Dragonfly Partner Conversation: How to Succeed in the Crypto Space Without Relying on Luck?

Original Article Title: How to get Rich by mastering crypto investing (without getting lucky) - Dragonfly Managing Partner

Original Article Author: When Shift Happens

Original Article Translation: Yuliya, PANews

Personal Background

Haseeb:

I am Haseeb Qureshi, currently serving as the Managing Partner of Dragonfly Fund, a global cryptocurrency investment firm managing billions of dollars in assets. When it comes to my career, it can be described as quite dramatic: starting as a professional poker player, transitioning to a software engineer, later becoming an entrepreneur, and finally entering the VC industry for over six years. Among all my professional experiences, cryptocurrency investment, although the most challenging field, has been the most rewarding and meaningful choice for me.

Host: What prompted you to ultimately give up your poker career?

Haseeb:

It was a very chaotic period. I had already built a considerable reputation in the poker world, but due to an incident involving cheating by one of my students, my reputation took a severe hit. At the same time, I was growing increasingly tired of poker. I did not want to look back on my life at 50 and realize that all I had done was play cards to win other people's money. That was not the meaning of life I wanted.

I made a very radical decision: I left myself only $10,000 as basic living expenses, and either donated the rest or gave it to my parents as retirement funds. I wanted to force myself to start over. At the age of 23, I returned to school to study non-technical subjects like English and philosophy. As the oldest student in the class, with nothing on my resume except "professional gambler," it indeed made me panic.

This decision gave me a new perspective. While working as a software engineer in Silicon Valley, my annual income was about $100,000, much less than when I played poker. But interestingly, my happiness did not change much. Because what truly brought satisfaction was learning new knowledge, personal growth, and building genuine connections with those around me.

Poker vs. VC: Similarities and Differences

Host: From a professional poker player to a venture capitalist, that's a significant transition. How do you view the similarities and differences between these two fields?

Haseeb:

The most fundamental difference between venture capital and poker lies in the length of the feedback loop.

· In a poker game, the correctness of a decision can be validated in a very short time. For example, when you assess that your opponent is bluffing and choose to call, the result is immediately revealed.

· On the other hand, in the realm of venture capital, the situation is entirely different. The success or failure of an investment decision often takes six to seven years to truly unfold. We frequently see scenarios where a startup progresses smoothly from seed round to Series A, only to face a critical crisis in Series C. This delayed feedback mechanism places high demands on an investor's judgment. It is worth mentioning that it is through rigorous judgment that we successfully avoided projects like FTX, BlockFi, Luna, which eventually collapsed.

Host: It sounds like the feeling of being correct in your judgment is also very different, right?

Haseeb:

Indeed. This difference is quite apparent. In poker or trading, the rewards of a correct decision are immediate, intense, and result in a dopamine rush of instant gratification. The sense of achievement of "I won" is very direct.

However, in venture capital, success is a gradual process. It is more like nurturing a tree: there are no dramatic peak moments but rather a continuous requirement of patience and dedication. You witness the incremental growth of a startup: each funding round brings a steady increase in valuation, continuous improvement in operational metrics, and collaborative problem-solving during challenges.

This process demands investors to have strong patience and persistence. Unlike the swift wins and losses judgment in poker, venture capital is more akin to a marathon, testing long-term thinking and sustained value creation capabilities. It is this progressive growth process that makes working in venture capital particularly fulfilling.

Investment Judgment

In the realm of venture capital, judgment of individuals is often more critical than an analysis of the business model. While investment giants like Naval Ravikant or Chamath Palihapitiya often emphasize the need to break stereotypes, the actual judgment process is much more complex. As a seasoned investor, I have found that there is a significant paradox embedded within this.

Junior investors usually need to go through a cognitive process: understanding that grasping a business model and technological innovation indeed requires continuous learning and in-depth research, which often involves building a systematic analytical framework through studying the history of technology and business. Interestingly, understanding human nature is our innate ability.

Our nervous system is naturally equipped to interpret others. When you feel distrust towards someone, even if you cannot pinpoint the specific reason, this feeling often stems from the synthesis of many subtle signals you receive.

