A case for web3 superapps
A case for web3 superapps
Superapps were supposed to revolutionize web2 products, and to some extent they did. Their true power, however, will become evident with web3.
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My name is Ev, and every week or so I publish a blog about technology and product, with a dash of strategy and a pinch of trends.
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In this post we will cover:
A brief history of superapps
How superapps make use of their financial layer
Parallels between web2 and web3 superapps
Why superapps might be one of the key strategies for web3 products
Web3 is misunderstood. The core technologies behind web3 take second place due to the speculation birthed by the NFT community and the religious devotion with which crypto acolytes proselytize decentralization. I get it, but web3 is so much more than that.
Today, crypto tech is rarely evaluated on its merits in a true product sense. In this post, I want to move away from the popular WAGMI narrative that “crypto will change the world!!!11”, and instead think of some of the ways this might actually happen.
Before I continue, you must know that I’m neither a crypto maximalist, nor minimalist. Instead, I like to call myself a crypto pragmatist. Blockchain tech has a proven ability to change the lives of many people, it’s got a broad enough user base to be considered a success, and it’s tech stack is developing rapidly. We do need to iron out a few kinks, but the fundamentals are falling into place.
Two biggest questions pop up in my head every time I see a new piece of technology: “Where have I seen this before?” and “What human behaviors can be made easier with this?” These questions are important because any successful technology is successful due to how seamlessly it embeds itself into our lives, i.e. how it amplifies existing use cases and whether there’s a competing tool or process that already does the job. This gives breakthrough consumer technologies low barriers to adoption and high stickiness.
To answer the question about how web3 might change the way we interact with technology, you don’t need to have Isaac Asimov’s imagination. Instead, you only need to look at how hundreds of millions of consumers go about their day.
A computer in your pocket
In 1990, Marc Porat, the founder of General Magic wrote to John Sculley, then CEO of Apple, Inc.:
“A tiny computer, a phone, a very personal object . . . It must be beautiful. It must offer the kind of personal satisfaction that a fine piece of jewelry brings. It will have a perceived value even when it's not being used... Once you use it you won't be able to live without it."
General Magic failed to turn that vision into reality, but Apple didn’t. With the launch of the iPhone in 2007, users got a hyper-personalized window into the internet. Consumer interactions with technology started to change. First, we began playing Bejeweled on a subway ride. Then the App Store opened the floodgates. In a few years, we had apps for any use case: sharing photos, splitting bills, taking rides, ordering food, listening to music, paying for stuff, organizing our day.
Paradoxical thing happened. Even though more apps got published on Apple App Store and Google Play over time, the count of mobile services we use daily and monthly remained the same over the past 5 years:
In 2017, we used 10 apps a day, and 30 apps per month (source: data.ai, nee App Annie 2017 report, link 1, link 2)
In 2022, average user has 80 apps, but only uses 9 a day, and up to 30 per month (source)
From the perspective of an individual consumer who uses conventional apps, we have reached saturation and a peak of value creation on mobile.
The old App Annie’s report said something else:
“By and large, consumers prefer to manage their lives through apps. For many industries, apps are increasingly becoming a must-have.”
With their WeChat superapp, users in China have known this all along.
Superapps are the operating systems of your daily life
Initially, the term “superapp” was suggested by the BlackBerry founder Mike Lazaridis. He defined it as “a closed ecosystem of many apps that people would use every day because they offer such a seamless, integrated, contextualized and efficient experience.”
WeChat, the most famous superapp in the world, offers services which users can access in various contexts as they go about their day. Want to pay for your morning coffee? Here’s the payment functionality. Want to split the bill with your friend? You got it. Want to send money to your parents in another city? Easy. Want to book a concert ticket? Find a restaurant and make a reservation? Order pet food? With WeChat, you can do all of that. Indonesian GoJek and Singaporean Grab are in the same category.
What Mike didn’t talk about is how exactly the services work together. Not only super apps offer high day-to-day utility to users, but they are often interoperable. The latter feature is made possible by a fintech layer that most superapps have. That financial layer is the not-so-secret sauce that helps superapps to facilitate transactions and contribute to their utility.
The financial layer of superapps
Between 2019 and 2020 I worked at Grab, one of the biggest superapps in Southeast Asia.
