E104: Dragonfly Managing Partner: How to get Rich by mastering crypto investing (without getting lucky)

26:36And you see this across the board in crypto, is that it's not just the investors, it's also the founders. Every bull market, there's a new tranche of very famous, very accomplished Web2 founders who try to come into crypto, raise a ton of money, and completely nose-blend. You know, they end up with data building, nothing useful. And it's almost always the weirdos and the crazy people who actually build the really important stuff in crypto. How mature for weirdo do you think you are? Me? I think I'm pretty weird. I have my own flavor of weird, and I can package it up pretty well to make it digestible to a broad base of people, but I'd say I'm pretty weird.

27:15So you're a weirdo who did really well in poker, right? Early on. You told me you made a lot of money. But you also told me I learned with all this money that I don't need much. What do you mean by that? Yeah, I started playing poker professionally when I was basically 17 is when I was more or less playing full time. And 17 is a young enough age that you still have a lot of ideas about what money is going to do for you. You know, you see a lot of movies, you see celebrities, you see people on TV, and you have this imagination, oh, the thing that's separating me from them is the money. And if I have the money, then like, oh, you know, the women and the lifestyle and the glamour and all that stuff will just come.

28:00and I was young enough at that time to very quickly realize that all that is complete bullshit. Just not true at all. How did you realize that? I just knew so many poker players. I knew so many people who were young and had money and were just fucking miserable. What does having money in poker mean? Having money, I mean, a lot of people, I mean, it's, you know, crypto money obviously can go many orders of magnitude more than poker money. But, you know, you have folks in their early 20s who are worth several million dollars and you know they're they get the Lambo they got the nice car they got the you know the who had the alligator skin belt and all this other stuff and they realize that yeah nobody cares have you ever been through that this like a phase where you just go fuck it i'm gonna buy a Lambo or whatever i didn't realize i've never bought a Lambo thank god um obviously not a not a not an appreciating asset in general but uh what's the most stupid things you've done with money early on?

28:56I bought like four watches that I never wore. They weren't that expensive. They're not like, again, like I was always kind of cheap. I think I inherited that from my dad. But I was around, like I lived with a couple dudes who were very, very just, you know, sumptuous spending just about anything, right? Because they sort of had this idea that if I spend a bunch of money, I'm going to get more attention from women or people are going to respect me more or whatever it is. And it was just so obvious that this is not doing anything. If you don't actually enjoy the things that you're getting from the money, if you just think you're buying status symbols, it's just so empty unless you have everything else about it that actually instills it with meaning.

29:45And that was very clear to me from the early days. I think poker is naturally kind of not as psychologically healthy of a career. It's one with very high volatility. So a lot of ups and downs, a lot of emotional wear and tear. The hours are really rough. Very often you're playing poker into very late at night and you're sleeping weird hours. You're not aligned with normal people. Sounds like crypto to me. It can be similar to crypto. I mean, the other thing is that people eat very poorly because they're around casinos, they're around degenerates all day, just gambling, right? So it's a little bit like crypto.

30:19It is a little bit like crypto, but I think crypto has more of an intersection with the normal world. poker really has none all right there is no um you know there's no black rock working in a way into crypto or sorry into into poker um and so i think this this makes it a very psychologically unhealthy place um for for young men to be able to find meaning and build an identity uh and it's disproportionately mad which is also similar to crypto um haso i i think in some way i learned a lot of lessons from seeing that culture and seeing on the failure modes within that culture within poker which translate almost one-to-one into crypto uh but the but the biggest thing that you see over and over again and you see this in crypto as well is that yeah the money doesn't make people happy and it's it's in some way it's such an old let you know it's like a shakespeare uh trope of yeah money doesn't make you happy like the thing that make you happy is other people it's connection it's human beings it's family it's friends it's it's the experiences that you fill your life with it's not money Is it not easier to say that when you have money?

31:23So I think what money I mean Money doesn't solve all your problems but it solves your money problems, right? It is a big thing and depends on where you live and the level of material circumstances from which you're coming at it the reality is that if you are basically middle class in a first world country which to be clear is a very small percent of the world population most people in the world live in China or India you know like that's more than half the world population and just a very small circle around there and for them an american middle class existence is out of reach so point very much taken that for the majority of human beings on earth the amount of money that we're talking about is very much a solution to their problems but you don't need a million dollars to get there you need more like fifty thousand dollars a year to get there right and all this all the research that we have seen about money and happiness shows us that beyond just sort of basic level of, you know, material wealth, it falls off logarithmically.

32:22Yeah. I mean, some say 100K, 200K, but like, basically you need 50K or 100K and to spend less time on Instagram. Probably. Yeah. Probably. I think that's right. You know, when I quit poker, I basically started over. and you know I gave away a lot of my money and worked my way from the ground up went back to school went into the tech industry got my first job in Silicon Valley as a software engineer and you know I was making basically when I first moved to the Bay Area I was making about you know a little bit over 100k and compared to what before that uh in in um look bonnet as a poker player I mean probably the best year I had I made over a million dollars and um now early 20s early 20s yeah and uh i was i think i was 20 when when i made that much money and i was um like i mean the other thing is that you of course you know 100k in the bay area is very different than you know a million dollars in texas in absolutely and also 10 years earlier um and so the the thing is though i i don't think my happiness changed very much between those two periods of time.

33:32Obviously, I was taking Uber, what was it called? Uber pool, where you go around, you're doing ride shares, you're saving money on food. But for the most part, my needs are met just as much between$100K and a million dollars. There's really not that much of a difference in my lifestyle. And the happiness is probably more linked to learning new things, right? Hey, I'm learning these new things, this is exciting. There is a new thing I'm excited about and I have new goals. I'm working and struggling towards my goals. Therefore, I'm happy. That's it. That always, always. And it's a combination. One, it's the sense of personal progress and growth.

