Nov 18, 2021 · 1h 13m · capital-allocators
Kyle Samani and Tushar Jain - Multicoin Capital (Manager Meetings, EP.20)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this Manager Meetings episode, Michael Liddy of Evanston Capital interviews Multicoin Capital co-founders Kyle Samani and Tushar Jain regarding their thesis-driven investment strategy, portfolio concentration frameworks, layer-one blockchain architecture, and hands-on governance in Web3.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 9% of the talking time here. How this is scored →
Ted as informed peer 3.7 Guest teaching 6.5 Guest disagreement 1.1 Ted pushing back 0.3
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 34:36 Rejecting mean reversion as a worldview
Kyle aggressively rejects the common industry premise of mean reversion in crypto, arguing that expecting assets to revert back down is an obsolete, backward-facing framework.
Hardest push from Ted ▶ 30:19 Challenging concentration during severe drawdownsMike Liddy pushes Kyle and Tushar on whether their extreme portfolio concentration creates unacceptable downside risk during severe market crashes like 2018 and March 2020.
Biggest teaching moment ▶ 46:50 Deconstructing Layer 1 scaling and multi-chain costsKyle delivers an in-depth technical explanation outlining why multi-chain and sharded rollups impose severe latency and redundant signature-verification penalties compared to a single monolithic state machine.
Ted holds their own ▶ 8:28 Institutional diligence mechanics in emerging asset classesTed Seides and Mike Liddy demonstrate institutional allocator sophistication by comparing traditional public equity underwriting against the unique technical diligence required for cryptographic networks.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Legal Disclaimer and Compliance Notice | 6 | 2 | 0 | 2 | Ted Seides conducts a structured diligence interview with Mike Liddy exploring how Evanston Capital underwrites crypto hedge funds. Seides drills on portfolio sizing, single-manager risk, and operational due diligence. | |
| Tushar Jain on Early Influences and the Ethereum Spark | 3 | 5 | 0 | 0 | Mike Liddy opens the discussion asking about Tushar's early career. Tushar describes discovering Ethereum and recognizing its potential for programmatic human coordination. | |
| Kyle Samani on Pristine, Google Glass, and Fund Inception | 3 | 6 | 0 | 0 | Kyle shares his background founding Pristine for Google Glass and how contrasting Stripe APIs with Ethereum smart contracts revealed the power of permissionless finance. | |
| Shared Tech Curiosity and Moving Away from Wall Street | 3 | 4 | 1 | 0 | Kyle and Tushar discuss their college bonding over hardware blogs and why both explicitly rejected conventional Wall Street career paths. | |
| Catalyst to Go Full-Time: The 2017 ICO Inflection Point | 4 | 7 | 1 | 0 | The guests detail how the Gnosis ICO triggered the launch of Multicoin and explain their thesis-driven approach as truth-seeking rather than typical VC deal picking. | |
| Public Research Writing and Silent Memo Culture | 3 | 6 | 1 | 0 | Tushar explains their culture of public research writing and silent memo-reading meetings to prevent charismatic dominance and enforce an idea meritocracy. | |
| Investment Horizons and Crypto's Compressed Liquidity Spectrum | 4 | 7 | 1 | 0 | The guests highlight how crypto compresses venture lifecycles by going public at Seed/Series A valuations, necessitating indefinite compounding horizons. | |
| Portfolio Concentration: The Best-Ideas Framework | 4 | 8 | 3 | 2 | Liddy questions concentration and drawdowns. Tushar distinguishes risk from uncertainty while Kyle emphatically rejects mean reversion as a backward-looking fallacy. | |
| Sponsor: Ridgeline Investment Management Platform | 4 | 7 | 1 | 0 | Following the sponsor read, Tushar contrasts traditional board-level governance with decentralized network-level governance requiring rough community consensus. | |
| Guiding Founders Through Crypto Capital Markets | 4 | 8 | 2 | 0 | Kyle breaks down why crypto capital markets operate differently from traditional markets, citing global retail liquidity, absence of formal comms rules, and founder inexperience. | |
| Co-Managing Partner Dynamics and Decision Protocols | 3 | 5 | 0 | 1 | Liddy asks how their co-PM setup operates without devolving into gridlock. Tushar and Kyle explain their division between thesis formation and portfolio construction. | |
| Layer One Taxonomy and the One-Chain Maximalist Thesis | 4 | 9 | 2 | 0 | Kyle provides an architectural breakdown of Layer 1 categories and argues as a one-chain maximalist that cross-chain fragmentation imposes unsustainable latency and computation costs. | |
| The Operating System Analogy for Layer One Consolidation | 3 | 7 | 1 | 0 | Tushar draws an analogy between historical mobile operating system consolidation (iOS/Android duopoly) and the inevitable consolidation of smart contract blockchains. | |
