How Solana Survived When Most Other Coins Fell | Anatoly Yakovenko Story

Solana, one of the biggest crypto success stories, where you had this crazy idea—basically to potentially change the future of finance. People must have all your absolutely crazy.

Yeah. I was manic for like 4 days after that eureka moment popped into my head. I did my calculation and it was 1,000 to 10,000 times more throughput than Ethereum or Bitcoin at the time. And to give folks a perspective, in a single month Solana does as many transactions as Ethereum does in its lifetime.

I mean, that's crazy.

But yeah, there's a bunch of challenges. Getting a lead on that first major check-in is probably the biggest hurdle. I mean, it was terrible. It basically took me 1,000 meetings. And because it's crypto, there was no standard safe that you can give people quickly.

We had probably one of the worst "oh shit" moments in the industry. During our biggest conference we ever had, 1,600 developers show up for this conference, we sold out of tickets, and on the flight back, FTX collapsed. This is like a massive collapse that could take down the whole ecosystem.

This must have been like a heart attack stage, no? So how did it all begin?

Anatoly, great to have you here. Thank you so much for coming.

Thanks for having me.

So we're here in SF, in Tech Week. What do you make of everything that's going onright now?

Um, I mean, it's pretty exciting. I think SF has been the center of technology for, you know, all of my life almost.

Yeah.

Um, so I think it's still really cool to see kind of startups being funded here and, um, getting to market. I think AI is still kind of probably the most dominant narrativeright now. Um, but I'm, you know, I'm in crypto so I'm less familiar with it.

Like the big thing I'm probably more most excited about is stablecoins and kind of related technologies around that.

Yeah. It kind of feels just this whole tech scene is changing so quickly.

Yeah, for sure.

I actually came here in my first Waymo today.

Oh, yeah.

And these like try-list cars? It's the future, no?

Yeah, 100%. I mean, I'm already used to it, you know.

Yeah, you guys have them like a lot more,right?

Yeah.

So.

Now I'm like, why isn't it here faster?

It's just unbelievable.

Yep.

And, you know, everything that's happening in AI, um, what are you most excited about in AIright now?

Um, you know, like, uh, probably the coolest company that I'm kind of following is Figure Robotics. Um, in terms of AI, I think this is kind of the next step of automation. You've had a Waymo,right? But I don't know if you have kids, but as soon as you have, um, just the amount of laundry that you have to do is astronomical.

So having a robot at home that can do chores, I think, would be like a huge game changer for a lot of people.

Oh, interesting. You have one?

No.

Not yet. This is, I mean, maybe it's going to happen. You know, it's bounty, no?

I think with driving, you can get a lot of data pretty, pretty easily. Relatively easily. But with robotics automation, I think that's going to be the bottleneck is just training data.

Hmm.

But it's kind of a chicken and egg problem. You need to deploy a bunch of robots and have them start doing tasks, even if they're remote operated, to collect the data and then, like, train them. So, but, um, it's going to happen.

It's just I can't tell if it's going to be a 20-year process or 5 years.

I mean, maybe robots for laundry. What Travis Fromube is doing for food.

Yeah.

Maybe we're going to have our own, like, robot chefs.

Yeah, maybe. Yeah.

Would you take one?

Yeah, for sure. Like, yeah, I'm, uh, yeah, it's a science fiction to me,right? Like, so, yeah, as soon as, as soon as it's commercially available, I would totally get one.

Let's do it.

Yeah.

Well, um, we'll talk a little more about AI, uh, later on, but, you know, we're here for Solana. You know, one of the biggest crypto success stories. Uh, we'd love to go back to the early stages. Um, you know, I think after two coffees and a cup of beers, I think it was, you know, you had this crazy idea, basically, to potentially change the future of finance.

So how did it all begin?

Yeah, this is, uh, as the legend goes, it actually did happen. So I had a startup with, or not a startup, a side project with a buddy of mine. Um, we were building actually AI stuff, like deep learning boxes.

And we were mining crypto with these GPUs that we were buying to pay off for the, to pay off the GPUs before we had any, like, real users or traction. And this idea of why are people paying us, like, real money for, like, what seems to be useless work started kind of getting stuck and warmed in my head.

And, um, I had two coffees and a beer and we were talking about mining and proof of work and the Nakamoto consensus and the algorithm, why it's important that you're using electricity in the process. And I was up till 4 in the morning because beer and coffee is not a good mix,right?

Not really.

Not really. And, uh, this eureka kind of idea popped into my head of, uh, encoding passage of time as a data structure. And it's kind of a weird little concept, but, um, I spend most of my career as an engineer at Qualcomm.

Most folks that have heard of the company know that they're heavily involved in wireless protocols, wireless radios and stuff like that, cell phones. If you have a cell phone, there's probably something from Qualcomm in it. And probably something that I worked on.

Um, if you remember your high school physics, uh, if two radio towers transmit at the same time over the same frequency, you get noise. And the first protocol that cellular networks were built on is called time division multiple axis.

This was the '70s, if not '60s, when this idea kind of was discovered. And it's very simple. You give each tower a clock and you alternate by time. So there is no interference and more information can pass through.

