Where and Why do Blockchain Projects need Product Managers? (v0)
How will we recruit some of the best and brightest PMs to work on blockchain projects? What roles will they play?
I wrote this to help blockchain projects connect to product managers interested in joining the blockchain movement. As we know, us human beings find it hard to choose something unfamiliar (like Web 3.0) over something familiar (Web 2.0). How will we recruit some of the best and brightest PMs to work on blockchain projects? What roles will they play?
State of Blockchain
The industry has successful use cases in a narrow set of applications, de-fi and NFT. The Ethereum ecosystem has grown massively and is by far the leader in terms of the number of engaged developers. But blockchain prokects are still looking for successful use cases elsewhere, in consumer banking (Celo, Eco), retail (Terra), media, social media, and more.
At the same time, scaling remains unsolved. The number of transactions per second is low and the cost of executing transactions is high. Engineering teams have been working for the past three years to create networks that can handle thousands of transactions per second and charge low fees. The expectation is that Ethereum 2.0 — which moves to Proof of Stake — will provide a jump in scalability for the Ethereum network.
In terms of progress, Ethereum has improved its transaction speed from 6 minutes in 2018, to 15 seconds now. Avalanche reports it could achieve 4,500 trans/sec and sub-second transaction confirmation, Solana reports it could achieve 50,000 trans/sec, and Cardano’s website reports it is designed to achieve 1 million trans/sec. (To get a sense of these numbers, compare to Visa with 3.3B credit cards globally which processes 1,700 trans/sec and says its capacity is much higher at 65,000+ trans/sec).
Outside Ethereum, we’ve seen other projects make investments in the low-level layers (e.g., Avalanche, Polkadot, and dozens of others) and in layer 2 off-chain / side-chain capabilities.
These are all heavy engineering challenges.
No-one has yet built the first “FaceBlock” (Facebook, but decentralized on blockchain), and we are a long way off from having infrastructure that would enable this.
But, what is the role of product managers?
Is it too early?
Scalability still faces heavy engineering challenges. Some estimates are that it costs about 400 million times as much to run a transaction on Ethereum as it does on AWS (see Note (1)).
It suggests the biggest need is for engineers — and maybe some support to recruit and help engineering teams be productive. Perhaps product managers are too early — and should join when there’s progress on scalability?
I’d argue that there’s not a need for large numbers of product managers.
I’d argue that there’s not a need for large numbers of product managers. Sorry to all the product managers out there. But there are critical roles to be filled. The roles of product managers are not those you find en masse in Web 2.0 businesses. In Web 2.0 the lower layers have been very stable for 10+ years. But that is not the case in blockchain / Web 3.0. So I’ve set out what I think some of those critical roles are.
Developer Focused PMs
Our intention is to attract developers to use our tools to build and maintain applications on our chain. A huge part of that is a developer relations task — creating awareness and trial — it’s not necessarily product management.
A long-time manager of products for developers explained to me:
“Recruiting developers is hard. There are a lot of programs recruiting them. Proof point projects are a good start only. It’s a multifaceted engagement model that is similar to converting a startup founder.”
There are two big problems that product management should own and be involved in solving:
- Why do developers leave / abandon after initially trying it?
- Why do projects switch the blockchain they are on?
Chasing down these questions and deeply understanding “why”, so that the project team can understand the problem clearly is key. For example, one project I follow switched from being on the Ethereum network to the Algorand network. Imagine how much information we can learn from that single project’s feedback, from the CTO, engineering team, and even the CEO?
These product manager roles will focus on synthesizing user feedback, co-ideation and design sprints with users, and competitive analysis. Since the focus is on users who are developers it would be a plus to have previous experience building developer tools, have a technical background, or code (even if casually).
🤔 I personally think the attitude has to be humble. Rather than seeking “user input” and “being user focused” as we are in web 2, it has to be a user dialog with developers as equals. This is very early technology and there’s hard work being done by everyone in the ecosystem, so it’s critical to add value and not waste anyone’s time.
Consumer/End User PMs
While a blockchain network powers the product, the front end is the product that users interact with, such as web or app, and those needs product managers. This is the typical role in Web 2.0 companies: define personas, find the truth about the problem to be solved, and build the product working collaboratively with user research, designers, and engineers.
The big difference, however, is that you will be constrained by — and have to push requirements to — the back end (lower layer) that supports what you want to do in the front end. In this respect, seemingly simple features on the front end can take a much greater effort than in the web 2.0 world. If you don’t control that lower layer (e.g., if you’re building a dApp on Ethereum) then you’re working on getting the most functionality you can within constraints and watching for innovation in the lower layer that you can take advantage of.
🤔 Besides being a stellar product manager already, ideally with consumer products, it would help to be a user of numerous crypto products.
Project PMs / Success Managers
Every blockchain project is trying to get successful applications running. Successful projects by early adopters will help attract mainstream developers to the potential of such projects, and generate templates and playbooks to be copied and leveraged by those that follow.
These early successes are essential.
Success is hard to come by. Look at the actual transaction volumes on many new apps/projects and you will realize that they are barely getting started — look at fees as a proxy, for example here.
This is a “do whatever it takes” role. While it may seem “small” — focused on one project — it has a huge impact, because getting one project humming will unlock what it takes for others to succeed.