| Case Study: Sizing the Solana Investment Thesis | 4 | 9 | 2 | 0 | Kyle and Tushar detail their early Solana bet, noting Anatoly Yakovenko focused on raw execution speed and engineering rather than unproven computer science theories like sharding. | |
| Moving Up the Stack: Consumer Applications and Creator Economy | 4 | 8 | 0 | 0 | Tushar and Kyle break down Helium's decentralized physical infrastructure network, highlighting proof of coverage, sensor unit economics, and open-source defensibility. | |
| Long-Term Vision: Self-Sovereignty and Missionary Capitalism | 3 | 6 | 2 | 0 | The guests outline their long-term motivation as missionary capitalists building self-sovereign systems, followed by rapid-fire reflections on cognitive biases and balance. |
Statements from this episode (35)
Jain: Ethereum enables code-based economic coordination and internet-native firms
“What we saw was the ability to use code to create a new type of human economic coordination, like a new type of firm. And we thought, oh, this is what internet native businesses Will look like this is going to be the next big type of organization.”
Samani: Multicoin deliberately operates at an 'underwater' pace to move fast
“It's much less common to see that, I'd say, among investors. It's certainly been very helpful for us in just making sure we move fast, keeping the pace of the firm moving, as people who work here will tell you. A lot of things are going on when it kind of feel…”
Samani: The 2017 Gnosis ICO raised $12 million in 30 seconds
“Actually, no, I think it was the Gnosis ICO, which was in like May fifth or May 10th or something of 2017, but it was in early May. And that was at that point, probably a 10th legit ICO. At that point, I remember I was tagging with Tushar, and they brought twe…”
Jain: Developers could not build functional applications on Ethereum in 2016
“In 2016, you really couldn't build anything on Ethereum. It didn't work, and like, you could never really build anything on Bitcoin.”
Jain: Multicoin Capital does not trade Bitcoin short-term
“Because we knew what we didn't want to do is go and start trying to trade Bitcoin up and down. That's not what we do. That's not our edge. Our edge is in thinking about these assets, thinking about how the technology is going to be applied.”
Samani: Market timing is the hardest risk for venture investors
“The one that I would say we consistently struggle with the most, and I think most other VCs also probably struggle with the most is timing. Being too early is always painful. It sucks being too late. It's usually easier to tell if you're too late than it is to…”
Samani: In-kind distributions maximize tax efficiency for venture LPs
“The other really amazing benefit of that is that it's also the most tax efficient way to invest because you don't incur taxable hits. And we also then, at least in our venture funds can make in-kind distributions as well. And so that passes through all the way…”
Samani: General education remains crypto's hardest challenge over five years
“Arguably the hardest thing to do in the space over the last five years and probably over the next five is just general education.”
Jain: Multicoin's biggest edge is publishing and getting corrected publicly
“We are not afraid to be wrong in public. We will share our thoughts in public Even if there's a chance that we're wrong, and we don't mind at all, and actually, that I think is probably our biggest edge, is that we are not afraid to be wrong, and then people c…”
Jain: Silent memo reading prevents senior partners from dominating investment decisions
“A lot of our meetings, especially like investment committee meetings, start silently, where everyone is reading memos and commenting back and forth in those memos to each other. We find that that works a lot better than having spoken meetings, because the prob…”
Samani: Multicoin requires a 10-to-20-year macro compounding thesis
“I have a kind of a rule with anything we invest in that the time horizon, again, it should be able to compound indefinitely. Not that it necessarily has to, but at the time of entry, we need to believe that 10 to 20 years from now, there are still broad based …”
Samani: Crypto projects effectively go public at the Series A stage
“If you look at capital markets in the last 10 years, excluding crypto, probably the most important Thing, or one of the most important things has been the private companies are staying private a lot longer before going public. And all of that wealth creation i…”
Jain: Multicoin Capital's hedge fund holds only eight to twelve core positions
“The way we look at this in the hedge fund is we have eight to 12 positions that drive the vast majority of returns, and it's really a best ideas fund, and it's quite concentrated.”
