The Earned Secret: Unique Experiences Shaping Crypto Investment Strategies

In the world of cryptocurrency and blockchain technology, having a unique perspective can be a game-changer. This is what Jeff Moore Jr. calls an "earned secret" - the distinctive experiences that make individuals uniquely suited for their current roles. In a recent episode of Lightspeed, Joe McCann from Asymmetric and Mike Dudas from 6th Man Ventures shared their earned secrets and how these have shaped their approaches to investing in the crypto space.

Mike Dudas brings a wealth of experience from both the media and fintech sectors. His journey began at Disney, where he spent a decade working on large-scale consumer media businesses. This experience gave him invaluable insights into how to package and present products for mass consumption. Later, he transitioned to the fintech world, working on projects like Google Wallet and Venmo. It was during this time that Dudas recognized the limitations of traditional financial systems and became intrigued by the potential of cryptocurrency.

"The biggest thing that I saw in those four or five years working on FinTech was that we weren't truly changing the world. You're just kind of making it easier for people to transact on multi-decade old technology," Dudas reflected. This realization led him to explore the world of cryptocurrency, particularly Bitcoin, as a solution to the high transaction fees plaguing merchants.

Joe McCann's path to crypto investing is equally fascinating. With a background in philosophy and logic, McCann taught himself programming and trading. His journey took him from the music industry to Wall Street, and eventually to the tech sector. McCann's experience as the CTO of a top ad agency in New York City exposed him to three major technological paradigm shifts: cloud computing, mobile technology, and open-source software.

McCann's involvement with Node.js, an open-source project, taught him valuable lessons about developer communities and what drives them. This knowledge would later prove crucial in his assessment of blockchain technologies. "What I learned from that was a lot about what makes developers tick and what makes developer communities work," McCann explained.

The Solana Thesis: A New Paradigm in Blockchain Technology

Both McCann and Dudas have shown particular interest in Solana, a high-performance blockchain that has gained significant traction in recent years. McCann's attraction to Solana stems from his background in open-source development and quantitative trading strategies. He saw in Solana a platform that could potentially overcome the limitations he had observed in Ethereum.

"When I found Solana, yes, I was early in terms of price, but I was also reading the source code and trying to understand the white paper and thinking to myself, man, if they can actually pull off what they say that this thing can do, it dramatically changes the spectrum of applications that can be built in a permissionless manner," McCann enthused.

Dudas, on the other hand, was drawn to Solana because of the types of applications it enables and the caliber of people it attracts. He noted that Solana allows for applications that can scale effectively, attracting incredible developers who are not just mercenaries but true missionaries to the cause.

"Solana really does have missionaries. And you can just tell when you look at, you know, there was a hackathon in Bangalore that biology, you know, tweeted about last week, and there's hundreds of people in the audience. And then you go to the next city in India and there's hundreds more. So it truly is an authentic developer community," Dudas observed.

The Monolithic vs. Modular Debate in Blockchain Architecture

One of the key discussions in the blockchain space revolves around the merits of monolithic versus modular architectures. This debate has significant implications for the future of blockchain technology and the types of applications that can be built on these platforms.

McCann provided a historical context to this debate, pointing out that the monolithic versus service-oriented architecture (SOA) discussion has been ongoing in the software development world for decades. He emphasized that there is no one-size-fits-all solution, and each approach comes with its own set of trade-offs.

"The monolithic versus service oriented architecture, SOA, this is old school. If you want to go back many decades has been around for a very long time. And there is no one right way to do things. There are trade offs," McCann explained.

In the context of blockchain, McCann leans towards the monolithic approach, particularly from a developer's perspective. He argues that a monolithic architecture makes it easier for developers to build applications, as they only need to target one platform instead of juggling multiple services in a modular setup.

"I think the monolithic approach with respect to blockchains makes a lot more sense. Forget the technical reasons. I think it makes a lot more sense for the developers because it makes it way easier to build applications when you have one target versus I need this data availability thing and this for state management and this for storage and this for execution and whatever and pick another service that will eventually get added to that modular stack," McCann elaborated.

