Dragonfly on Investment Principles: Stay True to the Market and Believe in Exponential Growth

Source: "When Shift Happens"; Compiled by: Felix, PANews

Dragonfly managing partner Haseeb Qureshi recently appeared on "When Shift Happens." In the show, Haseeb revealed a key rule that separates truly wealthy investors from ordinary investors: when everyone is urging you to exit, insist on staying in the market.

The poker pro-turned-venture capitalist shared how he survived the 2018 downturn and the crash of the FTX exchange, and why—when everyone else abandoned Ethereum and Solana—he still chose to defend them.

Host: How have you been feeling lately? How’s life going?

Haseeb: Tired—very tired. Not only because of the market; there’s a lot going on internally to deal with, too—so much hard work that most people don’t see. Most people think venture capital is a pretty relaxed job, like taking the summer off, making an investment, and then waiting ten years. But I think doing it that way is bad VC. We stand out because we work harder than others. My response time is extremely fast—I can take calls anytime. That’s how Dragonfly operates. Not everyone can keep this up for so many years.

Host: There’s a lot of talk about “leaving” lately—like Kyle Samani leaving Multicoin—and many industry OGs are leaving crypto. What’s your take?

Haseeb: I think this narrative is exaggerated. Every time prices fall, someone leaves. That’s a classic recency bias: because it’s happening now, people think it’s worse than the FTX collapse, which is total nonsense. After FTX collapsed, how many people were forced out because they lost everything? And those building metaverse and Web3 games also left because the concept didn’t catch fire again—people just forgot about them.

On the other hand, people also have normal tenures in their careers. It’s normal for someone to move on after 10 years in this field. Especially someone like Kyle—only God knows how much money he made. He’s an extremely successful VC who built a massive, multi-billion-dollar platform. Choosing to leave isn’t surprising. This happens in every industry.

Also, there’s a big difference between pioneers and settlers. They’re always different. It’s like a law of human nature. The people who blaze the trail westward to find California and reproduce on new land are not the same people who eventually built towns. Their psychology and mindset are completely different. The first 10 employees of a startup are totally different from the 50th or 100th—especially the 1000th. The builders who helped establish Google in its early days are entirely different types from those who later built Google Shopping or Google Drive. This is happening right now in crypto, and that’s normal.

Host: How did you manage to stick it out?

Haseeb: You have to have more that you need to prove. I think for someone like Kyle, he’s clearly very successful—he doesn’t need more money. Maybe he does; I don’t know his lifestyle. But at some point, this isn’t about money anymore. It’s about needing to prove something. If you’re Kyle, I bet you’d feel you’ve already proven yourself. You feel like everyone has doubted you. 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 biggest and most successful investments went to zero, exposed as the scam of the century. And Solana, their heavily weighted asset, fell from over $200 to $8. They survived all of that. When everyone else was wrong, they kept believing they were right—and ultimately they got vindicated. That is absolutely an incredible career peak achievement. I don’t know what it feels like, but I can say it must be amazing. After that, leaving—I’d say, yes, I understand why you would leave. If you’ve won a few championship rings, no one is going to be jealous of you for deciding not to “play this game” anymore.

Host: You mentioned recency bias. What other biases are trying to trick investors’ minds, but are actually unhelpful?

Haseeb: That’s a great question. I think the most insidious one for investors is status quo bias. In other words, preferring or expecting the status quo to continue—because if it weren’t resilient, why would it be the status quo? Today, I find it hard to find people who strongly favor the status quo, because the overall sentiment in tech is: “Everything is changing.” The AI revolution really makes people feel: “My god, anything can change.” A few years ago, there was a feeling that maybe nothing would change—and people were talking about “The Great Stagnation.” Peter Thiel wrote a very famous piece about how we have a lot of innovation in bits (information), but not in atoms (the physical world). I think we’ve, to some extent, broken out of that stagnation. Now we have longevity research, CRISPR gene editing, AI, drones, quantum computing, nuclear reactors, and so on. It really feels like there’s again momentum in science and technology, which is very healthy for society. But even so, among investors, the most common failure pattern is still not believing that things can truly change.

