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

Original: Sui Foundation

Compilation: Cointime Lu Tian

Reprinted by: Sui World

We recently had the pleasure of sitting down with Evan Cheng, co-founder and CEO of Mysten Labs, to discuss the value of Web3 technology to consumers, how to better understand it, and its impact on product development.

**Q: You mentioned that Web3 is a change in ownership, how will this new technology change consumer behavior? Can you elaborate on this point of view? **

A: This question boils down to who controls the assets we create. Virtually every action we take on the Internet generates something of value. Looking back in our so-called Web2 era, many platforms have grown on the basis of distributing consumer content, whether that content is consciously or unconsciously generated.

Take Twitter, for example. Tweets are content in themselves, and relationships can actually be leveraged as an asset. So I don't think most consumers are even aware that they have valuable assets that are basically monetized.

These platforms are essentially a two-way market, right? They act as an intermediary between consumers and content creators. That's not a problem in itself, we do need a platform or marketplace. In fact, the internet should help make that happen, allowing everyone to effectively create a marketplace. It means leveling the playing field and you don't have to be a big player to have a stage.

But the reality is that centralization and the associated network effects give these platforms enormous control and influence. They become distributors of content and thus profit handsomely from this interaction. this is not fair. It is no longer a synergy between creators, consumers, platforms or sellers. Instead, the seller controls everything. We see this repeatedly in all types of businesses. Middlemen are always in control and they are the biggest beneficiaries. You can't change it unless people are aware of it. Even with awareness, you're going to face an uphill struggle. We've seen this problem with Ticketmaster, we've seen a similar problem with the NFT market because they don't think it's in their interest to pay royalties.

Back to your question, if I own and control my asset, can decide how it is used, who can use it, and I can control how ownership is transferred or shared, then I can reduce the need for middlemen and platforms rely. This will fundamentally change the status quo and shift power. So, in Web3, everything revolves around assets, ownership, and distribution of ownership, because you want to move operations on your assets and ownership into 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 to be transparent and immutable, you don't have to worry about them becoming malicious actors.

**Q: Can you share some examples of malicious actors and how Web3 can improve the situation? **

**A:**You can find middle-of-the-road actors in every field. Think about platforms like Instagram and YouTube, although they work well globally, there are similar problems in other areas, such as supply chains, security assets and even real estate. Rent-seeking happens all the time, with middlemen always trying to get a profit out of the transaction.

Using the example of buying a home, you may be confused by the multitude of paperwork to sign and ask, “Why am I paying a title company or something?” Consider structured financing or various supply chains, from growing the coffee beans to final production How many links are there in the process of extracting value from coffee? This is obviously not reasonable.

So it makes sense for product builders and creators to focus on content and merchandise. Not only do they want to cut out middlemen in transfers and transactions, but they want to build relationships directly with users. However, the current profits are concentrated at the top of the industry chain. Apple basically taxes everything on the internet these days because they take a 30% cut from apps and limit what they can do. In turn, these applications end up passing this tax on to other parties.

The only way to break out of this cycle is to control the asset itself and create a relationship between producers and consumers that does not rely on middlemen, which is immune to any policy changes. This is where the value of Web3 lies.

When I learned that information arbitrage is a large part of the banking industry, I realized that the transparency of smart contracts is its advantage. In this way, there is much less room for middlemen or centralized players.

Trust arbitrage is another great example. People trust a platform, whether based on its brand, policies, regulations, or compliance. As an intermediary, you provide trust and take a cut. However, if you transfer this trust to software that is managed by multiple parties, trust will be diffused throughout, fundamentally changing this dynamic.

Advocates of Web3 often refer to the vision of attracting the "next billion users". The media is also nervously looking forward to Web3 products that can truly achieve large-scale applications. So, what should we do to achieve this goal?

Looking back over the past 10 years, many people have made money packaging technology that doesn't actually solve a problem. Therefore, in order to attract everyday users, the key is to provide a new and better product experience, so that they can truly understand the benefits of decentralization and have better control over their assets, all in a way that they can easily grasp presented.

Discussing decentralization may be incomprehensible to the average person, but we can talk about the virtue of no longer needing to trust a centralized authority. You can talk about trusting a piece of code that is jointly controlled by many entities, rather than a single entity. Education is important, but product experience is even more critical. Because our words mean nothing until we experience the benefits.

99% of people don’t even know the internet is centralized or what it means to them. So we have to really change the status quo. A lot of people focus on UI and UX and really need to think about reducing friction points. Even more critical, however, is demonstrating real benefits to consumers. This is in line with the point I made earlier. If we can show consumers the real benefits of doing it without an intermediary taxing them, their behavior will change. Consumers will actively seek such product experiences. And that's exactly how to get motivated, because to most people, it's really conceptually different.

**Q: In addition to removing intermediaries and giving users more access and control over data and assets, are there any other values that you think the average consumer doesn't realize? **

A: Besides removing intermediaries and having more access and control over data and assets, the average consumer may not realize another value of decentralized technology: trust. Today, there is widespread skepticism about developments in media, technology, social media, and even trust in governments is declining. I think it's a huge opportunity. Because when software is written in a transparent and reliable manner, people can trust the code. If this is achieved, it will be a complete game changer. When you put your trust in the software you interact with, behavior changes for greater convenience.

