20VC: Coinbase's Brian Armstrong on Real vs Fake Emergencies, Coinbase's Failed NFT Launch, The Politicisation of Leadership, Why This Crypto Winter is Different From The Past & Brian's Development and Insecurities as a Leader

Brian Armstrong is the Co-Founder and CEO @ Coinbase, the easiest place to buy and sell cryptocurrency. Over the last 10 years, Brian has led Coinbase to today, a public company with over 3,500 employees and revenues of over $7.5BN in 2021. Brian also raised venture funding before going public from some of the best including Fred Wilson @ USV, Micky Malka @ Ribbit, Marc Andreesen @ a16z and Garry and Alexis at Initialized. Prior to founding Coinbase, Brian was a Product Manager @ Airbnb. In Today's Episode with Brian Armstrong We Discuss: 1.) Founding Coinbase: How did Brian make his way from PM @ Airbnb to founding Coinbase? What is Brian running from in his past? What is he running toward in his future? What does Brian know now that he wishes he had known at the start of Coinbase? 2.) Brian Armstrong: The Leader: What does "high performance" mean to Brian in leadership? How does Brian think about stepping off the treadmill for a second and appreciating what has been achieved? How does one celebrate as a team without creating laziness or arrogance? How has Brian most changed as a leader over the last 10 years? On reflection, what does Brian believe are his biggest weaknesses today? 3.) Crucible Moments in the Coinbase Journey: What does Brian mean when he says, "you need to be able to differentiate between a real emergency and a fame emergency?" What is the difference? When Brian made the speech to the Coinbase team on political views in the company, was that a real or fake emergency? What happened? What would he have done differently? Is the failed NFT launch, a real or fake emergency? What big mistakes were made? What are Coinbase doing to correct and improve them? "Bankrupt Coinbase" campaign on social earlier this year, real or fake emergency? What has been Brian's biggest lessons on how to deal with fake news? 4.) Crypto and The Ultimate Mission for Coinbase: What is different about this crypto winter from all other crypto winters? Why did Brian ban discussion on the market cap from employees within Coinbase? How does Brian maintain morale internally when everyone sees the stock at all-time lows? How does the Coinbase mission extend far beyond financial freedom for the world? What does Brian want Coinbase to be in 10 years?

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  The main thing is that the macro environment is down too. So it's not really a crypto winter, it's an everything winter, it's a macro winter. This show with Brian today is such a good one. This is Harry Stebbings and 20 VC. And as you heard, our guest today is Brian Armstrong, co-founder and CEO at Coinbase. Over the last 10 years, Brian has scaled Coinbase to being a public company with over 3,500 employees and over $7.5 billion in revenue in 2021. In today's show, we have an incredible discussion on why this crypto winter is different to the last, pros and cons of being public, and crucible moments within the Coinbase journey, and how to determine a real emergency from a fake emergency as a leader. I want to say a huge thank you to Mickey at Ribbit, Emily Choi, and Adam Draper for some amazing question suggestions today, and I so appreciated that.

• 0:45Harry Stebbings?

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• 1:29Harry Stebbings?

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• 2:14Harry Stebbings?

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• 2:57Harry Stebbings?

  Visit marketxventures.com and check out their YouTube channel, Market X Ventures. But now I'm so excited to hand over to the one and only Brian Armstrong, co-founder and CEO at Coinbase.

• 3:14Speaker 01

  You have now arrived at your destination.

• 3:17Harry Stebbings?

  Brian, I'm so excited for this. So first off, thank you so much for joining me.

• 3:21Speaker 02

  Yeah, thanks, Harry.

• 3:22Harry Stebbings?

  Not at all. But listen, you've probably answered the question on how did you found Coinbase many times? And this show is going to be very different in many ways. So I want to dive by going straight into it. We're all a function of our histories and a product of our histories. If I ask you the question, what are you running from and what are you running towards, Brian? If we really just start at the deep end.

• 3:40Speaker 02

  I'm glad you're starting off right with the therapy session here. There is a lot of psychology and therapy involved in starting a company. So it's a really good question. I think a lot of people start off in their career running from something. And I'll tell you what it was in my case. I was always a shy and introverted kid. I felt like I have such good ideas, but I'm not confident, I'm not articulate, and I couldn't get people to hear my ideas. And then I think I had this deep fear about never doing something important in my life. And I don't even know exactly where that came from. But I was like, I'm going to fucking go do something great here or die trying. I had this real desire to, maybe it was like a status thing or a sense of importance. I didn't feel important or worthwhile like on my own, which is like a deep psych.