34:09That, I think, is a big driver of meaning for people. Absolutely. But the second thing is also the people around you. So your friends, your family, your connections, your relationships. And those things, I think, again, there's something that it's very easy to lose sight of when you're narrowly focused on the idea that money is the thing that you're supposed to be optimizing for. You said, I quit poker. Yeah. I gave away some of my money. Why? um so when i when i quit poker um it was actually it was a very chaotic period of time so there was a a student of mine so let me let me rewind a little bit so when i was a poker player i was i was very well respected i was sort of one of these senior elders in the poker community and me and a buddy of mine were mentoring uh this young guy um named jira and he ended up cheating a bunch of people and i defended him and basically you know i didn't didn't know he was cheating i didn't participate in any of the cheating but uh i i tried to protect him because he was very young and i was worried that his career was going to be ruined um and people end up learning that i was protecting this guy and that ended up being a big blow to my reputation in the poker world and this was around the time that i was personally getting more and more disillusioned with poker and I felt like poker was not what I wanted to do with my life.

35:37It was not who I wanted to be. I knew a lot of people who came into poker, they grew up around gambling. Their dream was to be a poker player. For me, poker was kind of random. It was something that I fell into and ended up becoming very good at. And it was a game. It was a fun game to optimize and to compete on. but I knew that if I'm 50 years old, I'm looking back on my life and all I've done is play cards and take other people's money, that I was going to be very disappointed in what I've done to myself over the course of my life. And so I knew at some point that I had to walk away from the game.

36:16And I decided when I did quit that the reality is that when you live with a cushion underneath you of, you know, I've made this money. I have all these savings. I don't spend a lot. So there's really, you know, like I had this vision of myself imagining I'm in an office somewhere unjamming a stapler. And, you know, I've made all this money as a poker player and I'm never going to get anywhere close to making that amount of money ever again. Because of course, like, you know, whenever you're going to find anything as lucrative as, you know, playing cards at that level. And just the sense of like, wow, the second chapter of my life just doesn't matter you know compared to the first chapter and i nothing scared me more than that idea i understand that and so i decided that the only way that i could force myself to have to reinvent myself would be to basically let go of the money that i'd saved and give myself no like no um no cushion all right so i i left myself at ten thousand dollars which i thought was enough to just make sure that you know i don't i don't die and i have you know at least some level of uh of uh ability to to invest in myself and i started from scratch went back to school um did you know found ways to make money and then came out to silicon valley and started my second career as a you know as a tech person what did you do with the money um so i i donated part of it and i gave part of it to my parents to um to allow them to to if it goes towards their retirement so that they could uh stop working so it was a very i mean for me at that time it was a very chaotic time in my life because i just yeah i didn't know that i wanted to go into tech yet but that was a very dispersive process there were many different things that i thought i might end up doing um and of course i was terrified that you know i was already uh you know by the time i went back to school i was the oldest person in my undergrad classes right i'd skipped a few years i'd before actually i went to college two years early uh because you know i sort of i skipped a grade i was just a smart kid growing up and then i went and became a poker player wasted my you know wasted all my educational capital uh and came back as just okay now i'm just like a 23 year old dude with no skills uh no you know which dog shit resume.

38:43I was a gambler and, you know, I was studying English and philosophy in school, which are both completely non-technical, non-employable, you know, majors. How much do you think this is due to, I can relate, but be more because of crypto, right? Yeah. When you make kind of too much money too fast, you feel like an imposter on one side. And on the other side, if you're kind of, if you made it too early, because all our life we think I need to make that much and then I'm done, right? Yeah. And that's the ultimate goal. But when you get there, you're like, life is empty. Yeah. What do I do next? Yeah.

39:19I don't even have a drive. Right. I'm fucked. Like it's kind of this complete like mind fuck, right? Yeah. I had the same a few years ago. Then I got wrecked. So help me, right? So help me on for you. Help me. But like I was like, if I sell now, I'm done. So what would I sell? Right. It was more that than agree that I like to think, maybe not, but I was like, I'm done. like what do I do next? Do I travel for the next 40 years of my life? But who am I going to travel with? They're all working. It doesn't make sense. My idea of the, I made it, is actually completely wrong, right? So I can kind of like relate to that.

39:56And maybe it was an imposter syndrome. I don't know, right? Which I also like had massively doing COVID and I was like, I don't deserve all this. Blah, blah, blah. Have you ever felt like an imposter? All the time. I think the reality, if you don't feel imposter syndrome, you're just not thinking art like you do you don't have enough self-reflection to be able to understand how insane it is to be in a situation like that how do you how to deal with it no idea with it um like there's no way out but through which is that you just you feel like an imposter and you do it anyway like i think that that's always the answer is that um you know you get you get through it by having no choice but to get through it and so you know if you become a you know when I first became an investor, I had so much imposter syndrome because I'm like, I've never built anything.

40:46I've never created a great startup. I'm not a great investor. Why the hell are these people asking me, is my project good enough to get this money? I have no idea. And if you make the money, you're like, I just put some money, but I'm not hustling all day long. They deserve it, right? Definitely. And so it is very... The weird thing is that when you are an investor, and this is something, again, that I think a lot of junior investors have to eventually learn. Being an investor gives you magic powers in that a founder can be at a company where it's very obvious they're doing something wrong. Let's say they just have terrible marketing or this product idea is just stupid and everybody knows it except the CEO.

41:33For some reason, the CEO doesn't see it. They don't see how stupid the idea is. and everybody at that company can tell the CEO, why are we doing this? We should not do this. And the CEO is like, oh, no, no, whatever. And their co-founders can tell them, we shouldn't do this, this is retarded. And they're like, oh, whatever. And you as an investor can tell the founder, you should not do this, this is a bad idea. And all of a sudden, they'll see like, oh. They'll have this like, for some reason, you as the investor are outside the game and they feel like you have some special vantage point that you can see something that they can't see.

42:07It's also because you're voting with your capital, right? And you're with your money. So it's, especially if they need the money. They're far too, but even, I'm saying this is true, even if they're not fundraising from you. Like for some reason, investors, no matter how junior you are, there is a magic power that you can do because you're outside of the structure of this company. And it's something that it took me a while to realize how powerful that was. But the more I lean into it, the more I realize it just happens over and over and over again. is that so much of your power as an investor is just saying what you see, right?