Currently, you have to trust global players like Google, Apple, and Facebook to log into various services. However, these companies can be hacked and various problems can arise. Conversely, if you could use a piece of code as a gateway to a service that requires authentication without being hacked or storing or transmitting your sensitive information, things would change dramatically.

**Q: Decentralized technology provides something that people want, people just don't realize they can have it. How do you think the industry needs to communicate this value? **

A: Well, my answer might be controversial. I don't think a lot of industries understand it. People understand it, but can't express it well.

The industry needs to adopt a clearer strategy when it comes to communicating the value of decentralized technologies. While decentralized technology can meet people's needs, many people have not realized that they can achieve these needs through this technology.

In fact, many people in the industry know very little about it. While some people may have an intuition about this, it is difficult for them to communicate this value to the masses. The industry has done a poor job of explaining the value of Web3. Usually, people only talk about the concept of "reading, writing, owning", but few people can clearly explain what "owning" really means.

The average person might wonder: "Why should I own these things? I'd love to hand over my photos to Instagram, my videos to YouTube, and my in-game efforts to game companies." They need to realize the value of ownership .

Additionally, there are a plethora of bad actors in the space, including scammers and people trying to get rich quick. These people seem to far outnumber really good practitioners. This has resulted in a chaotic and fraught environment in which we live.

Indeed, most people are not yet educated enough to distinguish between trusting the black box code of a big tech company like Google and the smart contract code in decentralized technology. However, decentralized technology is designed to make code transparent, and personal information is often less important to the value of a smart contract than it is to a centralized technology company.

Yes, this is important. These codes are transparent, not only trustworthy, but generally do not retain the user's assets. Decentralized technology aims to provide convenience, rather than requiring users to provide information, data, photos, videos, etc. like centralized models, and promise not to abuse it. While most companies don't misuse this data, they do derive value from it.

When these companies monetize users' data, they keep it because it can be of high value.

People may not realize that the side effects of this condition are worse. When these companies have large amounts of data, they may use it to engage in anti-competitive behavior and crowd out competitors. This way, their network effects will be stronger, ensuring that competitors cannot pose a threat to them. As a result, consumers may pay more, or receive less in return from these platforms. Apple is taking this strategy.

**Q: Recently I watched your presentation for the Digital Architecture Lab. In your speech, you emphasized that when designing L1, focus first on the needs of developers, the problems they want to solve, and the consumer experience they want to create, and then start to develop. How does this philosophy apply to application developers approaching their products when starting to use Web3? **

**A:**In the Web3 space, many people see complexity as a solution, focusing on solving a single problem. For example, many of the content provided in rollups, L2, and taxonomy, are addressing technical issues. This is actually the wrong direction.

When I say developers, I mean people who build products and services for consumers and businesses. They want to abstract away complexity and turn their product or service idea into working code. So it's not appropriate to sell them this complexity.

Product developers should not make the same mistake when facing consumers, and don't push the complexity on consumers. Many current Web3 offerings just add complexity that consumers shouldn't have to deal with. Consumers have to think about paying for gas, wallet experience, and how to extract value from assets. These problems should not arise. Many Web3 products currently focus only on monetizing the system.

To me, developers have to focus on behavioral changes. What are they trying to achieve? Many developers are already acutely aware of the problems they are trying to solve. They care about "How do I get customers? How do I engage with customers?" Now, they have a platform to build direct relationships with potential users. So, they need to figure out "how to use this platform? how to attract users? How do you convert them into users?" These questions are important aspects of the relationship between yourself and consumers that developers need to pay attention to when building products.

**Q: A lot of people talk about Web3 having user experience (UX) problems. Do you agree with this statement? **

**A:**I don't completely agree. Poor user experience does exist, such as token management, login or wallet issues, etc., but these are only on the surface. Solving these problems does not fundamentally solve the problems of Web3. At best, it can only compare Web3 products with Web2 products.

Take Celsius and other lending apps for example, they solve the user experience problem by returning to centralization. Users put money into the app, and the app deploys the money into yield farming activities. After that, they do business like lending companies in the centralized world. This is not the right way to solve the problem. You're not actually building a differentiated product, and you're not addressing centralization. This leads back to the same root problem.

Most people don't know enough about what consumers and developers really want. The financial impact of product policy changes on developers and consumers is underestimated. As a result, poor user experience is perceived as a barrier to adoption. However, even if your app has a great user experience, it still might not solve real problems for consumers.

**Q: Do you have any other ideas for building great products in Web3? **

**A:**I think developers need to communicate with consumers and understand their pain points. This does require a change in mindset. Consider how to move elements that are centralized, controllable, provide trust, and facilitate activity into a more coordinated process. Ultimately, this is the most challenging part and the one that has yet to be proven and implemented.

Sui provides a building block that provides tools and examples for solving such problems. That's exactly what Sui's mission is: to help developers build products that really work. So think about what you want to achieve and learn more about Sui. Work with Sui, Sui will be happy to help you.