• 4:20Speaker 02

  Psychological thing as people oftentimes in entrepreneurs life you grow you see a little bit of success and then what happens is The thing that was motivating you which was probably like fear or anger or shame initially starts to go away a little bit maybe it's not a hundred percent And so you start to lose your motivation and a lot I've seen a lot of entrepreneurs go through this existential moment of crisis After they start to lose the initial thing that was driving them like fear anger and then they have to move towards something that brings them actual joy or love or just That they're actually passionate about I had my own moment of that somewhere along the last 10 years where I started to think all right what do I actually like doing now that Coinbase has been billion dollar evaluation or whatever goal I had in my mind And I was like okay I love building things with technology that's probably my favorite thing to do and then the other thing I love doing is learning new things

• 5:03Speaker 02

  I'm always like curious I'm trying to absorb new knowledge being a company CEO is always pushing you outside your comfort zone into new areas It makes me feel good to try to do things at scale that have an impact on the big meta problems of the world If I see oh we went from a million people are using this to 10 million or something it just gives me a high I don't know why It gets me excited about oh my gosh like we can have even more impact some people they don't have that they're very content having an impact with a classroom of 30 kids Or maybe just helping one person that they're mentoring or whatever and they find that incredibly fulfilling for me I don't get the same feeling unless I'm trying to do something at scale that has like a major impact on the world so That's a little bit about my journey

• 5:40Harry Stebbings?

  The trouble is you never get off the treadmill

• 5:42Speaker 02

  Yeah

• 5:43Harry Stebbings?

  That is you get to 10 million users I don't know but then I know you Brian I'm probably the same what about next quarter and you never actually sit with the happiness Do you ever get off the treadmill and do you worry about that

• 5:55Speaker 02

  I have definitely thought about that because I'm not somebody who's really good at celebrating usually by the time I Accomplish some goal that I've set maybe I've worked on it for years by the time you're at like 60% 70% you're like oh my gosh I can see where this is going it's gonna get there in the next Six months or a year just if even if I did nothing but a lot of the hard work is upfront it's not like I have some Moment of oh my gosh it feels so good and I hit the goal like honestly I don't really feel that but I do feel like a deep sense of fulfillment I would say just about If I look at where I was 10 years ago or where I'm now or a year ago and I was like okay I feel like I'm making progress I'm doing something good in the world obviously I take time to do Things in life besides work, but I think if I wasn't working on something hard and really difficult, I wouldn't feel as fulfilled. I've tried going on vacation. After two or three or four days, I'm just like,

• 6:40Speaker 02

  I need to go read something. I need to learn something. I need to build something. It's almost like an addiction. I've had this thought before. I have no evidence to back this up, but people have all kinds of addictions. I happen to be addicted to building things and scaling them. And sometimes I'll overdo it and I'm like, oh my God, I haven't taken a day off in however long or whatever. I'm almost overdoing it. Then the other part of me is whatever, never stop. If I find it fulfilling, I'd rather just keep building things and do that for the next 50 years or more, hopefully if we get longevity stuff working. If you can make your career fun, you'll never work a day in your life. Oftentimes when it does work, it's getting to a place where I'm traveling to something ostensibly for work, but I'm having fun at the same time. I'm meeting with friends, people I haven't seen in a long time. I'll go on a hike. I'll go to dinner with interesting people.

• 7:24Speaker 02

  Jeff Bezos had this term one time where he talked about it's not work, life balance, it's work, life harmony. And I personally feel that if I go somewhere for a week with nothing to do, but sit on the beach, I find it to be like not that fun.

• 7:35Harry Stebbings?

  There's so many things I want to unpack there, which is why I'm so glad we ignore schedules. But like you mentioned, celebrating milestones that you hit. A hard thing that I have now with one one hundredth of the team that you have is like when you hit milestones, I want the team to be happy and I want them to celebrate them. It's just a milestone that's been hit back to work like 10 minutes later, guys. This is not something to, how do you create good culture when we hit milestones, but also not create apathy that yay milestone hit and we can have a break now?

• 8:02Speaker 02

  That's part of being a CEO is complimenting yourself with people around you that are good at the stuff you're not good at. Some CEOs are really good at celebrating. I'm not. So I have people around me who are better at it and on the exec team. And we also defer a lot of it to managers and leaders of various products and organizations, right? Like they all have budgets to go do stuff and I might be like the awkward person who like shows up for half an hour at like the massive social event because I'm a little more introverted, but I'll show up, make an appearance, but I'll let them do their thing. And if people want to celebrate until 2am or whatever, it's probably better for the CEO to step out before things get too wild at the party. But yeah.

• 8:33Harry Stebbings?