42:41It's like right there in front of you. It's like really obvious what's happening. Can you just say it? Can you just say it to the person in front of you? I see this. And nobody else around that person, especially when they're very powerful, you know, they run a big exchange or a big layer one or a big, you know, whatever. And there's like something that seems really obvious. You'd be like, man, surely this person already knows this, right? Like, you know, I remember having this conversation with Polygon, right? And I mean, we're investors in Polygons. They know I love them. But there was a time when they had the six different products.

43:13It's like Polygon this, Polygon that, Polygon zero, Polygon Miden, Polygon da-da-da. And I remember having this conversation with the founders of like, guys, there's too many of these. The market thinks this is stupid. And you need to simplify the product offerings so that there's a clear story. and for some reason like this just landed in a really big way that i'm like there's no way i'm the only person who told you this but so many times so many times so much that it's it cannot be a coincidence so many times i just realized that i'm the only person who can tell them this in a way that lands i mean founder denial you are i mean i think we've all been there i have been there too right you don't listen to people who are very close to you especially were involved in the business with you because hey i have the vision etc and you're in complete denial right and founders have that kind of gravitational distortion field yeah the closer you are to them the more you feel like oh they must be right i must not understand something and great founders have that effect on people which is one of the reasons also why they value the insights of uh investors who sit outside of that field right and it's like okay you are not subject to my distortion force.

44:27What do you think? You know? Uh, so that, that's something that I think, you know, you're in, on one hand that can feel like imposter syndrome, on the other hand, that can also be a superpower. Nice way to look at it. Yeah. You, so you donated your money after quitting poker and you told me you are pretty big in effective altruism. Would you say that's kind of like the beginning of your effective altruism journey? It was. Yes. I sort of became more and more into it after I quit poker and learned more about this field so those are really the early days of effective altruism like 2012, 2013 when it was just a burgeoning movement and now for your altruism it was cool, like everything is in the beginning of before it was cool, it became cool after FTX, well not after during FTX during FTX's reign, effective altruism became cool in a way that I was kind of uncomfortable because effectulogism as an idea is pretty weird, right?

45:27It's very out there. It's not a normal like New York Times kind of affliction. But with the rise of SPF and his immense, you know, popularity as this kind of selfless saint who spends almost no money and donates everything to Valeria Bednets, it sort of became this weird, like poc-cultury kind of version of itself. that all of a sudden EA became cool. And that was very strange to me. And it was very short-lived. Now it's not cool at all. I have to ask you, what car do you drive? I drive, what is it called? Toyota, what's the, I think Camry. I drive Miami. Because now I'm asking that because of SBF, obviously it is, I know.

46:17So I don't drive, so I, yeah. I mean, it's not like a, it's a nice Camry. Okay. It's nice. It's a nice car. It's not a Lambo, but it's also not a, you know, it's not a like a beat up 2002 record or whatever, whatever SDS supposedly drove. Which is a good sign. It's a good sign. That's right. That's right. I read the pinned tweet of a fellow poker player the other day, Dan Bilzerian. Okay. Yeah. He says people are more concerned with looking like a good person than being a good person. Hmm. How many fellow effective altruists are in it for the wrong reasons? I would say at this point, probably very, very few.

47:00Because effective altruism has kind of round-tripped sentiment. And now that effective altruism is uncool, and now you will get ragged on on Twitter and dragged across the coals, as I have experienced many a time since the collapse of FTX. It's an EA bear market right now. And I think this is, in a way, very healthy for EA. Because when EA is cool and it's sexy and you win points for saying that you're an EA, then you suspect the motives of the people who are saying that, okay, you claim you're an EA, that sort of wins you brownie points, you look like a great person. Now, if you say you're EA, people suspect you.

47:40They think that you are this cold, heartless person, that maybe you endorse the kind of crazy fraud that was taking place at FTX or then intrinsically your motives are suspect. Especially in crypto and in EA. In crypto and in EA, right. It's a double error. So if you say you're EA now, you're actually losing points from saying you're an EA, which to me, I think that's good. Because it asks of you, do you really have conviction in these ideas? Do you really believe this? Even if it doesn't win you any points in the public square. Like every bear market in any industry or field, right? Exactly. It's actually very healthy.

48:19So there are many people I know who have defected from EA and have said, look, I no longer affiliated with this movement. I think the leaders are corrupt. I think that the failures of SPF reveal a deeper stink at the heart of EA. And I respect that perspective. But for me, I'm like, no, I think in the same way that when you look at crypto and you say, OK, did SPF change your view of crypto? No, SPF had nothing to do with crypto. SPF was a centralized business that stole a bunch of money. What the fuck does that have to do with crypto? Crypto is about self-custody. It's about self-sovereignty. It's about programmable money.

48:53It's about getting an escape from the state. In a way, crypto is about exactly what FTX was not about, which is about trusting third parties. That is an endorsement of the core values of crypto. And so you could look at FTX and say, no, no, no, no, no. My conviction in crypto did not change one iota because of what happened at FTX. And to me, the same thing is true about EA. EA does not, like, it has nothing to do with, like, a bunch of crazy guys taking drugs in the Bahamas and stealing a bunch of people's money. That is not what EA does. No sane reading of EA would tell you, yes, that's a good way to orient your life and orient your affairs to maximize the amount of good in the world.

49:32How do you deal when, because it's completely right, right? And I remember a bunch of people saying, actually, just after FTX, this is actually endorsing decentralization, et cetera. but most people who are not paying close attention or and or and got completely fucked right which is most people right most retail people they'll tell you fuck you or you're crazy right so you might say yeah but it's good if they say I'm crazy because it means we're a bear market blah blah blah but like the actual truth is

50:07if people think you're crazy it's going to make your job in EA or let's say crypto because as I've been putting crypto because we're here today for crypto, much harder, right? It's harder, yeah. Much harder. And so... Well, what you're pointing to is the difference between philosophy and politics. Politically, it really matters who did what in each camp, right? If, you know, when we look at the would-be assassin of Donald Trump and, you know, the coming days as people try to go through his phone and understand, like, what's the motivation of this guy? And there's a big question, is he Republican or is he Democrat?

