The number one thing that if you want to see in a founder from the early stages is being extremely opinionated, like more obsessed with one problem than anybody else in the world.
For years, crypto has been building the foundations of a different financial system. Now, that technology has found its way into how people pay, trade, and move money. And the opportunity for founders is changing with it. On this trip, I'm following the investors betting on what comes next.
When a company goes from basically $0 of revenue to billions of dollars of revenue in a span of less than a year, it's impossible to stay on top of every single thing that you need to own.
Today, I'm going behind the scenes with Dragonfly, a crypto investment firm managing $4 billion. We're meeting the partners and going inside three of their portfolio companies spanning blockchain infrastructure, everyday payments, and prediction markets where people trade on real world events.
And so when I think of the future of Dragonfly, we think of it more as like the future of money and markets. This is the way money is evolving. This is the way markets are evolving.
Dragonfly's partners are betting that crypto becomes part of the wider financial system. So the real question I want to understand is what that future of money and markets looks like and how their multi-billion dollar investment strategy changes with it.
Okay, for those of you who watched the previous episode, you would have seen some footage of my interviews with Tom, Haseeb, and Rob, but I wanted to do a full episode on this because we get to go so much deeper in all of our interviews with the partners, and we get to see two more of their portfolio companies. So, enjoy.
So, today we are going behind the scenes with the largest venture capital fund we've had on the channel so far with, I believe, about 4 billion in assets under management. Right now, we're going behind the scenes with Dragonfly Ventures, a specialist crypto fund based out of New York City. We are also going inside three of their portfolio companies, all of which have their own reputations. I'm not going to say any names just yet, but the portfolio companies we're going inside today are insane and something I wouldn't have even dreamed of 12 months ago when we kind of kicked off this channel. So yeah, I'm keen to go chat with Tom, show you guys what's going on in their firm, and you know, what better way to meet him than his favorite coffee shop in New York.
What does Dragonfly do and in your industry specifically? Like obviously these guys know about venture capital but I think you guys are a bit different, right?
When we got started, really, this was 2018, we were very focused on what was happening in the crypto and blockchain markets. This was, you know, right around the time when Ethereum was just starting to get big and really we were very early to this new phenomenon called DeFi, very early to stablecoins. You know, you see every big fintech company, every big financial services company is starting to integrate stablecoins in some way, starting to integrate blockchain in some way. And so when you look at something like Revolut, you know, it's like an $80 billion, $100 billion dollar company. And hey, they're, you know, starting to issue their, you know, balances on chain, they're starting to use stablecoins. Like, is that a cryptocurrency company? I don't think so. But it's so fundamental to like what they do now that it's in our DNA, too. So when I think of, you know, the future of Dragonfly, we think of it more as like the future of money and markets. This is the way money is evolving. This is the way markets are evolving.
How do you think you differ to the rest of the team? Because how I was describing it to a friend of mine is you guys are like X-Men where everyone brings this secret sauce that's their own.
Yeah, I think Haseeb said I'm a little more alternative than, you know, the rest of the partners, but we all kind of balance each other out in different ways. So I don't know, it's nice having a partnership where you feel like you all are very different. No one's stepping on each other's toes and we kind of complement each other in many different ways. So yeah, I would say we're all very different, but like in a positive way, in a good way, you know.
So when I show the other partners this, they're going to say the same thing.
I think so. I think so. Actually, I'm actually curious to see what Rob says.
So we had to tour the office like all by ourselves, but the one thing I saw that was really cool is over here, they have this cap wall, which is all of the companies that they've backed. This is so cool. So, I'm assuming this just extends out and gets bigger and bigger as time goes on.
We're matching, by the way. We actually do plan this.
What is this, dude? I see I need to trade my watch for an actual watch.
I guess. So, that's the one thing that's missing.
What the hell? We got to get a dig cam photo of this.
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So, I'm Haseeb, managing partner at Dragonfly. So, I'm one of the co-founders of the firm. We've been operating now for coming up on eight years. We manage between three and four billion dollars. We're a pretty big firm. We got about 40 people around the world. I came into the industry and started investing in 2018 when basically the ICO bubble collapsed. And at that time there was a perception from most people that crypto was dead, that it was never coming back. It's funny because most of our fundraisers have happened around times of what we call crypto winters. When crypto is dead, people think it's never coming back. You know, they read about it in a headline and then six months later it's down 40, 50%. And they think, 'Oh, thank God I don't have to learn about this.' You know, it was just obviously this is never going to be relevant again. The best investments are made at the bottom and the worst investments are made at the top.
In February, this was the height of the most recent crypto winter, right?