  You mentioned the addiction element there and there's also always lows with addiction and kind of rock bottom. When you look back on the Coinbase journey, we see the documentary now, we see it on Hulu, we see it on Amazon Prime. I think it's often humanizing for entrepreneurs to also hear not so easy times. Applying that to addiction, what were the rock bottom times in the journey with Coinbase?

• 8:52Speaker 02

  Part of the reason why I wanted to create that documentary was to pull back the curtain and show people the good, bad and the ugly. And show that we're not geniuses and we're not bad people, we're just regular people trying to build something good in the world. And you can have quirky characters and you have flaws and you make mistakes. But some of those that were, we talked about in the documentary a little bit, but some of the ones that come to mind there was the neutrino acquisition we did, which was created this whole social media campaign to delete Coinbase. There was like a hashtag trend and we talked about that stressful moment. That was actually a moment where I happened to be in Hawaii trying to have a vacation and what was funny, the whole thing blew up. Everybody started calling me like, Brian, you need to fly back here later today. Like this is an emergency. Whenever you go on vacation, sometimes things blow up.

• 9:29Harry Stebbings?

  How did you deal with that as a leader? That is really stressful when you see delete Coinbase. This is not an easy time. How did you deal with that as a leader?

• 9:37Speaker 02

  There's real emergencies and then there's a lot of fake emergencies. A lot of times people will be calling you, they want to meet with you and as CEO, and they're really spun up on something. They're like, this is an emergency. You have to get good at determining what's a real emergency, what's a fake emergency. This is actually probably one of my weaknesses. Like the conventional CEO advice is if there's ever something that's going viral and it's scaring everyone. And you need to be out there immediately in front of the public and go on CNBC or like whatever the news show is, restore confidence. There's that old saying about a lie can get halfway around the world before the truth has the chance to put their shoes on. Sometimes I see these things like you're just going about your regular day, you're trying to build things, you're trying to meet with people, you're trying to hire people. And then some misinformation or whatever will just go viral around the whole world while you're in a bunch of meetings.

• 10:21Speaker 02

  You pop out of these meetings and you feel like, oh my gosh, the whole world has gone crazy. Okay. So what are we going to do? My default, almost to a fault, is I don't really feel any pressure to get out there with some kind of quick statement before we've actually figured out what are the facts? What do we want to do about it? The way to synthesize these two ideas is you can put out a holding statement. Part of the value of a great head of comms inside a company is they can craft this. Peace and help you get to ground truth, but they can put out a statement, the holding statement and say, we're aware of the issue. We're looking into it. We'll have an update for you by X 12 hours from now or tomorrow or whatever. So everybody can just calm down. They can take a breath. They're like, okay, they're aware of the problem. We're going to hear what they're thinking. And then it gives you some time to go figure out ground truth. It's surprisingly hard to figure out ground truth sometimes because you pull a bunch of people into this meeting.

• 11:05Speaker 02

  You're like, why did we do this? Why did we write it that way? And whenever the CEO pulls a bunch of people into a meeting, you can imagine people are a little nervous and they're like, oh my God, this thing is trending on Twitter. Brian is going to come in and fire somebody. And frankly, I've never done that once in my whole life. I've never fired somebody in anger in the moment. We evaluate people's performance over multiple quarters and things like that. You'll oftentimes get somebody in a room, you try to calm them down and you're like, this is not a blame thing. No one's upset here. We're just trying to figure out what happened. When people are triggered, they'll give you these, no, like we looked, we definitely did this. We checked that. We checked why we checked Z. Here's why we did it. Oftentimes I'll find out later, like the story was a little more nuanced. And so I always am trying to listen for, all right, but forget all that. What's the piece that we could have done better? Because sometimes that's what the world wants to hear externally. They don't want to hear all your excuses.

• 11:48Speaker 02

  Here's the part that we could have done better. Here's the part, by the way, that's misinformation and just the world seems to believe it. And they'll go back to focusing on something else. And if you try to put some corporate PR speak in there about how you didn't actually mess up. It'll just make the mob even angrier. Anyway.

• 12:03Harry Stebbings?

  I've got to ask, you said there about real emergency, fake emergency. I spoke to Emily before the show and she gave me some crackers and so I'm going to blame her for all of them. And as I'm going to see if which one's a real emergency, which one's a fake emergency. NFT platform launch that obviously didn't work. Was that a real emergency or a fake emergency? And why in your mind did it not work?

