Dragonfly Partners talk in detail: How to succeed in the cryptocurrency field without luck?

author | When Shift Happens

Compilation | Yuliya, PANews

In the cryptocurrency investment field, finding the next 100-fold return opportunity is every investor’s dream. As the world's top cryptocurrency investment fund, Dragonfly is known for its unique investment vision and deep technical understanding. Its investment portfolio includes many celebrity projects such as Avalanche, Near Protocol, Monad, Athena, etc.

In this podcast by Shift Happens, Dragonfly managing partner Haseeb Qureshi shares his legendary experience from a professional poker player to top cryptocurrency investors and how to build lasting influence in this fast-growing industry. This episode covers the most critical topics in cryptocurrency investment: how to turn cryptocurrencies into team sports, why money can’t buy happiness, how to deal with impostor syndrome, and the common mistakes made by new investors. PANews compiled the podcast text.

Personal background

Haseeb: I am Haseeb Qureshi, currently serving as a managing partner at Dragonfly Fund, and we are a global cryptocurrency investment institution that manages billions of dollars in assets. Speaking of my career, it can be said to be quite dramatic: I started as a professional poker player, transformed into a software engineer, and later became an entrepreneur, and finally entered the VC industry for more than six years. Of all my career experiences, cryptocurrency investment is the most challenging area, but it is also the choice that makes me feel most valuable and meaningful.

Host: What prompted you to finally decide to give up your career in poker?

Haseeb: It was a very chaotic period. I have already established a considerable reputation in the poker world, but my reputation has been hit hard because of an incident involving my student cheating. At the same time, I am getting more and more tired of poker. I don't want to look back at my life at the age of 50 and find that I'm playing cards and winning other people's money for the rest of my life. This is not the meaning of life I want.

I made a very radical decision: I only left $10,000 for myself as basic living expenses, and either donated the rest or gave my parents as pensions. I want to force myself to start over in this way. I was 23 years old at that time and returned to school to study non-technical majors such as English and philosophy. As the oldest student in the class, I had nothing but "professional gamblers" on my resume, which really scared me.

This decision gave me a new perspective. When I was a software engineer in Silicon Valley, I earned about $100,000 a year, much less than when I was playing poker. But interestingly, my happiness has not changed much. Because what really brings satisfaction is learning new knowledge, realizing personal growth, and establishing a sincere connection with people around you.

Similarities and similarities between poker and VC

Host: From professional poker players to venture capitalists, this is a big change. How do you view the similarities and differences in these two fields?

Haseeb: The most essential difference between venture capital and poker lies in the length of the feedback cycle.

In poker games, the correctness of decisions can be verified in a very short time. For example, when you judge that your opponent is bluffing and choose to call, the result will be announced immediately.

In the venture capital field, the situation is completely different. The quality of an investment decision often takes six to seven years to truly clarify. As we often see: A startup seems smooth to go from seed turn to round A, but may suddenly encounter a fatal crisis in round C. This delayed feedback mechanism puts extremely high demands on investors' judgment. It is worth mentioning that it is precisely because of rigorous judgment that we have successfully avoided projects such as FTX, BlockFi, and Luna that eventually collapsed.

Host: It sounds like the feeling of being correct, right?

Haseeb: That's true. This difference is very obvious. In the field of poker or trading, the rewards of correct decisions are immediate and intense, and will produce an immediate dopamine pleasure. The "I won" sense of accomplishment came very directly.

But in venture capital, success is a gradual process. It's more like cultivating a tree: there's no dramatic climax moment, but a constant patience and dedication. You will see startups growing step by step: each round of financing brings a steady improvement in valuation, a continuous improvement in operating indicators, and jointly find solutions when encountering challenges.

This process requires investors to have strong patience and persistence. Unlike the fast winning and losing judgment in poker, venture capital is more like a marathon, testing the spirit of long-termism and continuous value creation. It is this gradual growth process that makes venture capital work particularly meaningful.

Investment judgment

In the field of venture capital, judgment of people is often more critical than analysis of business models. While investment tycoons like Naval Ravikant or Chamath Palihapitiya often emphasize breaking through stereotypes, the actual judgment process is much more complicated. As an experienced investor, I find that there is an important paradox in it.

Junior investors usually need to go through a cognitive process: understanding business models and technological innovation does require continuous learning and in-depth research, which often requires the construction of a systematic analytical framework by studying the history of technology and business history. But what is interesting is that understanding human nature is our innate ability.

