Kyle Samani, Managing Partner of Multicoin Capital, on 11AM w/ Seed Club

I got into crypto because of Ethereum in 2016. The term DeFi didn't exist back then, even the term permissionless finance didn't exist. But when I looked at the SDK for Ethereum, I understood the kernel of the idea that we would now call permissionless finance, although I didn't have the vocabulary at the time to describe it. It struck me as a very important idea. I studied finance in college and I've been programming since I was a kid. So I thought this is a big idea. I got excited about Ethereum and went down the rabbit hole. By the end of 2017, I was very frustrated. They were going too slow. So I had to go look elsewhere. Obviously, that road led me to Solana. The funny thing is, I thought Ethereum was going too slow. I could have never imagined how slow they would end up going, because that was eight years ago. They've accomplished almost nothing in eight years, and I couldn't have forecasted how much inertia there would be in Ethereum. I looked for alternatives, and when I met Anatoly, I thought this is the right balance of engineering discipline, product focus, and being sensible financially. So we doubled, tripled, quadrupled down on Solana.

At this point, it's big boy time. The vision is internet capital markets. Any company going from a hundred billion to a trillion is not a one-trick pony. Apple, Google, Microsoft, SpaceX with Starlink, satellites, data centers in space, NASA contracts. Any big business is multifaceted. When I look at Solana, the major facets are two buckets: DePIN and trading, or payments and trading, with subcategories under both. I feel really good about where Solana is on both fronts. On the payment side, basically any payments company has two choices: Tempo and Solana. Most will not choose Tempo for competitive reasons unless they have a very deep relationship with Stripe. Almost all others will go to Solana. The early evidence supports that. You see Western Union, PayPal, Square, Fiserv, and Worldpay have already announced. In the next six months, you'll probably see announcements from Checkout.com, Adyen, and all the other PSPs around the world, because Solana has the scale, liquidity, and global on and off ramps to support them.

On the trading side, there are more subsectors. You have all the regulated asset issuers, the Wall Street people: BlackRock, Fidelity, Hamilton Lane, JP Morgan. You see announcements almost every week from one of those groups issuing something on Solana. I think Solana has checked that box. The primary thing that matters for that category is distribution. If BlackRock wants to get their bid-ask spread from someone in Argentina who wants to hold $400, BlackRock doesn't have that skill developed like a bunch of guys in New York. I hope and expect they will partner with groups like Phantom, Solflare, and Backpack, saying, 'You have 25 million users, mostly outside the US, let's promote our regulated financial products through Phantom.' Phantom is the number one wallet in the world now, a Solana-first wallet. I feel really good about Solana's positioning for regulated finance coming on chain and distributing traditionally regulated financial products to people around the world. The other major part of trading is all the crypto-native stuff: DePIN, meme coins, perp DEXes. I'll call that unregulated finance. Solana has taken the lead on that front in every way other than perp DEXes. In the next one to two quarters, Solana will be rivaling Hyperliquid on that front too. I feel really good about where Solana is on all these fronts. We have to execute, but I think it's ours to lose at this point.

I think the only area we're playing catch-up in right now is perp DEXes. On all other fronts, if it's not number one, it's number two with a clear line of sight to being number one. On intellectual capital, assets being issued and traded, net new applications, Solana is the leader. Internet capital markets has been a big meme over the last little while, and I've noticed a bifurcation of what that ultimately means.

Okay.

I think I maybe value memes more than you do. You write theses, I curate memes. You were on All-In at their big event and did a really great talk articulating your thesis around internet capital markets, which is a much broader category than how many people in the trenches articulate it. Can you encapsulate what you mean by internet capital markets?

At a technical level, the idea is very simple: the ability for anyone anywhere in the world to hold or trade any asset across any asset class, 24/7, with a phone and internet connection. Those properties apply to all of the internet today except for finance. You can stream any song on Spotify 24 hours a day, your emails arrive 24 hours a day, your Telegram messages. Everything about the internet feels like that except for money and finance. Internet capital markets is literally applying those properties to money and finance. At a more forward-facing level, it means embedding finance all over the internet. For the prior 30 years of the internet, you had Charles Schwab, E-Trade, Scottrade, Robinhood, Coinbase, Phantom. The user interface for all those products has been the same: a homepage, a portfolio, a list of assets, a search box, an asset page with a price chart and buy/sell buttons. That paradigm has lived in its own bubble, completely independent from the rest of the internet. Facebook, WhatsApp, TikTok never touched it. Internet capital markets means embedding finance all over the internet. In my presentation from the All-In Summit, I provided mocked-up examples. On YouTube, anything with financial media should have a ticker and a buy/sell button, or maybe a prediction market. If you're reading the Financial Times or Wall Street Journal about interest rates, there should be a buy/sell button for whether the Fed will cut rates. There are so many cool ways to embed finance around the internet. The first form of trading that didn't look like Schwab, Robinhood, Phantom, or Coinbase were the Telegram bots in 2023. That was the first time in the history of the internet that we had a trading modality that didn't look like the prior 30 years. The V1 Telegram bots were ridiculed and not very good, but I continue to think that a chatbot in a private or public group chat is an incredible modality for trading because it's an intrinsically social environment. I can make a trade, broadcast it, and the natural responses are to copy trade or counter trade, both with fun social dynamics.

