Dialogue with Dragonfly Managing Partner: How to Succeed in the Cryptocurrency Space Without Relying on Luck?

Original: When Shift Happens

Compiled by: Yuliya, PANews

In the field of cryptocurrency investment, finding the next hundredfold return opportunity is every investor's dream. As a top global cryptocurrency investment fund, Dragonfly is known for its unique investment vision and deep technical understanding, with a portfolio that includes many star projects such as Avalanche, Near Protocol, Monad, and Athena.

In this episode of When Shift Happens, Dragonfly Managing Partner Haseeb Qureshi shares his legendary journey from professional poker player to top cryptocurrency investor, and how to establish a lasting impact in this rapidly evolving industry. This episode covers the most critical topics in cryptocurrency investment: how to turn cryptocurrency into a team sport, why money can't buy happiness, how to cope with impostor syndrome, and common mistakes made by new investors. PANews has compiled a written version of this podcast.

Personal Background

Haseeb:

I am Haseeb Qureshi, currently serving as the Managing Partner of Dragonfly Fund, a global cryptocurrency investment institution managing billions of dollars in assets. Speaking of my career, it has been quite dramatic: starting as a professional poker player, transitioning to a software engineer, then becoming an entrepreneur, and finally entering the VC industry for over six years. Among all my career experiences, cryptocurrency investment, while the most challenging field, is also the one that feels the most valuable and meaningful to me.

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

Haseeb:

It was a very chaotic time. I had built quite a reputation in the poker world, but my reputation took a serious hit due to an incident involving cheating by my students. At the same time, I was growing increasingly weary of poker. I didn't want to look back at my life at 50 and realize I had spent my entire life just playing cards and winning money from others. That wasn't the meaning of life I was looking for.

I made a radical decision: I left myself with only $10,000 for basic living expenses, donating the rest or giving it to my parents as retirement funds. I wanted to force myself to start over. At that time, I was 23 years old, returning to school to study non-technical subjects like English and philosophy. Being the oldest student in the class, with nothing on my resume but "professional gambler," was indeed panic-inducing.

This decision gave me a new perspective. As a software engineer in Silicon Valley, my annual income was about $100,000, much less than when I was playing poker. But interestingly, my sense of happiness didn't change much. Because what truly brings satisfaction is learning new knowledge, achieving personal growth, and establishing genuine connections with those around you.

Similarities and Differences Between Poker and VC

Host: Transitioning from a professional poker player to a venture capitalist is a significant shift. 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 cycle.

• In poker, the correctness of a decision can be verified in a very short time. For example, when you judge that an opponent is bluffing and choose to call, the result is revealed immediately.
• In contrast, the situation in venture capital is entirely different. The quality of an investment decision often takes six to seven years to truly clarify. As we often see, a startup may seem to progress smoothly from seed round to Series A, but suddenly encounter a fatal crisis in Series C. This delayed feedback mechanism places extremely high demands on investors' judgment. It is worth mentioning that it is precisely through rigorous judgment that we successfully avoided projects like FTX, BlockFi, and Luna, which ultimately collapsed.

Host: It sounds like the feeling of making the right judgment is also quite different?

Haseeb:

Indeed. This difference is very pronounced. In poker or trading, the rewards of making the right decision are immediate and intense, producing an instant dopamine rush. That sense of "I won" comes very directly.

But in venture capital, success is a gradual process. It's more like nurturing a tree: there are no dramatic climactic moments, but rather a need for continuous patience and investment. You will see startups grow step by step: each round of financing brings steady increases in valuation, continuous improvement in operational metrics, and collaborative problem-solving when challenges arise.

This process requires investors to possess strong patience and perseverance. Unlike the quick win/lose judgments in poker, venture capital is more like a marathon, testing long-termism and the ability to create sustained value. It is this gradual growth process that makes working in venture capital particularly meaningful.

Investment Judgment

In venture capital, judgment about people is often more critical than analysis of business models. 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 an experienced investor, I find that there is an important paradox embedded in this.

Junior investors typically need to undergo a cognitive process: understanding that analyzing business models and technological innovations indeed requires continuous learning and in-depth research, often needing to build a systematic analytical framework through studying the history of technology and business. Interestingly, understanding human nature is an innate ability we possess.

Our nervous system is inherently equipped to interpret others. When you feel distrust towards someone, even if you can't pinpoint a specific reason, that feeling often stems from the many subtle signals you have received.

However, junior investors often overlook this intuitive judgment and instead rely too heavily on superficial evidence:

• "Maybe I lack experience and my judgment isn't accurate."
• "This founder has an impressive resume, and the business plan is well-structured."
• "He has so many well-known partners backing him."

