Anatoly Yakovenko

• The Bottom Line: Anatoly Yakovenko is a world-class engineer who founded Solana, a blockchain network, by relentlessly focusing on a core business problem—cost and speed—but his creation exists in a speculative arena where a value investor must tread with extreme caution, if at all.
• Key Takeaways:
• Who he is: The co-founder of Solana and the inventor of Proof-of-History, a novel method for organizing a blockchain to achieve massive transaction speeds at a very low cost.
• Why he matters: He represents the type of founder a value investor might find intriguing—a technical expert obsessed with solving a real-world problem rather than a promoter chasing hype. However, his project, Solana, operates far outside the circle_of_competence for most long-term investors.
• How to analyze him: A prudent investor should analyze Yakovenko not as a crypto guru, but as the founder of a high-risk, pre-profit technology venture. The focus should be on the potential for a durable economic_moat versus the immense risks of technological failure, competition, and speculative valuation.

Imagine trying to build a new global financial system using the technology of a dial-up modem. It would be painfully slow, frustratingly expensive, and couldn't possibly handle the world's traffic. For years, this was the state of blockchain technology. Bitcoin and Ethereum, the pioneers, were like that dial-up modem: revolutionary in concept, but functionally limited. Enter Anatoly Yakovenko. Yakovenko is not your typical tech promoter. He is an engineer's engineer. Having spent over a decade at Qualcomm, a company that lives and breathes efficiency in wireless technology, his mind is wired to optimize systems and squeeze every last drop of performance out of hardware. He saw the blockchain “dial-up modem” problem and became obsessed with a single question: How can we make this faster and cheaper, not just by a little, but by orders of magnitude? His answer was Solana, a new blockchain platform, and its secret sauce is an innovation called Proof-of-History (PoH). Let's use an analogy. Imagine you have a hundred people in a room, and they all need to agree on the exact order of events that just happened. They could spend hours arguing, voting, and sending messages back and forth to build a timeline. This is slow and inefficient, much like older blockchains. Yakovenko’s PoH is like setting up a camera in the corner of the room that takes a picture every single second, with a giant, publicly visible timestamp on each photo. Now, you don't need to argue. You just look at the photos. Event A is in the 10:01:01 photo, and Event B is in the 10:01:02 photo. The order is undeniable and instantly verifiable. By creating this verifiable “clock” within the network, Yakovenko effectively eliminated the main bottleneck, allowing Solana to process tens of thousands of transactions per second for fractions of a penny. He didn't just upgrade the dial-up modem; he tried to build the fiber-optic internet backbone for the blockchain world. He is a man focused on the “how”—the deep, difficult engineering—which sets him apart in an industry often dominated by narrative and hype.

“For me, it’s like… how can you build the most performant machine? That’s my art.” - Anatoly Yakovenko

At first glance, a figure from the world of cryptocurrency seems like an odd topic for a value investor. After all, value investing, as taught by Benjamin Graham and Warren Buffett, is about buying understandable businesses at prices below their intrinsic value. It's about predictable earnings, durable competitive advantages, and a steadfast refusal to speculate. So, why should we care about Anatoly Yakovenko? Because even if we never invest a single dollar into cryptocurrencies, studying figures like him sharpens our ability to analyze one of the most important factors in any business: leadership and innovation. A value investor must be able to distinguish between a visionary founder building a genuine economic_moat and a charismatic promoter selling a fleeting story. Yakovenko is a fascinating case study in this regard.

• Focus on a Real Business Problem: Yakovenko didn’t set out to create a new form of money or a “get rich quick” scheme. He identified a fundamental business constraint—high transaction costs and low speed—and engineered a solution. This is the same mindset that drives a business leader to build a more efficient factory or a more effective supply chain. He's attacking a problem of cost and scale, which is a language value investors understand.
• Building a Low-Cost Moat: One of the most powerful economic moats is a sustainable cost advantage. Walmart used its supply chain to sell goods cheaper than anyone else. GEICO used its direct-to-consumer model to offer lower insurance premiums. Yakovenko's entire thesis for Solana is to be the lowest-cost, highest-speed provider of secure transactions. While the “product” is abstract, the business strategy is classic. The question for the investor is whether this moat is durable or merely temporary.
• The Founder-as-Technologist: Value investors often prefer companies led by “product people”—founders who are obsessed with the quality and utility of what they are building. Think of Steve Jobs and his obsession with design, or Henry Ford and the assembly line. Yakovenko fits this mold perfectly. He is deeply immersed in the technical details, which suggests a focus on creating long-term utility over short-term hype.

