Source: "When Shift Happens"
Organizer: Felix, PANews
Haseeb Qureshi, managing partner at Dragonfly, recently appeared on "When Shift Happens". During the show, Haseeb revealed a key principle that distinguishes truly wealthy investors from ordinary investors: when everyone advises you to exit the market, stay put.
This former professional poker player turned venture capitalist shared how he survived the collapse of FTX in 2018, and why he continued to defend Ethereum and Solana even when everyone else had given up on them.
PANews has summarized the highlights of the interview.
Host: How have you been feeling lately? How is life treating you?
Haseeb: I'm tired, very tired. It's not just because of the market; there are many internal matters to deal with that the public doesn't see. Most people think venture capital is a relaxed job, like taking a vacation in the summer, making investments and then waiting for a decade. But I think that's bad venture capital. We stand out because we work harder than others. I respond very quickly and can take calls at any time; that's also how Dragonfly operates. Not everyone can sustain that for so many years.
Host: There’s a lot of discussion about "departures" right now, like Kyle Samani leaving Multicoin, and many industry OGs leaving the crypto space. What are your thoughts?
Haseeb: I think this narrative is exaggerated. Every time prices drop, people leave, which is a typical example of "recency bias." Because it's happening now, people feel it's worse than when FTX collapsed, which is complete nonsense. After FTX collapsed, many were forced to exit because they lost everything, including those in the metaverse and Web3 games, who left because the concept didn't regain its popularity. Everyone just forgot about them.
On the other hand, there is a normal tenure in people's careers. It’s normal for someone who has been in this field for ten years to move on. Especially for someone like Kyle, who knows how much he has earned. He is a very successful VC who built a huge multimillion-dollar platform. His choice to leave isn't surprising. This happens in every industry.
Also, there is a significant difference between pioneers and settlers. They are always different. Just like the laws of human nature. Those who braved the wilderness to find California or to settle the new world are not the same as those who eventually built towns. Their mindsets and mentalities are very different. The first ten employees of a startup are completely different from the 50th or 100th employee, especially the 1000th. The first people who helped build Google are completely different from those who later built Google Shopping or Google Drive. These dynamics are happening in the crypto space now, which is completely normal.
Host: How have you managed to stick around?
Haseeb: You need to have more to prove. I think for someone like Kyle, he is obviously very successful, and he no longer needs more money. Maybe he does, but I don't know his lifestyle. But I believe there comes a point where it’s no longer about money. It’s about needing to prove something. If you are Kyle, I guess you feel you have already proven yourself. You feel like everyone has doubted you at some point. We just talked about FTX; Multicoin was one of the biggest investors in FTX. That was their near-death experience. After FTX collapsed, one of their largest and most successful investments went to zero, uncovered as a century-long scam. And Solana, as one of their heavily weighted assets, dropped from over $200 to $8. They survived it all, believing they were right when everyone was wrong, and in the end, they got "vindicated." That’s absolutely an incredible career achievement. I don’t know what that feels like, but I bet it feels amazing. After that, if you decide to leave, I would say, yes, I understand why you’d leave. If you've got a few championship rings, no one will envy you for deciding to "not play the game anymore."
Host: You mentioned recency bias. What other biases try to deceive investors' minds but are actually unhelpful?
Haseeb: That's a good question. I think one of the most insidious biases for an investor is status quo bias. The preference or expectation that the status quo will continue because if it wasn't resilient, why would it be the status quo? Today, I find it hard to find many who are very comfortable with the status quo because the sentiment across the tech world is "everything is changing." The AI revolution has really made people feel: "Oh my god, anything could change." A few years ago, there was this feeling that maybe nothing would change; people were talking about the "great stagnation." Peter Thiel has a very famous article discussing how we’ve had many innovations in bits (information) but no innovations in atoms (the physical world). I think we have broken through that stagnation to some extent. Now we have longevity research, CRISPR gene editing, AI, drones, quantum computing, nuclear reactors, etc. It does feel like there are signs of movement in science and technology, which is very healthy for society. But still, the most common failure mode among investors is still failing to believe that real change can happen.
Host: You’ve spent a lot of time in Silicon Valley. What have you learned there that you can’t learn elsewhere?
