Creating, building, and delivering an innovative product is hard enough. Add to this special challenge that a popular product — with all of its features and user-centric greatness — also has to come along at the perfect time to align with the fickle tastes of the masses.
It’s into this complex fray that we can start to look at web3 applications — particularly related to social networks and info sharing — and start to try and tease apart why there is not more of an uptick in use and adoption. Especially against the backdrop of disarray happening right now across legacy social media platforms.
Building products for the future
Often, product market fit is easier to understand by looking backwards. The iPhone crushed because the conditions for its launch were perfect (earlier and maybe demand would have been softer, or the cellular infrastructure wouldn’t have been as good, or… Later, and maybe it feels like a copycat or doesn’t quite become the category definer that it is).
The issue though is that people launching products don’t have the benefit of hindsight. Instead, they have deadlines, investor expectations, and real world constraints like employee churn.
But when we look back at how great products or services have launched we can see that there can be optimal times and conditions for product market fit.
These priming events usual come as big inflection points, such as:
- Regulatory inflection points: When new laws or policies require a change, well-timed products or services can take advantage and become a first mover in a new market. In some states, for example, recent regulations require new commercial construction to incorporate gray water systems or rainwater management into their site plans. The idea is that these features will make larger commercial buildings more sustainable. So, in the states or jurisdictions that are rolling out these kinds of green infrastructure rules, it is a great time to launch a business or develop products for this vertical that all of a sudden will have an influx of demand.
- Technological inflection point: When there is a massive shift in technology, there can also be a massive shift in demand for new products and services. Take Google’s recent overhaul of its analytics reporting, for example. I don’t know what the stat is, but a massive chunk of digital businesses, from e-commerce to advertising, rely on the reporting and metrics of Google Analytics. Recently Google updated its analytics system to something called GA4. The new platform is not just an update — it’s like working with an entirely different product. So, naturally, people offering setup or consulting services — and others are building entire businesses (like courses and digital products) around the idea of filling a need of helping people understand a new spin on what has become a core piece of most online or digital businesses.
- Cultural inflection point: One of the clear winners of the Covid global pandemic was the footwear company, Crocs. Crocs have been around since 2002, but for almost 20 years remained almost a fringe footwear company. For a long time, Crocs were worn by… (well nobody really knows who), but then once the pandemic hit, the simple slip-ons seemed like they were everywhere. Rocking Crocs with socks became a routine fashion staple.
- Economic inflection points: We can all remember when there were major shifts in the economy — because the last one wasn’t that long ago. When the post-pandemic economic hangover hit, suddenly interest rates were rising at a historic pace, layoffs were announced, and things like inflation, recession, and the future felt uncertain. Often times of economic disruption can also lead to new ideas or new ventures. Famously, Bitcoin was launched on the heels of the 2008 global economic crisis.
- You get the idea: There are all kinds of mega-factors that can contribute to the success or failure of disruptive innovation and launching a successful business.
Another way to think about this is that a lot of product market fit comes down to right place, right time. And, with everything going on in the shuffle of social media, it seems like now is the right time for web3 social apps and services to gain a foothold.
But they aren’t, really. Why?
Web3 and the infinite possibility of creating user-centric social media
Right now, social media is going through its own kind of inflection point. Let’s call it a state of fragmentation.
I like this summary of the current state of things:
We spent the last two decades answering a question — what would happen if you put everyone on the planet into a room and let them all talk to each other? — and now we’re moving onto the next one. It might be better this way. But the way it has all changed, and the speed with which it has happened, has left an everybody-sized hole in the internet. For all these years, we all hung out together on the internet. And now that’s just gone. SOURCE
In the early days of social media, there was a race to become a leader in specific formats or verticals — YouTube won video sharing, Facebook won the friends and family format, and Twitter won short form news and dankest memes.
Later, competitors that had some new spin on the social media offering started to emerge — easy to use messaging, or disappearing messages, or mobile-first video sharing. With exceptions, if a competitor got big enough, it was acquired by one of the massive, more established networks.
The consolidation and concentration of social media over the past couple of decades makes sense from a networking perspective. A network becomes more valuable as more people use it. And as more people use it, it creates a flywheel or a cycle that makes it really difficult to compete with the already established network.