As you accumulate experience, you will gradually realize: you need to learn to trust your intuition. The key is to see through superficial social validations to perceive a person's essential characteristics, considering the choices they might make when facing pressure, uncertainty, and moral dilemmas. In most cases, your first intuition is often correct.

Stereotypes

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

The human brain is a system that constantly engages in statistical learning. Although contemporary culture tends to deny stereotypes, in reality, stereotypes can be positive, negative, or neutral. For instance, the stereotype that "Asians prefer rice" is neutral and statistically accurate.

Investment Motivation

Host: What drives you to continuously engage in these yet-to-be-fully-developed fields?

Haseeb:

Essentially, the fields I am involved in, whether early poker or now cryptocurrency, have two prominent characteristics: high chaos and creativity. This fundamentally distinguishes them from traditional linear development fields. For example, quantitative analysis on Wall Street is essentially an intellectual competition; whoever has the higher "score" gets more returns.

In emerging fields like cryptocurrency, it feels more like exploring an unknown continent. Here, not only is exceptional intelligence required, but also the courage to take risks, the ability to innovate continuously, and the insight to integrate multidimensional information. It is this challenging environment that keeps my enthusiasm alive.

There is no so-called "nobility" in the crypto industry. Unlike traditional VC, you don't need a prestigious background or a vast network of connections, nor do you need to have founded a billion-dollar company. Genuine effort and continuous hard work are the keys to success.

Bear markets act like a mirror, clearly showing who comes with sincere intentions and who persists quietly. Every bull market attracts a batch of successful Web2 entrepreneurs with substantial funds, but those who can ultimately remain are often those considered "alternative" or "crazy," as they are the ones truly building valuable projects.

Some Thoughts

Structured Learning

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

Haseeb:

I believe learning can be divided into two types. The first is structured learning, and the second is unstructured learning.

Structured learning is characterized by a clear learning path and tool support. Take chemistry as an example; it has a complete textbook system and accompanying learning resources, and learners only need to follow the established path step by step. The key to this learning model lies in cultivating self-discipline and focus. In fact, most of the training we receive in the traditional education system is of this type. However, the real world often doesn't care about your structured learning outcomes. When you finish college and go straight to work, you will quickly find that almost nothing 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 real professional environments, especially those that create high added value, there are often no ready-made manuals or training materials. You can't prepare systematically like you would for an academic exam. This requires practitioners to continuously explore and learn in unknown fields, even if there are experts in the field, they often do not have enough time for systematic knowledge transfer.

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

Haseeb:

• I encountered this learning method early on. When I started playing poker in 2006, there were very few educational resources in this field. Although there were some books, they weren't good enough. If you wanted to become a world-class poker player, you could only gather scattered information from blogs, forums, and videos. You had to self-learn, experiment, and take risks, investing your own money, learning from failures, and iterating continuously.
• The cryptocurrency field was similar six or seven years ago. At that time, there was only "Mastering Bitcoin" and a textbook from Princeton (authored by one of the co-founders of Arbitrum), and Ethereum was only mentioned briefly in that book. To learn these contents, you could only dive into practice, communicate with those at the forefront, create your own curriculum, and iterate continuously.

This kind of unstructured learning is often the most valuable and the most rewarded by the market. Those who can master this learning method usually receive the highest rewards, and this is precisely what school education has not taught us.

Money Can't Buy Happiness

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

Haseeb:

I started playing professional poker at 17, and at that time, I met many young wealthy people, but they were all very unhappy. In the poker world, you see people in their twenties worth millions, buying luxury cars and watches, but no one cares. If you buy these things just to gain status symbols and not for genuine enjoyment, then it is meaningless. Money can indeed solve your financial problems, but research shows that once income exceeds a certain level (for example, $50,000 to $100,000 per year), the increase in happiness declines 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 is indeed true.

Effective Altruism

Host: What are your views on the Effective Altruism (EA) movement?

Haseeb:

I started getting involved with EA after leaving poker, around 2012-2013, when the movement was just starting. During the FTX period, EA became quite "cool," which made me a bit uncomfortable because EA is essentially a very alternative idea. Now, with the collapse of FTX, the situation is completely the opposite.

Now it's a bear market for EA, which is somewhat healthy. When EA was "cool," people would doubt the motives of those who joined. But now, those who claim to be EA are instead questioned, which can test people's true beliefs in these ideas. Just like cryptocurrency, the failure of FTX does not affect my belief in cryptocurrency because FTX represents centralization and third-party trust, which is completely contrary to the core values of cryptocurrency.

Host: How do you deal with public misunderstandings about these fields?

Haseeb:

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

Views on Cryptocurrency

Host: What unique insights do you have about the essence of cryptocurrency?