The Impact of SVM Adoption on the Solana Ecosystem

The recent announcement of Eclipse, a project aiming to bring the Solana Virtual Machine (SVM) to Ethereum as a Layer 2 solution, has stirred significant discussion in the crypto community. This development raises questions about the potential impact on Solana's ecosystem and its underlying thesis.

Both McCann and Dudas view this development positively for Solana. McCann sees it as a validation of Solana's core technology and an opportunity for further improvement. "I think it is incredibly bullish for the core underlying technology of Solana because now you're also going to be getting pressure tested potentially in a new environment, in new set of use cases that may not actually be the core use case of the SVM today," McCann stated.

Dudas echoed this sentiment, emphasizing the open-source nature of the SVM and the potential for its broader adoption. He views this as a strengthening of the Lindy effect for Solana's underlying technology. "When this type of stuff happens, it adds a strengthening Lindy effect to the underlying technology that's being utilized elsewhere, the SVM. Because now if for example, if a eclipse is successful, what are they dependent on? The SVM," Dudas explained.

The State of Crypto Venture Capital in 2023

The conversation then shifted to the current state of crypto venture capital, particularly in light of changing market conditions and rising interest rates. Both McCann and Dudas provided insights into their investment strategies and how they're navigating the current landscape.

Dudas highlighted that true venture capital firms are not under pressure to deploy capital constantly. He explained, "We have a five year investment period, you know, to deploy. They're okay if we take six, nine, 12 months off because we don't think it's an investable market." This approach allows them to focus on working with their existing portfolio companies and waiting for the right opportunities.

McCann emphasized the importance of maintaining a consistent approach to due diligence, regardless of market conditions. "We have actually taken a measured approach. We haven't, we've done deals this year for sure. And actually we just signed another deal this week in Road Check," McCann shared.

Both investors noted that while the U.S. market might be slower, there's significant activity happening globally. Dudas pointed out developments in Japan and Southeast Asia that are creating new opportunities for crypto adoption and investment.

The Future of Crypto Applications: Mobile-First and User-Friendly

Looking ahead to 2024 and beyond, both McCann and Dudas see mobile as the biggest opportunity for crypto applications. McCann believes that as barriers to mobile crypto applications are removed, whether through projects like Saga or changes in Google and Apple policies, we'll see a new wave of innovative applications.

"I think as we get closer to mobile first web three applications, that's the huge unlock," McCann predicted. He emphasized the unique capabilities of mobile devices, such as various sensors, that could enable entirely new types of crypto applications.

Dudas agreed with the mobile-first approach and added that simplicity will be key in the next wave of successful crypto applications. He pointed to the success of simple concepts like Friend.tech as evidence of this trend. "The simpler the game right now, there's enough complexity with just figuring out how to get the crypto asset and how to interact with the blockchain," Dudas noted.

The Role of Media in Shaping the Crypto Narrative

The discussion also touched on the state of crypto media and its role in shaping the narrative around blockchain and cryptocurrency. Dudas, who founded The Block, a crypto media company, shared his insights on the challenges of running a crypto media business.

He highlighted the difficulty of presenting objective, credible information in the crypto landscape due to the high levels of skepticism and gaslighting from market participants. "You state something that is an empirical fact and 70% of people are going to be like that. You're a sheep and you're just following that. It's really hard to present objective, credible information in the crypto landscape," Dudas explained.

Dudas believes that successful crypto media organizations need to be "default optimistic" and partners to good companies, projects, and protocols. However, he emphasized the difference between amplifying good work and mere cheerleading.

Looking to the future of crypto media, Dudas doesn't believe there will be a "Bloomberg of crypto" due to the financial opportunities available to practitioners in the space. Instead, he sees the future of crypto media in formats like podcasts and shows that give real practitioners a platform to share their insights.

Rapid Fire Insights: Overrated Ideas, Favorite Verticals, and Advice for Founders

The podcast concluded with a rapid-fire round, providing quick insights into various aspects of the crypto space. When asked about the most overrated idea in crypto, McCann pointed to Layer 2 solutions, while Dudas mentioned Bitcoin ordinals and NFTs.