Host: You’ve spent a lot of time in Silicon Valley. What did you learn there that you can’t learn elsewhere?

Haseeb: It’s hard to put into words. It’s not propositional knowledge—just a set of facts you couldn’t learn elsewhere. It’s a unique way of operating and thinking that exists only in Silicon Valley. Many cities in the world say, “We want to be the next Silicon Valley.” But almost every time I hear that, I think it’s a joke. Like in Germany, people ask how Berlin can become the next Silicon Valley. I’d think, come on, don’t joke around. Silicon Valley’s uniqueness—I think only two places in the world have replicated it: China and Israel. Very few other places know how to build that kind of model.

The first is celebrating failure. In Silicon Valley, failure is normal, and it isn’t pathologized in any way. In Silicon Valley, you can “fail upwards.” In most places, that’s unheard of.

Host: In most places, they’ll tell you, “Failure is good.” But in reality, people will think you’re a loser and won’t give you a job. The truth is, if you start a company—especially if it fails—it becomes a permanent stain on your record. They’ll ask why you left a good job at Deutsche Bank or SK Telecom to start a company.

Haseeb: Exactly. That mindset clearly can’t create a vibrant startup ecosystem. The second thing about Silicon Valley that many people don’t understand is that it’s an extremely high-trust society. Even though it’s in the United States—which is a typical litigation-loving society—there isn’t much litigation in Silicon Valley. Not many people sue each other or get into intense fights. The reason is that we understand this is a bubbling cauldron of ideas. People will step on each other’s toes; people will steal each other’s ideas—but it’s fine. Because we’re all building in the same direction, we don’t obsess over small details; it’s for the greater good. In many other places, people become extremely short-sighted. If you want to see my startup, you have to sign an NDA—if you do this or that, I’ll sue you. If you want to build the future, you have to act quickly, and you have to be trust-driven.

Finally, the one thing Silicon Valley does right that others get wrong is that its mobility is extremely close-knit. California doesn’t 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 within one to three years. This effectively takes talent off the board and makes people extremely reluctant to leave their current company. Silicon Valley understands from a global perspective that even if, from an individual company’s point of view, my company might be harmed because someone takes knowledge elsewhere, for society as a whole, the efficient transfer of information is better. Look at all the AI labs—almost all are in Silicon Valley, except those in China. We once thought a single company would crack AGI and gain an unmatchable advantage. But three years later, all labs are basically at the same frontier level, and the models are free. Why aren’t they expensive? The answer is competition. Why is there competition? Because all labs leak information like a sieve. Engineers all over Silicon Valley gather in cafés, while walking, and at family gatherings, telling each other what they’re working on and their trade secrets. Knowledge spreads extremely fast, and everyone can catch up immediately. This doesn’t happen anywhere else in the world.

Host: You often compare crypto to technology. Because you have a Silicon Valley mindset, you’re optimistic about the future, long-term, and the bigger picture. In this podcast, we try to filter signal from noise. But when crypto performs well, there’s too much noise; when it performs poorly, people get angry and lose direction. Why do you compare crypto and tech so frequently?

Haseeb: Crypto is technology. It’s software that people run on computers—like Bitcoin. Of course, it doesn’t necessarily behave the same way as Microsoft. But in terms of building effective teams, how technology gets adopted, and sustainable growth curves, we can learn a lot from the tech industry. At the same time, crypto isn’t just technology; it’s also about money, society, and governance. If you don’t understand its financial elements—like learning how capital flows from the internet bubble—you won’t see the full picture of the elephant.

Host: What frustrates me is that because it’s about money, there are so many traders. They don’t understand it, or they’re in it for the wrong reasons. I can’t understand how they can be angry about these small things all day long.

Haseeb: David Hoffman said something great: “The point of crypto isn’t to make you rich. The point of crypto is to set you free.” That’s a profound insight. At the same time, I don’t want to pathologize people who enter crypto just to make money. I want to make money too—there’s nothing wrong with that. Crypto’s philosophy is about freedom, and freedom includes the freedom to make money. No market requires people to not be greedy. When things go wrong in crypto, people say it’s because someone was greedy (Three Arrows Capital, etc.). My response is that this explanation is too shallow. Are people in tech selfless? No. If everyone is greedy, but you’re creating value and doing it in a sustainable way, then it’s fine. Not everyone can make money, but everyone can be greedy.