• 12:24Speaker 02

  So that wasn't an emergency in the sense of it, just sometimes you put out a product and you could have launched it better. With the NFT launch, the thing that we should have done better was we made a classic mistake, which is never overhype a product before you put it out there. The version one of every product sucks. I've never seen a single product in tech I've ever launched or seen anybody else launch in their career. The V1 didn't suck. We made a mistake, which we started talking about the product and putting out screenshots ahead of time. So people's expectations were high and like all V1 products, it wasn't fully what they were expecting. So they were a little disappointed. But I think that's fine. It doesn't deter us. We're basically integrating it natively into our app just to make it easier. We're aggregating listings from all the different NFT marketplaces out there. People are already buying their crypto on Coinbase. Instead of having to move it to a self custodial Chrome extension and then using another marketplace.

• 13:08Speaker 02

  If you can just basically, you've bought it, your stuff's already in Coinbase, you might as well view the listings aggregated of all the exchange of different marketplaces out there. Click the buy button and it's done. So we're trying to just make crypto easier to use and NFT marketplaces are no exception. That's going to be a multi-year journey for us and I think NFTs will come back in the next cycle. So that's not a real emergency.

• 13:26Harry Stebbings?

  When you broke the internet, you know what I'm talking about here, with the politicization of leadership and that statement, real emergency, fake emergency?

• 13:34Speaker 02

  That was a real emergency, but it was self-induced. We knew it was going to cause all hell to break loose when we put out that statement. It's a third rail hot button issue. We spent probably about a month ahead of that drafting it, talking with the board, talking with different leaders internally. People were very nervous. Some people even really begged me not to post it, but I was like, I think it's the right thing. We have to do it. Cause we weren't aligned internally about being apolitical and we had a small vocal percentage of the company who thought we should be engaging in all these social issues. So it was a major distraction. That was like a slow rolling emergency. There was a single moment where the employee walkout happened, but after that, everybody came back to work. And then it was just like in the background noise, something was slowing down our progress and we weren't aligned. So I knew I had to fix it eventually. That's where we worked up the courage, put out the blog post. That's not like a true emergency.

• 14:19Speaker 02

  I mean, the emergencies are typically, the whole site is down, not just for a few minutes, but some kind of crazy tech debt migration, whatever thing happened. And you need to go and go investigate with the team. If you're down multiple days or something like that, that's a five alarm fire. Like you need to go, that's a true emergency, right? If some crazy misinformation is floating around, I think it was earlier this year, there was like a bunch of bankruptcy fears that were running around or whatever. And I probably shouldn't even say the B word. Everybody freaks out when CEOs say the B word, but that thing went all around the world. That was like a true emergency. And it just so much misinformation out there, but I don't know, those are true emergencies.

• 14:53Harry Stebbings?

  Do you have a decision-making framework? So for me, I have, okay, is it a reversible decision or an irreversible decision? And then like for the fund, will it be more than a 2% exposure or not on the cash basis? And if it's irreversible and more than 2% of my fund, it's an immediate decision. That's my framework. Do you have frameworks for making these decisions?

• 15:12Speaker 02

  There's a great scene about this in the documentary where Olaf, one of the early employees, I would be plugged in with my headphones trying to code for five hours a day. So people were instructed, don't bother Brian while he's jacked in or whatever. But if there was some major bug on the site, Olaf had this system he developed where he was like, is the potential loss four figures, five figures, six figures, seven figures? And so he would run up to my desk and he was instructed, don't come up to me unless it's more than like a hundred thousand dollars or something that we might lose. He'd come up with a post-it note and be like, potential loss, two million dollars. And I'd be like, okay, I'm taking off my headphones. Let's go, let's go deal with it. But as you get to be a bigger company, we have like a whole risk framework. We have a risk appetite statement. We have various signature authority policies about who in the company can decide to spend how much and why and when and where

• 15:57Speaker 02

  we're willing to take higher risk, where we're willing to take lower risk. We also use a decision making framework called Rapid, R A P I D, which Bain developed. I have found it to be pretty helpful as an organization gets to be more than 500 people where you just can't really keep track of who everyone is and what they're doing. And you don't want the CEO or the exec team to become a bottleneck. So you do have to push decision making down in the org and get clear about what decisions they can make and what they can't. And Rapids are good ways to do that because they basically help you identify who's going to be the decider, who's giving input, which sounds like a simple thing, but often in big companies, you'll get these vetoeracies of there's seven people, 10 people involved in this thing, and each one of them thinks they can veto or whatever if they don't agree. And then you basically end up having a committee which slows things down. So you need to get really clear about defining, okay, there's going to be one directly responsible individual to make this decision. Who

• 16:41Speaker 02

  is it? You try to often push that down in the org and then you can have input from all the relevant parties. They write their input in the document. So you make sure everybody feels heard, provides a good paper trail where three months later, when someone's, what did we decide again? You go back to the document or three years later, you're like, why did we decide to do that stupid thing? You can go back and read the document and what did everybody think? How did we reach that decision? That's been a great tool to formalize our decision making.