Yeah. Yeah. I think Bitcoin was trending, it was getting to be below $60,000. People said that it was the end of Crypto VC. And you know, it was true actually that a lot of our peers, people who raised a lot of money in the previous cycle, a lot of them basically wound down. Their partnerships broke up. They were just like, look, this is just not an industry that we can back anymore. Here's the context in which I mean that crypto VC might be over by 2030. So if you think about Sequoia, Sequoia obviously one of the OGs of venture capital, they were originally a semiconductor fund. So that's the sense in which I say crypto VC the way we think about it today, I think that will probably end. And the way in which VCs like ourselves and others in our cohort, if they survive, it'll be because they adapt to the way in which the technology changes and the way it seeps into the water supply and becomes part of everything.
When you were in the beginning, so it was hard enough raising the fund.
What about getting into these really hot deals? What were some of the tactics you guys were using to actually get in when there were, you know, other massive tier ones trying to compete for the same stuff?
Yeah. So, the very beginning, I mean, we just had no brand when we first started and a lot of it is trying to find little kinds of value add you can use to justify getting a small check in your first fund. Look, you have to embrace that you're a nobody. And when you're a nobody, like the goal of fund one is just to get somebody to believe you're anyone. And slowly but surely, you like gradient descent your way up of here are the relationships that we need, the people we should be talking to, the places we should be hanging out, the conferences we should be attending that would allow us to see more of this deal flow. Like for us, a lot of the reason why we have been successful and why we've won against other VCs is just because we outworked them. Like we just wanted it more than they did. A lot of times we weren't more talented, we didn't have more access, didn't have more money, but a lot of people just get lazy. So that's the reality is that the fact that most people think VCs suck, we also think most VCs suck. And that in a way creates the wedge for us to be able to break out and become who we are now.
I'm one of the co-founders of Monad. Monad is a high performance blockchain that's bringing finance to the entire world. It's an open decentralized system that we've been building for the past four and a half years now.
What was the story behind you getting connected with Dragonfly and all the rest?
If we scroll back to 2021, Haseeb and I first met. You were visiting the Jump Trading office.
Yeah, I think we were talking about Terra at the time.
Yeah, it was a crazy moment in crypto where there was a lot of kind of Ponzi-like crazy things happening that I think both of us were talking about this stuff is not going to make it.
And that was how we first met.
Honestly, you were one of the first people that I reached out to after leaving to just talk about the thing that we were working on. And then when we decided it was time to start raising funds, you were pretty much our first call.
I think I kept trying to give you guys more money and you wouldn't take it. If I recall, I think it was like every couple months I'd call you and be like, 'Give you guys more money. Here's how, take some more money.' And you guys were like, 'Maybe.'
To give a tiny bit of context, Ethereum is a really powerful idea because it's building a global financial system where anyone anywhere can transact, can get access to dollars in the form of stablecoins or decentralized finance. But when we fast forward in time from 2009 or 2015, these systems are not very scalable. So although the idea is really incredibly powerful, it just doesn't actually support that many people and definitely not capable of supporting the entire world.
And why is that? Is it like infrastructure is not built yet or is it like burning a lot of energy? What's the issue? What's the bottleneck?
Yeah, it's really both of those issues. The fundamental software that has been built has never really been optimized. It was built more from the perspective of building a system the way that an economist would build it or a game theorist would build it, where there's a lot of thought around the sort of mechanics and the economics of the system, but not from the perspective of building a system the way that you would in traditional finance. Compared to Ethereum right now, where there's a new block, which you can think of it like a train car that you can load a bunch of things into. One train car comes by every 12 seconds in Ethereum, and it can fit a couple hundred transactions in it. So, if you're getting a couple hundred transactions every 12 seconds, that's actually not that much throughput. Like, you can't support that many users. But the idea of building a high performance kind of Ethereum architecture inspired blockchain to me was one of those things that like I've been waiting for somebody to do. It just seemed so obvious if you look at like, you know, the way that JavaScript was optimized over years and years and years and years, and nobody was really doing that to Ethereum and really thinking about rebuilding it from the ground up.
Instead of just taking what Ethereum has and like bolting it on to another system, you guys were like, no, no, no, wipe the slate and like start over from first principles. How would you rebuild the blockchain today knowing what we know now about performance and latency? And like, you know, coming from high frequency trading, you guys had the DNA and the background to be able to really answer tough questions about how to build distributed systems super fast. And it was just obvious to me that you guys were going to be far ahead of everyone else who was trying to do this.
That's the live blockchain globally.
That's crazy.
So how was that back there at Monad?
That was great. It's always good to see them, you know. Keone's always cracking, building new things. Exciting.
Yeah, he seems very focused.
Yes. Yes. He is kind of the consummate technologist, you know, he's somebody who's gone so incredibly deep on one subject that he's kind of the perfect person in the world to build exactly that.