Samani: Crypto markets will inevitably experience 50% to 85% drawdowns again
“Stuff in crypto Has over the last 10 years gone down 50 to 85%. It's happened many times. I think it will happen again.”
Jain: Managing for crypto volatility prevents achieving maximum absolute returns
“It's impossible if you're trying to do that in crypto to manage for volatility and also manage for highest absolute returns.”
Jain: Multicoin worries more about entry liquidity than exit liquidity
“While a lot of people get worried about exit liquidity, honestly, given our level of conviction in these assets, I'm more worried about entry liquidity. Will we be able to buy this at scale again?”
Samani: Fundamental long-term crypto investors should reject mean reversion on principle
“I reject kind of the notion of mean reversion as a point of principle, given our mandate to be long-term fundamental investors.”
Jain: Crypto investors must practice network-level governance, not team-level governance
“So what we find is you cannot execute team-level governance in crypto. You need to do network-level governance, and that requires more active participation by investors into the community in order to have the legitimacy to change the protocol.”
Samani: Global retail risk tolerance for software exceeds traditional investor beliefs
“Risk tolerance specifically for early stage software things among the global retail populace is much higher than I think traditional capital markets investors acknowledge or recognize because everyone wants to be a VC, especially for consumer products.”
Samani: The vast majority of crypto token founders are first-time launchers
“Almost no one has launched a second token. The number of people who have already launched a single token and gone through that cycle is extremely low. And therefore the vast majority of people who launch tokens, it's their first time to launch one.”
Samani: Multicoin Capital has guided founders through 30 to 50 token launches
“We have gone through that process and that experience, 30, 40, 50 times.”
Jain: Multicoin splits thesis formation and portfolio construction roles
“Kyle leads on more of the thesis formation, and I lead on more of the portfolio construction.”
Samani: Multi-chain architectures inherently increase total computation and latency
“There's at a minimum two explicit costs and secondary and tertiary costs as well, but the two explicit costs are you are increasing the total amount of computation to be done because you're having to verify signatures on at least two chains or two places as op…”
Samani: Long-term technical and social gravity trends toward one single chain
“Given both the explicit technical costs and then the softer, squishier social developer experience costs, I think gravity trends towards one chain.”
Jain: Layer-one blockchains will eventually consolidate into an operating system duopoly
“So if I had to guess what the long-term outcome of layer one blockchains will be, I would expect it to be a similar duopoly as what we see in older operating systems.”
Jain: Ethereum 2.0 requires unsolved computer science; Solana only required engineering
“Whether we're talking about Ethereum, two point O near Polkadot, those are sharded blockchains and they require some meaningful Computer science breakthroughs to happen in order to actually function and deliver what they needed. Solana did not need that. Solan…”
Jain: Multicoin Capital led every single funding round for Solana
“Gave us a conviction to size it up aggressively, buy out other investors and secondary transactions, and we led every single round that Sloan ever did, and we expressed that conviction in significant portfolio concentration.”
Jain: Solana is high-speed broadband compared to Ethereum's dial-up infrastructure
“And now we have Solana, which is like broadband, To Ethereum's dial-up.”
Jain: Nestle and Lime use the Helium network for tracking
“Now there are a number of high profile customers that use a helium network, such as Nestle is using the network in order to track vending machine inventory. Lime uses a network to track location of scooters.”
Jain: Helium will have more access points than any telecom by 2022
“We are expecting The Helium network to really be the biggest wireless network in the world by the end of next year, have more access points than any other centralized telecom provider by the end of next year, and have potentially even more users.”
Samani: Multicoin underwrote its Helium investment assuming the corporate entity disappears
“We underwrote the investment assuming that Helium Inc. Goes away. Not to say that they will, but the entire system is open source. The hardware, the software, the antennas, the specs for integrating the SDK into Third-party hardware, the blockchain, everything…”
Samani: The concept of network effects is overused and misunderstood
“I find that network effects, the term on the internet is like way overused. And even when it is used, the implications of how it's being used are mostly incorrect.”
Jain: Investors do not need to catch every winning deal
“I don't think you have to catch them all. If you didn't have the thesis, if you didn't have conviction, it is okay. We're investors. We're not Pokemon trainers. You know, we don't have to catch them all.”
Samani: He would not have built Pristine if he studied hardware history
“I was way over indexing on the iPhone and the iPad, which were the two most recent ones and what turned out to be two of the most exceptional ones. And not appreciating how difficult it is to do new form factors and not looking at the Newton and a bunch of oth…”