But there still needs to be some appeal bigger than just making money. If everyone only cares about making money, this industry will be destroyed. There must be some people who truly care about the long-term value we’re creating. Greed and extraction are two different things. Goldman Sachs has a famous saying: “long-term greed.” Short-term greed looks like greed, but it’s actually stupidity—like King Midas turning everything to gold, only to starve because he can’t eat. Long-term greed means the decisions you make in the short term might not make you money immediately, but in the long run you’ll make more. Because that’s reputation—that’s your career. If you only think about making the most money as quickly as possible, then sell drugs. That is definitely not a long-term greed strategy.

Host: You’re a long-term greedy person—you’re an investor. Let’s talk about long-term greed. When you say you just need to believe in exponential growth, what do you mean? How does that relate to making big money?

Haseeb: I entered this industry full-time at the end of 2017, right at the peak of the ICO bubble. In early 2018, I started doing VC, right as the bubble was beginning to burst. 2018 was the worst sentiment period in crypto I’ve ever seen—possibly worse than FTX. Because at least when FTX collapsed, there was someone you could blame (Sam lying, fraud). But in 2018, there was no one to blame. It just felt like we all collectively fooled ourselves, and everything we built was worthless. Bitcoin fell from $19,000 to $4,000, and Ethereum dropped below $100. The right decision then was: stay in the market, hold these assets, and bet on what you believe in for the long term. From 2018 to before the pandemic in 2020, nothing happened—there was no price action—just a faint light in the darkness (like DeFi’s Maker DAO and Compound starting to form). In crypto, you have to believe in exponential growth, and believe that this technology will impact far more than those 100,000 people.

Host: After the FTX collapse in 2022, Bitcoin fell below $20,000. What made you step in and buy assets after such a complete washout?

Haseeb: The answer is still believing in exponential growth. At that time, telling people that the U.S. government would buy Bitcoin was unimaginable. We were wondering whether the United States would ban crypto because of this disaster. You have to believe. If you don’t, you’ll make wrong decisions at every moment. I used to be a professional poker player. What you learn in poker is that you can’t win every hand—you have to think strategically. You can’t always think “buy low and sell high” because you can’t nail the timing every time. What you can choose is strategy, and my strategy is to believe in exponential growth, understanding that crypto will be far larger in 10 years than it is today.

Host: Looking back, it seems obvious, but back then it wasn’t. Now it feels like most people are thinking, “What juice is left to squeeze?”—how much growth is left. Now that we have Trump, the U.S. government, and institutions involved, people might feel like they missed out. How do you view a future bigger than the present?

Haseeb: Look at how many institutions actually hold these things. As a large VC fund, we manage a lot of assets and institutional LPs. Most institutions have zero crypto exposure. Even among the institutions that invest with us, the share of crypto in their portfolios might be less than 1%. Morgan Stanley recently announced that it has started allowing its wealth management division to recommend digital assets to high-net-worth clients (suggesting allocating a few percentage points). Before that, every wealth manager’s advice was: this can’t be invested in, don’t touch it. Institutions are just starting to embrace crypto. Vanguard (the largest ETF provider in the United States) only recently said it isn’t ready to approve a Bitcoin ETF.

Another thing to understand is that crypto adoption is largely generational. The FIT21 Act passed the House. The biggest predictor of who voted for it was “age.” Older people don’t know what’s happening; they think crypto is scary, while their children use it. As Baby Boomers age and pass power to the next generation, everything will change. Young people entering college don’t remember the era before Bitcoin (Bitcoin is already 18 years old). Ethereum was created when they were 10. Changing how society thinks takes time.

Host: It’s like the shift to cloud computing. In 2015-2016, companies were afraid of cloud services, thinking that data not stored in their own buildings wasn’t safe. But with a new generation of executives taking over, what company doesn’t use cloud services now? It’s too useful—it’s just the natural progression. That took only a few years. And now we’re talking about money.