50:43And it really matters because whatever side he's on really changes the valence of this story of who is to blame for all the rhetoric that led to somebody trying to shoot a former president of the United States. And now that question is a political question because whatever the answer is, like philosophically, it doesn't matter. He's a crazy guy either way, right? What does it matter if a crazy guy thought this or a crazy guy thought that? I mean, no normal person is trying to assassinate presidents. So in the same way, you know, the question of, you know, does EA look bad? Does crypto look bad because of SPF?

51:18Politically, of course it does. Of course, the whole space got set back significantly. The movement of EA got set back significantly by the actions of this person. But crypto, at its core, is a philosophy. It's a question of how should money and value be oriented relative to the free movement of capital among individuals or should it be controlled by the state? That's a philosophical question. In the same way, effective altruism asks, what is the most optimal way to do good in the world? That is a philosophical question. And the answer does not hinge on what did one guy in the Bahamas do with his business?

51:58you're talking about the philosophical side of crypto right why or how did you get so fascinated by the crypto world i you know i i didn't come into crypto because of libertarian convictions or you know sovereign individual type uh beliefs i came into crypto in large part because i thought it was just so interesting. I'm somebody who, to be quite honest, I don't know that crypto is going to be good for the world on that. I think it's actually very possible that crypto will be bad for the world. Why? Because I think it is naturally destabilizing for countries to lose control over their monetary policy and to fail to be able to control the inflows and outflows of capital in a deterministic way i think it's very likely that crypto is going to introduce more chaos into the world and i think it's also likely that crypto is going to result in um you know more more hacking um you know especially with the rise of ai i think we may see very scary intersection between the rise of autonomous agents and all sorts of money that is unsensible and unstoppable there's there's there's something obviously that should make you uncomfortable when you think about what happens in that intersection.

53:17So it's not obvious to me that when we look back in 20 years that we will say, wow, the world is a lot better now that crypto exists. But I also think that crypto is inevitable. So one can ask the question, was social media good for the world or bad for the world? I don't know. I personally think it's pretty good for the world, but many people disagree with me. But I think the one thing you can disagree on is that it's inevitable. That's so interesting. I was talking with Meltem Demiror the other day and we were talking about is greed and speculation good or bad, right? And at the end of the day, she had the same way of thinking, which is, I mean, she loves it.

53:52Some people hate it, but it doesn't matter. It just is. If something is, the market decides, right, it's going to this direction. Either you jump on the train, either you just miss out, right? And therefore, it just is. And that's it, right? And so if you think that crypto is inevitable, which I think we all do, then you just jump on the train, right? Yeah. Well, it's an easier thing to say today. It was a much harder thing to say in 2017, 2019, to say that crypto is inevitable. And so I think that's also why the valence of that statement sort of carried a lot more weight to say that at that time.

54:32Back when crypto was still very tiny, everything seemed very speculative. A lot of these ideas like prediction market. Today, we're seeing Polymarket being quoted in CNBC and in the media and retweeted by Donald Trump. and back in 2018 you know we were talking about auger which was trading you know hundreds of dollars on you know stupid little stupid little bets and we had this idea like no no prediction markets are going to be big and you know it's it's it's kind of difficult now to really contextualize how weird it was to really believe that these things are going to change the world um you know at that time that was before libra that was before people started talking about cbdcs that was before stablecoins became, you know, 100 plus billion dollars in circulation.

55:13That time, all these things were so tiny compared to where they are today. You know, now you have central bankers talking about as crypto inevitable. But was it that weird if you really looked into it? Like, I remember, I mean, you talked about the first books, first few books for me. I got into crypto in 2018. Yeah. Thanks to Antonopoulos, the Internet of Money, talking about Ethereum and Save Dinamos, the Bitcoin Standard. Right. Just reading these two books, I was like, it makes so much sense. yeah obviously most people were like it doesn't make any sense but did you read the books did you spend 30 40 hours trying to understand that stuff yeah are you critical about most of the word that is basically not working if you look at it right almost nothing works this makes so much sense so i kind of feel like if you it's like any it's like any field like if you look into it you spend the time except if it's too crazy, right?

56:08It kind of becomes kind of like a second nature and yeah, it makes sense. Crypto, the thing about crypto is that it's intrinsically subversive and most technologies, if you think about it in history primarily strengthen the state and this is part of the reason why crypto makes so many people uncomfortable is because it's a technology, you know, it's a big part of the reason why people try to separate blockchain from crypto. They say, oh, well, blockchain is general technology. That's really great. Crypto, I don't know. You know, we'll see how it goes. The crypto side of all of this is intrinsically about changing the balance of power between individuals and governments.

56:49If money were already free, if money were already programmable, you wouldn't need crypto. Crypto is a solution to a problem that was created by governments. right you don't need to distribute you create a distributed system you don't need to do all this fancy stuff if you know for example the fed was like well here this money you can just do whatever you want to it you can program it you can custody it with private keys you can uh control it from anywhere in the world and we're going to make the monetary policy completely algorithmic and transparent if they did that nobody would ever need crypto crypto exists as a response to a constraint introduced by governments.

57:27And I think the, you know, it's almost like in the same way, YouTube and streaming, if TV had been open, so it's that anybody could, you know, add a new channel and allow anybody to watch it from anywhere. You know, YouTube allows you to basically, if you think about relative to TV, it's like, okay, you can jump into programming. Remember like DVR where you could like, okay, you record everything, you rewind and watch different times. that had already turned TV into not being on demand or sorry, into being on demand. But the main thing about TV is that there's only so many channels and not everybody can broadcast out of those channels.