Well, why this was kind of, this idea popped into my head is because with Bitcoin and proof of work, you kind of have a similar problem. If you have two block producers, two miners make a block at the same time, you get a fork and the network is in a noisy state.

So information can't pass through. You have to drop one of the blocks. Um, so if you could alternate each miner by time, you avoid any collisions and you can maximize the amount of, uh, bandwidth you can shove through the, through the protocol.

And I did my back of the envelope calculation and it was 1,000 to 10,000 times more throughput than Ethereum or Bitcoin at the time. Um, and that was kind of, okay, maybe I should start a company. And, um, I spend most of my career working on platforms, building developer tools, operating systems, and optimizations and kind of making things faster.

Um, and this idea of a smart contract platform kind of really took hold of me because it's a new environment for developers to build applications and that are quite different that you cannot build anywhere else. So you can't really go and build smart contracts on a normal AWS server.

You need these properties that you get from, uh, blockchains that give you verifiability and cryptographic guarantees and all those things that make it possible to write code that can handle money. And this is a first. Like, I think most people think, oh, databases and all this stuff in Wall Street, that's what controls money.

All those things are monitored by people. So it's effectively just optimizing those people,right? And smart contracts are quite different in that, is that the software itself takes escrow, custody of the funds, and it's the source of truth where things go.

So it kind of flips the whole model on its head.

You know, when, uh, people start off in tech projects or blockchain projects, you know, you're dealing with money, you're dealing with finance, people must have all your absolutely crazy. Why don't you just stick to a day job or just do something that doesn't require a whole lot of regulation and probably a bunch of challenges, which come later,right?

Yeah.

How do you convince your friends and people around you just to, you know, we've got to build this thing that is such a big opportunity?

Yeah, I think, uh, so my wife is an engineer. She was the first person I had to convince. And she was like, okay, this might work.

What did she say initially? Was she like, you have such a good job?

She's like, she's like, also working full-time.

Yeah.

But I was manic for like 4 days after that eureka moment popped into my head.

Really?

And, um, my entire life that, and she knew me, she knows me really well, is I've always had a side project. Like, I was always working on some idea on the side. Um, and, you know, from, we already had one, one kid and she basically told me, um, you can't, you can't do a job and be a father and a startup on the side.

You got to pick two. And the kid is not optional. You got to do the father part.

Mom's always in charge.

Yeah. So either, uh, like, there's no way to build a company on the side. You kind of have to go all in or not. And that's really what motivated me to kind of make that decision. And, um, funny enough, I think she was at, uh, Columbia when Facebook was expanding, working in a startup competitor to Columbia and to Facebook in the super early days.

And her lesson there was that, um, you have like this six-month window when there's kind of this super hot market and everybody knows that there's going to be this thing that's being built that's going to win 80% of it.

And kind of everyone knows that it's going to kind of have these properties and look like this. And if you miss that window, you're never going to be able to catch up. So at that time, in kind of late 2017, it felt like there was this window to go build a layer one blockchain with like specific set of properties that would scale to cover the rest of the world, to really handle all of global financial systems.

So that was really kind of the, the motivation for me. Because one is you have to fully commit. And two, when there is a hot market, you don't want to miss it. I think anyone that's listening that's thinking, should I jump into AI or something like that, or wait six months or a year, you might actually miss the boat.

You should do it now. Probably yesterday.

It kind of just feels like so much has changed.

Yep.

Just, I mean, Solana really launched in 2020,right? So actually it's only been five years.

Yeah.

Um, and it just keeps, you know, happening and changing so freaking quickly. What's the latest, uh, status of kind of like what's happening in the crypto world, do you think?

I think the, um, I've kind of described these stages a little jokingly that it started with punks and then moved on to hoodies and now it's moving to the suits. This rapid transition. And you're starting to see crypto being adopted in Wall Street effectively and kind of global institutions.

Um, and I think stablecoins are going to be and are the major driver of this. You're, the Genius Act that was passed by Congress effectively creates a framework for anyone to launch stablecoins and start, you know, getting product market fit for them.

And this is just a much better interface for money than any traditional banks have been able to provide. Even with all the fintech stuff built on top of it, it's just nowhere near as good as just handling, um, dollars with cryptographic keys.

So I think that's going to be a major driver. I mean, people are estimating $10 trillion worth of digital dollars minted in the next 5 to 10 years.

Crazy. Yeah.

To put that in perspective, it's about $250 billionright now. So it's like a 4X to 10X increase. Um, and I think those, that liquidity, all those, those funds are going to go into every possible business vertical that you can think of that handles money.

So if you're a founderright now and you're thinking, you're inspired by fintech or you want to build a fintech business, I would probably build it all around, like a stablecoin. Uh, like, either interfacing with them and managing lots of different stablecoins or building your own stablecoin for a specific purpose.

It kind of feels, you know, now is the best time to sell a company. There are so many opportunities around, like with AI and so on. So we'll talk about that, like, later on. Um, but for founders who are interested in learning about kind of the early days, you know, we all know building a company is so freaking hard and, uh, there are so many challenges just in that first year.

Yeah.

So let's maybe go back to the first year, you know, and, uh, give us maybe, you know, some the audience who might be listening, who don't know much about Solana. Um, you know, what are you guys building? And that first year, you know, uh, let's go back pretending it was 2020.