However, junior investors often overlook this intuitive judgment and instead overly rely on surface-level evidence:

·  "Perhaps it's due to my lack of experience, and my judgment is not accurate enough"

·  "This founder has an impressive track record, and the business plan is well-thought-out"

·  "He has endorsements from so many well-known partners"

With experience accumulation, you will gradually realize: You need to learn to trust your intuition. The key is to see through superficial social endorsement, perceive the essential characteristics of a person, and think about the choices they might make when facing pressure, uncertainty, and moral dilemmas. In most cases, your first instinct is often correct.

Stereotypes

Venture capital is essentially an industry about people. Although the field of social psychology faces a "reproducibility crisis," "stereotype accuracy" is one of the most robust research findings. For example, when you feel that highly aggressive individuals often lack reliability, this judgment is usually accurate.

The human brain is a system constantly engaging in statistical learning. Despite contemporary culture's tendency to negate stereotypes, stereotypes can actually be positive, negative, or neutral. For instance, the stereotype "Asian people prefer rice" is a neutral stereotype and statistically accurate.

Investment Motivation

Host: What drives you to continually immerse yourself in these underdeveloped fields?

Haseeb:

Essentially, the fields I delve into, whether it's early-stage poker or cryptocurrency today, share two prominent features: high chaos and creativity. This is fundamentally different from traditional linear development fields. For example, doing quantitative analysis on Wall Street is essentially an intellectual competition—those with higher "scores" receive greater rewards.

When it comes to the cryptocurrency field, it feels more like exploring an unknown land. Here, it's not just about extraordinary intelligence but also about the courage to take risks, the ability for continuous innovation, and the insight to integrate multidimensional information. It's this challenging environment that keeps my passion alive.

The crypto industry has no such thing as an "aristocratic class." Unlike traditional VCs, you don't need a prominent background or a vast network of connections, nor do you need experience founding billion-dollar companies. Genuine dedication and ongoing effort are the key to success.

A bear market is like a revealing mirror, clearly showing who is here with a sincere purpose and who is persevering silently. Each bull market cycle attracts a wave of successful Web2 entrepreneurs with a large amount of capital, but those who can ultimately stay are often the ones considered "alternative" or "crazy," as they are the ones who truly build a community with valuable projects.

Some Ponderings

Structured Learning

Host: Could you talk about your understanding of the learning process?

Haseeb:

I believe that learning can be divided into two types: structured learning and unstructured learning.

Structured learning is characterized by a clear learning path and tool support. Taking chemistry as an example, it has a complete textbook system and supporting learning resources, allowing learners to follow an established path gradually. The key to this learning mode lies in self-discipline and the cultivation of focus. In fact, what we mostly receive in the traditional educational system is this kind of training. However, the real world often doesn't care about your structured learning achievements. Once you finish university and start looking for a job, you quickly realize that almost none of what you learned in school is applicable. The education system is more like a qualification certification process, proving that you have the basic qualities to receive professional training.

In a real professional environment, especially in positions that can create high added value, there are often no ready-made guides or training materials. You can't prepare like you would for an academic exam. This demands that professionals constantly explore and learn in unknown fields, even if there are experts in the field, as they often don't have enough time for systematic knowledge transfer.

Host: Could you give an example of how unstructured learning is applied in practice?

Haseeb:

I have been exposed to this learning style for a long time. When I started playing poker in 2006, educational resources in the field were scarce. Although there were some books, they were not good enough. If you wanted to become a world-class poker player, you could only gather fragmented information from blogs, forums, and videos. You had to self-study, experiment, take risks, invest your own money, learn from failures, and constantly iterate.

The cryptocurrency field was also like this six or seven years ago. At that time, there was only "Mastering Bitcoin" and a textbook from Princeton (written by a co-founder of Arbitrum), with Ethereum only briefly mentioned in that book. To learn these topics, you had to engage in hands-on practice, interact with people at the cutting edge, create your own curriculum, and continually iterate.

This kind of unstructured learning is often the most valuable and the most market-rewarding. People who can master this learning style usually receive the highest rewards, and this is exactly what traditional schooling has not taught us.

Money Can't Buy Happiness

Host: You've previously mentioned that "money can't buy happiness." Could you elaborate on that?

