engineered user behavior with the purpose of getting more clicks on Blue Apron advertisements!
Walking the Product Manager Tightrope
As you can see from the example, Facebook’s users are not their customers, thus resulting in misaligned incentives between the people who actually use the social network — me & you — and the people who actually pay Facebook — the advertisers.
As a product manager at a Web 2.0 company like Facebook, a major part of your job is getting really good at walking a tight rope and juggling the needs of advertisers with the needs of users. Your job is to understand the algorithm — designed with Facebook’s goals and objectives in mind — and use it to guide product decisions.
The tight rope for companies like Facebook looks something like this:
The role of crypto product managers, however, is not to juggle misaligned incentives. Rather, their role is to create new incentives with alignment in mind, so as to not re-create the misaligned incentives from Web 2.0.
The Crypto Product Managers “Trilemma”
Crypto product managers must balance a different set of constraints as they craft new features and create new incentive mechanisms for their products.
The tightrope for crypto product managers looks something like this:
If you’re not familiar with the trilemma, it has become a cornerstone of the crypto community since Vitalik coined it. The premise of the trilemma is that — with the current state of crypto technology and the latest thinking— it’s very hard for a decentralized application to be secure, decentralized, and scalable. One of those three has to give.
If you’re a product manger working in crypto, you must understand the implications of the trilemma on your product and your users. You need to facilitate conversations with your team about this in order to solidify the company’s high-level mission and low-level goals and objectives around it. It’s a hard conversation, but don’t shy away from it.
Molding the Product Manager Role
As I mentioned at the beginning of this post, product managers working in crypto are molding the product manager role. A good example is product managers in decentralized finance, particularly those working on decentralized exchanges (DEXs). One of the biggest challenges for a DEX is liquidity: ensuring that each trade has a counter party i.e, how do you incentivize market makers? Some DEXs have solved this problem by not using order books, but this is arguably not a scalable solution. DEXs who face liquidity challenges have dedicated product managers working on novel solutions that juggle the needs of liquidity providers/market makers, in addition to users, all the while balancing decentralization, security, and scalability.
Being a product manager in crypto means having a deep understanding of the cryptocurrency value proposition. It means blending the skills of Web 2.0 product management with crypto acumen, and having a deep sense of passion and commitment to your product and your users.
Bridging the gap between customer and user is a facet of crypto that I’m very excited about. If you have feedback on this article or want to talk more about what it means to be a crypto PM, please don’t hesitate to reach out to me on Twitter or Linkedin. I am also the founder of a Crypto Product Manager Meetup in San Francisco where we discuss these topics in real-time.