MAD Society S1: Ep.9 Haseeb Qureshi - Dragonfly

Hello. By the way, you forgot to mention I am also founder of Helas and I am a well-known Salana K. So, happy to answer any questions you might have about that.

I'm here. I'm here. Well, yeah. You don't need any Mert. I'm here.

No problem. No problem. It's July 4th weekend here in the US, so there's not a whole lot going on today, so it's all good.

There's no fireworks yet. Fireworks should start tomorrow because right now it's July 3rd in the US.

Okay.

In venture? So, poker and venture don't have a very large overlap. Poker is very similar to trading because it's very fast feedback loops and very tight iterations. You know, you play a hand of poker, you immediately know did I win, did I lose, did I do the right thing. In venture, you have very, very slow feedback loops. So you back a founder and it takes years to know whether or not you made the right decision and you start to see a little bit within the first year or so of okay this company's growing. They seem to be getting some traction but then you know this the company can always blow up after series A or after series B even they can seem like they're making progress for a couple years but the founder had some fatal flaw that caused them to fumble the ball in the last play of the season. So the reality is that it's very hard to learn quickly. Did you do a good job as a VC? And there's a lot of funds that have raised money on early marks in a portfolio that turned out they didn't have any winners. You know, if you invested early into Axie Infinity or into Opensea, it might have looked like, wow, I'm an amazing investor. I've done such a great job. You know, there's a couple funds that were very early investors into FTX that they were just, you know, enormous champion of the universe. Can you believe he did the FTX seed round? and just a couple years later it ends up being like, okay, this fund is kind of a nobody now because their star portfolio blew up. So, venture is unique in that way.

The other way in which it's different from poker is that venture is a team sport. Poker is a single player game, right? You obviously play with other people, but it's you against the world. It's like PvE. Venture is not like that. In venture, you only win if your founder wins, if the rest of your firm wins, if the other partners who are doing deals at your firm win. And for that reason, it's extremely collaborative and relationship based. Whereas, if you're a poker player, you kind of don't need to care about anyone else in the world. As long as you can sit down at a poker table and play and do well, you can be an asshole, you can have zero friends, and you can still be a successful poker player. So that's another way in which it's quite different. And most VCs who are very good at what they do are very good relationship people. I don't think I'm that great of a relationship person, but I'm definitely much better than I used to be. And I'm a lot better than most of the people I know who are traders. Most traders, they don't have to be nice. They don't have to be good relationship people. They don't have to have a lot of connections. So I think for that reason the skills that lead you to being good at venture that do come from poker are the ability to think clearly about risk, the ability to control your emotions very well. Those things I find a lot of VCs actually are not very good at. They can get very emotional. They have a tough time with conflict. Those are two things that I'm very good at. But for the most part, I don't think those matter nearly as much as the other core skills of VC, to be honest.

Hitting the ball. Who is very good at hitting the ball? I'd say probably the most controversial investor in our industry, which is Kyle Samani. Obviously, he has now exited his ball hitting days. So he's like the Babe Ruth; he's retired. But he probably has the most pound-for-pound IRR and P&L on a dollar invested basis than anybody else in the industry. So if there is a GOAT in VC, it would have to be Samani. Now, that said, he is a very non-consensus person. He obviously attracts a lot of drama wherever he goes, but he's a true contrarian and the best VCs have this contrarian streak that they don't just index what other people are doing. So I'd say Samani in terms of who's good at hitting the ball.

What it takes to hit the ball. I mean, this is the hardest thing about VC is that it's very easy to convince yourself that you're wrong. It's like, okay, well, Chris Dixon's doing this deal or Paradigm's doing this deal or, oh, this company's so hot. They're blowing up on Twitter. Everyone's talking about them. Especially in crypto where so many of these deals are done pre-product market fit where, okay, there's this new L1 that's launching. There's this, okay, Bitcoin L2s are hot. Babylon is hot, I layer is hot. These concepts that they haven't necessarily proven themselves at that stage but the idea has so much traction and is kind of flying around everywhere in people's minds and in their collective conversations. It's really hard to convince yourself that no, I'm right, I don't believe it, or I do believe it and this thing that no one's talking about that no one cares about they will care about it. That is very difficult to do. And so what it takes in terms of quieting down your mind to hit the ball, I think the answer is it's built through the discipline of your investment committee. It's part of the reason why VCs often operate in firms. They don't operate alone. When you're alone, it's very easy to get peer pressured. There are so many voices and so many external forces that are acting on you as a thinker. But when you're within the context of a firm and you've built this institutional culture of like, look, we don't take anything on faith. And even if you're getting swayed a little bit, your partner is not getting swayed. Your partner is like, well, no, no, prove it to me. If this thing is so great, if the Bitcoin L2s are so great, then show me the data. Show me the evidence. What is the argument? Let's really map it out and walk through it step by step. And if you can't do that for me, I don't believe it. That discipline is a discipline that we at Dragonfly we've built over the years in the culture that we have as a firm. But if you don't have that, that's what I think makes it really hard to be a great investor.