Haseeb: It's hard to describe. It's not propositional knowledge, not a set of facts that you can't learn anywhere else. It's a unique way of operating and a mindset that is exclusive to Silicon Valley. Many cities in the world say "we want to be the next Silicon Valley." But every time I hear that, I think it's a joke. In Germany, for example, when people ask how Berlin can become the next Silicon Valley, I think, brother, don’t kid around. The uniqueness of Silicon Valley, I think, has only been replicated in two places in the world: China and Israel. Few other places know how to build this model.
First is celebrating failure. In Silicon Valley, failure is normal and is not pathologized in any way. In Silicon Valley, you can "fail up." In most places, that is unheard of.
Host: In most places, they would tell you: "Failure is a good thing." But in reality, people would think of you as a loser and not hire you. The truth is, if you go start a business, especially if it fails, that will be a permanent stain on you. They will ask you why you left a good job at Deutsche Bank or SK Telecom to start a business.
Haseeb: Exactly. This mindset clearly does not create a vibrant startup ecosystem. The second point about Silicon Valley that many don’t understand is that it is an extremely high-trust society. Even though it’s in the U.S., which is a typical litigious society, there aren’t many lawsuits in Silicon Valley, and not many people are suing each other or embroiled in bitter disputes. The reason is, we understand that this is a boiling pot of ideas. Someone will step on someone else's toes, someone will steal someone else's idea, but that’s okay. Because we're all building something in the same direction, not too concerned with the details, which is for the greater good. In many other places, people become incredibly shortsighted; if you want to see my startup, you have to sign a non-disclosure agreement, and if you do this or that, I’ll sue you. If you want to build the future, you need to move quickly, and it has to be trust-driven.
The last thing Silicon Valley does right that others get wrong is that its flow is extremely tight. California does not enforce non-compete agreements. In New York, Boston, or any other country, non-compete agreements are the norm. If you leave a company, you can't work elsewhere for one to three years. This actually leads to a talent drain and makes people extremely reluctant to leave their current companies. Silicon Valley understands from a global perspective, and even from an individual standpoint, my company might get harmed because someone brings knowledge elsewhere, but for society as a whole, the efficient transfer of information is better. Look at all the AI labs; almost all of them are in Silicon Valley, except for those in China. We used to think that one company would break AGI (Artificial General Intelligence) and then have an unmatched advantage. But today, three years later, all the labs are basically at the same cutting-edge level, and the models are free. Why aren’t they expensive? The answer is competition. Why is there competition? Because all the labs leak information like a sieve. Engineers throughout Silicon Valley gather in cafes, during walks, and at family gatherings, sharing what they are working on and commercial secrets. Knowledge spreads very quickly, and everyone can catch up immediately. This won’t happen in any other place in the world.
Host: You often compare cryptocurrencies with technology. Because you have Silicon Valley's mindset, you are someone who looks at the future positively and with a long-term perspective. We try to filter out the signals from the noise on the podcast, but when cryptocurrencies perform well, there's too much noise; when they perform poorly, people are angry and lose direction. Why do you compare cryptocurrencies and technology so often?
Haseeb: Cryptocurrency is technology. It is software that people run on computers (like Bitcoin). Of course, it may not perform like Microsoft. But in terms of building effective teams, how technology is adopted, sustainability growth curves, etc., we can learn a lot from the tech industry. At the same time, cryptocurrency is not just technology; it is also about money, society, and governance. If you don't understand its financial elements (such as learning from the internet bubble where money flowed), you will not see the "big picture."
Host: What frustrates me is that because it's about money, there are many traders. They don’t understand, or they're in it for the wrong reasons. I can’t understand how they can get mad over these little things all day.
Haseeb: David Hoffman has a great saying: "The meaning of cryptocurrency is not to make you rich. The meaning of cryptocurrency is to make you free." This is a profound insight. At the same time, I don’t want to pathologize those who entered the crypto space to make money. I want to make money too; there’s nothing wrong with that. The philosophy of cryptocurrency is about freedom, and freedom also includes the freedom to make money. No market demands that people not be greedy. When things go wrong in the crypto space, people say it's because someone was greedy (like Three Arrows Capital, etc.). My response is that this argument is too superficial. Are people in the tech industry selfless? No. If everyone is greedy but you are creating value sustainably, that’s also okay. Not everyone can make money, but everyone can be greedy.