Haseeb:

I started playing professional poker at 17, and back then, I knew many young and wealthy people, but they were all very unhappy. In the poker world, you would see people in their twenties worth millions, buying luxury cars, and watches, but no one cared. If you buy these things just for status symbols and not to genuinely enjoy, then it's meaningless. Money can indeed solve your financial problems, but studies show that after a certain level of income (such as $50,000-100,000 per year), the increase in happiness sharply decreases.

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 is true.

Effective Altruism

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

Haseeb:

I got involved with EA after retiring from poker, around 2012-2013, when the movement was just starting. During the FTX era, EA became very "cool," which made me somewhat uncomfortable because EA is fundamentally a very alternative concept. Now, with the collapse of FTX, the situation is completely reversed.

We are currently in the EA bear market, which is somewhat healthy. When EA was very "cool," people would doubt the motives of newcomers. But now, claiming to be EA will instead raise suspicion, which can actually test people's true beliefs in these ideas. Just like cryptocurrency, FTX's failure does not affect my belief in cryptocurrency because FTX represents centralization and third-party trust, which is completely contrary to the core value of cryptocurrency.

Host: How do you deal with public misunderstandings of these areas?

Haseeb:

This involves a philosophical and political distinction. Most ordinary people may not delve into the details and are prone to misunderstandings. This does make the work in the EA or cryptocurrency space more challenging, but it is important to stick to core principles and values.

View on Cryptocurrency

Host: What unique insights do you have on the nature of cryptocurrency?

Haseeb:

The core of cryptocurrency is a philosophy. It poses a fundamental question: should the flow of value and funds be freely controlled by individuals or should it be under state control? The depth of this question far exceeds the actions of some Bahamian merchant.

I did not join this field out of a belief in liberalism. In fact, I am not even sure if cryptocurrency will ultimately be beneficial to the world. It may bring more chaos: weaken state control over monetary policy, increase the risk of cyber attacks, especially in the age of AI, and the consequences of censorship-resistant, unstoppable fund flows could be dreadful.

But the key point is that the development of cryptocurrency is inevitable. Just like social media, regardless of whether people think it is good or bad, it has already become part of reality.

Host: You mentioned that cryptocurrency is quite different from other technologies?

Haseeb:

Yes, this is the most unique aspect of cryptocurrency. In the past 50 years, most technological innovations have strengthened state power. Think about the internet, artificial intelligence; they have all in some way enhanced government control.

But cryptocurrency is fundamentally disruptive. Just as YouTube disrupted the traditional monopoly of TV stations, cryptocurrency is creating "user-generated money." If money were inherently free, programmable, we wouldn't need cryptocurrency at all. Its very existence is a response to government constraints.

Most people believe that technology should ultimately be "tamed" by the government. However, the unique aspect of cryptocurrency is that its core value lies in not being tamed. This makes many people uncomfortable and is why some try to separate blockchain technology from cryptocurrency.

If we look at the content revealed by Snowden, we will find that the Internet has actually strengthened the government's surveillance capabilities. In contrast, cryptocurrency may be the only significant technological innovation in the past 50 years that truly serves individuals rather than states.

Key to Success

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

Haseeb:

1. The primary principle is to enhance technical understanding. Although everyone's technical level is different, cryptocurrency is fundamentally a technological innovation. Without understanding the technology, you cannot build a robust mental model to predict the industry's development direction. You don't need to be a top smart contract developer, but at least understand the basics of programming and how computers work. This way, you can judge what is feasible and what is a false promise. In this field, enhancing technical understanding is always the right choice.

2. The second important principle is to start writing publicly and sharing. Many people think they don't have new ideas and want to wait until they accumulate enough knowledge to start sharing, which is a huge mistake. I started writing a blog as soon as I got into cryptocurrency. Looking back at those early articles, they were indeed naive, but that's not important. Because:

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

·  It's actually good if no one pays attention early on, giving you room to practice

·  Progressing 1% every day results in amazing accumulation after a year

Advice for Beginners

Host: For new investors, what is the most counterintuitive fact?

Haseeb:

The most important thing to realize is that almost all major crypto projects are created by industry natives, not elite from Google or Harvard. Whether it's Ethereum, Uniswap, or other important projects, they are created by "weirdos" deeply involved in cryptocurrency. These people may seem "too immersed in the internet," but it is precisely they who have built the most important projects.

