Joe McCann is the outspoken founder of Asymmetric, a top-performing crypto venture capital fund backed by investors including Marc Andreessen, Chris Dixon, and Circle.
Introduction
Joe McCann is the outspoken founder of Asymmetric, a top-performing crypto venture capital fund backed by investors including Marc Andreessen, Chris Dixon, and Circle, as well as the founders of Solana and Multicoin. He's also a noted meme coin trader. We had a fascinating chat with him at Solana Breakpoint 2024 in Singapore last month, where we and this investment gigabrain covered everything from macro to meme coins.
Disclaimer: Joe’s opinions in this interview do not reflect CoinMarketCap's views and are not financial advice.
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On Macro
You’re a hedge fund manager, technology executive, and creative technologist. How did you come to wear all these different hats?
Joe: I was a philosophy graduate who decided to teach myself programming, software development and trading. People learn things in their own unique way, but once you figure out how you can learn stuff, you can basically teach yourself anything.
I've always pursued things that I've just been interested in. I have an insatiable interest in seeking knowledge and understanding complex systems, whether it ranges from music, fashion to even food. On the professional side, I've always flip-flopped between emerging technology and finance for trading and investment.
How did your crypto journey lead to Asymmetric?
Joe: I got into crypto in 2016. I started to get a sense that the digital transformation of money was going to be through crypto and blockchain. That serves me really well because my kind of professional career has sat at the intersection of technology and capital, but also culture. And that's what Asymmetric is.
Asymmetric is a digital assets investment firm, but we're unique in the sense that we don't just have a traditional financial background. We're not just venture capitalists with these kinds of bloviating theses around the future of Tech or Finance. We also have a very strong pulse on pop culture, particularly internet culture.
Where does the Fed go with interest rates?
Joe: We correctly called the September 50-basis-point rate cut back in early July. We started to see a softening in the labor market, and then we also saw data that clearly suggested that inflation is well below trend, as well as inflation for the next one to five years is either below the Fed's 2% target or approaching it.
All of that suggests that a Fed funds rate between 5.25% and 5.5% is just way too high from a historical basis of their neutral rate of real rates, which is around 1%. Real rates have been hovering north of 3% for a long time, and that just doesn't make sense at some point.
Furthermore, with the shift of the Fed's mandate over the past couple of months, they've been conversing with the press and the broader financial community that their view is “we mostly have inflation taken care of.” Obviously, we're monitoring it, but the focus is the other side of the dual mandate, which is employment.
The reflexivity, or the inflection possibility, when it comes to labor going pear-shaped is really, really bad for someone like the Fed because if businesses actually start to lay off people, they don't immediately hire them back. That has a big lag effect on the economy.
If there is a bad data print between the September meeting and the November meeting, they may have to do an emergency cut, and that's right in the middle of a U.S. presidential election, which then would become incredibly politicized. This 50-bps cut was already politicized, but imagine if they had to do an emergency cut right before the election. People in the U.S. would lose their minds—depending on who they're voting for, right?
On Solana, Ethereum and new L1s
Why do you say Solana is the fastest horse?
Joe: I've been ride or die for Solana, even through the bull run in 2021 all the way to the depression lows of $8. That's when we shoved all in between $8 and $11. We bought basically as much as we could for the fund. We also bought a bunch of cheap options that provided us a lot of leverage for the month of December and January 2023. After basically marking the bottom, we were up 75% that month, heavily because of the positions that we took on Solana.
So, why do I still think Solana is the fastest horse? Well, look at the fundamentals of Ethereum right now. The reason I've owned zero ETH, and really see absolutely no reason to own it, is that Ethereum has an identity crisis. They came out initially with a narrative that they were the decentralized supercomputer, and then they came out with a narrative of ultra-sound money. The reality is these two narratives that make up Ethereum are getting eaten by Solana as the actual decentralized supercomputer, and Bitcoin as actually sound money.
Until they fix that identity problem, I don't know how or why people would choose to put a significant amount, or even a trivial amount of their money into something like Ethereum as a relative value to something like Bitcoin and Solana. This is demonstrated by the Bitcoin-ETH pair and the SOL-ETH pair.
SOL-ETH is up 35% give or take, year to date. So if you're long SOL, short ETH, you're up 35%. ETH-BTC just hit another new low today, which is, I think, the lowest print since April 2021. And this in the year that Ethereum has gotten an ETF.
Forget your religious, spiritual views about Ethereum—that's fine. I'm a trader, and my job as a hedge fund manager is to make my LPs money. So if I look at the relative value of Ethereum to Solana and Bitcoin, the answer is a 0% allocation, period.
How important is user experience in blockchain?
Joe: User experience is the most important thing for any of these new technologies, full stop. Developer experience begets user experience. Ethereum created Solidity, their own programming language, which is not a difficult language to learn, but you have to learn all this new stuff, whereas Solana is built on Rust, and developers have been using Rust for over 15 years.
There's tons of tooling, security best practices, etc., so the developer experience is better because there's less friction for developers to adopt Solana versus a new technology stack such as Ethereum.
Furthermore, when developers can actually adopt a new technology quickly, with less friction, they can start to focus on improving the user experience. The reason that you look at something like installing the Phantom wallet and immediately being able to mint an NFT or swap tokens, or do whatever you need to do, is because developers have been able to focus on the end user, as opposed to figuring out the infrastructure and securing it.