Haseeb: Yes, it’s most obvious with Bitcoin. People have a deep attachment to gold—its long history, and that it can’t be replaced. I think they exaggerate that. For young people, their perception of value is already digital. Why should a stone dug out of the ground be more valuable than a digital asset? SpaceX plans to mine asteroids. If they find an asteroid with gold on it, the world’s gold supply could double—forever changing the dynamics around gold. All the gold in the world 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: Would you sell the major tokens you personally believe in?

Haseeb: My personal finances are very simple. I mostly hold. I have a heavy allocation into all our funds. Personally, I own some crypto and some ETFs—basically buy and hold. Only when it’s time to pay taxes or make donations do I liquidate assets.

Host: In the context of exponential growth, can you talk about your logic for Bitcoin?

Haseeb: As a VC, besides the Bitcoin I personally hold, I don’t invest in Bitcoin because it’s not a venture capital asset. The logic behind Bitcoin is entirely about Schelling points—social consensus, specifically the idea that society needs to build consensus that Bitcoin will become the future way to denominate non-sovereign wealth. People complain that Bitcoin doesn’t behave like gold, or about correlation issues—those are all foolish. Bitcoin and crypto are variable; they have different operating mechanisms. People actually don’t want it to behave like gold or be completely unrelated—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 extremely boring. Young people no longer talk about it; it’s something only older institutions do. When you feel awkward talking about it with your kids, that’s when it becomes truly mainstream. At that point, you might see Bitcoin behave like gold did in the past.

Host: Since you’re in the VC circle, some large crypto assets seem to fit VC thinking more closely. When many people lost confidence, you kept actively defending ETH and SOL. Why?

Haseeb: I generally like defending “unclaimed” viewpoints—that is, views that have no advocates. On X, at the time, the zeitgeist was that these assets were just memes, had no cash flow, and shouldn’t have valuations. I thought that was a mistake. The market was giving them valuation in the tens of billions of dollars, reflecting a deeper kind of wisdom: the market believes they have value, and that they will become bigger than they are today.

Host: Like Tesla? Because Tesla’s P/E ratio is ridiculously high, but it’s a growth story.

Haseeb: Yes. The market has two modes: a cash flow mode and a growth mode. The cash flow mode says, “Don’t tell me stories—show me the money.” The growth mode cares less about cash flow and more about growth. Which mode is Ethereum in? The market clearly treats it as a growth mode. Ethereum’s price moves not because fees increase or the amount burned increases—it’s a reaction to growth expectations, a reaction to narratives about the future.

Host: How often does the market get this growth story wrong over long periods?

Haseeb: Frequently gets it wrong—like WeWork, Peloton, and the metaverse. During the pandemic, people thought we’d work from home forever, but things returned to normal. However, crypto is very special. It goes through booms, busts, then booms again, busts again, and booms again. That’s extremely rare. It tells you that what’s happening in the crypto market has a deeper, more resilient nature, and that the speculation around it is inherent to the product itself.

Host: Which category does Hyperliquid belong to?

Haseeb: It has both, which is very rare. It has massive cash flow (buybacks and token burns), and it also has an extremely compelling growth story (expanding into commodities and index derivatives).

Host: When AI is sucking away talent and capital, why should people stay in crypto?

Haseeb: The answer might surprise you: I don’t know if they should. First, it’s absolutely true that AI is absorbing a lot of talent. AI is unquestionably the most important technology of the 21st century. If you can’t find value creation in crypto, maybe it’s time to leave. The reallocation of capital and talent is exactly what capitalism does.

The OGs we talk about leaving are the pioneers of the industry. Pioneers are the crazy people attracted to the “Wild West.” Now crypto is no longer the Wild West. We have the technology and the form; next we need to build civilization on top of it, with a lot of infrastructure. Social media had all its important apps built by 2010 (except TikTok). Back then, the ideas were there. After 2010, it was all execution and building, which achieved 10x to 30x financial growth and created the most powerful companies in the world.

We’re now in the crypto infrastructure phase (the execution phase). If you need Wild West-level craziness, it isn’t here anymore (maybe it’s in AI). You can feel regret about that, but it also has its own rewards and excitement. If you don’t want that, you should leave. But that doesn’t mean crypto is over. There are still crazy upside potentials—just like social media after 2010.