Navigating the App and Infra Cycle as a PM
What do I need to focus on to drive product success during each phase
Imagine a dynamic cycle where innovation ignites groundbreaking applications, only to be hindered by infrastructure limitations. However, once the underlying infrastructure evolves, these applications break through the barriers and captivate early adopters. Yet, as user demand surges, scaling challenges arise, initiating the cycle anew. This is the essence of the app-infra cycle, a perpetual dance between applications and infrastructure in the digital realm.
In the world of Web3, I've witnessed firsthand how this cycle unfolds. Prior to the DeFi Summer of 2020 and the explosive rise of NFTs, developers were immersed in Ethereum and smart contract development. It was this robust infrastructure that paved the way for platforms like Uniswap and Compound to thrive. However, today, we find ourselves amidst an infrastructure cycle once again, confronted with scaling bottlenecks and market shifts that have impacted users and projects. As a result, our primary focus has now shifted to enhancing the underlying infrastructure.
Just like a pendulum swings back and forth, the cycle moves between these two stages, each playing a crucial role in the success of products and projects in the digital landscape.
Whether or not you think apps beget infrastructure or vice versa, knowing this cycle and how to navigate each phase is important, whether you are a founder, investor, associate or anyone in between. I’m not a founder so I’ll look at this through the lens of a PM with the question being “What do I need to focus on to drive product success during each phase”
The Infra Cycle
From what I have seen, those who win in this cycle anticipate. They anticipate how the infra will look a year from now and position their product to be able to cater to future demand that will build on this.
Organizations that win in this cycle demonstrate foresight and vision by understanding how the infrastructure landscape will evolve and position their product accordingly. They invest in research and development, anticipating market trends and user needs that will emerge in the coming months or years.
For instance, Opensea, a prominent NFT marketplace, anticipated the rising demand for NFTs before the NFT boom. They strategically built their platform well in advance, positioning themselves as the key NFT marketplace in the market.
So long as you can afford it, by building with this mindset, you will capture future demand. This is easier said than done. It is a bet. You can, however, hedge this bet. Conduct research. Develop MVPs. Listen and test these with the early adopters in the space. Pivot quickly if the space doesn’t move in the direction you thought it would.
Existing users, if you have any, also have a place in this phase. It goes without saying you still need to meet current demands. But if you can show and test with these, they’ll stick with you in the long run while also putting you in a position to capture future market share.
The App Cycle
Applications are booming. People are aping into protocol copycats.
In the application phase, the pendulum swings towards the user. This phase is characterized by the emergence of innovative applications that capture the attention of individuals, bringing new demand and general excitement within the market. Developers and product managers need to be agile and responsive during this phase, as meeting and exceeding customer expectations becomes paramount. It is essential to actively communicate with existing users to identify their pain points and address the challenges arising from increased demand. For infrastructure projects, the focus is on understanding and resolving scalability issues, while applications concentrate on user activation and engagement.
During this phase, the growth potential is high, and the market is filled with opportunities. Incentives are abundant, with applications and projects striving to attract new users and gain a competitive edge.
To come back to the NFT example, take a look at how Blur ate Opensea's market share through a combination of excellent token incentives and product experience.
Source: CoinGecko
In the long run, the quality of service provided and the brand will be the differentiating factor that ensures user retention.
While the app cycle has a far more immediate outlook, it goes without saying one should still reserve the capacity to study what might be around the corner. It could be the difference between continued growth or not once the excitement dissolves.
Determining the Cycle
Determining the current cycle state can be a grey area given that they are not strictly linear. There are overlaps, transitional periods and periods of dominance between the two. But through some analysis and research, this grey area can become more clear. I try to pay attention to the market trends in particular. If there is a surge in new application launches, user adoption, and excitement around innovative products, it indicates the application phase. Conversely, if the focus is on improving scalability, addressing infrastructure challenges, and anticipating future needs, it suggests the infrastructure phase.
Take the current Web3 market. Infra projects are dominating funding rounds. All of the excitement exists with scalability solutions such as Zero knowledge and optimistic Rollups. Then you have the emerging modular stack and the respective projects building for each layer (Data availability, consensus, execution and settlement).
Also, try to identify what other projects are prioritizing. In the application phase, the emphasis is on user acquisition, activation, and delivering an exceptional user experience. In the infrastructure phase, the focus shifts towards anticipating future needs, improving scalability, and building foundational elements.
Finally, engage in conversations with industry experts, developers, and other PMs. Discussions around user experience, feature enhancements, and market adoption are more prevalent in the application phase. In the infrastructure phase, conversations may revolve around technical challenges, network capacity, and interoperability.