Yeah, the pitch, uh, actually hasn't changed. It's a high performance blockchain.

Yeah.

Smart contract platform. And the key, the key use case that we're going after, um, and still are, is trading assets. So I think if you think of Bitcoin as a store of value, digital gold, um, there's not a, it's not an engineering problem to build a store of value.

It is actually, I think, um, there's a bit of engineering that goes into guaranteeing settlement and global availability. Uh, and that's was beautifully done by the Nakamoto, uh, proof of work algorithm and the, the Bitcoin white paper. But you cannot build a Bitcoin plus plus.

There's just not like you can add features or increase its throughput and win against Bitcoin in, in that market. And I think, um, Ethereum went after settlement as a use case and this idea that you could, uh, use the Ethereum ledger as a reliable source of truth, uh, after execution and clearing happens as the final checkpoint.

Um, and I never, I was never like inspired to compete on the settlement side. And there might be engineering improvements you can do there, maybe handling more, more execution layers and stuff like that. But I was far more interested in execution itself.

So building a, a blockchain that's global that can handle trading and payments, everything that you're doing day to day that faces the user, handling all of it in a single system. Um, and this is probably the most unique part about Solana is this vision that you don't need separate blockchains or separate layers.

You can put everything into one giant state machine and do it all together as fast as possible. Um, and to give folks a perspective, um, I think in a single month, Solana does as many transactions as Ethereum does in its lifetime.

So, um.

Wow. That's crazy. So rewind. So what you guys do, uh, on a monthly basis?

Yeah. It's equivalent to the lifetime of the Ethereum L1. Yep.

That's crazy.

And at a fee that is, uh, I think less than 0.2 centsright now.

Yeah. I heard that this morning. I mean, that's crazy. And that's just for in five years.

Yep.

Yeah. What's the biggest challenge you had in the first year? Was it convincing regulators? Was it getting people to trust you? See, I know there's a financial part to it.

Yeah, there's, I mean, a bunch of challenges. I think, um, getting, for any founder, I think getting a lead on that first major check-in is probably the biggest hurdle. And vast majority of companies fail at that stage. Um, and it basically took me 1,000 meetings.

Wow.

So you started like kind of late 2017, made a list of every possible VC that was investing in crypto in SF. Luckily, I was in San Francisco and Silicon Valley. And I think this is probably why Silicon Valley continues to be the hub for startups, is that you can literally meet with 1,000 people in a very short amount of time and try to pitch your idea.

And that process of being able to sell the vision and the idea is, I think, a key process to harden and kind of make the vision simpler and more crystal clear. And the first task, can you sell? And like.

Start all this thing by being founder,right?

Yeah. CEOs have to be able to sell. Otherwise, you can't, you'll never be able to hire, you'll never be able to sell your product, onboard users, whatever, whether it's B2B or B2C, it doesn't really matter. You have to be able to, to close,right?

Um, so that was, I think, new to me. Um, but it's a process you can learn and get better. And this is why I think being in Silicon Valley, you do, you can actually build a huge list and force yourself to do it a thousand times and make sure that the highest value investors are towards the end of that process.

So you get better with the process and then you kind of, your pitch becomes really good.

Those first, you know, 20, 30 meetings you had with investors, you know, would you say you were a pretty good pitcher or did it just improve over time?

It improved over time. I mean, it was terrible.

Yeah. Was it like, uh, this is what kind of we do?

Um, it was less than that. It's kind of, I think you're trying to convey information that is as succinct as possible. And you're trying to, in that 30 minute, 10 minute conversation, you have to tease out what does this person already understand about crypto?

Because you don't want to repeat what they already know. And how can you explain the specific problem you're solving and its impact in the shortest amount of time and kind of give them that vision that the world is going to change in a way that this idea that is very much up in the air and kind of not super well defined will crystallize into like a $10 billion, $100 billion company.

So you, uh, so you took a thousand meetings, you said, and eventually when did you get that kind of first, uh, check?

So this was a strategy that I used. I don't know if, um, this will work for every founder, but basically my theory was like I can pitch to the firm and also to that particular partner. And even if they passed on the, the firm would pass on it, I would ask him, would you write like an angel check, a small check if I get a lead?

And then if I could get a soft commitment, then they were, they're much more likely to help me connect with other, uh, venture firms that they know that are investing in that space. And that eventually kind of led me down to the thousand meetings and finding firms that are, you know, 100% crypto and much more, I guess, uh, willing to take a risk in the, in the super early stages.

That's a pretty smart strategy. So the, the VCs who send those, you would ask the VC partners if they would be interested in angel investing?

Yeah. Because the VCs that invest are both working for a company. They're working for the firm and deploying capital that's not theirs, but they also do invest on the side themselves.

Yeah. That's a smart approach. I think quite a few founders do this today, uh, and quite a few VCs. Um, and, um, okay, cool. So you took a thousand meetings and then who is that magical investor you finally got on board?

We, we actually had a, like the round fully lined up and almost closed. Like people are willing to sign docs and write checks. And this is kind of first quarter of 2018. Because it's crypto, there was no standard, you know, safe that you can kind of give people quickly.

We had lawyers draw up the SAFs for it and that took six weeks. And at that time.

Six weeks?

Ethereum started dropping in value. Like, uh.