58:03In the same way, crypto, I think is, it's intrinsically about a fight. And this fight is something that most people think that technology is supposed to lose. They think people are supposed to lose. They think that the only way that technologies are supposed to get subsumed into society is when they are tamed by governments. And the crypto conviction is that no, no, no, no. The entire point of crypto is that it doesn't get tamed. That's what's so weird about it and so challenging about it, unlike almost every other technology in the last 50 years. Think about the internet. You think about AI. These are all technologies that strengthen the state.

58:47they give the state more powers than the individual has there are subtle ways in which okay now you can stream anything you can you know send messages to anybody at any time about stuff you know you can't censor the airways anymore but that relative to the powers that now gives the government if you think about the snowden revelations and just the raw amount of data that's now getting ingested and just the just the scale of government surveillance and government power comes from having control over the internet. It's the only technology we've really seen in the last 50 years that is for people and not for states.

59:22Yeah. What YouTube did to kind of TV, user-generated content, is what crypto is doing for money, user-generated money, right? Exactly. We were introduced by a common friend called Jason Choi. Shout out to my boy Jason. Yes, his name is Matt. Who was also on this podcast to discuss his principles on how to get rich without getting lucky based on naval thread but it is crypto thread and it went viral actually okay i was like i should do a podcast with jason about that oh yeah people love it we had like a near 100 000 views on youtube just in two weeks so i'm gonna ask you what are the sets of principles that you have developed through throughout your years in crypto that could help anyone watching this podcast who want to make it in crypto.

1:00:09If you want to make it in crypto.

1:00:15so number one thing is i would say get more technical and everybody's at a different level of technical but the reality is that crypto is about technology. And if you don't understand the technology, you are not going to be able to have a robust mental model of where it's going. And so study technology, study the history of technology, learn a little bit of coding. You don't need to become a great solitude developer or whatever, but learn enough that you at least have an intuition about how programs work and how computers work and why things that are hard are hard and why things that are easy are easy.

1:00:53if you have no real purchase over technology at a deep level it's very difficult to correctly predict where things are going to go and so much of crypto is about being able to see around a corner and be able to tell when you're being bullshitted and when something is really possible and when something is real oh so that's thing number one at the margin almost always the answer is get more technical so it means someone who is not technical is fucked no or you can somebody who's not technical needs to get marginally more technical and every little piece is going to help you for the most part uh now just because you're you know some amazing software architect doesn't mean all of a sudden you're going to get super rich in crypto but it does mean that whatever other skills you bring to the table almost always having a deeper technical understanding alongside whatever your other skill is is going to make you significantly better so that's thing number one uh thing number two is start writing and talking in public crypto literally is that and so many people think to themselves well i have nothing to say you know i have no new ideas i you know i don't know enough to even start talking and so i should wait until i learn enough until i have some cloud until i have some something useful and something original to say and then I'll start writing or podcasting or blogging or whatever the hell it is that's your modality.

1:02:17And this is such a huge mistake, such a huge mistake, and I see it all the time. But when I started writing about crypto, I started writing about crypto basically almost immediately after I started getting excited about it. And if you go back to my early blog posts, and you can still find that they're on Medium, they're so embarrassing. They're so dumb. They're just like, he's actually parroting other stupid stuff that I've read. about, oh, blockchain will change the world. It'll change how we interact with governments and supply chains and blah, blah, blah. It's like all this philosophical fluff.

1:02:50And I remember he got, you know, people liked it because that was the vibe of the time, you know, people blockchain pilling each other. But there wasn't very much substance there. It wasn't a very, you know, it was kind of a dumb piece. But the reality is that wherever it is that you are in your learning trajectory, there might not be you know thousands or tens of thousands of people who are um who have who are an audience for that level of learning but there's always this people who are right behind you who are five days of less learning than you are and you can teach the person behind you what you just learned right so your audience might be small at the beginning like my audience was small at the beginning you know not that many people cared or whatever oh my god this guy likes blockchains well yeah everybody in the space likes blockchains but it's sort of like uh yes many people have written that blog post before but anybody who wants to read about that today will read for me you said most people don't care which is actually a is a good argument for starting right because when you start and you it's almost look lame right if you look back in time oh man what the fuck was this podcast yeah with my laptop and i didn't this intro that i was just reading and what the fuck right yeah but no one looks at it all right almost no one so yeah and for a long time you might think it's a bad thing right because no one cares but actually it's a good thing because you're getting better yeah and no one is there to criticize right that's right so that's why you should start today because no one cares anyway yeah right and they're not gonna care before a while so yeah yeah and you know different people function differently like It doesn't have to be blogging.

1:04:33It doesn't have podcasts. But find your thing and add value. Give value to other people, even if it's value to just a very small number of people who are the people who are as dumb as you were yesterday. You can teach that. There's plenty of people who are sitting right there where you just were. and that I think is the easiest way to start the flywheel of building a name for yourself, building connections, building notoriety and getting deeper and deeper into this internet-based society that is crypto. Yeah, add value 1 % every day and at the end of the year it's going to be much more than 365%.

1:05:11Absolutely, absolutely. What's the most counterintuitive principle to a new crypto investor that is a well-known fact for seasoned investor?

1:05:27Counterintuitive. There's so many things that when you arrive, you're like, oh yeah, I think I know, right? And then you probably get screwed a couple of times and then you learn with time, obviously. So I'd say, I mean, I alluded to it earlier, the fact that generally speaking, almost everything important in crypto has been built by crypto natives. And it's very easy to get impressed by credentials and these great Harvard graduates and these people who came from Google who are starting a new thing. And it's basically never happened that these people end up building the next important thing in crypto.

1:06:09Pretty much never. It's always crypto weirdos who end up building the, you know, whether it's Ethereum, whether it's Uniswap, whether it's, you know, HeidenLayer, you know, all these things. It's always like these kind of weird people who are way too online and spend way too much time in crypto. Those are the people who end up building the most important things. So the next logical question is, I want to start doing some stuff in crypto. How do I become a crypto native? Do I need to be weird? Or if I'm not a mega nerd, do I even have a chance? Because it's very intimidating. is like a bunch of weirdos who are just arguing all day on Twitter.