The most dangerous blind spot. I think there's a... if you're a crypto VC, you are a creature of crypto cycles. Everyone who's done this for long enough has experienced the ups and downs, has experienced a sense that, oh, okay, none of this stuff matters. It's all shit. It wasn't that long ago that financial nihilism was the cultural zeitgeist within crypto Twitter and people believed that none of this stuff mattered, none of it was valuable, it was all memes. Now, people, there's I wouldn't say it's financial nihilism today. It's more that like, oh, it's not that nothing matters. It's that only a few things matter and they only matter if they have revenue and these things that don't have revenue don't matter. I think if you're a crypto VC it's easy to fall into this view that there's this kind of Hegelian dialectic that things just come and they go and they come and they go and there's an infinite time series of booms and busts waiting for us. The longer you're in crypto you just get more four-year cycles and it's four-year cycles all the way down. And if you allow yourself to be lulled to sleep by this idea that it's inevitable that this is how it's going to play out, I think you can potentially make very, very bad mistakes as an investor, by just not really thinking deeply enough about what's going to change. The other thing I think people don't think enough about is that at some point crypto VC might just be over. There might just be a last vintage. And if you think about for example social media, social media was the biggest technology trend of the 2010s. Almost all the public, if you think about Google and Facebook and Microsoft with their acquisition of LinkedIn, the biggest social media networks just kept growing and growing and growing. But VC in social media was basically done by like 2009. There were almost no new social media companies that were created after 2009 except for TikTok. ByteDance was pretty much the only one that actually was able to build a real meaningful business after that time. And although the products themselves evolved, the platforms didn't evolve at all. It's basically still, Meta, WhatsApp, Instagram, blah blah blah, all that stuff existed in 2009. So it may be that crypto actually looks like that. That even though crypto continues growing, stable coins continue growing, Bitcoin continues growing, Ethereum continues growing, all these things go up into the right, but let's say maybe by the year 2030, pretty much every important company is built and the platforms are just so big that they just keep growing, but there's really very little room for new players to be able to come in and disrupt. Now, I don't know that that will happen. And if that does happen, I don't know when it will happen, but it will almost certainly happen at some point. It happens that way in almost every industry, especially when there are returns to scale and network effects as there are in crypto. But I think most crypto VCs don't think about that. And I think that's a potential blind spot is to believe that because we've been doing this, we'll just continue doing this forever. Consumer, there will always be consumer companies. There will always be new consumer companies. It's not clear there will always be new crypto companies. There may be, but there might not.

Yeah, good question. There's a lot of categories that are basically dead or they're on death's door. We do occasionally get pitches for some of these. There's still occasionally, oh, I'm doing Bitcoin layer 2 with lending or something. We do occasionally get stuff like this, but it's pretty rare now. I would say one of the categories I see a lot are these structured products on Hyperliquid where it's like this is a CLO on top of Hyperliquid and CLOs are a huge market and so Hyperliquid will have them and it'll be huge. So we still see a lot of these kind of esoteric financial products that are trying to launch on Hyperliquid or on some isolated venue. I think this will probably stop sometime soon just because these are not businesses. Having just one financial product is not a business. There's no business ever been built on selling one financial product. Especially not if you don't own the distribution. If Hyperliquid owns the distribution, then you're essentially just a reseller of your product. That's not a very compelling business model. What else might go away? There's a lot of people who are tokenizing individual assets. So, it's like I'm tokenizing gold mines or I'm tokenizing cars. It's just like this is not a business. This is maybe a product. It's good that this exists, I guess. But if you're not tokenizing something really big like treasuries or stocks and bringing them to scale and actually figuring out the distribution, these people who are trying to say, I'm going to tokenize this one asset that I own and please venture back it. Yeah, I think this stuff is going to go away if not already. Those are the things that jump out to me the most.