Host: So, how does one become a crypto native?

Haseeb:

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

·  Clearly identify your area of expertise

·  Maximize this strength

·  Find the crypto project or person in greatest need of this skill

·  Prove your value through tangible action

It's like entrepreneurship; don't mimic someone else's path, but find a unique position based on your strengths. Don't think about "how to get that cool-looking person's job," but rather consider "what value can I bring to this industry."

Host: This sounds a lot like entrepreneurial thinking?

Haseeb:

Exactly, this aligns perfectly with entrepreneurship. When starting a business, you ask yourself: What am I good at? What problem can this skill solve? You choose a field you love and excel in, rather than blindly trying to create the next Uber. Similarly, in career development, don't attempt to replicate someone else's career path, but plan your own based on your strengths and weaknesses.

Follower Count ≠ Influence

Host: When I first started managing Twitter, I thought that the number of followers equated to influence. However, I later realized that many high-follower accounts were actually just "content farms." Although they had high engagement, their actual influence was minimal. Interestingly, true industry leaders often don't have a large number of followers. This is actually a phenomenon known as the "Button Paradox": in extreme cases, two originally related factors (follower count and influence) diverge. Could you explain this in more detail?

Haseeb:

This is a phenomenon that many people can intuitively feel. Those with millions of followers may indeed be good at creating content and entertainment, but when they really want to make something happen, they often fall short. For example, an account with 5 million followers wanting to drive a coin's price up may find no one responding.

Conversely, some accounts with a small number of followers can attract industry-wide attention once they speak out. For example, Dragonfly's partner Bow is very low-key on Twitter, to the extent that he doesn't even have a social media account, yet he is a highly influential figure in the industry.

The Development Curve of Influence

This phenomenon tells us two things:

1. You Can't Judge Influence by Social Media Following

·  Many people admire high-follower accounts, thinking they must be very influential.

·  However, in reality, the actual influence of many high-follower accounts is limited.

·  This often leads the account owners to experience a moment of "wake-up."

2. The Relationship Between Follower Growth and Influence Is Non-linear

·  Going from 200 to 2,000 followers, you do feel a significant change indeed.

·  But going from 50,000 to 100,000, the actual influence may not change much.

·  This indicates that after reaching a certain threshold, the return on further investment in gaining followers is very low.

Host: So, how can one truly build influence?

Haseeb:

Many people think that building influence in the cryptocurrency space is through self-promotion, flaunting connections, or quickly cashing out from presale projects. But in reality, the true approach is:

·  Creating value for the industry

·  Helping founders solve problems

·  Doing meaningful work behind the scenes

·  Providing value in every interaction

This is indeed much more challenging than simple posting, which is why most people cannot truly build influence—because most people are takers rather than givers.

VC Experience and Reflection

The cryptocurrency industry has attracted a diverse range of participants, from day traders seeking short-term gains to professional hedge fund operators, as well as entrepreneurial innovators and venture capitalists supporting innovation. This industry often exhibits zero-sum game characteristics, much like a "player versus player" (PVP) game. Long-term participants may face psychological challenges, easily falling into a cynical mindset, engaging in nihilistic thinking, hovering in cyclical hype cycles, and enduring the psychological pressure of rapid liquidity events.

However, venture capital plays a unique role in this industry, fundamentally being a zero-sum game. Venture capitalists drive success by identifying top talent and providing necessary support to help teams succeed. VC success is entirely dependent on the success of the founding team, transforming the original "single-player game" into a "multiplayer game" through this close-knit vested interest relationship. This not only creates greater value but also offers industry participants a healthier mindset and development path. This collaborative teamwork approach may indeed be the best way to engage in this disruptive and crucial industry.

Impostor Syndrome and Self-Awareness

Host: Have you experienced Impostor Syndrome during your transition?

Haseeb:

Yes, that feeling has always been there. I think if a person has never felt this way, either they haven't thought deeply enough or they lack self-reflection. The key is not to overcome this feeling but to learn to coexist with it. When I first became an investor, this feeling was particularly strong—"I have never built a successful company, so why should I advise others?" But interestingly, it was precisely this "outsider" perspective that allowed me to see problems that founders might not see.