Our nervous system is born with the ability to interpret others. When you feel distrust of someone, even if you cannot clearly point out the specific reason, this feeling often comes from a combination of many subtle signals you receive.

However, junior investors often ignore this intuitive judgment and rely too much on superficial evidence:

· "Maybe I have insufficient experience and my judgment is not accurate enough"

· "This founder has a great resume and a perfect business plan."

· "He has endorsed so many well-known partners"

As you accumulate experience, you will gradually realize: learn to trust your intuition. The key is to see through superficial social certification, perceive a person's essential characteristics, and think about the choices he may make in the face of stress, uncertainty and moral dilemma. Often, your first instinct is often correct.

Stereotype

Venture capital is essentially an industry about people. Although the field of social psychology faces a "repeatability crisis", "stereotype accuracy" is one of the most robust research findings. For example, when people who feel extremely aggressive tend to lack reliability, this judgment is usually accurate.

The human brain is a system that continuously performs statistical learning. Although contemporary culture tends to deny stereotypes, stereotypes can be positive, negative, or neutral. For example, the stereotype of "Asians prefer rice" is neutral and statistically accurate.

Investment motivation

Host: What driving forces will make you continue to devote yourself to these areas that have not yet been fully developed?

Haseeb: In essence, the areas I am involved in, whether it is early poker or current cryptocurrencies, have two distinct characteristics: high degree of chaos and creativity. This is fundamentally different from the traditional field of linear development. For example, doing quantitative analysis on Wall Street is essentially an intelligence competition. Whoever has a higher "score" will get more rewards.

In emerging fields like cryptocurrencies, it is more like exploring an unknown continent. This not only requires extraordinary wisdom, but also the courage to take risks, the ability to continue to innovate, and the insight to integrate multi-dimensional information. It is this challenging environment that keeps me passionate.

There is no so-called "noble class" in the crypto industry. Unlike traditional VCs, you don’t need a prominent background or a huge network of contacts, or even have the entrepreneurial experience of over 100 million companies. Sincere dedication and continuous efforts are the key to success.

The bear market is like a mirror that can clearly show who comes with sincere purpose and who is silently persisting. Each bull market will attract a group of successful Web2 entrepreneurs to enter with a lot of money, but the people who will eventually stay are often those who are considered "alternative" or "crazy", who are the groups that truly build valuable projects. .

Some thoughts

Structured Learning

Host: Can you talk about your understanding of learning methods?

Haseeb: I think learning can be divided into two types. The first is structured learning, and the other is unstructured learning.

The characteristic of structured learning is that it has clear learning paths and tool support. Taking the subject of chemistry as an example, it has a complete textbook system and supporting learning resources. Learners only need to follow the established path and proceed step by step. The key to this learning model lies in the cultivation of self-discipline and concentration. In fact, most of the training we receive in the traditional education system is this kind of training. However, the real world often doesn’t care about your structured learning outcomes. When you finish college and look for a job, you will soon find that no matter what you study in school, you can hardly use it. The education system is more like a qualification certification process, proving that you have the basic qualities to receive professional training.

In real career environments, especially those positions that can create high added value, there are often no ready-made guidance manuals or training materials. You can't prepare for the battle systematically like you prepare for the academic exam. This requires practitioners to constantly explore and learn in unknown fields, and even if there are experts in this field, they often do not have enough time to teach systematic knowledge.

Host: Can you give examples to illustrate the application of unstructured learning in practice?

Haseeb: I was exposed to this learning method very early. When I started playing poker in 2006, there were very few educational resources in this field. Although there are some books, they are not good enough. If you want to be a world-class poker player, you can only gather scattered information from blogs, forums and videos. You have to learn by yourself, experiment and adventure, invest your own money, learn in failure and iterate continuously.

The same was true in the cryptocurrency space six or seven years ago. At that time, there was only one textbook by Mastering Bitcoin and a Princeton (the author was the co-founder of Arbitrum), and Ethereum had only a few words in that book. To learn these contents, you can only practice in depth, communicate with people at the forefront, create your own curriculum system and iterate continuously.

This unstructured learning is often the most valuable and most rewarded by the market. People who can navigate this learning style are usually paid the highest, and this is precisely what schooling does not teach us.