You know, there's a classic one. There's this joke in traditional venture capital that there are these basins that founders keep falling into all the time, especially when they pivot. They just tend to like the same ideas and constantly do them over and over again. Even though VCs will always tell you don't do that. So one of them is dating apps. Like anytime a founder pivots, they always consider doing a dating app. And it's almost always because founders are young and single and so they think a lot about dating. Or another one is co-founder dating is also a very common thing that founders end up thinking because they're trying to find a co-founder. And dev tools, a lot of productivity tools. Like, oh, I make a better to-do list. Someone to make a better Sauna or whatever. So there's a lot of these basins of bad ideas that people just keep coming to again and again. Crypto has these as well. I'd say the most common one is Bloomberg for crypto. So it's funny because Bloomberg for crypto was like a bad idea when I first became a VC, like 10 years ago, people were pitching me on Bloomberg for crypto and every year you always get pitches for Bloomberg for crypto and they don't really know what they mean. It's a little bit vague what Bloomberg terminal with crypto would even mean or what's supposed to be in there. But it's kind of like it's 2026. You need a crisper angle of attack than just a tagline like Bloomberg for crypto. So those are things. I don't know that's a trend so much as just a little tidbit. There's a lot of these things and they stay in the air, they never quite go away.

I think talk to less people is honestly my advice. Really. I think if you're a new VC, I think a lot of new VCs make the mistake of talking to too many people and having their opinion be the average of what a bunch of people who they know are. I think as a VC it actually really helps you to force yourself to think for yourself. And it's very easy to be like, oh yeah, I'm thinking for myself. I have my own ideas. I wrote a blog post. I write my notes after I talk to someone. But the easiest way to not think for yourself is to just talk to too many people who have strong opinions. Now, it's not to say you should talk to no one, but most VCs I know, they just are basically a pastiche of the seven people they talk to most often. And the more that you are actually by yourself and just thinking and reading and learning, the more you're going to actually have your own unique opinions. Now, they might not be right. They might not be totally accurate, but at least they're different from other people around you. And the most likely way you're going to have alpha is by actually thinking differently. So there's a risk that maybe you're wrong, but there's a risk also that maybe you're right about something else that everyone else is getting wrong. And as a VC, that's what you get paid for. You don't really get punished for being wrong. You know, if you have a portfolio of 50 deals and 15 of them are wrong, who cares? All that really matters is that you get the one thing right that everyone else got wrong. And that comes from being able to think differently. I think that takes some degree of self-awareness because even through the podcast I've had guests, I've interviewed a lot of people, so this not from today, saying this mostly for people listening.

I think it also takes a level of self-confidence. It's very easy and safe to talk to a bunch of people and be like, oh, okay, here's what I think about neobanks because I talked to five people and they think this about neobanks and so I'm going to average their opinions and then say that on my next podcast. I think it demands more of you to not do that and to really try to re-underwrite and think for yourself about what you believe about these things. And again, the cost of being wrong is not that high. So I think most people are trying to optimize for seeming smart or seeming good at the job as opposed to actually being good at the job. And that's again one of the reasons why I always say Kyle Samani is the GOAT. He is crazy, right? He clearly is just in his own world. He has very weird beliefs about a lot of things. He's gotten a lot of trends wrong and very confidently stated, 'Oh, I think XYZ is going to happen.' And he's totally off. But it's kind of like it just doesn't matter if you get the one thing right that pays for everything. Who gives a shit? VC is not the business of trying to seem unobjectionable or trying to seem like a focus group would think that you're smart and respectable. That's not how you win as a VC. You win as a VC by getting the one thing right that everyone else gets wrong.

Well, first I've fundraised at this point over a billion. So fundraising in the millions is a different set of lessons you have to learn than fundraising in the billions. Okay, millions. You're going to modify the question. Okay. No change. Here's what I'd say. When you're fundraising, there's one thing you realize through fundraising is that there's very different styles of fundraising and they can all be successful. One style of fundraising is really building trust and getting to know somebody on a personal level and making them invested in you and want to back you because of who you are and what you believe. I am not good at that. I am a very antisocial person. It might not seem that way but it's very much the case that I have a tough time being able to build deep relationships with a lot of the folks who are investors and allocators. I think the place where I end up being successful and there's many strategies to succeed in fundraising, there's not just one. My MO and this is also where I tend to succeed more in fundraising is more with institutions. And institutions, what they really care about more than anything else is you demonstrating extreme levels of competence and knowledge and mastery over your domain. If you're a family office, you're an individual, that's often where relationships and trust is going to matter a lot more and they kind of want to know you for a very long time and get to know who you are and how you operate and they want to be able to pick up the phone and call you, maybe even get a beer with you every once in a while. Whereas institutions, what they're looking for really is that you are the best in the business. You are the best at this of anybody that we speak to or know of and you can make the most ironclad robust argument of why you're going to win and other people are going to lose and you bring the receipts for it. That is where I tend to be strongest in that kind of fundraising. But the reality is that if you're raising for a fund, if you're raising for a lot of money, it's a team effort. You need people who are good at these different styles of fundraising to be able to attack different parts of the fundraising market. So if you're a fund, if you're a founder and you're raising, you're basically raising from VCs. Maybe some corporates, maybe some individuals, but mostly you're raising from VCs. And VCs are all pretty similar to each other. But if you're a fund and you're raising from pools of capital, those pools of capital are very different. They're not as similar to each other as VCs are to each other. So raising from an endowment versus raising from a hospital foundation versus raising from an insurance company versus raising from a public pension versus raising from a family office. These are all very different experiences and they require different skill sets, different angles of attack, different storytelling in order to get this stuff to work with each of these different groups. So fundraising is its own skill. The people who are really great at VC are good at both investing and fundraising. I've gotten better over the years, but I'm definitely not a world-class fundraiser.