Haseeb:

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

I did not enter this field out of liberal beliefs. In fact, I am not even sure whether cryptocurrency will ultimately benefit the world. It may bring more chaos: weakening state control over monetary policy, increasing risks of hacking, especially in the age of AI, where uncensored and unstoppable flows of funds could have terrifying consequences.

But the key 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 a part of reality.

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

Haseeb:

Yes, this is the most unique aspect of cryptocurrency. Over the past 50 years, most technological innovations have reinforced state power. Think about the internet and artificial intelligence; they have all, to some extent, enhanced government control.

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

Most people believe that technology should ultimately be "tamed" by the government. But the uniqueness of cryptocurrency lies in its core value of not being tamed. This makes many people uncomfortable, which is why some try to discuss blockchain technology separately from cryptocurrency.

If we look at what Snowden revealed, we find that the internet has actually strengthened government surveillance capabilities. In contrast, cryptocurrency may be the only significant technological innovation in nearly 50 years that truly serves individuals rather than the state.

Keys to Success

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

Haseeb:

1. The primary principle is to enhance your technical understanding. Although everyone's technical level varies, cryptocurrency is fundamentally a technological innovation. Without understanding the technology, you cannot build a robust mental model to predict the direction of industry development. You don't need to become a top smart contract developer, but you should at least understand the basic workings of programs and computers. This way, you can judge what is feasible and what are false promises. In this field, enhancing technical understanding is always the right choice.

2. The second important principle is to start writing and sharing publicly. Many people think they have no new ideas and want to wait until they accumulate enough knowledge before sharing, which is a huge mistake. I started writing a blog when I first got into cryptocurrency. Looking back at those early articles, they were indeed quite naive, but that doesn't matter. Because:

• No matter what stage of learning you are in, there will always be someone who needs the foundational knowledge more than you.
• It's actually a good thing that no one paid attention early on; it gave you space to practice.
• A 1% improvement each day leads to astonishing accumulation after a year.

Advice for Newcomers

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

Haseeb:

The most important thing to recognize is that almost all significant crypto projects are created by crypto natives, not by elites from Google or Harvard. Whether it's Ethereum, Uniswap, or other important projects, they were all created by "nerds" deeply involved in cryptocurrency. These people may seem "too obsessed with the internet," but it is precisely they who have built the most important projects.

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

Haseeb:

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

• Clearly identify the area you excel in.
• Maximize that advantage.
• Find the crypto projects or people that need that skill the most.
• Prove your value through practical actions.

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

Host: This sounds very much like an entrepreneurial mindset?

Haseeb:

Exactly, it is completely the same as entrepreneurship. When you start a business, you ask yourself: What am I good at? What problems can this skill solve? You choose the area you love and excel in, rather than blindly trying to do the next Uber. Similarly, in career development, don't try to replicate someone else's career path; instead, plan your path based on your strengths and weaknesses.

Followers ≠ Influence

Host: When I first started managing Twitter, I thought the number of followers equated to influence. But later I found that many high-follower accounts are actually "content farms," which, while having high interaction, have little actual influence. Interestingly, true industry leaders often have few followers. This is actually a phenomenon known as the "Buton Paradox": in extreme cases, two originally related factors (follower count and influence) can diverge. Can you explain this further?

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 when they genuinely want to push something to happen, they often can't. For example, an account with 5 million followers might want to drive up the price of a coin, but no one responds.

In contrast, some accounts with few followers can draw the entire industry's attention once they speak up. For instance, Dragonfly partner Bow is very low-key on Twitter, even without a social media account, but he is a highly influential figure in the industry.

The Curve of Influence Development

This phenomenon tells us two things:

1. You cannot judge influence by social media attention.

• Many people admire high-follower accounts, believing they must be influential.
• But in reality, the actual influence of many high-follower accounts is limited.
• This often leads the owners of these accounts to experience a moment of "awakening."

2. The relationship between follower growth and influence is nonlinear.

• When growing from 200 to 2000 followers, you can indeed feel a significant change.
• But when growing from 50,000 to 100,000, the actual influence may not change much.
• This indicates that after reaching a certain critical point, further investment in follower growth yields low returns.

Host: So, how do you truly build influence?

Haseeb:

Many people think that building influence in the cryptocurrency circle is through self-promotion, flaunting connections, or quickly cashing out on pre-sale projects. But in reality, the true method is:

• Create value for the industry.
• Help founders solve problems.
• Do meaningful things behind the scenes.
• Provide value in every interaction.

This is indeed much more challenging than simply 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 attracts a wide variety of participants, from day traders seeking short-term gains to professional hedge fund practitioners, innovative project entrepreneurs, and supportive venture capitalists. This industry often exhibits characteristics of a zero-sum game, much like a "player versus player" (PVP) game. Long-term participants may face psychological challenges, easily becoming cynical and falling into nihilistic thinking, lingering in periodic false booms while bearing the psychological pressure of rapid monetization.