Money cannot buy happiness

Host: You have said before, "Money cannot buy happiness." Can you tell me in detail?

Haseeb: I started playing professional poker at the age of 17, and I knew a lot of young and rich people at that time, but they were all in pain. In the poker world, you will see people who are worth millions in their 20s who buy luxury cars and watches, but no one cares. If you buy these things just to get a status symbol, not to really enjoy it, it makes no sense. Money can indeed solve your economic problems, but research shows that after income exceeds a certain level (such as $50,000-100,000 a year), the growth of happiness will drop sharply.

People’s happiness comes more from personal progress, growth, and connections with others - friends, family and relationships. This may sound like a cliché, but it does.

Effective altruism

Host: What is your view on the Effective Altruism (EA) movement?

Haseeb: I started to get in touch with EA after I quit poker, it was 2012-2013, and the sports were just getting started. During the FTX era, EA became very "cool", which made me a little uncomfortable because EA is essentially a very alternative concept. Now with FTX going bankrupt, the situation is completely the opposite.

It's a bear market for EA, which is healthy to some extent. When EA is "cool", people doubt the motivation of the joiner. But now people who say they are EA will be questioned, which can actually test people’s true belief in these ideas. Just like cryptocurrencies, FTX's failure does not affect my belief in cryptocurrencies, because FTX represents centralization and third-party trust, which is completely opposite to the core value of cryptocurrencies.

Host: How to deal with public misunderstandings about these areas?

Haseeb: This involves the difference between philosophy and politics. Most ordinary people may not have a deep understanding of the details and are prone to misunderstandings. This does make working in the EA or cryptocurrency space more difficult, but it is important to stick to core philosophy and values.

Perspectives on cryptocurrencies

Host: What are your unique insights into the nature of cryptocurrencies?

Haseeb: The core of cryptocurrency is a philosophy. It raises a fundamental question: Should the flow of value and capital be freely controlled by individuals or should it be controlled by the state? The depth of this problem is far beyond the behavior of a certain Bahamian businessman.

I did not join this field out of liberal beliefs. Actually, I'm not even sure if cryptocurrencies will ultimately benefit the world. It could bring more chaos: weakening state control over monetary policy and increasing the risk of hacking, especially in the age of AI, where censorship-free, unstoppable capital flows can have dire consequences.

But the key is that the development of cryptocurrencies is inevitable. Just like social media, it has become part of the reality, no matter people think it is good or bad.

Host: You mentioned that cryptocurrencies are very different from other technologies?

Haseeb: Yes, this is the most unique thing about cryptocurrencies. Most technological innovations have been strengthening state power over the past 50 years. Think about the Internet and artificial intelligence, which have all enhanced the government's control to some extent.

But cryptocurrencies are fundamentally subversive. Just as YouTube has subverted the monopoly of traditional TV stations, cryptocurrencies are creating "user-generated currencies." If the currency is originally free and programmable, we don't need cryptocurrency at all. Its existence itself is a response to government restrictions.

Most people believe that technology should eventually be "tamed" by the government. But what is unique about cryptocurrencies is that their core value lies in not being tamed. This makes many people uncomfortable and is why some people try to discuss blockchain technology separately from cryptocurrencies.

If we look at what Snowden revealed, we will find that the Internet actually strengthens the government's surveillance capabilities. By contrast, cryptocurrencies may be the only major technological innovation in nearly 50 years that really serves individuals rather than states.

The key to success

Host: Can you share the key principles for success in the cryptocurrency field?

Haseeb: The first principle is to improve technical understanding. Although everyone has different technical levels, cryptocurrencies are essentially a technological innovation. If you don’t understand technology, you will not be able to establish a robust thinking model to predict the direction of the industry’s development. You don't need to be a top smart contract developer, but at least you need to understand the basic workings of programs and computers. This is the only way to determine what is feasible and what is a false promise. In this field, improving technical understanding is always the right choice.

The second important principle is to start writing and sharing publicly. Many people feel that they have no new ideas and want to wait until they accumulate enough knowledge before they start sharing. This is a huge mistake. I started blogging when I first came into contact with cryptocurrencies. Looking back at those early articles, it is indeed naive, but it doesn't matter. because:

No matter what stage of learning you are in now, there is always someone who needs basic knowledge more than you

· It was a good thing that no one paid attention to in the early days, giving you room to practice

· Accumulation after 1% every day is amazing

Newbie suggestions

Host: What is the most counterintuitive fact for new investors?