That's an interesting addition to that question. At scale, what makes someone likely to succeed at scale? I think being very intellectually flexible is probably the best predictor that I've seen of somebody who's good at handling scale. The reality is being a founder. People think of being a founder as like okay there's founding skills or CEO skills or whatever, but the reality is that if you're a founder of a successful company, your job changes every two to three years. Being the founder of a three-person company versus being the founder of a 15-person company versus being a founder of a 100-person company versus being a founder of a thousand-person company. Each of these really requires a different skill. It's a little bit like being the head of your PTA to being the mayor of a small town to being the president of America. Those are actually three different jobs and they require different skill sets. Being the president of America does not mean you're going to be a good PTA member and also doesn't mean you're going to be a good small town mayor. So the founders who are very good at adapting are ones who are very curious about learning, changing their minds, letting go of old frameworks and adopting new ones. The founders who don't tend to do well with this are founders who are like, oh, I used to do this when we were seven people. Why aren't people following my instructions? Why is the product velocity slowing down? Why is there so much politics now? And they think that this is a problem that needs to get solved. Oh, the problem is there was so much waste or we have leeches in the executive team. I got to fire them all. We got to go back to basics. No, it's not to say those things are never problems. They often are. As a company scales, almost inevitably, they're going to be growing pains. But the best founders are ones who are curious about the way in which the job is supposed to change as you get to scale. And they adapt their skill sets to be more like running a thousand-person company is more like running a small town, where it requires political skills, diplomatic skills in order to run a company of that size. As opposed to running a seven-person company is really just all execution. When you're in a seven-person company, you don't need a lot of management. Everyone's rowing in the same rowboat and you don't need to talk. You just see what everyone else is doing and you row. But when you have 50 people, 100 people, a thousand people, then everything is about communication. There's nothing that you're going to do personally in a thousand-person company that's going to move the needle. Everything that you do is about moving the troops through the commands you're giving as a general and orienting those troops and inspiring those troops to be willing to go the extra mile and really put the attention to detail they need in order to create a great product. So that's why I say that's the hardest thing for most founders who get to scale is navigating those changes in their job. And not everybody can do it well.

In order to underwrite a successful founder, generally our philosophy is that we look for spikiness. So, we're investing for strengths, not for lack of weakness. Almost every great founder has weaknesses. You know, if you think of Mark Zuckerberg, at the time that he was building Facebook, obviously not a great leader, had very significant weaknesses in his ability to lead a team, but the stuff he was strong at, he was world class. Almost every founder, you know, Travis Kalanick, founder of Uber, also very famously, he had tremendous strengths, but also very significant weaknesses. I think this is a kind of a universal law of startups is that the best founders are not the all-rounders. All-rounders make for great executives when a company is at scale. You know, somebody who they're never going to quite drop the ball. They're never going to quite say the wrong thing. They're never going to make anyone mad at them. These people are good when a company is at scale. They're great executives, but they're not good for zero to one, and they're not good for navigating these phase transitions that a startup generally goes through as it grows and scales. So, we're okay with deeply flawed founders. I think you have to be in order to fund great companies. What we're not okay with is a founder who's not great at anything in particular.

off.

Uh, there's something off. I mean

Yeah. So I mean one of the most obvious things is integrity. So if this founder is not being completely honest or completely transparent, look, every company, there's always a little bit of puffery, there's always a little bit, oh, we're going to take over the world. We're going to have a cajillion, you know, we're going to do this, we're going to do that, we have a, you know, we're going to have a partnership with this person tomorrow. And you ask them, okay, but how far along are you?

