Web3 services are some of the most niche offerings ever designed for use on the Internet. At the same time, numerous web3 ventures aim for a very high degree of generalization. Some of them promise to solve the world’s problems. They sometimes defy common sense, but so did the most successful technological innovations in their early stages.

Web3 is a wonderful culture. It has it all: niche & generality, pockets of incurable idealists, sensible socialists, artists of all stripes, and even formal verification. Who are the brave souls that dare to play with this fire? Who are the customers of web3?

What is a customer?

By customer I mean someone who can say no to using a web3 product for any of their needs. This is a very broad definition of customer: it includes any Internet user who might benefit from a web3 product. I think it would be risky to restrict my definition of customer to something more narrow. There are no clear winner markets yet in this field, so the risk specifically if I go too narrow is that I might overlook some type of user that could become a key customer in the future.

So I’ll go with this broad definition of a customer as someone who can say no. One neat benefit is that I can consider skeptics & hardcore crypto-opposers as customers.

Types of web3 customers

Depending on how fine-scoped we want to be, there are tens of types of web3 customers. I’ll list below a few of them.

1. Builders: The group of people who develop & integrate web3 products.
2. Skeptics: The most useful group from a feedback perspective: those who say actively no to web3.
3. Believers: Investors, fans, who may or may not be builders, who play with the products.
4. Pragmatists: Those who employ web3 services on a day to day basis for a better quality of life.

This list is preliminary. It’s likely I’ll discover other roles or better names for them as I go along. Also, a single individual might fit into multiple roles at the same time. For instance, many builders are also believers. Some believers may also be pragmatists.

I’m writing a series of essays, with opinions on each of these category. I can’t stress enough that these are opinions, a bit more than guesswork. My goal is to share how I think about this ambitious and strange place called web3, and help solidify my understanding of it.

In the rest of this post let’s focus on the builders.

Builders

Builders are developers and integrators: everyone who contributes or takes decisions anywhere in the lifecycle of a web3 product. All builders are customers of web3. There’s two basic points to argue why these folks are customers.

First, builders are customers because they typically hold some web3 asset. Those that don’t hold probably said “no thanks, maybe later.” There’s nothing debatable about saying that the great majority of web3 builders are token-holders. I know some who get paid in tokens, but that is a very small group.

Second, builders are customers because of... biases. Web3 is more than tokens: gaming platforms, social networks, email & privacy suites, bartering platforms, and so the list keeps on growing. The builders of these products might not hold a token because there isn’t necessarily one. They are customers, however, because contributing to this technology will ensure their bias will slip into the design. This bias is not all bad. One good part is that it is making the technology more appealing or intuitive to those who built it – and who could more likely be its customers.

Especially in early phases, a novel technology should aim to address one small, specific, user base. Web3 has such a base: its builders.

Some features of builders

Developers and integrators of web3 are typically specialized individuals that get it. If they don’t get it, they either leave the space, out of frustration, for example, or they quickly adjust and learn the ropes. They tend to be relatively young, or have been working on decentralized systems before web3 was a buzz word.

Some builder are skeptics. (We’ll get to skeptics in a future essay.) Even though they’re skeptics, they are not working against it. They still get it and feel the buzz. But they expect some failures. They know instinctively that this is the domain of venture and few survive.

From what I can tell, the pool of web3 talent is quite uniform. This is normal, as web3 has not pierced mainstream and is not sufficiently attractive yet for the layman. By uniform I mean, roughly speaking: good technical background in computers and software interfaces, good appetite for new technologies, plus a healthy dose of passion and patience in how they approach their work. The last point is mandatory.

Thanks to this uniformity of talent, there is a feedback cycle in web3 that is difficult to escape right now. The cycle comprises two forces that reinforce each other: the builders of web3 and the output they produce. The homogeneity of talent in web3 (talent) and the lack of broad appeal to their work (product) seem to me to go hand in hand.

Cutting through this feedback cycle is a chicken-and-egg problem. Does product success drive talent into an industry? Or does talent drive products & adoption? Two answers come to mind:

• It may be that both product and talent are necessary in small, incremental doses. They feed into each other until a critical point of inflection (mass appeal) is reached.
• Maybe the class of builders will explode only after some web3 product will solve a pressing human need, evicting competition in that problem space. In this case, when a web3 startup delivers its promise (inflection point) this domain of venture will be able to attract new strands of talent.

Other answers are possible, but these two seem the simplest and most direct. I’m very tempted to say that the first answer is more weighty than the second.

So far we spoke about some of the characteristics of web3 builders. What about quantity?

Quantity

In late 2021, according to Electric Capital, there were roughly 18’000 developers across web3. That may sound like a lot, but it’s not.

I would say 18K is not a lot because this pool of builders is spread very thin. They are spread across hundreds (if not thousands) of organization. Suppose all 18K were concentrated in a single organization with a unified vision on a single product, like a conventional bank, say, or similar to Amazon. Then their impact would be different, easier to predict or plan. But that’s not how web3 rolls.

Growth in web3 is spurred by open-source and the desire to experiment, not by top-down management. Impact is something that emerges, it cannot be structured. For that reason, 18K developers is not a lot, their output and success will continue to be unpredictable. In this way, web3 is the Silicon Valley of the world. It is not concentrated in a single place, and has many of the good features of entrepreneurship of SV.

