Conversation with Mysten Labs CEO: How to build Web3 products that consumers want?

Original: Sui Foundation

Translation: Cointime Lu Tian

Reprint: Sui World

Recently, we had the opportunity to sit down with Evan Cheng, co-founder and CEO of Mysten Labs, to discuss the value of Web3 technology for consumers, how to better understand this technology, and its impact on product development.

Q: You have mentioned that Web3 is a revolution in ownership. How will this new technology change consumer behavior? Could you elaborate on this view?

A: This question ultimately comes down to who controls the assets we create. In fact, every action we take on the Internet generates something of value. Looking back at the so-called Web2 era, many platforms were developed based on the distribution of consumer content, whether intentional or unintentional.

Take Twitter as an example. Tweets themselves are content, and social relationships can actually be used as assets. As a result, I believe that most consumers are not even aware that they have valuable assets that have been monetized.

These platforms are essentially a two-sided market, right? They act as intermediaries between consumers and content creators. This itself is not a problem, we do need a platform or marketplace. In fact, the Internet should help us achieve this goal, allowing everyone to effectively create a market. This means a fair competitive environment, and you don’t have to be a big player to have a stage.

But the reality is that centralization and related network effects give these platforms great control and influence. They become distributors of content, thus reaping huge profits from this interaction. This is unfair. It is no longer a win-win situation between creators, consumers, platforms, or sellers. Instead, the seller controls everything. We see this situation repeatedly in various types of businesses. Intermediaries always hold the power and they are the biggest beneficiaries. Unless people realize the existence of this phenomenon, you cannot change it. Even if you are aware, you will face a tough battle. We see this problem at Ticketmaster, and we see similar issues in the NFT market, because they believe that paying royalties is not in their interest.

Returning to your question, if I own and control my assets, can decide how they are used, who can use them, and all ownership transfers or sharing I can control, I can reduce my dependence on intermediaries and platforms. This fundamentally changes the status quo and shifts power. Therefore, in Web3, everything revolves around assets, ownership, and the distribution of ownership, because you want to transfer operations on your assets and ownership to a piece of code, such as a smart contract.

Smart contracts are neutral, they have no emotions. They can be designed for profit, but once designed transparent and tamper-proof, you don’t have to worry about them becoming malicious.

Q: Can you share some examples of malicious actors and how Web3 is improving this situation?

A: You can find actors abusing their intermediary position in various areas. Think of platforms like Instagram and YouTube, which operate well globally, but there are similar problems in other areas, such as supply chain, security assets, and even real estate. Rent-seeking is always happening and intermediaries are always trying to profit from transactions.

Take home buying as an example, you may be confused by the many signed documents and wonder, “Why do I have to pay fees to title companies or other institutions?” Consider structural financing or various supply chains, how many links are there in extracting value from planting coffee beans to finally making coffee? This is obviously not reasonable.

Therefore, it is reasonable for product builders and creators to focus on content and goods. They not only want to reduce intermediaries in transfers and transactions, but also want to establish a direct relationship with users. However, the current profits are concentrated at the top of the industry chain. Nowadays, Apple basically taxes all behavior on the Internet, as they extract 30% share from applications and restrict what they can do. In turn, these applications will ultimately pass on this tax to other parties.

The only way to break this cycle is to control the assets themselves and establish a relationship between producers and consumers that does not depend on intermediaries and is not affected by any policy changes. This is the value of Web3.

When I learned that information arbitrage accounts for a large part of the banking industry, I realized that the transparency of smart contracts is its advantage. This will greatly reduce the space for intermediaries or centralized participants.

Trust arbitrage is another good example. People trust a certain platform, which may be based on its brand, policies, regulations, or compliance. As an intermediary, you provide trust and take a cut from it. However, if you transfer this trust to software that is jointly managed by multiple parties, trust will be dispersed within it, fundamentally changing this dynamic.

Web3 enthusiasts often mention the vision of attracting “the next billion users.” The media is also anxiously awaiting Web3 products that truly achieve large-scale applications. So, what should we do to achieve this goal?

Looking back over the past decade, many people have made money by packaging technology that actually cannot solve the problem. Therefore, in order to attract daily users, the key is to provide a better new product experience, so that they truly understand the advantages of decentralization and can better control their assets, and all of this needs to be presented in a way that they can easily understand.

Discussing decentralization may be difficult for ordinary people to understand, but we can talk about the advantage of no longer needing to trust a central authority. We can discuss trusting a code controlled by many entities rather than a single entity. Education is important, but product experience is more critical. Because our words are meaningless until consumers truly experience the benefits.

99% of people don’t even know that the internet is centralized, nor do they understand what this means for them. Therefore, we must truly change the status quo. Many people focus on UI and UX, and it is indeed necessary to consider reducing friction points. However, more critical is to show consumers the actual benefits. This is consistent with the point I mentioned earlier. If we can show consumers the actual benefits of not being taxed by intermediaries, their behavior will change. Consumers will actively seek out such product experiences. This is the way to stimulate development momentum, because for most people, this is truly conceptually different.

Q: Besides removing intermediaries and giving users more access and control over their data and assets, what other values do you think ordinary consumers are not aware of?