Regarding their favorite verticals in crypto, McCann favors trading, while Dudas is most excited about payments and value exchange. Both investors emphasized the importance of the founding team when evaluating startups, with McCann looking for "grit" and Dudas seeking founders for whom "success is inevitable."

When it comes to advice for crypto founders in the current market, both investors emphasized patience and perseverance. McCann advised, "Hang in there. Don't throw in the towel because if you do, you'll never get to raise money again." Dudas added, "Don't get impatient and make an unforced error. You don't have to be doing something at every moment."

Conclusion: The Evolving Landscape of Crypto and Blockchain

As the conversation with Joe McCann and Mike Dudas illustrates, the world of cryptocurrency and blockchain technology is continuously evolving. From the impact of SVM adoption on Solana's ecosystem to the future of mobile-first crypto applications, the industry is ripe with opportunities and challenges.

The insights shared by these experienced investors highlight the importance of understanding the historical context of technological developments, maintaining a balanced approach to investment, and focusing on the long-term potential of blockchain technology. As the crypto space matures, it's clear that success will come to those who can navigate the complex interplay of technology, finance, and human behavior.

For Solana, the future looks bright. The adoption of its virtual machine by other projects serves as a validation of its technology and opens up new possibilities for growth and innovation. As the ecosystem continues to attract talented developers and visionary entrepreneurs, we can expect to see a new wave of applications that leverage Solana's unique capabilities.

Ultimately, the conversation underscores the transformative potential of blockchain technology and the critical role that thoughtful investment and development play in realizing that potential. As we move forward, it will be exciting to see how the insights and predictions shared by McCann and Dudas play out in the ever-evolving world of cryptocurrency and blockchain.

Facts + Figures

• Joe McCann has been trading for 23 years and has a background in philosophy with a focus on logic.
• Mike Dudas spent a decade at Disney before moving into FinTech, working on projects like Google Wallet and Venmo.
• Solana's stability has significantly improved with recent updates including priority fees, isolated fee markets, and quick and weight-stated QoS.
• The SVM (Solana Virtual Machine) is being adopted by other projects, including Eclipse which aims to bring it to Ethereum as a Layer 2 solution.
• Crypto venture capital firms typically have a five-year investment period for deploying capital.
• Japan recently announced that startups can issue tokens to venture capital funds as a form of legal investment.
• Grab, a Southeast Asian ride-hailing app with 200 million users, now includes a crypto wallet.
• Mercado Libre is integrating USDC into its platform.
• Visa has indicated that Solana is potentially the most performant blockchain for future payment use cases.
• The crypto media landscape is challenging, with organizations like The Block, CoinDesk, Decrypt, and Blockworks being recognized for their ethics and quality reporting.
• Mobile is seen as the biggest opportunity for future crypto applications.
• Simplicity in game design is crucial for crypto games due to the inherent complexity of blockchain interactions.
• Grit and inevitability of success are key qualities investors look for in founders.
• Stablecoins are considered a potential "killer app" for demonstrating the advantages of crypto over traditional banking systems.

Questions Answered

What is the "earned secret" concept and how does it apply to crypto investing?

The "earned secret" is a term coined by Jeff Moore Jr. referring to unique experiences that make individuals particularly suited for their current roles. In crypto investing, it refers to the diverse backgrounds and experiences that investors bring to their analysis of blockchain projects and startups. For example, Mike Dudas's experience in media and fintech gives him unique insights into user experience and financial systems, while Joe McCann's background in trading and open-source development informs his understanding of blockchain technologies and developer communities.

How does Solana differ from other blockchain platforms?

Solana stands out from other blockchain platforms due to its high performance and scalability. It uses a unique approach to consensus and transaction processing that allows for extremely fast and low-cost transactions. Unlike Ethereum, which is moving towards a modular architecture, Solana maintains a monolithic structure that some argue makes it easier for developers to build applications. Solana has also attracted a dedicated community of developers who are described as "missionaries" rather than "mercenaries," indicating a strong belief in the platform's potential.

What is the debate between monolithic and modular blockchain architectures?