And that’s more or less how the state of social media looked and felt over the last decade at least. Sure, there were some variants or local competitors, but the frontrunners or dominant networks were established and entrenched.
But then something happened — an inflection point, or more like a series of little inflection points — that suddenly felt like it could major platforms have gone through existential-level changes over the last 12 months (Twitter got X’ed, Reddit wanted to cancel its moderator culture, and Meta tried to add to its constellation of control via the launch of Threads, to name just a few highlights).
After years of monopolistic control, it suddenly felt like there were cracks in the walled-gardens created by the big social media companies. The conditions almost seemed perfectly ripe for some kind of innovation across the space.
This is where web3 comes it. The oversimplified gist of web3 is that its a tech stack that aims to make the internet better by building on these foundational principles:
- Permissionless: This means that anyone can join the network as a user or contribute to the development or upkeep of the network. Permissionless architecture is not only inherently fair and accessible, but it also better aligns broader incentives with individual user incentives.
- Public key cryptography: This architecture allows users to interact with a network but also gives them ownership (and data portability) and would make it easier to port from one network to another without losing all of the content and information produced on a platform.
- Decentralized: Ideally, social networks of the future are not build as corporate databases, but instead are designed up with security, privacy, and data ownership in mind.
Right now we are seeing the confluence of two big forces: the disruption of social media (in some cases caused by the gatekeepers themselves), and the emergence of a tech stack that is finally robust enough to accommodate the creation of secure and user-centric social media platforms.
So why is is so hard to create better social media?
I think one of the biggest reasons why redesigning social media is that the original user-generated content design is kind of wonky to begin with. Currently, massive social media is reliant on a disconnect between the idea of user-generated content (where all the value is) and the business of the network (where all the value is accrued).
So building a new kind of social media first requires reimagining what's possible and who should actually benefit from all of the posts, photos, and updates. But, of course, starting over isn't exactly feasible.
Here are three basic theories about why its so hard for web3 to compete with legacy social media:
Apathy for the core value proposition: Maybe most people don’t actually care about data ownership. One of the cornerstones of web3 is that internet users will have more control and ownership. Web3 systems allow users to hold and manage access to their digital life through a secure identity.
This identity can act like a hub for all kinds of activities ranging from accessing and posting on social media, to collecting, purchasing, and selling, digital products, to using the ID as a means to access walled-off services like logging into an email account or something like a DMV profile.
Currently, we use third parties to access most of our digital lives. While the third-parties, usually the mega corporations, use our profiles and data to created sticky experiences and targeted advertisements. Another downside, is that running your life through third party apps is not secure and is one of the reasons why there is exponential growth in things like cyber crime.
Ease of use/onboarding friction: The design of web3 systems is still not simple enough for people to easily join and/or promote. There are more walls and more friction before there is enough buy-in to make any of that stuff worth it. The current state of affairs is almost like having to go through a handful of security checkpoints, pass a quiz, and chug 32 ounces of water before entering a festival. When the alternative is simply entering an email and creating a password, it’s no wonder that people aren’t showing up. On this point, it feels like web3 versions of things, like social media, are just serving up a clunkier version of what’s already available. Instead, the entire experience needs to be redesigned
Network effects are real: One of the things that makes established and high functioning digital networks valuable are the network effects. The same principles are at work with social networks. On social media it works like this: you are more likely to join a network if you friends or family are on it — or at least people you want to follow like writers or athletes or stars or whatever you are into. The more people that join, the more likely it is that new people will join because that’s where the action is, or because of the massive psychological driver known as FOMO. (I’m not a psychologist, but I am a parent of four kids and I’m pretty sure that FOMO starts when we are really young and continues with us — maybe forever. It’s just that it morphs and changes and the things we worry about missing out on change over time.)
What comes next?
To sum up how we got to where we are now: Social media networks are in a state of transition from a small handful of super dominant companies controlling the social media scene to a phase of fragmentation and exploration.
The outcome of all of this reorganization doesn’t really feel clear yet. Ideally, the time of disruption will lead to products and networks that are more user-centric from both a security standpoint and from the perspective of better aligning value creation and accrual with the users and developers who build and maintain the networks.