This is like a whole year.

By 10%. And a bunch of those funds like collapsed. Like through that process.

This is not, this is not a great.

Yeah.

Time for founders.

Yeah.

To have.

But yeah, that was, that was, uh, stressful. But out of the mix, there was enough people that were like still willing that were, weren't fully just crypto funds that were like 100% exposed to crypto and, and their balance sheets weren't 100% in ETH.

They were more in dollars and they saw it as an opportunity. So we, we ended up closing the round, but it was pretty shaky, um, at the time. When I, my co-founder Raj, in that moment, I just remember him sitting, we were sitting at the 500 startups offices that we were using because one of the investors was, was from there.

He was like, I think he's this quote, if I remember correctly, he said, "I think I'm going to have to work for this. I'm going to have to hustle."

You know, it's like one of those moments where every founder, we'll talk about this later on, every founder has a panic moment.

Yeah, that was the first one.

Yeah. But what is like the best thing to do? Is it like everything's going to, because everything kind of works out one way or another,right? Um, at some point, it might take a lot longer.

Yeah. I think, uh, continue, I think once you have commitments, uh, it's pretty likely that you could basically snowball into actual checks, but continue raising until you actually have the money in the bank, I would say.

Yeah.

Um, even if term sheets are signed, I mean, it's really rare. I think that was an exceptional circumstance, I think, because a lot of the funds were newly minted funds that were 100% ETH denominated.

Yeah.

Um, so if you're in crypto, maybe be more aware of the, of those risks. But in traditional startups, most funds are dollar denominated. As soon as they sign a term sheet, uh, it's very rare that they, they go back on it.

And if they give you a verbal, send an email to confirm the verbal, like immediately,right? And.

Yeah.

And then get the term sheets across.

Yeah. Like we see this sometimes with founder stories,right? Um, VCs either putting out or just it doesn't work. Um, but it's not a done deal,right? Until the money's in the bank. And exactly the same in sales partnerships and so on.

Um, that's probably a good lesson for all founders to have.

For sure. Yeah. The, but it, it works out. Um, and then I think the second challenge was hiring, but, um, I was pretty lucky that a lot of the folks that I worked with at Qualcomm were kind of itching to go do something else.

It was kind of a, and it was very serendipitous. Um, because these are folks with like 10 plus years experience in really, really low level hard operating systems or protocols. Like one of the folks that worked on the Solana protocol literally worked on the LTE spec.

So people that have like really in-depth understanding of networks and operating systems, GPUs, CPUs, like low level chips, were able to kind of, the, the, the pitch that I gave to them, like you're going to go get a different job anyways.

You're kind of bored here. So you could do this as like a sabbatical. Like take, take six months, we'll see where we end up. And I was able to hire like basically experts in their field that I knew really well.

And we were able to hit the ground running and, and build out a really, I think, state of the art network that proved to be ahead of all our competitors at launch by, uh, you know, 10 miles at least.

Yeah. I mean, that's amazing. I mean, A, also you had your kind of like friend, I guess our friends,right? And personal relationships. Um, you mentioned earlier, Raj, your co-founder. Um, you know, we see with a lot of founders,right, finding that, you know, best in class co-founder to go along.

This is just not a one or two year journey. It's like five, 10 years,right?

Yep.

What was that like magical touch with your co-founder that you thought this is like an absolute game plan?

Um, so I think, I mean, I think you kind of have to, uh, I don't know, it's like the closest I could think of is like dating. You just got to kind of go for it and commit. And, uh, this was a, a mutual friend that I was introduced to.

I, I met Raj like a couple years before camping. I wasn't impressed with him or anything at the time. It was just a guy,right? Like I met him and the friend that introduced, uh, me to him when I was raising specifically said that you're a great engineer, but you don't have any other skills outside of that.

So you need somebody that can complement him. And Raj has, uh, built a company before and raised it and like just kind of has the, the totally non-engineering sense. And, um, we kind of hit it off and he became my, um, like we're, we're call, my wife calls us work married basically.

So.

That's what it is basically.

Yeah. Our decision making process is kind of exhausting, but I, I don't know what else you could do in like, uh, in that super high stressful environment, high tempo environment. We would basically argue decisions until we could eliminate all the obvious bad options and you're stuck with what I call the Pareto efficient option set.

We can do A or B or C. All the trade-offs look about the same. We've like argued to death like every possible branch here. So you can almost roll the die at that point. Like you don't know what's going to, what's going to happen,right?

So you can make that decision knowing that you've kind of did the best to eliminate all the bad options. Um, but it's exhausting. Like you need a lot of stamina for that.

You do, and you, it needs to be like, uh, you need to be firm, but you need to trust each other as well,right? Each other's judgments.

Yeah. Well, you need to be, I don't know if, um, you need to have kind of the kind of personality, I think both the CEO and the initial employees or co-founders that you bring together that trust each other to actually argue like really hard, but still feel like everyone respects each other and treats each other as a peer.

Um, and I think that part is pretty hard.

How do you ingrain that into your company culture? Because I kind of feel sometimes with.

I just love to argue.

Yeah. Like.

Just do it. And I don't mind losing. So like to me.

It's healthy as well.