This product manager’s role is to work with a critical project and focus on their success, and unblock anything that is in their way, whether it is a lack of technical understanding that requires a conversation with our own development team , a feature that is missing in the development tool, or dashboards to measure project success. This is a “do whatever it takes” role. While it may seems “small” — focused on one project — it has a huge impact, because getting one project humming will unlock what it takes for others to succeed.
🤔 My sense is this product manager fits Marty Cagan’s definition of Feature Product Manager! Marty’s framework distinguishes Empowered Product Managers and Feature Product Managers, the former working on solving problems and finding solutions that meet the user’s AND the businesses’ need; while the later focusses on responding to user/client needs or requests. In Web 2, you don’t want to be a Feature Product Manager… but in Web 3, that’s exactly what is needed.
Node Analysts
Web 3.0 applications run on a decentralized computer network. The nodes of this decentralized network are incentivized to contribute their compute resources. Those compute resources affect the network quality, as experienced by the apps that run on the network and by the end users themselves. It affects how quickly and cheaply transactions are processed in reality — and persistent problems with these metrics will cause the network to lose credibility.
Projects focus critical effort on cryptographic constructions to ensure the good behavior of nodes / miners. For example, read about Filecoin’s here. Filecoin’s problem is even harder because it needs miners to stay around for a period of time (to store data), compared to Bitcoin, where the miner can leave the network if they want without affecting the user experience.
Blockchains are moving away from Proof of Work to Proof of Stake. Ethereum 2.0 will be Proof of Stake and many other blockchains already are Proof of Stake. (Proof of Work requires ALL of its miners to attempt to solve a complex sum, with the winner — the node that gets to process the block and earn the reward — determined by the person who has the most powerful/quantity of hardware devices. Proof of Stake model randomly chooses the winner based on the amount they have staked.
The question is, how do we maintain consistently high network quality and low/predictable gas prices? How are node operators deciding which network to run nodes for — will they run Ethereum nodes, Bitcoin nodes, Filecoin nodes, Algorand nodes, or any one of several dozen credible alternatives? Will they switch when incentives on another network become more attractive?
We would want to think about the questions such as does this network have enough nodes?, Are we vulnerable due to concentration of nodes by a single provider?
Each blockchain project has a distinctive design for nodes and incentives.
The role of product managers include establishing analytics and monitoring to understand what is happening, and devising new mechanisms to ensure node availability meets demand. For instance, thinking of features like Uber’s surge pricing, or building a backup capacity of nodes to be brought online when needed. It will also be important to understand dynamics as others enter the market (e.g. Amazon Managed Blockchain is now helping node operators with some of their operational challenges).
For PMs, having a background in cloud computing would be an advantage; also, try running a node yourself. Most likely, you will be an engineer, or have training in economics/incentive theory that you can bring to the problem.
Partnership Managers / Product Managers
The barriers to entry to starting a blockchain project are very low. Getting traction will involve thinking about partnerships with real-world companies as a way to ramp up activity on the network.
For example, if you’re working on the Filecoin project, one questions is, how do you start to replace Box and Dropbox in the corporate world? The product manager’s role is to think about the blockchain project they are running, and figure out how to build up real activity on the network. It’s both strategic, to identify the right partner targets and roadmap sequence, and product features, as discussion of roadmap is going to be important to convince partners that your project can scale through increasing levels of activity.
Governance designers
I added this role because this issue is upfront and center for all de-centralized blockchain projects. How are we going to manage this solution over its lifetime?
This is the kind of question that is itself a product question, well suited to the skills of a product manager.
Let’s say we build a decentralized version of Facebook (“FaceBlock”). The algorithms are extremely transparent and avoid the issues of Facebook, and as a result, it has 40 million users (about the size of Signal). All is well for quite a few months, but gas prices are becoming very high. What started out as inexpensive gas fees for posting and reading messages from one’s friends has become prohibitive. One idea is to allow advertising and use the advertising revenue to subsidize the gas fees for all users, according to a proposal that explains how ads will be targeted, transparently, by a smart contract. Another idea is to move the app to a different blockchain. There are several ideas. How does this decision get made, and how is governance organized for this decision to be made quickly?
🤔 This role is the least clear to me (and yet, very exciting!) and I’m keen to hear input and update this post.
All Product Managers
There’s one more way that product managers add value, regardless of their area of focus.
Engineering is making design choices, weighing up alternatives to make their decision on what to implement to serve the needs of the project. In the blockchain there are still many fundamental decisions being made; the low-levels of the stack have not reached maturity yet. So engineering teams are working on these design problems all the time and making very critical decisions. As engineering works on these choices, sometimes a product manager may be useful in an advisory capacity. This involves listening to the engineering conversation and/or reading proposals, and adding a perspective when it sounds like it would help. This is not trying to be an engineer, or trying to lead the decision making, or even asking the engineers to explain what they are talking about so you can interject with a smart comment. It’s about connecting two worlds: connecting what you know about the market with the conversation they are having right now. It’s adding a diverse and different perspective. It’s a very ambiguous role, and it should be engineering led —engineering should consider when the team might want such PM involvement.
Help-able projects
Many projects started out as technology projects with killer technical teams, focused on something such as speed or privacy. They’re now coming out of that phase into looking for use cases. They need product managers who can help drive to product-market fit. Worth remembering as you talk to projects to find out where you fit.
NOTES:
(1) What is Ethereum Gas?. Consider adding 2 numbers 1 million times. $22 Eth vs. less than 1/1000th of a cent on AWS EC2. AWS is 400 million times cheaper.
This document is v0 — intended to get feedback! — and I will post an updated v1.