However, there must be some greater allure than just making money. If everyone only cares about making money, this industry will be destroyed. There must be some people who genuinely care about the long-term value we are creating. Greed and exploitation are two different things. Goldman Sachs has a saying called "long-term greed." Short-term greed may look like greed, but in reality, it's foolish, like King Midas turning everything to gold but starving to death because he can't eat. Long-term greed means that the decisions you make in the short term may not immediately earn you money, but in the long run, you will make more. Because that’s reputation, that's a career. If you're only thinking about making the most money as quickly as possible, then go sell drugs. That's definitely not a long-term greed strategy.
Host: You are a long-term greed person; you are an investor. Let’s talk about long-term greed. When you say to just believe in exponential growth, what does that mean? How does it relate to making big money?
Haseeb: I entered this industry full-time at the end of 2017, during the peak of the ICO bubble. In early 2018, I started doing VC, right as the bubble was bursting. 2018 was the worst sentiment period for cryptocurrencies I’ve ever seen, possibly worse than FTX. Because at least when FTX collapsed, there were people to blame (Sam lied, committed fraud). But in 2018, there was no one to blame; it just felt like we collectively made a fool of ourselves, that everything we built had no value. Bitcoin dropped from $19,000 to $4,000, Ethereum fell below $100. At that time, the right decision was to stay in the market, hold those assets, and bet on what you believed in for the long term. From 2018 to the pre-pandemic in 2020, nothing happened; there were no price movements, just a flicker of light in the dark (like Maker DAO and Compound starting to form in DeFi). In the crypto space, you have to believe in exponential growth, you have to believe this technology will impact far more than just those 100,000 people.
Host: After FTX collapsed in 2022 and Bitcoin fell below $20,000, what made you step in and buy assets after such a thorough washout?
Haseeb: The answer remains believing in exponential growth. At that time, telling others that the U.S. government would buy Bitcoin was unimaginable. We were wondering if the U.S. would crack down on cryptocurrency because of this disaster. You have to believe; if you don’t believe, you will make wrong decisions at every moment. I was once a professional poker player. What you learn in poker is that you cannot win every hand; you have to think strategically. You can't always think of buying low and selling high because you can't hit it right every time. The only thing you can choose is strategy, and my strategy is to believe in exponential growth and understand that cryptocurrency will be much larger in ten years than it is today.
Host: In hindsight, it seems obvious, but it wasn’t at the time. Now we have a feeling that most people might think, “What else can be squeezed out?” (How much more growth is there?). Now we have the participation of Trump, the U.S. government, and institutions, and people may feel they've missed out. How do you see a grander future than now?
Haseeb: Just look at how many institutions actually own these things. As a large VC fund, we manage a lot of assets and institutional LPs. Most institutions have zero exposure to cryptocurrency. Those institutions that invest in us might have less than 1% of cryptocurrency in their portfolios. Morgan Stanley recently announced that it will start allowing its wealth management arm to recommend digital assets to high-net-worth clients (suggesting an allocation of a few percentage points). And before that, every wealth manager's advice was: you can't invest in this, stay away. Institutions are just beginning to embrace cryptocurrency. Vanguard (the largest ETF provider in the U.S.) just recently stated that they’re not yet ready to approve a Bitcoin ETF.
Another thing to understand is that the adoption of cryptocurrency is largely generational. The FIT21 Act passed in the House, and the biggest predictor of who supported the bill was "age." Older people don’t know what’s happening and find cryptocurrency scary, while their children are using it. As the Baby Boomer generation ages and power is handed over to the next generation, everything will change. Young people entering university today don’t remember a time before Bitcoin existed (Bitcoin is already 18 years old), and Ethereum was created when they were ten. Changing societal perceptions takes time.
Host: This is similar to the transition to the cloud. In 2015-2016, businesses were afraid of cloud services, thinking data wouldn’t be secure if it wasn’t in their buildings. But now, with a new generation of executives in power, which company doesn’t use cloud services? It’s too useful, it’s a no-brainer. It only took a few years. And now we’re discussing money.