Because that kind of behavior only ever accelerates. I've never seen it get better. It only ever gets worse as a company grows. So that's one that is kind of like a showstopper. If we see a pattern of dishonesty, that'll get us to say, you know what, we're good. The other thing I'd say is just consistency is, you know, very common mistake that a lot of investors make is they really like the story, they really like the founder, they really like the team, they really like the market, but things just aren't quite adding up. You know, the founder is saying that, oh, they're super eager to get this thing closed, but then they're kind of slow rolling and they're not moving very fast. Or you know the founder is very, very bullish and they have a lot of demand but they're willing to rely on all the terms and they're actually giving a pretty low valuation. Okay, so these things are not consistent, right? Like the story is not quite adding up. And very bad investors oftentimes will just ignore these. They'll be like, oh, well it's probably that I'm so great or it's probably that, oh, you know, there's just they find some innocuous explanation for why the story is not consistent. Almost anytime the story is not consistent with the behavior that you're seeing from a startup, you're missing something. And if you don't know what it is, probably it's not good for you. That's almost always the answer. If you don't know what it is, probably it's not good for you. And if you learned it, you would not want to invest. So, that I'd say it's not a specific thing, but it's a category of things that as investors, you just learn the more experienced you are that hey, hey, hey, Spidey senses are tingling. Pull the brakes. Something isn't adding up. And we don't know what it is. If you don't know what it is, probably it's not something you're going to like.

Um, so most deals you never even get that far along so that if the founder's lying, who cares because we're not, you know, we're not even going to pass or we're not even going to investigate it because we're just going to pass.

Um, the founder lying when you get into the actual meat of things, pretty rare. Um, but not so rare that you don't see it. So, it's more often, again, puffery is more common, right? Puffery of just sort of, oh yeah, you know, we're going to have a deal with Nvidia or, oh, we're going to, you know, Binance is really wanting to come in and then you go talk to Binance. You go talk to Nvidia and they're like, oh, you know, we're thinking about it.

Um, so I don't I wouldn't consider that a lie. I would consider that okay, you know, they're obviously trying to get us to buy. They're obviously excited. They like their company. Maybe they're not even calibrated. Maybe they think that they're going to come in and they just don't know because look, it's an early stage startup and these guys maybe are young and inexperienced. So, I don't generally take that as being that dispositive of I can't trust this person or they're lying to me. But somebody like actually lying about something material, I'd say very rare, but it does happen and when it does happen, it's like an absolute showstopper. Yeah,

They can and it's always been possible to start a startup by yourself. It's more that it's not that it's that hard to start a startup by yourself. It's more that most people who try to start a startup by themselves, there's some adverse selection. In that like if you're really good, people will want to work with you and build a company with you and you'll find really strong co-founders. If nobody wants to build a business with you, it could be that you don't understand that you're not good enough to work with the people you want to work with.

It's like you just don't get along with people, which is not a great signal for building a company and being able to win allies and customers and da da da hiring people well and retaining them and so on. That said, if we don't think there's anything wrong with the person and they're starting a story by themselves, yeah, we don't care. It's totally fine. So it's not so much that like oh this is a bad sign so much as it's more likely that this will be a bad founder if they're a solo founder. The other thing of course is that there are oftentimes fatal flaws with a founder, right? So let's say a founder is extremely technical. They don't really have any business sense or business experience or sales experience or whatever, but they've partnered with somebody who has that. Then it's like okay, this team balances itself out and they're making up for each other's weaknesses which makes you less worried about the downside of this founder CEO. If you're a solo founder, then it's like, okay, now I'm really worried because like who's going to stop you? If you hire a chief business officer or a COO, right? The reality is that within a company, founders are special. They're always special. Doesn't matter if like, oh, this founder has a weakness and they know they have this weakness and they hire this COO and the COO is doesn't matter. It's always true that the founder is special and the COO or the chief business officer or the head of sales or whatever is always going to be slightly holding themselves back because they don't have control. And if they don't have control, that always means there's a power distortion field that's being applied by the founder whether they know it or not. And having somebody else who's also in the distortion field, you know, they're sort of sitting inside the bubble with the founder is a very powerful corrective in being able to avoid some of those failure modes or those weaknesses. So that's why as VCs we care about this, but if the founder doesn't have that, then yeah, whatever. It's totally fine to be a solo founder.

