If an entrepreneur was to call at 9 p.m., Kyle Samani, the co-founder of Multicoin Capital, would pick up the phone. Thankfully, even during this period of market routs, liquidity crises and unpredictable volatility, none of his portfolio companies has had to call.
This article is part of CoinDesk's Future of Work Week.
“Our portfolio companies are very well-capitalized. I'm not worried about" trouble, Samani told CoinDesk.
Samani is known in crypto for his bold personality, his unwavering bets and his Austin, Texas, crypto investment company's returns. Founded in 2017, this is a company that told investors in 2021 that its hedge fund assets have soared 20,287% since inception.
He also thinks big about the digital asset industry: Not only will crypto succeed, he asserts, the market is approaching “a multicoin world.” His company backed the Solana blockchain in a pre-seed round in 2019 as well as Helium, the blockchain-powered internet, and Arweave, which is decentralizing file storage.
However, the bets don’t always pay off. Multicoin lost nearly 95% of its investment in a non-fungible token (NFT) project called "Loot" this year. It was created by Vine founder Dom Hofmann and was meant to support a yet-to-be-built NFT-based, text-based game. For a weekend or so it was a fast-selling NFT project – before people realized it was actually more of a flash in the pan.
"It is extremely important to be OK losing money,” Samani said. “People who are worried about losing money will underperform. We outperform everyone because we are OK with losing.”
Samani, who started investing in crypto in 2017, said he hates trends and that following them is not a very good "mental model” to think about the world. Multicoin has become successful because it ignores what everyone else is doing, he added.
"Everyone else told us to sell Solana and buy Ethereum," Samani said, discussing what is likely one of the New York University graduate’s most-profitable investments.
CoinDesk spoke to Samani for our “How to Make It” series during the “Future of Work Week.” Apparently, "long-term oriented" people could make it in crypto. And if you need a tip, "do not look at the price," Samani said.
This conversation has been lightly edited for brevity and clarity.
What is your typical day like as an investor in tokens?
I spend most of my day reading or talking with entrepreneurs who are building in the space or, obviously, doing due diligence if we were interested in something. And so digging into some concepts further.
Do you ever feel regret over investing in some projects? Like LOOT?
No, I don't care. It's OK to lose money. It is extremely important to be OK losing money. People who are worried about losing money will underperform. We outperform everyone because we are OK losing money.
As a co-founder of Multicoin Capital, what do you see as the latest trend in crypto now?
I don't know. I don't follow trends.
So what are you looking at?
I'm looking at first order changes and how you can use tokens to reshape sectors of the economy. Everything we look at should be happening before it is a trend. If it's already a trend, I am probably not interested in it. I hate trends. Trends, as a mental model, are not a useful way to think about the world.
What's the difference between Web2 mindset and Web3 mindset?
There's a lot of differences, but one of the most important ones is the belief that you want to empower others to contribute and to grow wealth in line with the success of the overall thesis. I think that's very important. Helium is the best example of this. I mean Helium helped a lot of other people build wealth and those people were core to the success of Helium.
What was your turning point from being interested in Web2 to Web3?
In 2017 probably – I decided to work full time in crypto. I realized I was spending 40 hours a week reading about crypto on the internet. If I'm getting to the point where I'm spending 40 hours a week on this, I should probably turn this into a job not just a hobby. I realized crypto is going to change a lot of things and social structures.
You once mentioned a rule at Multicoin Capital – if someone calls you Friday at 9 p.m., you answer the phone. Who, if anyone, is calling you at 9 p.m. nowadays.
None of our portfolio founders have called us at 9 p.m. in the last few months now.
Why did you come up with that rule?
The rule is important because if and when things are going wrong, that's when we need to be supporting our portfolio founders. Typically, things go wrong in inconvenient times – there's just a way that tends to happen. I tell our investment team, “Hey, you need to love this so much that when the guy calls you, you're going to answer the phone Friday at 9 p.m.” I think it is a very important bar. We care about our founders, we work with them during the week and we don't like being passive investors.
What kind of projects will survive the so-called crypto winter?
Our portfolio companies are very well capitalized. I'm not worried about it. I don't care about people who we’re not invested in.
What kind of project will attract your interest?
Everything that's differentiated and unique. We are not sector-specific investors. We invest across [decentralized finance], NFTs, games, consensus algorithms, data [decentralized autonomous organizations], consumer social. We invest in every sector. As long as an entrepreneur has a unique view on how that sector is evolving, then we're excited.
Considering you’ve invested since 2017, what type of people "make it" in crypto?
You need to be long-term oriented. That hasn't changed. The thing that's changed most about founders is, as a lot of the core technical problems are being solved the next generation of founders are not what I would call crypto natives. The founders [early to crypto] were curious. They learned about it. They realized, “Hey, I can do something cool with this.” But they never want to become what I'll call “crypto native.” That's kind of a new class of founder. And we're very excited about a lot of those guys because those are the founders who are going to take crypto into real world industries.
What advice would you give to someone trying to make it in crypto?
Do not look at the price. The single most important thing you can do is not look at the price.
I talked with Laura Shin. And she mentioned you in the interview. And she said there's no set way to do all these things in crypto. What’s your opinion?
I very strongly agree. Multicoin has become successful because we ignore what everyone else told us to [do]. Everyone else told us to sell Solana and buy Ethereum.
How did you make that decision?
I don't think Ethereum after seven years has a real scaling strategy. I have believed that for quite some time. It is now June 2022. I still believe that. It took a lot of conviction to say the number one market share smart contract platform is fundamentally broken, and they do not have a plan. Saying that publicly made a lot of people very angry.
I asked them to give me data and evidence to counter my theory. They were unable to do so. They were therefore lying to themselves. And we called everyone out. And we said no, we're gonna hold our SOL. We bought a lot more. And we held it. And it was one of the greatest venture investments of all time. You have to be willing to ignore what other people say.
You need to do what you believe is right. You need to reason from first principles, other people's opinions do not matter. That is extremely important.
In your opinion, will crypto fundamentally change how we work?
Absolutely, I'm not doing this 100 hours a week because it's a side hobby. I think crypto is going to change the nature of software and the internet as we know it.
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