Yeah, yeah, yeah. Yeah. So I don't know. Maybe part of that is like kind of the CEO's personality. A lot of the CEO's flaws or, or like talents end up defining company culture.

Well, there's some of the things you would argue about like in the early days. Is it, yeah, it could be anything,right?

Yeah. Well, um, I think especially in those early days when we're trying to build a product, we're trying to build it as fast as we can. And your engineering timelines are super optimistic. You just don't anticipate all the possible failures.

And should you assume you're going to succeed and go deploy capital to go build like secondary things to make that success and launch better, or do you build out the product first, prove that you can do it and then do everything else and kind of delay your time to market?

There's a bunch of those decisions that you have to make in those early days, if, especially if you're building something complicated. Um, like when you, if you read like zero to one and a bunch of, you know, startup books, there's a lot of really great advice there.

And, um, the best advice that you're going to get is you want to build the minimum viable product, like build the smallest thing possible that proves out your idea. But that's actually really, really hard to define. So you have to find kind of your niche.

And that took us a while. Um, I would say that happened almost out of necessity kind of in year two of, of us in the development cycle.

What was the initial niche? Like I, and I also kind of feel with founders, they have all of these like customers they can approach,right?

Yeah.

It's really important, I think, to be like super focused.

Yeah. So one, we did chase every customer we could because you still have to do that.

Yeah.

Um, but two, as we're running out of money, you know, you, you get 24 months of runway, you hire a bit too many people and that's just kind of getting.

That's how it works.

Getting lower. And then you maybe do a bridge round and stuff like that. Uh, so we're down to like 12 months of runway and the product still doesn't work. And at that point, you just cut every other feature except let's just launch this thing and, um, minimize whatever changes we need to do.

And that was out of necessity. Uh, but what that allowed us to do is get to market first and have a product that was very differentiated from, um, like everything else that was on the market. So in, in some, in some weird way,right?

In those first, in that first year, I wanted to make as many kind of take as much product risk as possible. Like we really wanted to build the best in class thing that was really kind of part of the vision.

And then by the end of that year, you hold, you, you build a bunch of features, you take like eight technology risks. Um, by that I mean like let's, you take one technology risk, it means there's a 50-50 chance it's going to work.

When you take eight, for all eight of them to work is one in 256 odds.

Yeah. No grades.

So it's very likely it's not going to work and stuff is going to break. And then you have to go basically fix it and kind of massage it to get it to market. But because I took all those risks in the early days, we actually did have a bunch of differentiating features that more or less basically work.

They weren't like perfect, but we did expand capacity and lower latency. And, um, it was a very different developer experience to build on Solana than anything else in comparison. Um, like I guess to give you some hard numbers, at that time, Ethereum was proof of work and a single block was like 12 seconds, but you needed to wait for at least two to get some sense of finality.

So you're talking about 30 second finalization, the UX for a user waiting 30 seconds to confirm a transaction.

Too long.

Right. And the capacity of seven transactions per second or 11 was too low for any application of kind of what size. And what we had was thousands of transactions and finality in like 400 milliseconds, you know, one, one to two seconds if you count all the full round trip time with servers and things like that.

Um, so for a user or developer that got hold of this thing, they were wowed.

Yeah.

Because it was so different, even though the product could barely stand up. Like we would, it would.

I'm just imagining like all of you now are like in this room.

Yeah.

It's kind of working, but it's not working.

Yeah. It works, but then it crashes in like an hour or something like that. So that timeline of getting it stabilized into market, that was the super stressful thing. And then you cut all the other stuff that you think, oh, we need to support EVM or we need to support this programming language or we need a fancy explorer or our own wallet stack and all this other stuff.

You just strip all those things out and ship the bare bones version of that to market as fast as you can. But I think defining that MVP, uh, that can hit PMF as super high capacity, low latency, and remove everything else, that part is hard because you just don't know like how much to sacrifice or like what developers actually care about.

And, um, we got, I think, lucky, and that's in that, like we kind of followed our instincts and experience from, um, you know, building operating systems and developer platforms that I think helped us a lot to make mostly correct choices and how it landed.

Yeah. I kind of felt also the, um, the hardest part is the longevity of like how long you can actually find product market fit. You might find it in the first six months, 12 months, but then a year later, things might completely change again.

Yeah, absolutely.

That's the hardest,right? Um, when did you realize you had product market fit? I kind of think like in your first year, I mean, you guys, it went super viral, no?

Yeah, it felt viral, but, um, crypto, I think it can give you a lot of deceptive viral effects. Like one is the price your token can move, but there's no users,right? So you're disconnected. If, if that's happening, it feels a little bit, I mean, very discerning.

You're like, we don't have any traction or users. Yeah, the price went up. That's great. But we need to actually use this opportunity to onboard as many actual live use cases as you can. And if you miss that window, it's very hard to come back from it.

Um, but we were lucky in the kind of the first hackathons. I would say we had a lot of folks submit, but they built really bad applications. So it was all kind of junky, silly things. And by the, in the second hackathon, what, where I felt like, oh man, I think we're onto something is because the folks that built stuff in the first hackathon continued building for those three months and they had really polished products that were really functional and actually were on point for the, the whole vision of finance and trading and, and DeFi effectively.