When you offer advice as an investor, it is often given special consideration. For example, a company may have obvious issues such as poor marketing strategy or product positioning that everyone inside the company can see but the founder overlooks. Yet when an investor—even a relatively inexperienced one—offers the same advice, founders often pay attention.

This "magic" partly comes from the external perspective of investors, unaffected by the company's internal "gravity field." For example, at one point, Polygon was operating six different product lines simultaneously. I told the founder, "You have too many product lines; the market will perceive it as chaos. You need to simplify the product lines to make the story clearer." This advice was positively received, even though I may not have been the only one to suggest it.

Success VS Failure

Host: In venture capital, what is the biggest "success moment"?

Haseeb:

To be honest, there is no such thing as a "big bang moment." VC is a day in, day out, incremental process. Even when you get the check at exit, it feels more like a "finally" than a "wow, unbelievable." This characteristic makes VC healthier compared to other investment avenues.

Host: How does failure feel? Can you share a specific example?

Haseeb:

In the VC industry, the biggest mistake often isn't making a wrong investment but missing out on a good project. Because VC follows a power law distribution, missed opportunities are more fatal than failed investments.

For example, my biggest regret is missing out on Uniswap's Series A funding. At the time, we analyzed all the data:

·  Liquidity pool profitability

·  Trading volume

·  Quality of the pricing mechanism

Our analysis was all "smart" and all "right," but we completely overlooked the most crucial point: Uniswap's revolutionary innovation—a fully automated system where anyone can list and trade any asset.

The Eternal Dilemma of Investment

Haseeb: As an investor, you are never fully satisfied because:

·  You either regret missing out on a good project

·  Or you regret not investing more

·  Or you worry about selling too early or too late

But this discomfort is normal, and even a good sign. If you are too comfortable, it might be a dangerous signal.

As a VC, I have become more comfortable with timing the market exit. The key is to understand:

·  Do not chase the perfect exit timing

·  Set realistic goals: exiting within a 40% range around the peak is quite successful

·  Overly pursuing precision can be dangerous and may result in missing the entire cycle

·  Trying to perfectly time the bottom or the top is impossible

Maintaining Public Image

Host: As a public figure, how do you deal with the drastic changes in public perception?

Haseeb:

Indeed, this is quite challenging. Take 2021-2022, for example, the overall image of the cryptocurrency industry underwent a significant transformation. Especially after the collapse of FTX, the entire industry was affected. Due to my association with effective altruism, I also faced a lot of impact after the FTX closure. Suddenly, you're no longer invited to parties, and people are reluctant to associate with you.

As a venture capitalist, how others perceive you does matter because that's your business. However, I've found that the best way to deal with this situation is:

·  Maintain transparency

·  Speak your true thoughts

·  Continue to create value

In this industry, you're bound to offend some people. I've angered the Solana community, Cardano community, and other major project communities. But this industry has a unique characteristic: short memory. For instance, I once wrote a critical article about the Ethereum Virtual Machine (EVM), and the Ethereum community was very mad at me at that time. Now, many people consider me an Ethereum maximalist.

When faced with controversy, you can ask yourself, "Is this a battle I truly care about?" If not, delete the controversial content and move on. In this rapidly evolving industry, you don't have to take every controversy to heart.

Future Outlook

Host: Looking ahead to the next 12 months, what are you most focused on?

Haseeb:

From a macro perspective, the market's direction will largely depend on the Federal Reserve's policy moves. The institutionalization of cryptocurrency is an irreversible trend, but this process will be relatively gradual, with unlikely sharp fluctuations.

A notable aspect is the shift in institutional attitudes. Take BlackRock, for example. From 2019, when we were still striving for their approval, to now, where they have become strong advocates for a Bitcoin ETF, this transformation is quite significant. Over the past five years, the progress made by the cryptocurrency industry in institutional acceptance has far exceeded the awareness of many market participants.

Based on the current market environment, I expect a more rational growth trend in the next two to three years. However, it should be noted that the cryptocurrency market has its uniqueness, and once it enters a new market cycle, the market's direction may surpass conventional expectations. This shift may stem from a risk appetite adjustment or changes in the interest rate environment. Overall, I maintain a cautiously optimistic outlook on the cryptocurrency market, but anticipate that the volatility will be lower than in the 2021 cycle.

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