What about competitors like Aptos and Sui?
Joe: I'm all for more parallelized high throughput chains because all that's going to do is create competition for Solana.
If you don't have competition for Solana, you don't have a market. I want a market, and I want Solana to compete in that market. Move is an elegant programming language. I think it's fantastic. But the challenge is that it's a new programming language, and now a developer has to learn all this new coding. That introduces developer experience friction. You can't pay developers to use your tech. They have to want to use it.
What are you pumped about for Breakpoint?
Joe: First, what's the progress of the teams already developing on Solana? I just saw some of the announcements today, like my friends over at Jupiter just unleashed a flurry of new stuff. Tensor, which is an NFT trading platform, just open-sourced their entire codebase.
There's tons of stuff happening with the existing teams on Solana. The reason that's an important signal to me is that they're not giving up, and they're continuing to innovate and continuing to add new capabilities and features to serve their end users and potentially new users.
Second, what's happening on the investment side? Who's getting funded? I am a friend of Mert from Helius, and I’m a big fan of what those guys are doing. They just announced a huge Series B, and more importantly, they had VCs come in that have never invested in a Solana business before. That's also a very positive signal.
Third, all the new tech announcements. We saw Anatoly yesterday talk about Seeker, the new phone—looks incredible. Very reasonable price point. While pretty much everybody in the U.S. has an iPhone, the rest of the world does not operate that way. I think they pre-sold like 140-150,000 Saga phones.
And everybody's really looking forward to Jump and Fire Dancer, which has this theoretical upper bound of a million transactions per second. I think Kevin Bowers came out over the past couple of months and said that they've done a lot of research, and there are some infrastructural challenges to getting to that number. It's not just about their tech, it's the broader internet infrastructure.
Meme Coins
Why did you invest in Bonk so early?
Joe: Bonk was trading at a $28 million market cap when we got in. We bought it because we said there's true asymmetry in this trade. If we're right that Solana is breaking out, new flows will come into the market. New stablecoins are coming on-chain to purchase things on this chain. It doesn't take a rocket scientist to figure out that people are going to buy meme coins, especially because you had Dogecoin success.
Bonk also has a Netflix-quality background story to how they came to be. You add all this together and it's a very simple trade to be made, except a lot of hedge fund managers are worried about their appearance. I am not. I'm focused on generating returns for my LPs, not how I look.
Not only did Bonk go from $28 million to a $2 billion market cap, but my LPs were very, very happy with the results. They don't care that I was buying a meme coin. In fact, if you don't have exposure to meme coins in your portfolio in 2024, as an investor, certainly as a crypto hedge fund manager, you are doing your LPs a disservice.
What's your view on the proliferation of meme coins?
Clearly, there's been a massive proliferation of meme coins. Most of them are worthless. That's part and parcel to product market fit for Solana. Solana is a chain, the only chain that can enable this level of experimentation and innovation. A lot of upset VCs don't like it—well, tough sh*t. It's a permissionless network. People will experiment any way they want, whether you like it or not.
Why do VCs hate meme coins?
Joe: The reality is, most VCs have raised money from LPs and sold them on a story of radically changing the financial system for the better, democratizing access to financial services. And Ethereum is the path to do that. Well, unfortunately, that's not happening. Furthermore, these funds have raised enormous amounts of capital, whereas if they, all of a sudden, pivot 180 on their approach, they have to go back to their LPs and be like, "Hey, remember that thing that I told you? Yeah, that's not true anymore."
Are meme coins bad for crypto? What’s the upside?
Joe: I don't think that meme coins are bad for the industry. If anything, they're net positive because it's one of the fastest ways to onboard people into Web3. It's that a lot of VCs have to now justify their underperformance or missing of this cultural phenomenon that is meme coins, as well as the on Solana, so the majority of the VCs that you will see out there bloviating about why meme coins are bad are massive ETH holders.
If you study the history of any industry or any market, no market or industry has ever existed without speculation first. Meme coins are just like lottery tickets. They're just like scratch-off tickets or slot machine, whatever culture you see. I look at it from a longer-term perspective, to say speculation is the thing that actually drives towards new use cases.
Let’s look at Iggy Azalea’s Mother project for example. Iggy is doing this fundamentally differently. When I met with her for dinner earlier this year, I was absolutely blown away by her business acumen, and also how she understands building brands, building communities. She clearly knows how to make content go viral. With Mother, her token, she's not just shilling a token. She's building an entire brand around Mother. The Mother brand itself has value. She's plugged the Mother token into myriad businesses where you get discounts and actual benefits by using the token.
What’s the future of meme coins?
Joe: I think that what you will end up seeing is blue-chip meme coins. The definition of blue-chip meme coins is $1 billion market cap or more and it holds it above it. The ones that get there tend to stay there for structural reasons.
Market makers actually want to trade them. They have inventory. Exchanges want to list them because there's trading activity. I think there will be a handful of winners in this cycle. At the end of the day, the power of the viral nature of the internet and how people can either capture attention and retain it or provide genuine value to the communities being created around these tokens, those are going to be the ones that rise to the top.
Do you have a favorite meme?
Joe: This is going to sound very self-aggrandizing, but somebody in my Telegram chat made a sticker pack of me with a bunch of memes, and they took “The Wolf of Wall Street,” where he's doing the quotes, put my head on it and said, "higher." So, I would say the "higher" meme is my favorite.
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