Haseeb: The most important thing is to realize that almost all important crypto projects are created by industry natives, not elites from Google or Harvard. Whether it is Ethereum, Uniswap or other important projects, they are created by "freaks" who are deeply involved in cryptocurrencies. These people may seem "too addicted to the internet", but it is precisely the ones they have built the most important projects.

Host: So, how to become a native of cryptocurrency?

Haseeb: The key is to find your unique strengths. Don't try to completely transform yourself into another Vitalik, or learn complex zero-knowledge proofs. Instead, you should:

· Clarify your best field

Take this advantage to the extreme

Find the crypto project or person that needs this skill the most

· Prove your value with practical actions

This is like starting a business. Don’t imitate other people’s paths, but find a unique positioning based on your own strengths. Don't think about "how to get the job of that cool-looking person", but think about "what value can I bring to this industry".

Host: Does this sound like entrepreneurial thinking?

Haseeb: Yes, it's exactly the same as starting a business. When starting a business, you will ask yourself: What am I good at? What problems can this skill solve? You will choose the field you love and are good at, rather than blindly going to the next Uber. Similarly, in career development, don’t try to copy other people’s career paths, but plan your own path based on your own strengths and weaknesses.

Number of fans ≠ influence

Host: When I started running Twitter, I thought that the number of fans was equal to influence. But later I found that many high-public accounts are actually just "content farms". Although the interaction is large, their actual influence is very small. Interestingly, true industry leaders often don’t have a large number of followers. This is actually a phenomenon called the "Buton Paradox": in extreme cases, two factors that were originally related (number of fans and influence) will be differentiated. Can you explain it in detail?

Haseeb: This is a phenomenon that many people can intuitively feel. Those accounts with millions of followers may indeed be good at creating content and entertainment, but often cannot be achieved when they really want to push something to happen. For example, an account with 5 million followers wanted to push a certain coin price to rise, but no one responded.

On the contrary, some accounts with few fans can attract the attention of the entire industry once they speak out. For example, Dragonfly partner Bow, who is very low-key on Twitter and doesn’t even have a social media account, but he is a very influential figure in the industry.

The development curve of influence

This phenomenon tells us two points:

1. Social media attention cannot be used to judge influence

Many people admire high fans accounts and think they must be very influential

But in fact, the actual influence of many high-public accounts is limited

· This often allows these account owners to experience "clear cognition"

2. The relationship between fan growth and influence is nonlinear

· When you increase from 200 to 2000 fans, you can indeed feel the obvious changes

· But when it rises from 50,000 to 100,000, the actual influence may not change much

This means that after reaching a certain critical point, the return on the increase of fans will be very low.

Host: So, how to truly build influence?

Haseeb: Many people think that building influence in the cryptocurrency circle is through self-promotion, showing off your connections, or quick cashing out pre-sale projects. But in fact, the real way is:

Create value for the industry

Help founders solve problems

· Do something meaningful behind the scenes

· Peace of value in every interaction

It is indeed much harder than simply posting, which is why most people can’t really build influence – because most people are seekers rather than givers.

VC 's experience and reflection

The cryptocurrency industry attracts a wide range of players, from day traders who pursue short-term returns, to professional hedge fund practitioners, to entrepreneurs of innovative projects and venture capitalists who support innovation. This industry often shows the characteristics of zero-sum games, like a "player vs. player" (PVP) game. Long-term participants may face mental challenges, easily develop cynical emotions, fall into nihilistic thinking, wander in periodic false prosperity, and bear the psychological pressure of rapid monetization.

However, venture capital plays a unique role in this industry, which is essentially a zero-sum game. VC drives team success by discovering outstanding talents and providing the necessary support. VC's success depends entirely on the success of the entrepreneurial team, and this close interest relationship transformed the original "single-player" into "multiplayer". This not only creates greater value, but also provides practitioners with a healthier mentality and development model. This way of teamwork is probably the best way to participate in this disruptive and important industry.

Impersonation and self-awareness

Host: Have you experienced Impostor Syndrome during the transformation process?

Haseeb: Yes, that feeling is always there. I think if a person does not have this feeling at all, either he or she does not think deeply enough or she or she lacks self-reflection. The key is not to overcome this feeling, but to learn to live with it. When I first became an investor, this feeling was particularly strong - "I have never created a successful company, why should I give advice to others? " But what's interesting is that it is precisely this "outsider" perspective that allows me to be able to See problems that the founder may not see.