Man, I'm very loathe to give advice without having somebody and their situation in front of me. It's a little bit like giving advice to young people and saying, 'Oh, you're in college. Well, here you should do this. You know, you should go take this degree and you should do blah blah blah.' And it's like, you know, if you don't know this person, you don't know their environment or their circumstances or their skills. I think it's actually very hard, it's not just hard, it's probably bad to be giving advice in generality without really knowing what someone's situation is. The number one thing that I would say that may be useful is oftentimes what holds people back from being able to make decisions that they know are good is shame. And there's a lot of shame that gets wrapped up in the time, the energy, the money that you've raised, the employees that you have hanging on you. That prevents people from making what ultimately is the right decision. And the right decision might be to wind down. It might be to get acquired. It might be to do something else. Might be to keep going. But the most deleterious thing for a lot of these founders is that they feel ashamed of making a decision or straying from the status quo. And the only advice I'd give is to try your best to let go of that and to really try to assume that okay, imagine that it wasn't you, it was someone else that was in the situation that you're in. What advice would you give them? Um, I imagine a lot of it could be having the confidence that they are having the right judgment. So I guess the question could also be formulated in um what's the right framework to look at the current state of the industry and from that perhaps people can take information and make their own decision. Yeah, I think it's very clear there are parts of this industry that are never coming back. You know, if you're sitting around holding NFTs hoping that someday there's going to be another NFT cycle, I'm like, you should probably let go of that. You should probably move on. You should probably find something else to do that's going to be a good use of your time and your capital and your talents. Um, on the other hand, there are parts of the industry that I do think will come back and that are deeply cyclical. Um, if you look at DeFi, DeFi is a perfect example of this. You know, a lot of DeFi things are down bad, but DeFi is one of these things that I think is just never going to go away and it's going to be a fundamental part of how the world works and about how crypto works. Um, so that's why I say it's hard to speak in generalities. You know, the famous line from Anna Karenina by Tolstoy is that all happy families are alike but all unhappy families are unhappy in their own way, and I think it's very true of startups as well.

We're talking now, a lot of this is not going to be around. What is certain to be around? Others like, don't tell me DeFi, be more specific.

Um, what is certain to be around I think prediction markets will be around, layer 1 will be around, DeFi will be around. I think it's very clear that the connective tissue between onchain and offchain, you know, on-ramps and these kind of capital corridors, they'll be around, remittances will be around, payments will be around, stable coins obviously will be around, the issuers, the orchestrators and so on. Those are pretty much guaranteed in my mind to continue to matter. Pretty much everything else, it's hard to say.

So, to be clear, I am already right. Uh, I made that prediction in January and I think it was in March that it was leaked that Meta is going to be launching their own stable coin wallet. So, nailed that. Um, they've already announced that they're doing stable coin payouts in emerging markets for creators on I believe on Instagram. Um, but they're going to be expanding and they're going to be launching a wallet at some point soon. And obviously, Zuck has been very bullish on crypto ever since Libra. He believes in the space very clearly. So, uh, I think Meta is probably going to be first to the race. But if you look at this OSD announcement that took place just a couple days ago, this stable coin consortium, that's going to be all these different companies that are stable coin issuers. Google is on that list. Google is one of the members of the OSD consortium. So, could well be that, you know, GUSD or Google's USD, which is a wrapper over USD, um, may go live. Uh, OSD is supposed to go live later this year. Um, that said, I have some skepticism about OSD and I've been tweeting about how uh I think I said on the chopping block this week that I thought OSD was probably not very likely to succeed because of this consortium of 140 companies. It's kind of like this, you know, sort of UN type model with way too many cooks in the kitchen and this kind of diffusion of responsibility doesn't tend to end well. Um, and we already saw just this morning I was tweeting about this announcement that uh some of the Korean companies, I think it was, you know, um, what was it Hyundai and SK Telecom or something? They announced that they were like, 'Yeah, I don't know why we were in this announcement. We don't know about this. We haven't signed anything.' Um, I don't know why they included us. Uh, and there may be more of this coming of just like, 'Oh, I thought I signed like an LOI. I didn't approve you saying to the world that I'm launching a stable coin,' which by the way also happened with Libra, you know, five years ago. So, uh, what's old is new.

What? Hold on. Yeah, definitely. How does that not count? That's a top 10 company in the world.

Yeah.

We'll see. We'll see. We'll see. I mean look when it comes to coverage of emerging markets, there is no rival to Meta. Like if you look in places like India, Southeast Asia, Latin America, these people live on WhatsApp, you know, and obviously Instagram as well is ubiquitous around the world. So these are enormous platforms with respect to their reach. Um, so I wouldn't take it lightly that they're launching a stablecoin wallet. Like the only person that has more reach than Meta when it comes to people's wallets is probably Binance themselves.

