Interview with Frens.Capital GP: An ex-Product Manager’s Crypto Manifesto

TechFlow: Sunny

Frens.Capital: Chris Abiaad

“Crypto products are a subset of digital products, and should therefore adhere by the core principles of building digital products."

-- Chris Abiaad, General Partner at Frens.Capital

In November 2023, in Amsterdam, at the annual Solana developer conference, Chris Abiaad delivered a keynote presentation on how to build Web3 products.

The product landscape in the crypto space has seen a significant dichotomy: on one end of the scale, one can envision a series of “grassroots” projects, including airdrops, memecoins and the establishment of communities, while on the other end, there are ambitious engineering efforts and consumer products such as wallets, payments, zero knowledge proofs, and decentralised exchanges.

This focus on engineering or marketing manifests itself either as highly technical breakthroughs or as shallow marketing-driven trends – with product-first projects getting left behind.

So, why should we care about Web3 products?

As of today's statistics, Web2 has 5.3 billion users, the cryptocurrency space has 420 million holders, yet the number of daily active users truly in Web3 is only ~3.5 million. Chris provided a simple comparison, highlighting that the traditional internet game Chess.Com has 20 million daily active users!

Web3 is still in its infancy today. If we believe that Web3 is the future of the internet — a fusion of information, value, and security — then we should encourage more people to explore this untapped territory.

Similar to the traditional internet industry, Web3 spans multiple vertical application areas. Summarising the product landscape of Web3 into a cohesive framework is no easy task. Chris, the founder and partner of Frens.Capital, who had extensive experience in the U.S. internet industry as a product manager before diving into the crypto rabbit hole, shared his constant insights into product design in his keynote.

In this conversation, we delve into product design, particularly in the current trending field of decentralised infrastructure (Depin). If you aim to design meaningful products in Web3, this dialogue is tailor-made for you! We hope you find value in it.

Three Company Cultures: Engineering, Sales, and Product

TechFlow: You have worked in Web2 as a product leader building knowledge-graphs and data products. How do you classify the challenges of designing products in Crypto?

Chris:

In the realm of software industry, companies often adopt engineering-led, sales-led, or product-led approaches. The distinction lies in the emphasis on hardcore engineering, effective sales strategies, or a compelling product. Successful examples include Google (engineering-led), Facebook (sales-led), and Amazon (product-led).

However, the challenge in crypto space arises when many projects focus solely on attracting users without considering long-term sustainability and product differentiation.

The analogy to Web2 and Web3 highlights the need for creating lifetime value for customers.

While engineering-heavy projects excel in solving complex technical issues, consumer-oriented applications, like games, DEXes, and NFT projects, require a strong product mindset to stand out in a crowded market.

The product's framework and its ability to foster network effects become crucial for sustained success. Unlike engineering challenges that take time to solve, the product's appeal must be compelling from the outset to achieve and maintain momentum in the ever-evolving crypto landscape.

TechFlow: What drove you into crypto from a Web2 product manager to start your own crypto liquid fund?

Chris:

In 2016, during my time at Cornell Tech, I enrolled in a blockchain course, sparking my initial interest in the technology. As I learned about the foundations of blockchain, it was the ICO boom in 2017 that my focus intensified. At first, I struggled to navigate the crypto landscape and choose viable projects amidst the influx of random ICOs. Despite not formally entering the crypto space, I began advising companies and applying my Web 2 knowledge to Web 3.

This informal involvement proved valuable. As the previous bull market unfolded, I observed a substantial increase in substance, with more businesses adopting real and sustainable models.

Recognizing the growing potential, I decided to formally transition into crypto beyond my advisory and investment roles. This led to the launch of Frens.Capital, where I leveraged my understanding of new projects, their business models, and their potential success.

Frens.Capital and its current strategy

TechFlow: In your own terms, how do you define a liquid fund?

Chris:

The fund invests across liquid assets at different maturity stages. Similar to venture investments, in terms of investing in early-stage companies, with a different liquidity profile since the token can be freely traded. This allows the fund to grow or reduce its position depending on how well the project is executing on its milestones. It’s a favourable instrument allowing investments to be more dynamic and allow the investor to have skin-in-the-game throughout the lifecycle of the investment.

As a fund, we adhere to a long-only strategy, eschewing the need for shorting or leveraging in the current market. Our approach echoes that of a value investor, emphasising a thorough understanding of an asset, gradual accumulation, continuous metric tracking, and a commitment to holding for at least two years.

Depin as global permissionless infrastructure system

TechFlow: According to your tweets, you are a big believer in decentralised physical infrastructure (Depin). Why and what is your narrative for Depin?