1:06:49Yes, correct. So how do I become a crypto native? Because there is a lot of people who are now more and more interested to work for a crypto company, not even starting something, but they say, what do I do, right? Like, where do I even start? I mean, you can start with this podcast. There you go. but I would say number one is figure out what's your superpower if you if you come in thinking okay well I need to totally refashion myself into a crypto shaped person so I need to you know become more of a like vitalik I need to learn how zero knowledge proofs work or something it's like no that is absolutely not what you should be doing what you should do is find the thing that you are you are really good at and sharpen that into a very, very fine point.

1:07:39And then figure out how can I take this skill that I have and find the one person in crypto who most needs this and do it for them. You know, so do not think about, you know, how can I become the head of strategy for, you know, Eigenlare or whatever, right? That's just the wrong way to be thinking, oh, this guy is so crazy on Twitter. or how do I get his job? That guy's so cool, I want to be like him. Do not think that way. What you should think about instead is what are you good at and where is the place that you can immediately add the most value and then go do everything that you can to prove to the people who are sitting there that you can already do that job.

1:08:19This is a very entrepreneurial approach, right? It's the same as starting a company. Absolutely. If you want to start a company, what are you good at? Yeah. And that is potentially a problem to other people, hopefully, right? That's right. And you're going to be so good at it because you're passionate about it and you're good at it, right? Instead of like trying to build the next Uber when you don't give a fuck and that's... Don't try to start someone else's company. Yeah. In the same way, don't try to build someone else's career. You got to build your career. Yeah. And your career is oriented around your skills and your weaknesses.

1:08:51Yeah. Absolutely. So you started to write years ago, right? And then you built an audience. I did. You tweeted, when I started building my Twitter audience, I thought more followers meant more influence. But I soon realized many high follower accounts are just engagement farmers and hyper posters with little real influence. Interestingly, the real movers and shakers often don't have that many followers. That confused me for a while. This is actually a common phenomenon known as Bergson paradox or the tails come apart. two things that are initially correlated, followers and influence, they correlate at extremes.

1:09:35Can you explain? Yeah. So this is something that I think most people notice intuitively. They just see this for themselves, that very often these accounts that have millions of followers and tons and tons of engagement, they can tell that they're good entertainers. They have the ability to pump out content that a lot of people are going to read and see and follow, but they don't actually control anything. And when they want something to happen, it doesn't happen. You know, so like this account that has 5 million followers, they're like, great, now I've been posting news stories or snippets or whatever, and now I want this meme coin to pump.

1:10:14And they post the meme coin thing and nobody cares. and you see how very often there's these accounts that have not that many followers and when they post something just the world just you know just shifts around them you can see like wow this person is powerful this like the most important people are listening to this person and they when they want something to happen in the real world it happens and um you know my partner uh at dragon fly beau he's somebody who's very very low-key on like you won't find him on twitter he's not on twitter he doesn't have a big social media presence it's something that he very intentionally cultivates is he doesn't want to be in the limelight and yet he's a very powerful person and you you see this enough times uh and you start to realize like huh okay so in the in the in the very beginning of your journey right you can tell that as i gain more influence i gain more followers as i gain more influence i gain more followers but then as you start climbing up that curve all of a sudden these things are diverging and there are people who have got all these followers and no power no influence no ability to make this happen and there's people who are incredibly powerful and if you know you know but it's not legible on social media it's very similar to money actually yes the wealthiest people are the quiet the most quiet right?

1:11:36That's right. The people who talk loud, usually not. Exactly. It's the same. It's the difference between rich and wealthy, right? Wealth tends to speak very quietly, whereas rich people tend to be loud. And I think what it teaches you, well, two things I think follow from this. One is that you can't infer too much about somebody's influence from their social media following. I think many people kind of, they lionize the people with big followings. I think it's amazing to have this many followers because I'm sure you have so much power and so much influence to have that many followers. And it's really not true.

1:12:13I know a lot of these people who have really big followers and follower counts. And there are a lot of things I can do that they can't. And there are a lot of things that they think they can do and they can't. So this is often a rude awakening for many of these people until they eventually learn what are the limits of their power, their influence over the people who follow them. and second the second thing that it teaches you is that very often uh when you get to these upper reaches right when you start having enough followers you realize that gaining more followers actually has no impact on your influence and this is kind of a weird lesson because it does shift at a certain point right like when you have you know 200 followers and you go from 200 to 2 000 followers so okay that really feels like a big a big quantum change in how many people are engaging with your content and listening to you and how much reach your stuff has.

1:13:02But when you go from 50 ,000 to 100 ,000, it really doesn't change that much, the amount of people who you are able to actually influence. And this lesson teaches you that if you want to move past this point, which I think is very much the point where I am at, if I gain more followers on social media, I don't think it's going to have very much impact on my ability to actually do things in the world, to actually do the things I care about. and so you learn okay I should stop investing in this vanity metric that isn't actually resulting in the thing I care about then invest in founders instead well a lot of things right having founders think that you are fantastic is one way to increase your influence being useful behind the scenes and helping solve problems for folks in the industry is another way to increase your influence there are a lot of ways But at the end of the day, most influence, and this is another thing that I think people don't fully understand, but they sort of have the cynical take that the way that you become crypto famous, the way that you build the followers, the way that you have a bunch of relationships in the industry that matter is by talking yourself up, beating your chest, surrounding yourself, name dropping people, getting into pre-sales and then exiting really quickly and this kind of stuff.

1:14:19And that's not the way that you do it. The way that you do it is by adding value. You add value to everybody you meet, to every interaction you have, to every project that you work with. And that is what builds your reputation and to your followers. But it's much harder. It is hard. It's much harder to add value, right? Yeah. And most people are takers. They're not givers. Correct. Correct. Which is why most people don't end up getting there. Yeah. What is Dragonfly? So we're a global venture fund. We've got a presence in Asia as well as the presence in the US. We back founders from the very early stages.