Grab nailed its superapp strategy and created an extremely sticky product: each of the apps within Grab’s ecosystem embeds itself in the daily lives of consumers. Grab users can book rides and peer-to-peer deliveries, order food, pay for various online and offline services — all from a single application.
The absolute majority of those transactions are done through a wallet service called GrabPay. Owing to its relaxed KYC procedures, GrabPay was able to penetrate the previously unbanked demographics in the Philippines, Indonesia, Vietnam, and others. With GrabPay and the rest of the superapp services, Grab’s users are now empowered to participate in the economy. The successful march of GrabPay across Southeast Asia culminated in Grab Financial Group getting a digital banking license from the Monetary Authority of Singapore in 2020.
When I briefly worked at Delivery Hero on their Foodpanda food delivery and quick commerce app, one of my sister teams was building a stored value wallet as a way to capture the money and recirculate it within the ecosystem. Wallet, as the team recognized, was the key component missing in Foodpanda’s superapp strategy.
With a financial layer in place, when users pay for food delivery, restaurants can use a share of that revenue to sponsor promoted listings or discounts. This is a very practical use case, and at one point Grab was exploring ways to make restaurants and merchants pay for advertising using the GrabPay dollars which they earned from eaters in the app.
Based on how prevalent marketplace dynamics are in superapps, I have my own, more modern and specific definition of a superapp:
Superapp is a multi-service marketplace complete with a financial transaction layer. Within the superapp marketplace, trust is guaranteed by the platform that runs it.
From that definition, you can see that the superapp patterns fits web3 narrative well.
On Web3 and product patterns
First, let’s admit that the majority of web3 products are arcane: they have high barriers to adoption, and their usability is low. As for utility, it’s usually limited to niche use cases. This is expected from technology that is very much in its infancy. Recall the Web 1.0 of mid-90s: Fidonet, IRC, and the world before JavaScript. The Internet sucked for much of it’s early days.
Things are changing, though. Software wallets decreased onboarding friction and made it easy for new users to work with crypto. Getting started is now so simple that I was able to set up a Metamask wallet in just a few minutes.
In every new technology, certain UX and product patterns become de facto standards. Hashtags, popularized by Flickr, became one of the prime patterns in modern social networking. Algorithmic timelines helped Facebook, Twitter, LinkedIn, and others to dominate social. And, of course, we all use “skip intro”, “slide to unlock”, and “buy with one click”.
Web3 will not be an exception. Some patterns and mental models will come to dominate the field. You already see this happening: almost all crypto products rely on onboarding flows to introduce new users to their concepts, and use communities and academies to build stickiness. This is now done with Discord and panoply bots, but the idea is similar to onboarding web2 products of the early 2010s.
Superapp might be another such pattern. Based purely on what I’m seeing in web3 from a product design perspective, I believe that we will see more and more web3 products turning themselves into superapps. This is a match made in heaven:
The DeFi layer of web3 is a basic building block of the system
Many web3 products are showing marketplace dynamics which fit the the superapp pattern
Superapps can help to recirculate value in DeFi marketplaces
Web3 vs web2 superapps
While web2 superapps are closed proprietary ecosystems, web3 superapps will be decentralized natively. With this comes a scaling advantage: in theory, web3 superapps will be able to add new services on demand.
Imagine a web3 analog of Airbnb that not only helps to book a place at your next travel destination, but also helps you arrange breakfast delivery or a brunch spot reservation for a few days that you’re there. That same product could facilitate the transactions between the host and their learning services provider.
Of course, all of that is possible now, but it requires tight platform and business coordination, as well as integration between all parties involved: the booking platform for properties, restaurant booking platform, learning services providers. Colloquially, this is called integration hell.
Because identity verification and trust are built into web3 superapps, they have a potential to escape integration hell by design. This, in turn, increases the range of services available in a web3 superapp and drives its growth. Here, web3 platforms will move away from solving the problem of integration, and toward solving the problem of curation.
As a product manager, I’m excited. Web3 superapps open the opportunities for stitching many services into curated, even personalized experiences, and that will create a whole new category of products. As Kevin Kelly wrote some eight years ago:
The last 30 years has created a marvelous starting point, a solid platform to build truly great things. However the coolest stuff has not been invented yet — although this new greatness will not be more of the same-same that exists today. It will not be merely “better,” it will different, beyond, and other. But you knew that.
What you may not have realized is that today truly is a wide open frontier. It is the best time EVER in human history to begin.