In this piece, we discuss:

• Why new crypto products struggle to gain adoption

• How builders can out-innovate web2 incumbents

  • How you can understand the complexity of the ‘job’ users hire you for

  • How to attract users based on the ‘job’ you provide

    • Crafting a compelling GTM strategy

    • Providing a unique upside that incumbents can’t

    • Over-investing in trust

Thanks to Endaoment.org for funding and collaborating with OpenUX on this research.

Why new crypto products struggle to gain adoption

Why does Coinbase have so much market share? Functionality? Usability? Price? Branding? In a larger context, how does any popular web3 app maintain its market share? Uniswap, Safe, MetaMask—all of these products compete with close substitutes, yet they dominate. Why?

The answer for each is nuanced, but a central theme throughout crypto is that trust reigns supreme. Time and time again as new products emerge and innovate on old paradigms, the bulk of users stick with brands they know and trust, causing many new builders to struggle to retain a customer base.

How can new crypto builders succeed when incumbents’ moats of trust are so strong? Must all builders sidestep their competition by creating entirely new product categories?  If not, which areas should new builders invest in?

OpenUX explored this topic with Endaoment, a web3 startup looking to re-invent how we all give to charities by modernizing Donor-Advised Funds (DAFs), a philanthropic financial instrument that makes donating flexible and tax efficient. We interviewed 21 donors with various degrees of crypto experience about the extent to which existing tools support charitable giving today.

What follows is a  subset of the insights and recommendations OpenUX developed with Endaoment. Our goal is to help ambitious startups craft a compelling and sustainable product strategy in today’s challenging and incumbent-dominated space. Thank you to Endaoment for committing to keep insights like these open as a public good.

How builders can out-innovate web2 incumbents

Understand the complexity of the ‘job’ users hire you for

When we asked donors about their reasons for using (or ‘hiring’ in Jobs-to-be-Done lingo) Donor Advised Funds (DAFs), we identified two main camps:

1. The first camp hire DAFs for a narrow job: to deliver funds to charities with little hassle and cost. This group’s motivations begin and end with the transactional benefits of DAFs: give to a charity; receive a tax benefit. Additional benefits that improve the giving experience are of little interest to this group. Unless their DAF is actively making their lives difficult, they’re not seeking out alternatives.

2. The second camp hire DAFs for a broader job: to increase the impact they have through giving. This group is deeply motivated by the gratification of supporting causes they care about. They often go the extra mile to educate themselves on charities, meet individuals supporting the same cause, and take action in their local communities. This group pushes DAFs to their limit, often taking outside actions to achieve their giving goals.

For all builders, it’s important to understand the job your users are hiring your products for. When the job is narrow (e.g. “execute a task with little hassle”), you have much less room to innovate to get prospective users’ attention. You may be able to carve out a wedge by offering something with better usability or lower cost, but you risk not enough people caring about the job to switch.

When the job is broad (e.g. “increase my impact”), you have much more latitude to impress users with novel features and experiences. Moreover, smaller usability improvements to the most basic, transactional part of the job may not be enough to get your users’ attention. When you’re in this situation, understand where users are putting effort into workarounds, and build something that meaningfully addresses their motivations.

When focused on a narrow ‘job’, understand users’ inertia to craft a compelling GTM strategy

There are two negative forces that deter someone’s decision to switch to new products:

1. The first negative force is anxiety of new solutions—people are naturally averse to products they don’t understand, don’t see social proof for, or simply don’t like the look of. All products must combat user anxiety to gain adoption, and we provide some tips for investing in trust to overcome user  anxiety in the last section of this article.

2. The second negative force is inertia of the current solutions—it takes a lot of energy for someone to consider, commit, and follow-through on switching from one solution to another. Some products have higher inertia than others, such as products that rely on network effects, ecosystem lock-in, or have high onboarding costs.

What can you do if you observe your prospective users’ inertia is low—that is, they’re not at all loyal to your competitor’s product? If the job you’re providing for is narrow, you could try to build a product that better solves that narrow job—a “better mousetrap” if you will. If the narrow job is extremely important to your audience (e.g. a tax filing service), a combination of small improvements and crafty messaging may be enough to convert some of your competitor’s users. But if that narrow job is less important to your prospective users, a wildly better solution may fail to capture their attention enough to get them to switch.

What can you do if you observe your prospective users’ inertia is high—that is, they’re especially hesitant to leave your competitor’s product? As we mentioned above, if the job you’re providing is narrow, you could invest a fortune into marketing and still see poor results. A lower cost solution may be to find an audience of users who are good candidates for your product and have not yet been onboarded to a competitor. If the job you’re providing is broad, check out the next section in this article about providing unique upsides.

During our work with Endaoment, we spoke with users who use competitor products for a very narrow job and also have high inertia to leave. It turns out these users were not easily convinced by the proposition of switching to Endaoment based on new features and UX improvements alone given their position of high inertia. But we also spoke with individuals who have never heard of DAFs, despite making donations regularly. It turns out the biggest reasons these donors hadn’t tried DAFs was a lack of awareness and trouble onboarding¹. Endaoment may be able to gain traction faster with campaigns that target onboarding these non-consuming cohorts, rather than go after individuals already using a competing product.

¹ Interview quotes about awareness of DAFs:

• “Nobody’s ever asked me about a DAF” —Participant A, a financial advisor

• “I didn't even know they had a DAF. I mean, I've been with [my current wealth management platform] for years and I don't even know if I saw a DAF option on their website.” —Participant B, a donor

Builders should consider how this applies to them. If your job is narrow and users are dissatisfied with incumbents, consider how much inertia will keep them from trying your ‘better mousetrap’. If your job is narrow and users are already satisfied with incumbents, consider the likelihood of converting non-consuming users with new branding and frictionless onboarding. And if none of this is true because your job is broad, read the next section for suggestions on going after a different job entirely.