It's pretty hard to see how the genie goes back in the bottle at this point. Under the Trump administration, we've gotten enough guidance from Treasury, CFTC, SEC, FinCEN, and the White House directly that I feel pretty good about all this. Most tangibly, Kalshi just announced partnerships with CNN and CNBC. They haven't publicly announced the scope, but my guess is the V1 versions won't be the buy/sell button on the news article, but they all know that's where it's going. Media companies have struggled to make money on the internet for the last 30 years. This is going to be one of the most amazing monetization opportunities for media companies: to monetize order flow.

We invested in the Series C of Kalshi, which was only eight months ago. There have been two rounds since.

It was really about spending time with Tarek. I met Tarek at the RNC last July and stupidly didn't spend enough time with him. I met him again at the inauguration in January and got a little more time. I thought I need to follow up with this guy. It took another couple months because his calendar was busy. I got to an unequivocal internal yes in late February or early March. It was a combination of spending time with Tarek and understanding that Kalshi's vision extends beyond prediction markets. I didn't fully appreciate the CFTC and the Commodity Exchange Act, and how you can use Kalshi's DCO and DCM to go beyond prediction markets. Once he laid out that story, we thought, 'Wow, this is a massive vision.' So we pulled the trigger. Investing in Kalshi prior to the Series C, Kalshi was not a functional business until this year. Incredible props to Alfred and the Sequoia team for backing Tarek two or three times. The CFTC was suing them, the Biden administration slapped them down. There was nothing to be happy about, pure misery for four years, and they didn't give up. We looked at Polymarket, but there was no evidence to support anything other than elections. Tarek painted the vision for us.

I'll let Tarek answer that question when he's ready, but his ambitions extend far beyond prediction markets.

People have been asking me to do a DAT for Solana for more than 12 months. I said no about 10 times. I changed my mind at some point. Two things got me from no to yes. First, realizing it's not just about holding SOL on a balance sheet and staking it. There's a whole DeFi ecosystem of cool things we can do with the balance sheet, using yield to cover coupon payments and other debt instruments. Strategy's capital structure doesn't make sense to me because they have no income and coupon payments. I can solve that problem by tapping into Solana. Second, I was slow to realize that I don't just have to hold Solana. It's a publicly traded company, a Berkshire Hathaway or a Bending Spoons kind of vehicle. There are interesting companies in and around the crypto sector that could do things on top of Solana. That light bulb went off over the summer. The third thing that got me all the way there was on July 31st, SEC Chairman Paul Atkins gave a speech called Project Crypto, saying unequivocally that they're going to move US securities markets on chain. He gave a follow-up speech a week ago saying within two years. I'm very happy about that, but I don't know how it's going to happen. I came to all those realizations over the summer, and then he gives this speech. I thought if we control a publicly traded company, we can kill three birds with one stone. Launching Forward Industries to play an NAV game and increment my SOL holdings is not worth the brain damage I've incurred. But being able to accomplish regulatory objectives, accelerate crypto's adoption, and use this as a publicly traded holdco to make accretive acquisitions for shareholders and the Solana ecosystem is an exciting opportunity.

I don't think we have some insight others don't. Part of it is a scale problem. Forward is basically minimum viable scale to execute the strategy. Our next closest Solana competitor is a quarter of our size. It will be very difficult for them as a function of scale. The other ecosystems are smaller than Solana and not large enough to facilitate this strategy in a way public market shareholders would want. The background of the sponsor group—Multicoin, Jump, Galaxy—brings unique value to Forward. We are one of the leading investors in the Solana ecosystem with pointed views on how market microstructure and monetization will evolve. Public market investors are years behind us in understanding that. Our ability to take those insights, do M&A, tell that story, and execute gives us massive swings. We are perfectly positioned to do that given who we are and our relationships in the ecosystem. I think we can get deals done that very few others will be able to do.

Guys, thanks for having me on the show. Appreciate it. Pleasure, man. Happy Breakpoint.