Chris:

I find the decentralisation of physical infrastructure, as exemplified by projects like Helium, Akash Network, and Hivemapper, to be a significant force in democratising the establishment of expansive physical networks.

What makes this particularly intriguing is how crypto space addresses the challenges associated with such endeavours, which often entail substantial capital expenditures (capex).

Building a cellular network or mapping the entire world for mobile hotspots and Wi-Fi requires a considerable financial investment and coordination across vast geographies and diverse hardware devices.

Depin's approach is noteworthy as it enables crypto projects to engage in crowdsourcing for capex, fostering decentralised coordination of resources and transparency.

This allows for a clear understanding of network growth, enabling people to strategically organise resources and address gaps in coverage. For instance, in constructing a cellular network, if there's a lack of coverage in a specific area, increasing incentives in that area becomes a feasible strategy to enhance overall coverage.

We're witnessing groundbreaking innovation in crypto, particularly in the creation of large physical infrastructure networks.

This marks a unique era, as it's now possible to establish global ecosystems at a massive scale without requiring permission or access to lots of capital, a capability previously unavailable.

Advice to Young Entrepreneurial People in Crypto

TechFlow: Regarding Depin products, what advice would you offer to individuals aiming to launch their own project in Depin? With your extensive experience in Web2 and a background in industrial engineering, which provides a solid foundation for product thinking, what guidance would you give to young aspiring entrepreneurs looking to start their own Web3 projects?

Chris:

Depin presents a unique opportunity in crypto space due to its involvement in establishing business models that were otherwise not feasible.

My advice is geared towards individuals with experience across various industries like energy, telecommunications, computing, IoT, AI, and services. People with domain expertise can leverage the Depin model to create their networks.

In the realm of Depin, having a profound understanding of the domain is crucial. Precision execution is essential, and projects like Helium showcase the difficulty but also the potential rewards.

For young professionals entering crypto space, my first advice is to identify a real problem within their expertise area.

Crypto spans numerous industries, so choose one where passion and expertise align. Define the problem clearly and have a well-defined hypothesis for solving it.

This approach helps navigate the noise of crypto Twitter and crypto space in general. As a builder, avoid getting caught up in launching tokens hastily or focusing on managing tokens.

Substance is key, and builders should prioritise mid-term and long-term thinking over short-term hype.

Ways to get around noisy crypto tweets

TechFlow: If not crypto Twitter, where else should people go to actually learn some substance?

Chris:

While being on Crypto Twitter is beneficial, it's crucial for builders not to solely focus on building a strong presence there. Constant engagement might lead to getting lost in the noise.

Seeking high-signal information through avenues like specific research groups, dedicated data providers, and research publications is essential.

Conferences provide opportunities to meet people in person, fostering a well-rounded approach to information gathering. The builder’s journey can often be influenced by short-term sentiment especially when the project has a token.

TechFlow: I think what you said aligns with my experience. Once, during a visit to Singapore, I participated in a crypto discussion and encountered individuals predominantly from a TradeFi background. I found it challenging to engage in the conversation because my perspective on TradeFi is limited.

They were attempting to translate the intricacies of TradeFi into protocols within the realm of Defi. Additionally, I recently listened to a podcast, by Lightspeed, discussing Solana's ecosystem.

One statement stood out to me: "crypto is more suited for mature individuals capable of building better solutions". This appears paradoxical to the prevalent notion in the crypto industry where young individuals supposedly get rich overnight, and there are numerous stories of creating fortunes without extensive knowledge.

Chris:

You're very correct.

I believe certain qualities make great founders, regardless of their industry, and organisations like Y Combinator have excelled in studying smart founders in tech.

Determination stands out as a crucial characteristic, with maturity often developing through experience. Experience, however, isn't a prerequisite for building a successful company, as demonstrated by highly successful founders throughout countless examples.

While there's no golden rule, there are good guidelines for what not to do. In crypto, for example, one key point is not to launch a token unless necessary.

Many overnight success stories have faded, emphasising the importance of building solid foundations for crypto companies that truly aim to change the world, akin to the impact made by companies like Facebook, Amazon, and Google. Some promising crypto projects are already on their way to becoming such transformative entities.

How to avoid zero-sum product designs in crypto?

TechFlow: In the realm of crypto companies, there's a divergence into two polars: one resembling a zero-sum game, and the other a non-zero-sum game. Regarding product development, techniques are shared across industries, whether within crypto or not.

From your perspective, how can one steer clear of zero-sum gaming in product design? What elements contribute to creating an enduring crypto product with lasting impact?

Chris:

That's a great question. Let me start by emphasising that all good products take time to build.