So it was, but during that second hackathon, like reviewing the submissions, there was such a dramatic delta in terms of quality and usability and business models and actual like ability to like go for the startup to go raise capital and survive and seeing those companies funded during the hackathon.

Um, to me that was like, oh man, okay, we now have PMF and it's in a core business that has a path to making money. Um, so that was, I think the, the big change. I mean, all things considered, getting to that point within a year of product launch is like extremely lucky.

Yeah.

Right? Like I think that, that was, um, you know, most companies do the drunken stumble to find PMF for years. I think it takes 10 years to like really build a company.

Yeah. And you guys found, I mean, like you said, you found it pretty quickly, which is pretty cool. Um, but as we know, like every company in that journey, they're always going to have like a shit, you know, moment.

Yeah. Yeah. We had a.

Probably many.

Yeah. We, we had probably one of the, one of the worst of, you know, oh shit moments, I think, in the industry. So one of our biggest investors and partners was FTX, as, as everyone knows.

Yeah.

And during our, this was our, I think, third conference, breakpoint, biggest conference we ever had. All our conferences kind of blew up in size every year. And we had, you know, like 1,600 developers show up for this conference.

Geez.

Uh, it was massive. Uh, we sold out of tickets and on the flight back, um, FTX collapsed. It was literally like this, like during the flight, you went from like everything, we're riding high. Yeah. Crypto was down. You're kind of in a bear market, but people are building products and, and like everything is growing year over year to, oh shit.

Just this, this is like a massive collapse that could take down the whole ecosystem. And, um, one of the, um, you know, like I think because probably Solana was started in that first 2018 bear market where ETH was dropping 10% a week, uh, I was very paranoid and it, we never overhired.

So we were very stingy in hiring and we had internally a ton of runway and enough capital to go build and improve the product. But, um, I was terrified that a whole bunch of Solana ecosystem companies that have raised from FTX actually kept their funds on FTX.

Hmm.

Because if they lost their runway, like that would've been, that would've been it,right?

Yeah. Terrifying.

Yeah. Um, there was no way to go replenish them because all the capital during this kind of sudden event just completely dries up. Um, uh, luckily, like we did like this big survey and 85% were fine and 15% were totally screwed.

So these are companies, um, like one of them that was, you know, a very promising company was, uh, Armani's backpack.

Hmm.

This was a wallet that he was working on and, um, they just raised like a 10 million or something like that. A round, they had it all on FTX and it was totally locked up. So they had a few million bucks.

They're planning to double the team, like grow a build product, and it was just them with their remaining seed round and like six people.

I see.

And, um, I think the, uh, most companies would fold, but, um, they're exemplary of what happened, I think, internally at labs or in the rest of the ecosystem. Like we didn't have any turnover during that time.

Wow.

And that, those guys, even though they lost a big ton of their runway, um, big part of their runway, they just worked twice as much. They just worked longer hours, worked harder, like really hyper-focused on product. And, um, I think the way that they came back through their MadLads launch and then building out an exchange, that kind of, I think, anger that Armani like had at FTX and wanting to build a better exchange.

Yeah.

Like an anger-driven founder. Um.

I would've been.

Yeah. That energy that he just like physically just, uh, brought back, I think, a ton of the, the momentum back for Solana and for the rest of the ecosystem. Um, I think their launch, the launch of MadLads where they kind of captured the attention of, of the NFT market and kind of the whole industry for solid two weeks felt like complete turning point.

And you saw a bunch of companies that, you know, just doubled down on building actually come back during that as the, as the bull market return. So one of the biggest lessons that I got from that is that during, um, it's actually very hard to build a company during a bull market, um, especially in crypto because you have so much distorted signal.

You don't know who your power users are and, um, what features are actually important to your product and growth. But during a, a bear market, if you have even like 10, 20 users that are dedicated users that are constantly using your product in finance especially, um, if you hyper like understand what value your product brings to them and optimize it and keep making it better week over week, uh, that's where you'll start seeing massive acceleration during the bull market because one, those users will become your biggest ambassadors and two, your product will be hyper-optimized for something useful that has PMF already.

And finance is very like cyclical, especially kind of this tail risk of finance, um, where, you know, during a bull market, the, the risk on time is just creates such dramatic volumes and, and, uh, like revenues that that's where you want to have your product already super optimized and like being ready to scale and, and, you know, whatever your business model.

Um, so that was really cool to see like all the companies that I talked to, like post FTX collapse that were literally just, you know what, we're just going to continue optimizing our product. We have enough runway.

You have to.

Like, and we'll see what happens like next year. All those companies succeeded and blew it out of the park. So it was awesome.

That's good.

Yeah.

But for the audience listening, I mean, FTX, this was, this was a big deal.

Yeah.

So you were flying from.

I mean, the entire, the entire market collapsed, but Solana dropped like 97% from its peak. So most people discounted us dead.

Take us back. Like, I mean, when that's happening and going back to what we said earlier,right? Around panicking, this must have been like heart attack stage, no?

Yeah. It's, it's really good to have a co-founder that I think loves crisis and trauma.

I don't know any founder who loves crisises.

I, I think some people are just more wired for that to operate in a crisis because you got, you have to, uh, your decision making gets constrained and you just have to act, um.

And fast,right?