In a sense, these 18K developers do have a common vision: more accessibility and transparency in human coordination and organization, whether that is financial or beyond. But this vision is very high level and becomes deeply fragmented when trying to apply it to designing products and services across many organizations. There’s many dimensions in which we can describe this vision, with opposers and hardcore fans on each side of web3.

So I would say there is no one vision that all 18K devs in web3 are contributing to. Some are Bitcoin believers, others have their eyes set on diversifying the application space. Some believe in power of money and finance, others believe in power of games and education. This is a lot of fun. It translates into competitive spaces that provide a lot motivation. It’s interesting to see that in contrast to big tech/web2 services, which have ~zero competition. (I’m exaggerating, but just a bit.)

Most technological domains have a winner-take-all characteristic. In the domain of Internet search, for instance, Google has no competitor, the product is deeply entrenched. In web3, the emerging feature is one of connectivity among competitors. Like a tapestry, users and organizations are intertwined in different classes of relationships. This is what open access to coordination means.

Despite a competitive mindset, web3 products must inherently learn to live in peace in a jungle of products. This is a different ball game than web2. Web3 organizations must co-exist and be able to prosper side-by-side with their competitors. In fact, competition is not the right way to think about it. It might be most appropriate to frame everything within web3 as a space of possible partnerships -- while everything outside of web3 is potential competition.

What can we notice if we think of these 18K builders as customers?

First, these customers have a lot of options to choose from. Many existing products tend to be similar. There are hundreds of layer 1s, for example, akin to one another. There are also tens of wallets, and some are carbon copies of each other. It’s easy to see that the degree of innovation in web3 is tapering off, with some notable exceptions (spikes) to be expected.

It may sound harsh to say that innovation is tapering off. But this is both normal and is a consequence of the best part of web3. What do we see when we go to a local arts fair? The majority of paintings and sculptures are not works of genius; they couldn’t be, by definition. Similarly, web3 is a bazaar. Everyone is encouraged to give their best, to design and implement ideas beyond their capacity. Every once in a while a spark will go off. The defining characteristic of web3 is not the spark, however, it’s that the ground is fertile enough for anyone to plant a seed. Web3 is an open garden. Builders are artisans.

Second, customers have many options, which leads to confusion. This blurs the line between what is essential and what is non-essential, or important versus hype. Users rely on hearsay to make decisions. The large overlap between users and builders is not a coincidence. Builders also rely on hearsay in their design. Further, outright copying of design is encouraged (or at least possible) due to the open-source culture.

Both users and builders might be confused by the amount of options they face, but this is the flip-side of the defining characteristic noted above (that web3 design happens in the open, the space is a bazaar). Customers seem to be comfortable with confusion. Partly this is because it’s early and they get it. Partly because they seem to understand that they are in a bazaar, not a fastidious supermarket, and openness implies some degree of disorder and confusion. In the same vein, instead of working against it, builders seem to embrace confusion and even work with their competition and regard them as potential partners.

Third, partnerships brings us to the idea of cross-product integration. Being an open system, the need for integration is great. For example, interoperability & composability primitives such as light clients or bridges, as well as  exchanges (centralized or decentralized) are good example of a need that is being addressed. Integrations are in demand and deserve continued effort. They help to take the edge off the competitive mindset and strengthen the culture of openness.

Web3 systems are designed by principle to be unable to trap users in walled gardens. This is in sharp contrast to web2 platforms, like I mentioned already.

It’s difficult to overstate how important this principle of openness is. What surprises me sometimes is that web3 organizations manage to remain faithful to this principle, though it may work against their short-term economic interests. These organizations for the most part remain aligned with the principle of designing systems that preclude monopoly. In other words, this is repetition of the  observation about winner-take-all dynamics. No single web3 product is a clear winner today. This is a feature of the web3 culture itself, which has built-in support to prevent power accumulation. Accumulation still happens, it’s unavoidable, but the tendency is counterbalanced effectively so far.

Conclusions

I could summarize my thoughts here in three broad ideas.

1 / The four types of customers I sketched above are the innovators and early adopters in the technological lifecycle of web3 (see Rogers’ bell curve). Builders are a prime example of them. My biggest surprise while compiling this list was that I found more than a couple of roles. Beside the four types above (builders, skeptics, believers, pragmatists), there’s a few others that I didn’t mention. Another surprise was that some people employ web3 out of a need for their wellbeing, the pragmatists. I’ll expand on that soon.

2 / The pool of web3 builders is relatively uniform and small. This drives innovation and adoption. That is also caused by the current rate of innovation and adoption. It’s a feedback cycle. I think we will cross this chasm in the spirit of web3: in emergent, unstructured, unplanned ways.

3 / Web3 organizations have a stated goal to build open system and they are achieving that. Open systems are more amenable to cross-integration, they coexist better, but can be disrupted more easily because they have difficulties becoming a winner-take-all. For this reason, the vision of a single global platform monopolizing over others is unlikely. I doubt a single platform will service the majority of online decentralized coordination, financial or otherwise. It’s possible this means that customers will continue to be fragmented among varied yet similar products.

Will customers have to get used to the complex UX and unclear value proposition of web3? I don’t think so. Eventually, given the lack of strong business models, many products will wither away. The ones that survive will grow, some will merge, some will be acquired. Web3 culture will likely continue to be a fertile ground for collaboration and partnerships, as it is now done in integrations, for example. But overall, compared to web2 this will remain an open landscape of competition and diffuse prosperity. If that stops being the case, web3 will become web2.