The debate between monolithic and modular blockchain architectures centers on the trade-offs between simplicity and flexibility. Monolithic architectures, like Solana, integrate all components of the blockchain into a single system, which can make development easier and potentially improve performance. Modular architectures, on the other hand, separate different blockchain functions (like execution, settlement, and data availability) into distinct layers, which can allow for more specialized optimization but may increase complexity. This debate reflects a longstanding discussion in software development about the merits of monolithic versus service-oriented architectures.

How might the adoption of SVM by other projects impact Solana?

The adoption of the Solana Virtual Machine (SVM) by other projects, such as Eclipse bringing it to Ethereum as a Layer 2 solution, is generally seen as positive for Solana. It validates the strength of Solana's technology and could lead to improvements as the SVM is tested in new environments and use cases. This adoption could strengthen the "Lindy effect" for Solana's technology, meaning that its continued use and adaptation increase its likelihood of long-term relevance and survival. However, it also raises questions about potential competition and the unique value proposition of the Solana blockchain itself.

What are the current trends in crypto venture capital?

Current trends in crypto venture capital include a more measured approach to investment, with firms not feeling pressured to deploy capital constantly. There's a focus on working with existing portfolio companies and waiting for the right opportunities. Global developments, such as Japan allowing startups to issue tokens to VCs and increased crypto adoption in Southeast Asia, are creating new investment opportunities. Investors are particularly interested in mobile-first applications and simple, user-friendly products that can onboard new users to crypto. There's also a growing interest in payments and value exchange use cases, particularly with the validation of platforms like Solana by major financial institutions.

What role does media play in the crypto ecosystem?

Media plays a crucial but challenging role in the crypto ecosystem. It's difficult to present objective, credible information due to high levels of skepticism and conflicting narratives within the community. Successful crypto media organizations need to balance being "default optimistic" and supportive of good projects while maintaining journalistic integrity. The future of crypto media may lean more towards platforms that allow practitioners to share their insights directly, such as podcasts and shows, rather than traditional news outlets. The challenge for media organizations is to provide valuable information and analysis in an ecosystem where participants can often make more money by being practitioners rather than reporters.

What advice do experienced investors have for crypto founders in the current market?

Experienced investors advise crypto founders to persevere and maintain patience in the current market. They emphasize the importance of not giving up, as doing so could make it difficult to raise money in the future. Founders are cautioned against making hasty decisions or feeling pressured to constantly launch new initiatives. Instead, they should focus on building solid foundations for their projects and be prepared for market cycles. Investors look for qualities like grit and inevitability of success in founders, suggesting that those who can weather the current challenges may be best positioned for future success.

How are mobile technologies expected to impact the future of crypto applications?

Mobile technologies are seen as the next big frontier for crypto applications. As barriers to mobile crypto applications are removed, either through specialized devices like Saga or changes in policies from companies like Google and Apple, there's potential for a new wave of innovative applications. The ubiquity of smartphones and their unique capabilities (such as various sensors) could enable entirely new types of crypto applications. Investors believe that mobile-first web3 applications could be a "huge unlock" for the crypto industry, potentially leading to more widespread adoption and novel use cases that aren't possible on desktop platforms.

What are the key qualities investors look for in crypto startups?

When evaluating crypto startups, investors prioritize the quality of the founding team above all else. They look for founders with grit, passion, and conviction in their ideas. The concept of "inevitability of success" is mentioned, suggesting that investors seek founders who demonstrate an unstoppable drive to achieve their goals. Beyond the team, investors are interested in startups that can create simple, user-friendly applications that address real-world problems or create new possibilities enabled by blockchain technology. The ability to execute and adapt to the rapidly changing crypto landscape is also highly valued.

How is the adoption of cryptocurrencies progressing globally?

Cryptocurrency adoption is progressing at different rates around the world, with some regions showing significant advances. In Southeast Asia, for example, the ride-hailing app Grab, with 200 million users, has integrated a crypto wallet into its platform. In Latin America, Mercado Libre is integrating USDC, a stablecoin, into its services. Japan has made regulatory changes to allow startups to issue tokens to venture capital funds as a form of legal investment. These developments suggest that crypto adoption is gaining traction in various forms across different markets, often driven by practical use cases like payments and remittances. The global nature of these advancements underscores the importance of looking beyond U.S.-centric perspectives when assessing the progress of crypto adoption.