Yeah. And act fast. Um, but a lot of what we did was just really just talking to the founders that continue building those companies and trying to help them grow and get PMF and unblock them where we could, we couldn't help them with capital because like at that moment, capital just completely dried up.

Yeah. It's kind of like when Silicon Valley Bank,right?

Yeah.

Was it one, two years ago? Maybe.

That wasright after.

So.

Yeah.

Okay. Wow.

That was, uh, that was like the second panic moment because, um, the US companies did have a bunch of money and like Signature and Silicon Valley and Republic and all those collapsed at the same time.

It's like that was in a year,right? It's just like everything changes. Um, you, I guess you met Sam from FTX.

Yeah.

What's it do like? I mean, uh, if you're open to talking about it, I mean.

Yeah. I mean, he was like the, what you saw on, uh, his interviews, like this kind of super nerdy, um, MIT quantish, like super geek.

Just sleeping here.

Yeah.

On the beanbag.

It was a complete shock and kind of surprise to myself and like his employees, honestly, like folks like Armani and stuff that they were completely underwater. Um, but I think it's, uh, crazy to think about how much damage that whole mess could have done.

Like it could have been a lot worse. Um, and like seems like most companies that were impacted by this kind of came out of it like better,right? So.

It's kind of like, you know, we saw this with FTX, we saw this with, uh, Silicon Valley Bank, Axia Financier as well, like that had a massive problemright a few years ago. Do you think now we're at a stage, especially with, you know, better regulation, can these things still happen or is it getting better?

I mean, you're still, I think, uh, on the engineering side, there's been a, kind of the frequency of hacks has dropped off, has dropped completely. And a lot of it is because, um, there's actually less innovation in the smart contract side.

Um, a lot of the ways that you can use blockchains have kind of been discovered. So you're starting to see commoditization of smart contracts. You only have so many XY equals K automatic market makers that you need. Once you implement them, you don't need to go and take a lot of engineering risk on building another one.

You can just use that one. Similar with bonding curves or lending protocols and things like that. So you've seen kind of this consolidation on the, um, the attack surface for hackers. I think anytime where you have a ton of innovation on the innovation in the smart contract space, there's a lot, a lot of risk.

But even beyond that, I think now you have just better tooling, formal verification, and better testing and better understanding of the attack vectors involved that people have just gotten better, um, at deploying these. So I think that risk has dropped off dramatically.

Um, I think with new financial kind of systems that are coming online, I think they're less risky simply because they're more on chain.

Hmm.

So a lot of the kind of the big problems with centralized exchanges that are outside of the US is that they're not actually regulated in the US. So if you have regulation that's too, too restrictive, like it takes too long, too expensive to start a business, doesn't even have to be restrictive, restricted.

It just could take you two years to get a license. You're not going to wait two years to get market share. So you're going, people are going to move offshore to go build that business. And this is where like you start seeing like problems emerge because they go offshore to a less regulated spot and go build a business on top of, you know, banking infrastructure that is less watchful than America's like offshore and you run into all sorts of problems.

I think a lot of the failures in the previous cycle basically came from that.

Mm-hmm.

Now, like in the US, you have, um, the Stablecoin Act and just kind of totally different SEC that makes it a lot easier to go and build, uh, businesses here. And also I think, um, a lot of the bad ideas have been washed out too.

So I think I would be extremely surprised if, uh, like another algorithmic stablecoin.

Hmm.

Had PMF. Like I just don't see that happening. I mean, I guess people will forget.

Yeah.

Lessons, but I, I thinkright now the current generation of founders and participants would at least have that immune response to, to like bad ideas that hopefully would prevent that from happening.

Definitely. I think actually like founders now, they're a lot more cautious,right?

Yeah.

Um, but actually I've like what I've seen, especially with, um, you know, Trump now and governments, you know, getting all these pretty smart, like actually like entrepreneurial VCs, you know, people around him like David Sachs,right, for AI and crypto.

I don't see any other governments doing this yet and more shit.

Yeah, for sure. I mean, US is late. There's been.

Yeah.

Uh, crypto legislation, I think in Japan, France, England, that have made it a lot easier. And, um, Japan, I think has been probably the best place in the, in the developed world to go build a crypto business.

Yeah.

Uh, I think for that reason why is why like FTX Japan was totally fine.

Yeah.

Right?

Yeah. Good point. I should I forgot about that.

Yeah. So they, they actually have been far ahead. It's just a small market compared to the United States.

Yeah. And I mean, I mean, it's amazing,right?

Yeah.

Japanese market where most people don't speak English, you know, to be fair. Um, there's so much further ahead than Western markets.

Yeah.

Kind of crazy.

Yeah.

Um, cool. Okay. So we've seen the likes of Google who take over our daily lives for search. No one has kind of owned the, uh, payments space yet. Are you guys going to do it? You're going to be like the Google for payments?

Um, the big vision for Solana is that there is no engineering reason or technology reason why you couldn't have a single network that could actually handle payments and trading and futures contracts and IPOs and everything else all in one chain, all in one actual execution engine.

So the, your velocity of the dollar,right, could, it could participate in like an IPO market and then the same transaction atomically pay for a coffee and buy an NFT from in a market in, you know, Australia or Nigeria or whatever, all atomically in one transaction and execute and settled in the round trip time for speed of light around the world.