1:14:57Things like, you know, we're early investors in Avalanche, Neoprotocol, Dune Analytics, Monad, Athena, MegaEth, Bybit. Almost everything under the sun in crypto, we've done it at one stage or another. And we're known for being one of the most technical VCs in the space, as well as being kind of one of the earliest and highest conviction investors in crypto, DeFi, layer 1s, layer 2s, exchanges. So that's us in a nutshell. I'd say we've grown a lot over the last five years. When we started, we were a ragtag crew. Nobody knew who we were. And now I think we've kind of entered into that echelon that at least if you're in crypto, you've heard of Dragonfly.

1:15:41Why did you start Dragonfly? So actually, I didn't start Dragonfly myself. I joined basically in the first year of Dragonfly. So I came on board very early. but Dragonfly at that time it was again like a no name fund nobody really heard of it, nobody knew what it was about and I knew that I was sort of coming in early enough of the phase that I could really morph Dragonfly to be this kind of fund that I wanted it to be and I really did not know that I wanted to be an investor it was kind of like poker, it was this thing I sort of fell into and And I realized that so much for me about investing is, and I think this is also true of poker, is proving to myself that I can do this.

1:16:30Like venture investing is unlike anything else I've ever done. It's very, very long time horizons. you have a very slow feedback loop because when you invest in a founder at a seed stage startup it takes years for you to figure out where you're right or where you're wrong right if you imagine that compared to a poker game poker game it takes you know less than a minute to figure out oh you know okay i call this guy and it turned out i thought he was bluffing he's not bluffing so you instantly see ah made a mistake um or when you're trading right trading instant feedback immediately you know, was my trade good or was my trade bad?

1:17:11Venture, it takes years. And very often, it's not until the end of six or seven years until you know, was I really, really right or was I kind of right? Because you're going from even, oh, okay, this thing had a seed round, and then it had a great series A, and a great series B, and then it ends up collapsing at series D. And it's a block five. We had many examples years ago. Exactly. Exactly. And so we've been fortunate. We never invested in FTX, no BlockFi, no Luna, no Celsius or Genesis or any of these kind of crazy blowups. But it's a general phenomenon in crypto is that you can't, the reward signal that you get is very, very delayed, which means that you really have to, you have to really use, it requires a lot of judgment relative to a lot of other things like trading or poker even.

1:18:00How good does it feel when you're really, really right? it feels amazing uh but it also like when you when you are really right like in in trading or in in poker when you're really right you get this incredible rush the moment you say okay i think you're bluffing and i call you down and you turn your cards over and i take the whole pot down it's just such a so much endorphins rushing through your body this moment of feeling like aha i i beat you yeah and in venture um like if you're right you're right very very slowly right like there's no moment like you're right you know you're right and they're like oh every year they raise another round is a little bit higher it's like oh metrics are still going up into the right now that's good it's like oh there's a drama you call it you fix it okay things are good again and it's there's no there's no like endorphin rush that you get in venture you know it's like watching a child grow up uh there's no like yo we did it i can't believe we raised a child uh it's just like yeah you're just every single day you show up you support and you watch it grow into something really amazing and then eventually you exit maybe when you exit and you know the money hits your bank account from the carry check maybe that's the moment but even then it's kind of like i like like finally yeah it's been so long finally for me it's like you You sort of know that that's not like, oh my God, I can't believe this money showed up.

1:19:26There really is no big bang moment in venture, which I think, again, is part of what makes venture more healthy than a lot of these other modalities of investing. How does it feel to be really wrong? That is really tough. That is really tough. What's your example, an example where you were really wrong? I think probably the biggest, I mean, there's so many examples of bad passes I've had. I mean, almost always when you go wrong in venture, it's not making a bad investment. It's a bad pass. Always, always, always a bad pass. Because venture is power law distributed. And in a power law, the only thing that matters is what you pass on.

1:20:02It doesn't matter all the deals you did that ended up not making it. It doesn't matter at all. So I remember actually the memo I wrote on the Solana seed round, the four cent round where I passed on Solana. Four cents. Four cents. Yeah, four. Zero, zero, four. that's how much Solano was worth in that time um but actually that I mean that that pass was fine actually I think the um the pass that pains me the most is the Uniswap Series A pass that was probably the the one that most weighed on me psychologically and the one that I think I've learned the most uh as an investor what did you learn so Uniswap at that time this was before DeFi summer really took off and before we saw what liquidity mining would eventually become.

1:20:52And when Uniswap was raising their Series A, Hayden approached us and he knew of Dragonfly at that time. We were still relatively young as a firm, but we had built a reputation for ourselves in DeFi investing in particular because we were early investors in MakerDAO, OneInch, UMA, Compound. So we were early players in DeFi. And so Hayden came to us, gave us a pitch. And we really tore apart all the data about Uniswap at that time. And we saw, if you look at the biggest pools, almost all the pools, the LP is even unprofitable since inception. If you look at the two biggest pools at that time, I think they were like HEX.

1:21:27And then it was synthetic ETH to ETH, which was an incentivized pool. And we were like, okay, well, this is not organic volume. This is inorganic volume. We thought that, well, well, your pricing here is never going to be as good as a centralized club or even an RFQ system. And we had all these smart takes and all this data that we pulled to convince ourselves that Uniswap was just, it wasn't good enough on the longevity of the data. And everything that we said about Uniswap at that time was very smart and it was all correct and it didn't matter. None of the points we made mattered. We even claimed that we think Uniswap is going to get for it if it gets too big, which it did, and it didn't matter.

1:22:17None of these things mattered. And the thing that we failed to see was just how fucking big this core idea was of having a completely mechanized system for anybody to be able to list and trade anything. that was the big idea that we failed to capture and you know uniswap from that point you know it depends on when you exited but the height it was like a 200x investment 100s game and that was a that was the one that i remember the day of the uniswap token floated was the most like kind of really honestly one of one of the most challenging introspective days of my career as an investor was just thinking, how do we get that so wrong?