That I've lost over the years.

That's a great question. That's a great question. Yeah. Um, I mean, yeah. Probably the biggest one is that the best technology wins. I think I had a conviction in that early on that I have since lost and I no longer believe that.

It's been replaced by a combination of go to market, distribution, partnerships, product quality, UX, all the obvious things. I mean I don't think this is going to surprise anybody that best technology doesn't win, but I think I had a somewhat polyannish belief that crypto was incepted by technologists and the technologists, the taste makers, the people who are like very deep in the core, in the code, in the algorithms, that they were ultimately kind of gatekeeping for the rest of us what is good enough to use, what is robust enough and trustworthy enough to use. Um, and we've come to a world where a lot of these things don't really matter so much anymore. People don't really care. Um, and maybe that's normal. Maybe that's inevitable. But it is a little bit sad to see that, you know, we may end up converging on technologies that are not really the best that we have to offer.

Um, beliefs that I had that I no longer hold. Um, I once believed that crypto was fundamentally opposed to the state and that this stuff would eventually get so big that it would get banned pretty much everywhere. Um, and that crypto was going to have to become valuable despite being this kind of underground, you know, anti-authoritarian asset. And we're in a world now where that's just not true at all. You know, Bitcoin is in ETFs in the US and Japan and Hong Kong and in Europe. Uh, stable coins now are legal. You can send a hundred million dollars instantaneously to, you know, someone in North Korea and no one will stop you and it's totally legal. Um, I mean, it's obviously illegal in that, okay, sanctions violation, but in terms of having to stop the stable coin before it gets there, uh, that's just how stable coins work. It's completely the law. Um, so this version of the world is very surprising. I would not have predicted this 10 years ago. Um, and that I think has been a fundamental shift in my perspective about what crypto is and what role it plays in the financial universe.

Exactly. It's become. Yeah. It used to be that crypto was a rebellion and now, you know, it's a little bit like America, right? Like America was founded on a rebellion. It was literally a bunch of people said taxes are too high. They grabbed guns and they killed their government and pushed them out and started over. Um, and now America is an institutionalist. You know, now America is, you know, the longest running freestanding constitutional government in the world. Um, you sort of live long enough to see yourself become your dad. You know, that's kind of the moral of the story. And so I think like Bitcoin was born out of this, you know, this rebellion against the banks and now here we are negotiating with the banks. Like literally that's what's happening right now with the Clarity Act. So yeah. Things change.

Um, biggest mistake that we ever did was making an idol of Sam Bankman-Fried. I think that was the biggest mistake out of everything that happened in the industry.

Like that? Probably not. You know, it's kind of like the great financial crisis, right? It was a housing crisis. The next crisis is never quite the same because you build all of these defenses and all of these rules to be able to see the next one early. You know, now we have proof of reserves. Now we have all these sleuths looking on chain and marking what's coming in and out of this exchange or that exchange, checking for solvency tests. All this, you know, all the regulations that are now, you know, Binance getting kicked out of EU, blah blah blah, all this stuff is designed to stop the next FTX, which means that probably we're not going to get another FTX. We'll get something. This is definitely not the last failure. This is definitely not the last public embarrassment. Um, but it is probably the last one that will look like that.

We never know. We could never predict that happening, I guess.

I think we will definitely continue to have big moments. I mean, just look at OSD, right? OSD was just announced two days ago. This is the biggest consortium of like some of the largest companies in the world of you know BNY Mellon and the big banks and Google and Samsung and blah blah blah, all coming together and saying we are going to build a stable coin to take down Circle and Tether. That's crazy. If there is a path to stable coins getting to three trillion by the end of the decade, it's going to look something like this. Now I don't know if it's going to succeed. Obviously, I have my doubts, but this just goes to show like, yeah, history's not over. We're still in the early innings of this industry. So, despite everything that I've said about the things that are not coming back and the things that you sort of can't be complacent in assuming that, oh, okay, it's all going to just rewind and we're going to play it back forward again. Um, it's very clear crypto is still early. We're not done. On the scale of financial assets, stable coins are 315 billion dollars. If you're BlackRock or, you know, a financial institution, that's not a lot. Stable coins are still pretty small in the realm of looking at actual dollar flows, treasury issuances, etc. It's growing fast. It's positioning itself to become systemically important, but it's not systemically important right now. It's basis points of the total dollar supply. Um, but that will change. And when that changes, you are going to see a lot more crazy shit happen in this industry. It's going to look different. It's not going to be quite the same form factor as we've seen in the past, but no, the story is definitely not over and I expect a lot more to be happening over the next decade.