Haseeb: Yes, this is most evident for Bitcoin. People have a deep attachment to gold, saying it has a long history and cannot be replaced. I think they exaggerate this. For young people, their perception of value is already digital. Why is a rock that you painstakingly mined from the ground more valuable than a digital asset? SpaceX plans to mine asteroids; if they find an asteroid with gold, the supply of gold on Earth could double, which would forever change the dynamics around gold. All the gold can fit into a cube smaller than a football field. And Bitcoin is software; you can't find Bitcoin on an asteroid. For a software civilization, it makes sense that our money should also be software-based.
Host: Will you sell the main tokens of your personal beliefs?
Haseeb: My personal finances are very simple; I mostly hold. I have heavily invested in all of our funds. I personally own some cryptocurrency and some ETFs; it’s basically buy and hold. I only liquidate assets when it comes to taxes or donations.
Host: In the context of exponential growth, can you talk about your logic regarding Bitcoin?
Haseeb: As a VC, I won’t invest in Bitcoin aside from my personal holdings because it’s not a venture asset. The logic of Bitcoin is entirely based on Schelling points, on social consensus, that society needs to build a consensus that Bitcoin will become the future way of pricing non-sovereign wealth. Complaints about Bitcoin's performance not being like gold, or issues of correlation, are all foolish. Bitcoin and cryptocurrencies are volatile, with different operating mechanisms. People don’t want it to act like gold or be completely uncorrelated; they just want it to go up. As long as it goes up, everything can be forgiven.
Host: What does Bitcoin look like at saturation?
Haseeb: Saturation means Bitcoin becomes very boring. Young people don’t talk about it anymore; that’s something old institutions do. When you feel embarrassed discussing it with kids, it has truly entered the mainstream. By that time, you might see Bitcoin perform like gold did in the past.
Host: Since you are in the VC circle, some larger crypto assets seem to align better with VC thinking. While many people are losing confidence, you have been actively defending ETH and SOL. Why?
Haseeb: I generally like to advocate for viewpoints that are "unrepresented." At that time on the X platform, the zeitgeist was that these assets were just memes with no cash flow and shouldn't have any valuation. I believe this is a mistake. The market has given hundreds of billions in valuation, reflecting a deeper wisdom: the market believes they are valuable and will become larger than today.
Host: Like Tesla? Because Tesla's price-to-earnings ratio is absurdly high, but it's a growth story.
Haseeb: Yes. There are two models in the market: cash flow models and growth models. Cash flow models say, "Don't tell me a story; show me the money." Growth models are less concerned with cash flow and more focused on growth. Which model is Ethereum in? The market clearly sees it as a growth model. Ethereum's price fluctuations are not due to an increase in its fees or burning amounts; it is a response to growth expectations and a reaction to narratives about the future.
Host: How often does the market misread these growth stories for an extended period?
Haseeb: Often misread, like WeWork, Peloton, and the metaverse. During the pandemic, people thought remote work was here to stay, but then it returned to normal. However, cryptocurrency is very special. It has gone through boom, bust, then boom again, bust again, and another boom. That is extremely rare. This tells you that what’s happening in the crypto market has a more profound and resilient essence, and the speculation surrounding it is inherent to the product itself.
Host: Where does Hyperliquid fit in?
Haseeb: It possesses aspects of both; that is very rare. It has both a large cash flow (buying back and destroying tokens) and a compelling growth story (expanding into commodities and index derivatives).
Host: As AI is siphoning off talent and capital, why would someone stay in the crypto space?
Haseeb: The answer might surprise you: I don’t know if they should stay. First, AI definitely is swallowing a lot of talent. AI is undoubtedly the most important technology of the 21st century. If you cannot find the value you create in the crypto space, maybe it’s time to leave. The redistribution of capital and talent is simply how capitalism works.
The OGs we're talking about leaving are pioneers in the industry. Pioneers are the wild people attracted by the "wild west." Now that cryptocurrency is no longer the wild west, we now have technology and form, and what’s needed next is a civilization built on that foundation, which requires a lot of infrastructure. All the important applications of social media were built before 2010 (except TikTok). At that time, the ideas were there; after 2010, it was all about execution and building, achieving 10 to 30 times in financial growth, creating the strongest companies in the world.
We are now in the infrastructure phase of cryptocurrency (the execution stage). If you need the madness of the wild west, it's no longer here (maybe in the AI field). You may feel regretful about it, but it comes with its own returns and excitement. If you don’t want these, you should leave. But that doesn’t mean cryptocurrency is over; there are still crazy potential gains, just like social media after 2010.
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