However, a value investor's admiration for the founder's skill must be tempered by a cold, hard look at the investment case. The Solana ecosystem is the definition of a speculative venture. It has no long history of earnings, its “customers” are often speculators themselves, and its technological foundation has been shaky (evidenced by multiple network outages). Therefore, Yakovenko matters because he forces us to confront difficult questions at the intersection of technology and value. How do you value a disruptive technology? At what point does a promising technology become an understandable business? And most importantly, how do you avoid the narrative fallacy, where a compelling story about a brilliant founder blinds you to the immense risks and lack of a true margin of safety?

When faced with a brilliant founder like Yakovenko operating in a speculative field, a value investor should not get caught up in the hype. Instead, they should apply a timeless, fundamental framework. This isn't a formula for finding the next big thing, but a method for protecting yourself from catastrophic error.

1. 1. Assess the Founder's Pedigree and Focus: Before looking at the project, look at the person. Are they an engineer or a salesperson? Are they obsessed with solving a problem or with the price of their stock (or token)? Yakovenko's deep engineering background at Qualcomm is a check in the positive column. A value investor prefers a founder who knows how to build the factory, not just one who knows how to sell it.
2. 2. Analyze the Problem, Not Just the Solution: Is the problem the founder is trying to solve real, important, and persistent? High fees and slow speeds on blockchains are a genuine problem for potential users. A great founder is tackling a great problem. This is a critical first filter. If the problem is trivial or imaginary, the brilliance of the solution is irrelevant.
3. 3. Scrutinize the “Business Model” and Path to Value Accrual: How does this project, in theory, make money? For a network like Solana, value comes from transaction fees. A value investor must ask a series of tough questions:
   • Who are the paying customers? (Developers, users, applications)
   • Is the demand for their service durable or faddish?
   • Can the “revenue” (network fees) grow to a point where it provides a sensible return on the network's current valuation?
   • This is where most technology ventures, especially in crypto, fall apart under a value investor's scrutiny. The path from a cool technology to a cash-generating business is often a long, treacherous, and uncertain one.
4. 4. Identify the Moat and Test Its Durability: Yakovenko's goal is a low-cost, high-speed moat. The investor's job is to play devil's advocate.
   • Is it truly unique? What prevents a competitor (like Google or Amazon, or another blockchain) from copying the technology or building something better?
   • Is it reliable? Solana’s multiple network outages are a massive red flag. A toll bridge that is frequently closed for repairs doesn't have a very durable moat. Reliability is a key component of any competitive advantage.
5. 5. Demand an Apocalyptic Margin of Safety: For a proven, stable business like Coca-Cola, a 20-30% discount to your calculated intrinsic value might be a sufficient margin of safety. For a venture as speculative as a blockchain network, the margin of safety would need to be colossal, perhaps 80-90% or more. The price would have to be so low that it accounts for the very real possibility that the entire project goes to zero. For most value investors, such a price will never materialize, and the correct decision is simply to pass and stick to simpler, more predictable investments.

Let's compare how a value investor might view two different hypothetical tech founders.

This example shows that while a value investor would ultimately pass on both, their analysis is not dismissive. They recognize the potential in Anna's approach but are disciplined enough to admit it's not a suitable investment for them. They see Chad's approach for what it is: a trap. Yakovenko clearly falls into the “Anna” category.

Analyzing a company through the lens of its founder, especially a technical visionary like Yakovenko, has distinct pros and cons for an investor.

• Clarity of Vision: A strong, technically-proficient founder provides a clear, long-term vision that can guide a company through difficult periods. This can lead to groundbreaking innovation that less focused, committee-run companies can't achieve.
• Product-First Culture: Engineer-led ventures often prioritize building a superior product or service above all else. This focus on creating genuine utility is the foundation of every great long-term business and can lead to powerful, lasting economic moats.
• Alignment of Incentives: A founder often has a significant portion of their net worth tied up in the venture, making them deeply aligned with long-term success rather than short-term quarterly results.

• Key-Person Risk: The project's fate is inextricably linked to the health, motivation, and continued presence of one individual. If Yakovenko were to leave Solana, it would create a massive crisis of confidence and a leadership vacuum.
• The “Story Stock” Trap: A brilliant founder with a compelling vision can be so captivating that investors fall in love with the story. They may start to ignore warning signs, like a lack of profits, operational failures (like network outages), or a valuation that has become detached from reality.
• Technical Tunnel Vision: An intense focus on engineering perfection can sometimes come at the expense of other critical business areas, such as marketing, user experience, or capital allocation. The best technology doesn't always win; the best business does.

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