It's a good question. Um, what's clear is that when crypto succeeds and it crosses that chasm, it succeeds because crypto just becomes ubiquitous. It gets in the water supply. You know, in the same way, social was a category in the days of Facebook and LinkedIn and Snap. Um, but eventually social is just a feature. You know, you build an app and you have social features in it. It's not you're building a social network. It just becomes part of everything. And in the same way, crypto will not be the company, it will be a feature within the company. Is that, oh yeah, we have stable coin balances or we have this thing or we have, you know, blah blah blah. Um, and so I think that is where we are going. And if that's where we're going, you do not need to have a unique expertise in crypto in the same way you don't need to have a unique expertise in social to underwrite a company that has social features. Um, if it's not primarily a social media company. So I think that's where we're going. If not, that's already where we've started to transition. And in that world, the answer is that to be a good VC, you have to be a good VC. You have to be good at all the things that VCs are good at. Which means that now generalists are coming into your lane. Fintech investors are coming into your lane. If it's a crypto AI project, AI investors are coming into your lane. And you just have to be a better partner. You have to be a better VC. You have to be a better support. You have to be a better advisor. You have to be a better supporter of the founders that you're working with. And if you can't, then you don't get to manage money in the end. Um, so it's kind of quaint advice, but it's the obvious answer is that if crypto wins, it wins by becoming ubiquitous. And the companies that use crypto are not crypto companies. They're just companies.

Yeah, I think not long. I think maybe another year or two honestly is probably as far as it will take. Um, these models are already getting really good at being able to use resources intelligently and now I think the economic nature of, you know, people are spending so much money on AI tokens that they're already effectively spending money.

My feelings on Ethereum. Um, right now price-wise, obviously, alts are pretty challenged and Bitcoin itself probably needs to get a floor and some footing in order for ETH and Sol and, you know, kind of everything in the alt space to be able to do well. That's going to take some time. It's pretty clear right now there's not a lot of appetite and retail is gone. Retail is trading AI stocks and memory stocks and space, all this other stuff is captivating retail over crypto right now. But if you assume that that comes back, I think actually Ethereum is pretty well positioned to be able to do well in this environment. Um, the recent launch of ETH Labs, which is the spin out from the EF, which is this new organization that's more commercial and more focused on acceleration relative to the EF, I think is a good change. And it shows that Ethereum is expanding beyond the initial remit of the EF. EF has always been kind of this like innermost chamber of the high priests of Ethereum and they're kind of devoted to the core values whereas ETH Labs is more pragmatic and I think that pragmatism is good. That's really what Ethereum needs at this point when it's much more about adoption and institutions and market support. So I think that is a very good development for Ethereum. Um, Solana is still a little bit I think struggling to nail down its identity. You know if you remember the last cycle, Solana was the retail chain. It was the memecoin chain. It was the trading chain. It was like everything consumer goes on Solana. And that was very much Solana's positioning. They embraced it to some degree. They kind of never were really super comfortable with the memecoin stuff, but they sort of knew where their bread was buttered and they didn't resist it. Now it's very clear that that's not the tune that Solana is singing, right? And this will be interesting if you get Mert to come on and you let him know what I said. So I think Solana right now is a little bit of a no man's land because the reality is that still the fees, the money being made in Solana is being made by pump.fun and, you know, the memecoin activity is still there, right? So right now, anoncoin is pumping. It's getting all this action. So there's some residual activity still happening in the trenches. But where Solana is trying to position themselves is about TradFi, you know, they're like, 'Oh, no, no, we're launching, we have stable coins and we have asset tokenization and we have this and we have that and we have TVL.' That's the story that Solana is trying to tell. It's where they're spending their money. It's where they're pushing all their effort. Um, but it's not really working on that level, right? Solana is not best-in-class there. Ethereum has more TVL and more institutions and more tokenized assets and RWAs and so on. And if it comes to volumes, Hyperliquid is eating everyone's lunch. And then you know number two behind them is Lighter, which is built on Ethereum, and so on and so forth. So that's part of the reason why there's this dissonance right now I think in Solana, is that we are still the memecoin chain de facto. We really don't want to be, we know that's kind of a dying category, and we're trying to diversify our brand away from that, but there's a dissonance right now in Solana that's difficult to resolve.

You're very welcome. I'll let you go now.