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When Justin Hunter was an MFA student, he wanted to use something like Google Docs—but what he didn't want was Google Docs. The information company's data collection methods were incompatible with user privacy. So, in addition to writing his novel, he taught himself how to code so he could make his own privacy-centric version of the collaboration software. The result was Graphite.
Graphite was something of a hit. It was featured in a 2018 Wired writeup about decentralized applications. Lifehacker gave it a glowing review. BREAKER, may it rest in peace, did not. All the attention led to plenty of interest from people and organizations who wanted to have control over their own data.
That's when Hunter realized there was a problem—a problem that ultimately led him down the path to creating a much different product, SimpleID, which launched this week.
1/ Six months ago, we had a different product. We had what appeared to be early traction. We thought we had figured it out. So, how then are we launching a brand new product into a new market today? First, check out what we’ve launched: https://t.co/H2iT941uWm.
— SimpleID (@getsimpleid) January 22, 2020
SimpleID allows companies working on Web 3 (an umbrella term for what Emre Tekişalp called "a user controlled Internet") to send targeted emails and in-app notifications. Though these are commonplace in Web 2, SimpleID says its versions prioritize privacy.
But, back in 2018, Hunter was just thinking about how to get people to start using his own decentralized product, Graphite. Because it was built with Blockstack, that involved using a special browser (kind of like an Ethereum wallet), creating an identity and seed phrase, and all the other hassles of blockchain-based products before users could even log in and start actually using the product.
Hunter thought of this as “the onboarding problem.” As he remembers it: "I had a call with an NGO. We spent 45 minutes on the call—actually went over on the call—just onboarding one person to the app. I was like, 'This is not sustainable. Nobody's going to pay any money for this.'"
He started talking to Prabhaav Bhardwaj and Alex Carreira, who were in the same boat. The two had launched a decentralized messaging app, Stealthy, at TechCrunch Disrupt in September 2018, but couldn't keep their user numbers up. They too framed the problem as an onboarding issue.
The three men started by creating a simple wallet, thinking that would help make their products—and others developer’s dapps—easier to use.
But working through the problem, they discovered that there were a lot of workable onboarding solutions out there, like Fortmatic and Portis: "That made us take a step back and say, 'Okay, this is going to be a solved problem, or is a solved problem. What's the actual problem that we face with our apps?' Because if it's a solved problem, then our problem thesis as a whole at the beginning was completely wrong."
Their conclusion? Web 3's main issue wasn't getting people to try out a dapp. It was getting them to continue using it.
"In terms of onboarding vs retention, onboarding is easy,” said Jordan Spence, chief marketing officer at MyCrypto. “Getting someone into the funnel is easy but having them follow through or stick around after they're in—that's the hard part, and I don't think that has been solved yet by most."
Obviously, a great many—too many—dapps are simply trying to reinvent the Web 2 wheel by adding privacy and decentralized features that don’t really offer the user enough of a reason to switch. The many Twitter clones, for instance, that make the commenting platform uncensorable, haven’t found enough users who are willing to pay even tiny amounts of crypto for that benefit.
"If you’re offering an app that intends to replace/solve the Web 2 platforms (let’s say, a decentralized YouTube) you need to offer more than a complex token scheme with a minimum yield for the user," said María Paula Fernandez, external relations lead at Golem. The users will eventually give up—"either because the platforms are mostly beta or alpha with their hurdles or because the Web 2 offers more possibilities to them."
In other words, sometimes Google just does it better.
The sheer number of dapps, versus active users, speaks for itself. Developers launched 1,365 new dapps in 2018, and another 519 in 2019, bringing the total to 2,726 (roughly half of which are live, with the rest abandoned, broken, or in development). The number of active users for those dapps, however, is still less than half of what it was in January 2018, when the price of ETH hit $1,400. State of the Dapps, an application directory, put the number of active users for December below 200,000, its lowest point since February of last year.
Still, there are plenty of Web 3 dapps in certain sectors, such as gaming or DeFi, that are not only radically different from anything in the early Web world but arguably better. Yet even they are failing to build large audiences. That’s the market Simple ID is aiming for. Said Hunter: "You have to actually build products that people use, and we're trying to support that."
So, Hunter's team pivoted away from onboarding to creating a product that could help applications create and build relationships with customers—an idea that seems almost impossible in the Web 3 ecosystem. Trying to retain customers implies collecting emails, and data is anathema in Web 3 and, increasingly, Web 2 as well.
Even Google is trying to be less like Google and is trying to allay people's privacy fears. This month, it started removing third-party cookies from its browser, Chrome.
Spence pointed out that there are certainly ways to use, within limits, Web 2 tools—optional email communications, asking users about their preferred communication preferences, and keeping analytic info narrow so that people don't have to give away personally identifiable information. Still, he said, maintaining a balance between privacy and communication depends on the audience. Novices don't really care too much about decentralization. But, he warned, "If your audience is the anarchist, blockchain expert who wants to remain anonymous, you need to spend a LOT of time thinking about how you wanna move forward."
Hunter says that getting customers to keep coming back to an app doesn't actually require much personal data. Founders just have to focus on the data that's most important for their product, which is typically info that's already available on the Ethereum blockchain.
"Ethereum's a public blockchain, so every single transaction that somebody makes is available for you to use," he said. SimpleID leverages that info and helps apps use it for targeted emails or in-app messaging "to allow [them] to send the right message to the right person."
Hunter gave an example: "Single collateral DAI became multicollateral DAI and people needed to migrate to these new contracts. And the way that that happened was…[a tweet] that said, 'There's $800,000 locked up in these addresses that need to be moved. If you know people that own these addresses, let them know.' That's a horrible way to talk to people. And it's not efficient."
With SimpleID, he said, Maker could have set up a group, or segment, for people who held Sai and sent them an email or in-app notification—"That's the type of thing you can do with data without doing all the things Google is asking for." (A spokesperson for MakerDAO told Decrypt that it used several active forums as well as its website to give users plenty of notice that multicollateral DAI was coming, though it said it's always open to exploring new ways of communicating with users.)
But to some, those emails and apps are worrisome for more than their data privacy implications. Elizabeth Renieris, a Fellow at Harvard's Berkman Klein Center for Internet & Society, worries that, in their rush to gain users, companies like SimpleID and others may be "rebuilding what blockchain set out to disrupt."
SimpleID's value proposition boils down to "no one is using these blockchain apps, so here are some classical AdTech and CRM tools to behaviorally engineer people to spend more time in-app,” she said. “Privacy aside, they are building tech to mine our attention and manipulate our behavior just as Web 2 has. There’s nothing particularly decentralized, user-centric, or self-sovereign about their approach.”
But to Hunter, a small dose of Web 2 might not be so bad if done responsibly. "In Web 2, good companies build relationships with their customers. That doesn't require a ton of personal data... You don't need to know who that person is, who that person is married to, how many dogs they have. All a user cares about is getting the right message at the right time without it invading their privacy. And that's possible."
Whether the product has earned the right to demand your attention is up to you. Which, in the end, is what Web3 is all about.