A: In addition to removing intermediaries and having more access and control over data and assets, ordinary consumers may not be aware of another value of decentralized technology: trust. Today, people are generally skeptical of developments in media, technology, social media, and even government trust is declining. I think this is a huge opportunity. Because when software is written in a transparent and reliable way, people can trust the code. If this can be achieved, the rules of the game will be completely changed. When you trust the software that interacts with you, your behavior patterns will change, bringing more convenience.

Currently, you have to trust global corporations like Google, Apple, and Facebook to log in to various services. However, these companies may be vulnerable to hacker attacks and various issues. Instead, if you can use a piece of code as a gateway to access services that require authentication, and this piece of code is not susceptible to hacker attacks, nor does it store or transmit your sensitive information, there will be a huge change.

Q: Decentralized technology provides people with what they want; they just don’t realize they can have it. What do you think the industry needs to do to communicate this value?

A: Well, my answer may be controversial. I think a lot of the industry doesn’t get it. People understand it, but they can’t articulate it well.

Industry needs to take a more explicit strategy in conveying the value of decentralized technology. While decentralized technology can fulfill people’s needs, many people still don’t realize they can use this technology to achieve those needs.

In fact, many people in the industry know little about it. While some may have intuition about it, they find it difficult to convey the value to the general public. This industry does a poor job of explaining the value of Web3. Often, people only talk about the concept of “read, write, and own,” but few can explain the true meaning of “own.”

The average person might wonder, “Why do I need to own these things? I’m more than happy to give my photos to Instagram, my videos to YouTube, and my efforts in games to game companies.” They need to realize the value of ownership.

In addition, there are a lot of bad actors in the field, including scammers and those trying to get rich quick. The number of these people seems to far exceed genuinely excellent practitioners. This has led to an environment that is chaotic and worrisome.

Indeed, most people have not been educated enough to distinguish between the black box code of large tech companies like Google and the smart contract code in decentralized technology. However, the design of decentralized technology makes the code transparent, and for the value of smart contracts, personal information is generally less important than it is for centralized technology companies.

Yes, this is important. These codes are transparent, not only trustworthy, but also often do not retain users’ assets. Decentralized technology is designed to provide convenience, rather than requiring users to provide information, data, photos, videos, etc., as in centralized models, and promising not to abuse it. While most companies do not abuse this data, they do derive value from it.

When these companies profit from user data, they retain it because it may have high value. People may not realize that the side effect of this is worse. When these companies have a large amount of data, they may use it for anti-competitive behavior to exclude competitors. This makes their network effect stronger, ensuring that competitors cannot threaten them. As a result, consumers may need to pay higher fees or receive less return from these platforms. Apple is taking this approach.

Q: Recently I watched your speech for the Digital Building Laboratory. In your speech, you emphasized that when designing L1, you should first focus on the needs of developers, the problems they want to solve, and the consumer experience they want to create before starting development. How can this concept be applied to how application developers approach their product when they start using Web3?

A: In the Web3 field, many people see complexity as a solution and only focus on solving a single problem. For example, many of the content provided in aggregation, L2, and classification are addressing technical issues. This is actually the wrong direction.

When I talk about developers, I mean the people who build products and services for consumers and businesses. They want to abstract complexity and turn their product or service ideas into executable code. So promoting this complexity to them is not appropriate.

Product developers should not make the same mistake when facing consumers. Don’t push complexity onto consumers. Many Web3 products currently only add complexity that consumers should not have to deal with. Consumers have to consider gas fees, wallet experiences, and how to extract value from assets. These issues should not exist. Many Web3 products currently only focus on how to profit from the system.

For me, developers must focus on behavioral changes. What do they want to achieve? Many developers are acutely aware of the problems they want to solve. They care about “how to acquire customers? How to interact with customers?” Now they have a platform to establish a direct relationship with potential users. Therefore, they need to figure out “how to use this platform? How to attract users? How to first get their attention? Do they need to give up something to stimulate their interest? Should they sell products to them and promise future returns? Once they have their attention, how to convert them into users?” These questions are important aspects for developers to consider when building products and focusing on the relationship between themselves and consumers.

Q: Do you agree that there are UX issues with Web3 that people are talking about?

A: I don’t completely agree. Poor user experience does exist, such as token management, login or wallet issues, but these are only surface-level. Solving these problems won’t fundamentally solve the problem with Web3, at best it just makes Web3 products comparable to Web2 products.

Taking Celsius and other lending applications as an example, they solve the UX problem by reverting back to centralization. Users deposit funds into the application and the application deploys those funds into yield farming activities. After that, they operate their business like a centralized lending company. This isn’t the right way to solve the problem. You don’t actually build a differentiated product and you don’t solve the centralization problem. This leads back to the same fundamental problem.

Most people lack understanding of what consumers and developers actually need. The economic impact of product policy changes on developers and consumers is underestimated. Therefore, people think that poor UX is the obstacle that is being adopted. However, even if your application has perfect UX, it still may not solve real problems for consumers.

Q: Any advice for building great products on Web3?

A: I think developers need to communicate with consumers and understand their pain points. This does require a mindset shift. To think about how to turn those centralized, controllable, trust-providing, and activity-facilitating elements into a more coordinated process. Ultimately, this is the most challenging part and the part that hasn’t been validated and achieved yet.

Sui provides a way to build modules and tools and examples to address such issues. That’s exactly Sui’s mission: to help developers build truly useful products. So think about what you want to achieve and learn more about Sui. Work with Sui, and Sui will be more than happy to help you.

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