1:23:03What's the most painful? The 200x missed or being wrong maybe on an ego side? No. Absolutely, it's the misses. 100 % it's the misses. The miss, the money miss. I mean, the only other thing that does have that same kind of pang is when you don't own enough of the thing you believe in. You know, so... As a Bichel often says, as a venture investor, you're never happy. Because either you see all the things you passed on that did amazing, and the things you did do that did do amazing, you never owned enough. So there's always this sense of like, I could have, oh my gosh. This thing that we won, we were talking about doing more, we didn't do more, we didn't fight that hard to get more allocation.

1:23:50And it's one or two deals that drive your entire portfolio. Is it not a really great lesson for investing in general to say you're never going to be happy? Because either you'll sell too early, either you'll sell too late if it goes to zero, right? It's okay or it's actually normal to not feel happy or to not be comfortable and it's probably a good sign. Because if you're too happy, you're probably in trouble, right? like so to be honest as a venture capitalist I'm actually a lot more okay with the market timing around exits you're never going to get perfect when it comes to exiting your positions and you should not try to be because if you're trying to be perfect then you're going to have too narrow a margin of error and that's going to result in you basically saying oh I don't if you're trying to have a certain level of confidence that this is the top then you just have a problem that you're going to hold way too long because you're going to go okay if you miss the top then you're going to be very inclined to sit there and wait and wait and wait until you feel like the real top has come in right so generally what i tell our team is that our goal is not to try to time the top our goal is to be within 40 percent of the top yeah we're within 40 50 percent of the top we nailed it an amazing wonderful time to exit um but if you are exactly on the top, you barely survived.

1:25:22You know, like you got incredibly lucky and you almost missed the entire cycle because much more likely the mistake is not selling too early. The much more likely the mistake is riding this thing all the way through the entire boom-bust cycle. And that tends to be the much bigger mistake. That's an amazing point, actually. And on the crypto side, it really applies on the meat of the returns are probably made between bear market and previous all-time high, maybe times two max, right? But like, if you manage to get out, I hear 30%, right? But like 40, 50, 30%, it's amazing. And it's very counterintuitive because people think I should catch the bottom, which is impossible, and I should write it to the top, which is impossible.

1:26:04Exactly. It's a fool's errand. One of the hard things in crypto, if you're a public person, can be to manage how you are perceived by the people around you. one day you're a cool hipster the next day you're a rock star and the day after you're a scammer yeah can you go through your own story of becoming a rock star in 2021 and being seen as a scammer in 2022 by the same people who are seeing you as a star just a year before that um wait who saw me as scammer 22 i don't know we talked about that the other day you said it's really hard to go through these circles and like you can really be seen as a yes yes yes i I think that I don't know that anybody saw us or me as a scammer in 22, but I think the maybe some people in jail didn't know you that well.

1:26:51I think the collapse of FTX kind of gave that feel to the entire industry is what I would say. OK. I think my affiliation with Effective Altruism has also earned me a lot of that opprobrium after the collapse of FTX in that in 21, being a crypto, EA, venture capitalist was the coolest thing in the universe. and at the end of 22, it's the cringiest thing in the universe and something that, you know, you're not getting invited to parties anymore. People don't want to affiliate with you. And that, going through that boom-bust cycle of not just how other people are treating you, but almost like in the way that you think you should be seeing yourself is very challenging if you derive too much of your sense of self-worth from how other people see you.

1:27:33Now, look, as a VC, it really matters how other people see you because that's your fucking business. Your business is how people see you, what they say about you, what they think it's like to work with you and to have you on their side. So when you're a VC, it really, really does matter. But the answer to my mind is always the same. It's always the same answer, which is be more transparent, say what you really think and add value. And almost always, no matter what the question is, the answer is one of these three things. So that has been what I've internalized is that, you know, as a VC, you know, sentiment against VCs and crypto has really gone up and down a lot over the last five years.

1:28:11Right now, I think VCs are much more villainized than they were in the 21, 2020 cycle. And so there are a lot of people who just think I'm an asshole to kill a VC. And that's also fine. And there are times that I've pissed off other communities. I've pissed off the Solano people. I've pissed off the Cardano people. I've pissed off almost anything that's big enough, Poconaut, anything that's big enough and reified, at some point I've said something to make them angry. And if you're not doing that, But I'm like, you're not living if you haven't actually poked the hornet's nest every once in a while.

1:28:41But I think, to be honest, crypto also has a very short memory. And it's part of the beauty of it. Absolutely. Yeah. People could be super fucking mad at you. And I remember I had a time that the Ethereum community was super mad at me. Now people think I'm an Ethereum maximalist. And I remember I wrote a blog post about the EVM and how the EVM sucks. and it went super viral. Everybody in the EVM ecosystem was just pissed at what I was saying. And they were like, how dare you? How could you be saying this? You're just pumping your own bags. And as an investor, you just said, all right, look, is this fight the fight that I care about?

1:29:19No, if not, delete it, move on, and go move forward and go back to being transparent, saying what you think and adding value. What's your biggest prediction for the next 12 months? i think macro is driving for the next 12 months uh i think there's just been a lot of kind of fed watching uh the slow march of crypto adoption is kind of inevitable to my mind but i think it's also kind of slow i don't think it's going to happen in these big chunky ways that it did in the last few years a lot of the villains that existed in crypto you know these these big shadowy organizations that we wanted to take us seriously like blackrock uh we sort of forget what it was like in 2019 to try to get BlackRock to pay attention to what we were doing.

1:30:06And now BlackRock is on TV talking about Bitcoin like they own it. It's crazy the amount of progress that we've made over the last five years. And people don't fully internalize that. It doesn't surprise me that things are going to be not as explosive over the next two or three years. Now, that being said, crypto is crypto. When we enter to a cycle, all these things get thrown out the window. You never know where things are going to go. And that may be instigated by risk appetite and interest rates coming down. I don't know. But my base case is that I think crypto is going to do well, but it's going to be a lot less crazy than the 21 cycle.

1:30:43Thank you so much for doing that, man. That was a great conversation. Always. My pleasure.