The best SaaS companies are product-led. They’ve become highly efficient at building, maintaining, and innovating products that customers love to use and have created tremendous value in the process. However, while the benefits of being a product-led SaaS company are clear, can Web3 organizations take the same approach? To answer this question, we first need to understand what it takes to create a great product in any industry.

How Great Products Are Made

Marty Cagen, perhaps the most respected expert on SaaS product-led growth, outlines four primary areas that must be de-risked before companies can succeed in creating excellent products:

  • Value: How well the new product solves a problem for customers that current products or methods do not.
  • Usability: How effectively the customer can use the product to solve their problem.
  • Feasibility: How reasonable it is for the engineering team to build the solution.
  • Viability: How realistic it is for the company to create a business model based on selling the solution and sustaining its growth.

Based on these dimensions, it’s easy to understand the success of product-led SaaS companies and other organizations that rely on centralized network infrastructure. However, the advent of decentralized technology and the rise of Web3 entities may require a reassessment of the status quo.

The Optimization of Centralized Companies

Over the last several decades, state-of-the-art technology and an understanding of how to build and scale centralized solutions have bolstered the growth of SaaS-based platforms. Tools and methods to apply them have also multiplied exponentially. As a result, companies have become effective at building general solutions on customized, private platforms.

However, new technologies may be pushing the limits of these existing product development processes and tools. Much has been made of how Web3 technology has impacted currencies, organizational structures, and even micro token economies. However, little has been said about its impact on product processes, including discovery, innovation, marketing, and support.

De-Risking Dimensions for Web3 Companies

Web3, in its pure form, turns the four de-risking dimensions mentioned above on their head. Let’s consider each of them in turn.

Value

A product-led company creates value in two ways. First, by creating an entirely new, visionary product. Or second, by implementing incremental changes based on the company’s interpretation of customer feedback. At the core, centralized product development assumes that customers don’t really know what the best solutions would be to solve their problems. Two of the most successful product developers said as much. Henry Ford famously said, “if I ask the customer what they want, they’ll say a faster horse.” Steve Jobs said, “customers don’t know what they want until we’ve shown them.” In a Web2 world, the product company leads the vision of what a new product should be and then solicits and interprets customer feedback to improve that product.

Alternatively, in a Web3 world, product value risk is owned by the customer, not the company. Every community member can decide which problems to solve and how to solve them, building the solution on an open-source platform. Each community member derives value from this approach, but so does the entire community, given that any discoveries are added to the open-source infrastructure. The benefit of this approach is that multiple people work on the same problem, not a select few; all stakeholders then benefit from the solution. As a result, innovation and ingenuity increase exponentially.

Usability

Like value, usability in the SaaS world is determined by product-led companies interviewing customers, determining what they need or want, and then building the solution. Progress happens through iterative testing and validating that the company got it right, ensuring the customer can use the solution. Like the value risk, usability risk in a Web3 environment is pushed to the “customer” directly. Specifically, people can build solutions on an open-source platform to be used how they or their organization desires. The Web3 model removes the product-led company as the “middleman” in the solution.

Feasibility

In a truly decentralized community, feasibility isn’t even in the purview of the company or organization managing the Web3 platform. Whether something can or cannot be built is entirely in the hands of the community members who are building the solution to solve their own unique challenges.

Viability

Finally, in a Web3 environment, viability risk evolves from how a company can make money with a product to how a company or organization can increase the value of a token. As a result, monetary viability isn’t determined by subscription revenue but by how well an organization manipulates tokenomics to increase the value of its token.

Transitioning from a Web2 to Web3 Product-Led Company:A Hybrid Approach

At this point in the discussion, it’s clear that the boundary between Web2 and Web3 product management is far from definitive. Most organizations will employ a hybrid model. For instance, Web3 community members might contract others to do all of the product development work for them, creating a world where some companies own the solutions they build on top of open-source platforms. Of course, these companies might also deliver and support the same solutions for other organizations. But even in this case, the focus is on customized, potentially shared solutions on top of general, open-source platforms — a complete reversal compared to the SaaS environment.

Companies like Red Hat have taken this approach for years, beginning with a centralized model and then moving further toward a decentralized one. And the more such companies move away from the specific and provide general, open-source solutions, the more monetization will rely on tokenomics. The reverse is also true — the more proprietary products a company offers, the more its revenue will depend on a subscription model.

The benefit of this evolution is that Web2 product management methodologies are being upended and remade in a Web3 world. As a result, much will likely change in the near future as companies adopt Web3 technologies and organizational structures, especially in terms of product creation, delivery, and maintenance.

Bryan Ritchie

CEO

Bryan Ritchie comes to SIMBA from the IDEA Center at the University of Notre Dame, where he served as CEO and head of the Investment Committee for the Pit Road Fund. During his time in higher education, Ritchie also ran commercialization and startups at the University of Utah and Michigan State University, helping launch more than 600 startups. He is a serial entrepreneur and startup venture de-risking expert.

Prior to being named CEO in Fall 2021, Ritchie served as chairman of the SIMBA Chain board as well as a key adviser on SIMBA’s Series A fundraise.

Ritchie earned an MBA in International Business from the Marriott School at Brigham Young University and a PhD in Political Economy from Emory University.