How Solana is like Netflix: Kyle Samani on the ‘Business Breakdown’ Podcast
It’s not about the current landscape — it’s about looking at the future. That’s the message Multicoin Capital’s Kyle Samani sent during his appearance on the “Business Breakdown” podcast with Patrick O’Shaughnessy on September 29th, 2021.
In the hour+ conversation, Samani broke down the current crypto landscape, the challenges facing the industry, and why Solana is better suited to look to the future. The entire conversation is worth listening to (and you can stream it above), but here’s some of the highlights.
These quotes have been edited for length and clarity.
How Solana is different from other chains
Kyle Samani: “[Solana] is a programmable blockchain. So third parties can write code for it, like you can for Ethereum or Avalanche or these other systems as well. Bitcoin notably does not really a smart contract. It is programmable that in a very, very limited way.
“Solana is fully programmable and the way Ethereum is, but the big, big difference with Solana is that from inception, the system was written to go as fast as possible. The way I think about it is look, computers have aggregate processing ability of X, by introducing bandwidth communications between a group of nodes all over the world that don't trust each other. You are introducing some overhead on X. Your net performance is less than X. Solana's goal is to get as close to X as possible. If you look at Ethereum today, it's probably 0.01x, maybe lower than that. And Bitcoin is hundredth or a thousandth of that. Solana is really trying to get to X.”
How Solana is like your phone… and Netflix
Kyle Samani: “If you think back to the late 90s-early 2000s computers, the clock speed was improving at a really fast rate. And this kind of peaked, I think the Pentium 4… was kind of the peak of the clock speed wars. They got up to about 4gHz, maybe 4.5gHz or thereabouts. And then they stopped getting faster, call it around 2005. You want to be generous, let's say 2008. And just go look at laptop reviews or desktop reviews for the last 12 years, you notice that the headline clock speed has not increased at all.
“The reason it hasn't increased is because this heat creation, and therefore the need for heat dissipation, increases super linearly with clock speed. I'm not close enough to silicon to explain to you why that's the case, but just as the transistors switch faster and faster, the heat becomes the problem. And so basically fans, computers, desktops primarily and laptops to a lesser degree, kind of have topped out at about 3.5-4 gHz or so. And then if you look at the fanless devices, notably your phone and your iPad, those have capped out at 2, maybe 2.5 gHz. And they just don't go any higher than that because you have heat problems. And that's been true for a decade, if not longer. Where have all the gains come from and computes?
“They've come from making each process cycle a little faster. There've been some gains there, but certainly nothing close to Moore's law. They've come from parallelism, which has been huge and modern cards are massively parallel. And then they've come from chip specialization.
“If you look at your iPhone, for example, your iPhone system on a chip has a hundred different sub processors on it that do camera stuff and video stuff and microphones and whatever. When we think about the next 10 years of compute, these are not really specialized functions, camera functions or video functions. The most generalizable way to think about scaling that is just parallelism, because as you increase the number of cores at a fixed clock speed, the heat creation doesn't increase super linearly. And so we've been able to scale parallel.
“That's exactly what Solana does, and that's how it gets this massive gain relative to its predecessors. But then more importantly, it also then gives you a forecastable path on which if you're writing code today, you can say, in five years time, in 10 years time, I can reasonably believe aggregate throughput will be 10x or 100x, 1000x, whatever, based on current trajectories of how silicon is working.
“I think that probably the most famous story like this is Netflix. Reed Hastings wanted to do streaming at the time of starting, but knew that the bandwidth wasn't there and they were able to look at that in like 2002 or whatever, and start calculating, ‘Okay, bandwidth is getting there. We can do the streaming thing.’ I think they could look at this as kind of a similar type of problem space.”
How Solana is built for the future
Kyle Samani: “My assumption is that if you're going to get to a world where you have a billion daily active users who are each producing a hundred transactions per day — so you've got a hundred billion transactions per day, going through the system — I think the only way we're going to get there is zero-knowledge stuff on top of Solana.
“That's my mental model with how we get there. And probably the highest probability path you do to get there is you max out Solana layer-1, which has a fair bit of room to run. At that point, you have enough credible neutrality, you have enough ecosystem usage and global growth and recognition that everyone says, ‘Okay, this is the future.’ And then how do we extend this thing further? And you extend it further with zero-knowledge roll-ups. That's what I think is the highest probability outcome.”
Why the ‘De’ in ‘DeFi’
Kyle Samani: “I think it's probably less about censorship resistance and more about credible neutrality, saying, ‘Do we all have a playing field that whether you're Bank of America or JP Morgan or a guy in Africa or me, or you? Can we all agree that this database, this transaction processing layer is incredibly neutral that we all agree on, where it is now and where it will be in the future?’ I think that's probably the important thing.”