When focused on a broad ‘job’, provide a unique upside that incumbents can’t

We just went over a few strategies for builders when the job they’re providing is narrow. But what if the job is broad? As we mentioned before, when the job is broad (e.g. “increase my impact”), you have more latitude to impress users with novel features and experiences. The reason for this is that broad jobs typically span multiple categories of benefits that reach users’ motivations. If you’re serving users for a broader job, more often than not you can find at least one benefit within that job that is underserved or has room to delight users beyond what they’re used to.

If you can’t identify any leads within the core job you intended to provide, look for adjacent jobs. For example, if someone’s digital payment needs are well served, ask about other financial needs in their business—how satisfied are they with invoicing, tax filing, etc? Even if this ‘secondary benefit’ is not the core part of your product today, if you’re able to provide it successfully, you may be able to leverage the trust it builds with users to upsell them on your  product’s other core benefits.

Part of our research with Endaoment included interviews with Financial Advisors. Many established Financial Advisors hire DAF tools for narrow jobs and face significant inertia to switching. These factors include everything from forced ecosystem lock-in from an employer to concerns over new products’ compliance². However, throughout our interviews, we did hear from a subset of Financial Advisors about the continuous and frustrating challenge of growing a client base. Rather than wastefully designing and marketing features to Financial Advisors who have no interest in a new DAF tool, we identified an opportunity for Endaoment to win over Financial Advisors by providing an adjacent benefit: help them find clients by offering superior client-facing tools that make them standout.

² Interview quotes about ecosystem lock-in with DAFs:

• “There are 3 DAF sponsors that are approved. One is the American Endowment Foundation, one is BNY Mellon Charitable Gift Fund and the other is Renaissance Charitable Foundation. I didn’t choose Renaissance because it's held on a separate platform as the other two.” —Participant C, a financial advisor

• “If I were to try a new DAF, I would have to have compliance approval from [employer]… That would probably be the first hurdle to overcome.” —Participant D, a financial advisor

Going after adjacent jobs is not only successful when the job you’re providing is broad, it can also be effective when an incumbent has a lot of market share and users are satisfied. When most users are locked into an incumbent product and it appears there are few users left to sell to, your best path forward may be to innovate into a new job category or user group entirely.

Over-invest in trust

A reality is that even if you do all of the above well, if new users have never heard of you, have no peers who use you, or don’t trust your brand messaging, your users’ anxiety factors are going to make everything harder for you. The reality of the tech industry—financial tech especially—is that people are more likely to trust institutions they or their peers already know. Trust is itself a network effect, and until you reach critical mass, you are going to have a hard time gaining adoption.

Through our interviews for Endaoment, we discovered a similar trend: most DAF users chose their vendor based on an existing relationship through another product line³. For example, DAF users who manage assets with Fidelity were extremely likely to be using Fidelity’s DAF product. While part of their rationale for using two products from the same brand was convenience, we discovered lack of trust in new brands would be a significant barrier to convincing any of these users to switch.

³ Interview quotes about preferences towards existing providers:

• “They all seemed fairly similar, it wasn’t as if any one provider was totally differentiated. The ease of use of having the DAF with the provider that I already had a relationship with was gonna trump everything else.” —Participant E, a donor

• “Vanguard is an established name so they can kind of sit behind that brand recognition; there's a certain trust factor. I had come from their personal investment platform, so I already knew them and figured their charitable arm was probably legit.” —Participant F, a donor

While there are many ways to invest in trust, we recommend a few specifically based on insights gleaned during our interviews for Endaoment:

• Word-of-mouth not only expands your reach but also makes a meaningful impact on trust: Our interviews revealed that people hear about financial tools and strategies through people they consider experts via podcasts, investment groups or clubs, reddit, and many other outlets. Builders should lean into the benefits of having other people talk about their product by creating referral programs, getting mentioned in online media, etc.

• User-centric messaging can make discoverability and onboarding easier: When someone visits a product site, they should be able to immediately understand the product, how it provides them value, and how they can start using it. Builders can achieve this by serving content and messaging with language that speaks to the challenges and benefits users associate with the job they’re hiring a product for.  Brands that are disorienting on first impressions, project too much technicalities, and/or don’t ground users in where to begin can be very off-putting and create distrust.

• Human-based customer success can bridge feature gaps and provide additional stickiness through personal relationships with users:  We learned through Endaoment’s users that the core team was amazing in bringing new users’ experiences to life and as a result felt deeply connected to the brand in many ways. Builders should recognize the value of having staff make themselves available to help new users in their early moments using a product. Someone representing the brand can bridge a lack of features or good experience delivery until product teams can catch up to a fully realized roadmap.

Take action on these suggestions

If you’re a product builder and these insights sound meaningful to you, consider investing in understanding your users so you can chart the best path for your product and company. OpenUX is a collective of user researchers, designers, and product strategists working to make insights like these more available to builders. If you need help talking to your users, feel free to reach out to us at https://openux.xyz.

If you’re an individual active or just interested in donating more to charities, we would strongly recommend Endaoment. Endaoment is committed to building tools for the modern donor, and have demonstrated that clearly by funding this research into their own users. For more on Endaoment, visit https://endaoment.org.

Credits

• Authors and lead researchers on this project: Henry Harboe & Eric Aker

• Special thanks to Robbie Heeger, Vishal Kapadia, Noah Gallant, Alexis Miller, Bruxa, Dae, and the rest of the Endaoment.org team for supporting this research