Um, this is not an engineering problem. It is a, it's not a research problem. It is a bunch of engineering work that's blood, sweat, and tears. It's going to take a lot of time to optimize and make it awesome, but there's no engineering reason for that thing to not exist.

Um, so this is really what we're building for because I think if this system exists and, you know, has PMF and everybody's using it, you actually reduce the cost of finance to its, whatever the costs of the physics are to as low as possible.

Um, and this is to me kind of the end state of software eating the world is the world of finance.

Mm-hmm.

Um, you know, you've seen, I think this is Market Jason quote,right?

Yeah.

Software, software eating the world.

Mm-hmm.

So because of the properties that blockchains have, uh, been able to create this idea of verifiability and cryptographic guarantees on execution and settlement, um, this allows software to eat a very large part of the financial stack. Basically all the parts where humans are involved and faxes and documents and all of these disparate databases.

Exactly.

All that goes away and you're, you can pay a fraction of a penny to move electrons around in some boxes. And that's.

It's amazing,right? I mean, if we get to that in a few years, maybe it's five or 10 years. Um, I mean, I think that's totally amazing. And that really is like software eating the world of finance.

The, the challenge here is that this is a massive kind of prize.

Yeah. But very complex as well.

Yeah. I, I, I think it's, uh, for the network layer kind of thing, it's actually, you know, I don't, that part, the smart contract platform stack.

Yeah.

Is not that complex. I think that part has now been pretty well understood. Uh, the hard part here is like this is such a massive pot of gold. I think everyone's going to build their own blockchain like as the first iteration of this.

And then it's really hard to tell who's going to win. Um, obviously we have, um, so the Solana ecosystem has a bunch of kind of advantages because it's been in the market longer, it's grown and it continually, continuously growing.

Uh, but I think competition's going to be fierce. So the major reason why I don't know if you will have the, the one Google kind of scaled up blockchain that's handling, you know, the top 99% of all the important transactions.

Mm-hmm.

Um, is because probably China's going to have its own thing because of its kind of its own regulated island and the, the great firewall. But then too, because, uh, everybody wants a piece of this. So even Google like launched a blockchain,right?

Mm-hmm.

So how successful is that thing going to be? How are fintechs and businesses that have the actual, uh, agency to move like retail users to what rail and stuff like that, how those integrations are going to go is kind of still up in the air.

But, you know, I think my vision is that Solana is that layer. So we'll see what happens.

So it's going to happen hopefully. If we move two years ahead, five, let's look in five years actually, uh, probably slightly easier. What do you see, where, where do you see like Solana and, uh, what does that, what does that vision look like?

Um, the one thing that I, that I really want to see, um, that will move us a great deal forward in that direction is that companies in the US and Silicon Valley that want to IPO can IPO much faster and much cheaper by just what I call this kind of dumb idea called the Linux from scratch IPO.

So me as a founder that wants to do this, you can use a smart contract on chain that's immutable. You can put it in your S-1 filing to the SEC and say, I'm using this contract to do direct listing on this public commercialized blockchain.

These are all the properties of the auction and I can list my equity directly on chain. That's the source of truth for the cap table and give the public access in whatever stage of company formation I want and not have to pay any investment bank, any fees or any of that.

There's no overhead, it's just purely direct. All the incentives and whatever fees that you would pay a bank, you can use that as the incentives in that automatic market maker to provide liquidity. That would be my kind of ideal unlock because once that happens, even if those companies are not the OpenAI or the SpaceXs of the world, but once you have a hundred of them, 200 of them, small percentage of them will actually become big companies.

Um, and that I think will dramatically change how companies get access to capital and how the public actually gets access to early stage companies. I think one of the biggest parts of the American dream is our free markets.

And, you know, I landed in the United States literally from the Soviet Union in 1982.

Yeah.

As the internet like dot coms were like taking root and, and like growing, like those companies like Microsoft, Amazon, they were like building the future and those became the multi-trillion dollar companies today. Um, I think having Amazon like stock available to people in the nineties I think is a tremendous gift or tremendous value proposition of America.

So I think, you know, we've seen probably the smallest number of public companies now in the United States like then since like the seventies or something crazy like that, smallest number of IPOs. So if we can just give the tools to founders to do this like cheaply and quickly with the least amount of legal overhead, um, I think that could dramatically change, uh, the landscape.

Um, and obviously not every founder's going to do this, but because it's possible, the cost to do this through a third party that will handle the whole process for you is going to drop to the value that they provide,right?

So you'll see like a dramatic reduction in fees and kind of extraction that the banking system takes out of the, the company formation.

This is super exciting. I hope you guys do it. It is a really good time to build. It is a really good time to be kind of in this space. And, you know, if you make it happen, then I think, you know, it creates a whole new world of finance, but most importantly, everyone gets to participate in this, you know, whole new world of finance.

For sure. Yeah. This is, I think, um, part of this kind of cool, really cool science fiction kind of future where you have finance globally available to everybody as cheaply as possible and, you know, at the speed of light.

I think this is like one of the coolest things I could be working on.

Thank you so much for time. This has been amazing. Really excited to see where you guys go next and let's see what the future holds.

Awesome. Thanks for having me.