However, venture capital plays a unique role in this industry; it is essentially a zero-sum game. VCs drive team success by discovering talented individuals and providing necessary support. The success of VCs entirely depends on the success of entrepreneurial teams, and this close alignment of interests transforms the original "single-player game" into a "multiplayer game." This not only creates greater value but also provides practitioners with a healthier mindset and development model. This collaborative approach may be the best way to engage in this disruptive and significant industry.

Impostor Syndrome and Self-Perception

Host: During your transition, did you experience impostor syndrome?

Haseeb:

Yes, that feeling has always been there. I think if a person completely lacks this feeling, they are either not thinking deeply enough or 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 created a successful company; why should I advise others?" But interestingly, it is precisely this "outsider" perspective that allows me to see problems that founders may overlook.

When you offer advice as an investor, it often receives special attention. For example, a company may have obvious issues, such as poor marketing strategies or product positioning, which everyone inside can see, but the founder may be blind to. However, when an investor ------ even a relatively inexperienced one ------ offers the same advice, it often gets taken seriously by the founder.

This "magic" partly comes from the investor's external perspective, unaffected by the internal "gravitational field" of the company. For instance, Polygon was simultaneously operating six different product lines for a while, and I told the founder, "You have too many product lines; the market will find it confusing. You need to simplify the product lines and make the story clearer." This suggestion received a positive response, even though I might not have been the only one to make it.

Success vs. Failure

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

Haseeb:

To be honest, there is no such thing as a "big breakthrough moment." VC is a day-to-day, continuous accumulation process. Even when you receive a check at the exit of a project, that feeling is more like "finally arrived" rather than "wow, unbelievable." This characteristic makes VC healthier than other forms of investment.

Host: How does it feel to make mistakes? Can you share a specific example?

Haseeb:

In the VC industry, the biggest mistakes often aren't making wrong investments but missing out on good projects. Because VC follows a power law distribution, missed opportunities can be more fatal than failed investments.

For example, I regret missing the A round of financing for Uniswap. At that time, we analyzed all the data:

• The profitability of liquidity pools.
• Trading volumes.
• The pros and cons of the pricing mechanism.

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

The Eternal Dilemma of Investment

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

• You either regret missing out on good projects.
• Or regret not investing more.
• Or worry about selling too early or too late.

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

As a VC, I have become relatively calm about timing the market exit. The key is to understand:

• Don't pursue the perfect exit timing.
• Set reasonable goals: for example, exiting within 40% of the peak is very successful.
• Overly pursuing precision can be dangerous and may lead to missing the entire cycle.
• It is impossible to precisely time the bottom or the top.

Maintaining Public Image

Host: As a public figure, how do you cope with the drastic changes in external evaluations?

Haseeb:

This is indeed very challenging. Take the example of 2021-2022; the overall image of the cryptocurrency industry underwent a huge transformation. Especially after the collapse of FTX, the entire industry was affected. Due to my association with effective altruism, I was also impacted after FTX's collapse. Suddenly, you are no longer invited to parties, and people are reluctant to engage with you.

As a venture capitalist, how others perceive you is indeed important because that is your business. But I have found that the best way to deal with this situation is to:

• Stay transparent.
• Speak your true thoughts.
• Continue to create value.

In this industry, you inevitably offend some people. I have annoyed: the Solana community, the Cardano community, and other major project communities. But there is a characteristic of this industry: memory is short. For example, I once wrote a critical article about the EVM (Ethereum Virtual Machine), and at that time, the Ethereum community was very angry with me. Now, many people instead think I am an Ethereum maximalist.

When facing controversy, you can ask yourself, "Is this a battle I truly care about?" If not, just delete the controversial content and move on. In this rapidly evolving industry, there is no need to get caught up in every controversy.

Future Outlook

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

Haseeb:

From a macro perspective, the direction of the market 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, unlikely to experience dramatic fluctuations.

It is worth noting the shift in institutional attitudes. Take BlackRock as an example; from 2019 when we were still striving for their recognition to now when they have become active advocates for Bitcoin ETFs, this shift is quite significant. Over the past five years, the progress made in institutional recognition of the cryptocurrency industry has far exceeded the perceptions of many market participants.

Based on the current market environment, I expect the growth trend in the next two to three years will be more rational. However, it should be noted that the cryptocurrency market has its uniqueness, and once a new market cycle begins, the market direction may break conventional expectations. This shift could stem from adjustments in risk appetite or changes in the interest rate environment. Overall, I hold a cautiously optimistic view of the cryptocurrency market, but I expect the volatility will be less than in the 2021 cycle.