Take Bitcoin, for instance, which is now 15 years old. Building a great product in crypto involves adhering to principles applicable to digital products and Web 2 products. A key factor in what makes a product great is its ability to solve a real problem for users.

Depending on the industry, some products benefit from network effects, while others leverage economies of scale. Understanding your product's category is crucial.

Instead of pushing crypto to the forefront, showcase your product by comparing it to existing alternatives, demonstrating how users can achieve more with your solution.

Start by asking if your solution is potentially ten times better than what currently exists. While the ten times factor is not literal, it signifies aiming for a significantly better solution. Consider frameworks that assess your product's applicability to many users, frequency of use, and the value users derive from it.

Although not all answers should be a perfect yes, most responses should clearly indicate positive alignment with these considerations.

Decentralised GPU Marketplace: Akash Network

TechFlow: What is your favourite crypto product? Can you give a technical explanation for that too?

Chris:

I really like Akash Network.

Decentralised compute extends the advantages discussed earlier with Depin to the compute marketplace. Instead of relying on large companies to build massive data centres with high capex for GPUs and CPUs, decentralised compute allows individuals or small companies to contribute their GPUs and CPUs, democratising access to computing power and enabling them to contribute their excess capacity to a network for others to utilise.

TechFlow: How effective is it to use such decentralised compute infrastructure such as in the case of Akash Network? Since many people are sceptical about efficacies of decentralised products...

Chris:

Certainly, it can depend on the GPU being used. Take Akash, for instance, with its Foundry, a well-known entity in crypto space contributing high-end GPUs like Nvidia A1HUNDREDS and H1HUNDREDS. The usage of such GPUs is driven by two key factors.

Firstly, there's a scarcity of access to high-end GPUs due to the AI boom.

Secondly, Akash, being a decentralised marketplace, allows dynamic pricing based on market conditions. In cases of excess availability, prices become more affordable than those on platforms like Amazon, Google, or Microsoft.

Conversely, during shortages, prices rise, resembling the pricing model seen in services like Uber, adapting to demand.

On the demand side, potential users range from AI startups training foundational models to game developers seeking GPU resources for their projects.

The token has performed exceptionally well. What particularly captivates my interest is Akash's impressive statistics, especially in terms of its strong, non-incentivized, natural, and organic demand. I find this aspect to be exceptionally powerful.

TechFlow: How did you know about the Akash network in the first place?

Chris:

Having an interest in Depin, it's notable that Akash has been in existence for some time, which is a positive aspect. Unlike many new projects jumping on the AI bandwagon, Akash had already established itself as a decentralised cloud marketplace. What sets them apart is their subsequent development of a compute marketplace built on top of the existing cloud infrastructure.

TechFlow: How do you view the competition of decentralised compute marketplace since now we have Gensyn, CUDOs (decentralised cloud services), and more?

Chris:

In this market, I believe we'll witness multiple players thriving, unlike a scenario where a single winner takes all.

Similar to the presence of AWS, Google Cloud, and Microsoft Azure in the cloud market, competition will likely result in a few dominant players sharing the market share. This diverse landscape benefits both the market and consumers, fostering healthy competition. While I'm not extensively familiar with CUDOs, the existence of alternatives is generally a positive development.

Crypto in Miami

TechFlow: You live in Miami for your career, and what do you think of Miami's crypto crowds?

Chris:

I love Miami; it strikes a great balance for crypto enthusiasts with a mix of builders, investors, and native crypto enthusiasts. The environment is highly conducive to crypto, fostering enriching conversations and encounters.

It's a place where people are eager to expand their knowledge in the market, showing less interest in just the trading aspect of crypto and more in delving into the technical aspects of the crypto revolution.

Miami draws heavily from innovation in New York, San Francisco, and globally, making it an excellent hub for crypto enthusiasts. Personally, I've found it enjoyable to live and build within the crypto community there.

2024 Crypto Expectations

TechFlow: What are your expectations for the crypto market in 2024?

Chris:

Certainly, I believe we'll continue to see progress. Unlike the tendency in crypto Twitter to focus on one thing at a time and then move on, I foresee ongoing advancements across various verticals.

Whether it's in Depin, ordinals, or the modular narrative, numerous storylines will unfold. The key point is that progress remains progress, regardless of the prevailing narrative.

The next couple years are going to be massive for crypto. Certain products will truly reach escape velocity and make waves outside of crypto to hopefully onboard 100M users onchain. It’s an exciting time to work in this space.

Closing Words:

Chris is also one of the founders of a high-quality Research DAO. If you are someone interested in products and have substantial research achievements, please direct message him on Twitter.