When you make suggestions as an investor, you often receive special attention. For example, a company may have obvious problems, such as poor marketing strategies or product positioning, which can be seen by people within the company, but the founder may turn a blind eye to it. And when investors - even those with low qualifications - make the same suggestions, they often receive attention from the founders.

This "magic" comes from the external perspective of investors and is not affected by the "gravity field" within the company. For example, Polygon operated six different product lines at the same time for a while. I told the founder: "There are too many product lines, and the market will feel confused. You need to simplify the product lines and make the story clearer." This suggestion was positive. Respond, although I may not be the only one who made this suggestion.

Success vs Failure

Host: When is the biggest "moment of success" in venture capital?

Haseeb: To be honest, there is no so-called "moment of big explosions". VC is a process of continuous accumulation day after day. Even when you receive a check when the project exits, that feels more like "Finally arrived" than "Wow, unbelievable". This feature makes VC healthier than other investment methods.

Host: How do you feel about making a mistake? Can you share a specific example?

Haseeb: In the VC industry, the biggest mistake is often not making the wrong investment, but missing a good project. Because VCs follow power law distributions, missed opportunities are more fatal than failed investments.

For example, what I regret the most is that I missed Uniswap's Series A financing. At that time we analyzed all the data:

· Profit status of liquidity pool

· Trading volume

· Properties and disadvantages of pricing mechanism

Our analysis is "smart" and "right", but we completely missed the most important point: the revolutionary innovation brought by Uniswap - a fully automated system that anyone can list and trade any asset .

The eternal dilemma of investment

Haseeb: As an investor, you will never be completely satisfied because:

Or regret missing a good project

Or regret not investing in more

Either worry about selling too early or too late

But this discomfort is normal, even a good thing. If you are too comfortable, it may be a red flag.

As a VC, I have become more calm in grasping the timing of market exit. The key is to understand:

· Don't pursue perfect exit timing

Set reasonable goals: For example, it is very successful to exit within the highest point of 40%.

· Overbose pursuit of precision is dangerous, which may lead to missing the entire cycle

· It is impossible to buy the bottom or the top accurately

Maintaining public image

Host: As a public figure, how to deal with the drastic changes in external evaluations?

Haseeb: It's really challenging. Take 2021-2022 as an example. The overall image of the cryptocurrency industry has undergone a tremendous change. Especially after the collapse of FTX, the entire industry was affected. Due to my connection with effective altruism, I also suffered a lot after FTX went bankrupt. Suddenly, you are no longer invited to parties and people are unwilling to have too much contact with you.

As a venture capitalist, it is really important how others think of you, because this is your business. But I found the best way to deal with this situation is:

· Stay transparent

· Tell your true thoughts

Continuously create value

In this industry, you will inevitably offend some people. I have annoyed: Solana community, Cardano community, and other major project communities. But this industry has a feature: memory is very short. For example, I once wrote a critical article about EVM (Ethereum Virtual Machine), and the Ethereum community was very angry with me at that time. And now, many people think I am the biggest Ethereum maker.

When facing controversy, you can ask yourself: "Is this a battle I really care about?" If not, delete the content of the controversy and keep moving forward. In this rapidly developing industry, there is no need to be serious about every controversy.

Future Outlook

Host: Looking ahead to the next 12 months, what do you pay most attention to?

Haseeb: From a macro perspective, the market direction will largely depend on the Fed's policy trend. The institutionalization process of cryptocurrencies is an irreversible trend, but this process will be relatively gradual and is unlikely to experience drastic fluctuations.

It is worth noting that the change in institutional attitudes. Taking BlackRock as an example, from 2019 we were still trying to seek its recognition, and by now they have become active advocates of Bitcoin ETFs, the shift is quite significant. The cryptocurrency industry has made progress in institutional recognition over the past five years far exceeding the perception of many market participants.

Based on the current market environment, I expect the growth trend in the next two to three years will become more rational. But it should be pointed out that the cryptocurrency market has its own uniqueness, and once it enters a new market cycle, the market direction may break through conventional expectations. This shift may stem from adjustments in risk appetite or changes in interest rate environments. Overall, I am cautiously optimistic about the cryptocurrency market, but expect volatility to be smaller than the 2021 cycle.