• 17:02Harry Stebbings?

  Mentioned that kind of the skies of the company also. You said post 500, obviously Coinbase much larger, but you're also a public company now. I spoke to a lot of your ambassadors before the show and they've mentioned this and I wanted to ask, do you enjoy being a public company CEO? And is there any elements that are like super surprising about it?

• 17:19Speaker 02

  Okay, so this was a big question for me before Coinbase went public. And I wanted to go figure out, do I even want to be a public company CEO? What I did was I went and I talked to a bunch of CEOs before going public. And so I got a good, different set of options. And I personally decided I wanted to become a public CEO.

• 17:34Harry Stebbings?

  What did you learn from speaking to them? I know you would have gathered all the data and inputs that you could have done.

• 17:39Speaker 02

  There's a lot of pros and there's a lot of cons. The pros are that it's a great marketing event for the company. You're suddenly viewed as legitimate by the world. Makes it easier to get deals done with other Fortune 500 companies. The Fortune 500 just wants to do business with other Fortune 500. It's seen as they're more established. The financials are audited. They've met a public company standard. It's a real company. That's turned out to be very true. We've been able to close deals with BlackRock, the largest asset manager in the world, and Meta, formerly Facebook. Like, we're now, especially with our Coinbase cloud business and things like that, we're now able to power things with Fortune 500, which wasn't really happening before. The other thing is it's a lot easier to raise money as a public company. As a private company, you often spend a lot of time as a CEO on fundraising, and it's a ton of work. As a public company, you can issue equity. You can also raise debt.

• 18:23Speaker 02

  In 2021, our CFO came to me and was like, the markets are really good. Debt terms are really good. We should probably stock up if there's another cycle, which turned out to be fortuitous. So she basically went out, we raised $3 billion in one week. I didn't do a single meeting. And we got very favorable terms on this debt. And the whole reason is that we're a public company. So there's a very liquid market for debt for public companies. As a private company CEO, if you'd ever told me, you can do the next fundraiser without going to a single meeting, I would have said, you're crazy, right? And so that turned out to be a big benefit. There's definitely a lot of cons. One thing is that I've talked to some founder CEOs who run public companies. They have to deal with a lot of activist shareholders and investors, right? This is a big topic. I think activist shareholders probably can create value in some situations. But if you're in a place where you're trying to get the company working, you want to take big ambitious bets,

• 19:07Speaker 02

  and activist shareholders are calling you at time or trying to do hostile takeovers of the company, or they're trying to force you to go for sort of profits and dividends, where you want to invest in the next wave of the growth or whatever. These can be things that are huge time sucks for the company, both for the board and for management. I've talked to some founder CEOs that just said, the job's not fun anymore, because I'm basically just dealing with activists. There's various ways to solve that. You can get like dual class stock and that's like a norm that people do.

• 19:32Harry Stebbings?

  I was just chatting to a very close friend of mine who runs a very large public company today. And obviously their stock price is sixty percent down. And he said, the hardest thing for me today is I have to come into the office and everyone is just looking at their net worth. Yeah. I'm sixty percent down and the company is just the same. It's just really fricking hard having the same level of morale when everyone has just become half as wealthy.

• 19:53Speaker 02

  You took the words out of my mouth. The other downside is people are looking at the stock price every day and you basically get mark to market every day. Whereas in the private markets, you can be living in a fantasy land, at least until you need to raise money again. One thing that I did, which I think turned out really well was, I think it was like the day after, the week after we went public. And I sent out a note to the whole company and I basically said, and by the way, this is when the stock was doing super well, super high. So it's not when things were down. It was like when things were really good. And I said to everybody, look, new cultural norm. We don't talk about short-term fluctuations in the stock price at Coinbase. It's a faux pas to do so and we're all human, like we can't avoid seeing it sometimes, but we don't talk about it. Because we don't want to have short-term thinking at this company. We want to make sure we're building for the next decade or two or three or four.

• 20:34Speaker 02

  For the most part, that turned out to be a really good thing that I think took hold within the organization. Maybe people are doing it and they're just not showing me, but I actually don't really see people talking about short-term stock price fluctuations. Even in this market where things went down dramatically, it's hard not to like think about it a little bit, right? And so when you're having conversations about stock-based compensation or things like that, of course you have to look at these metrics. But that's in the context of a very specific group of people within the company. The last thing I'll say is that I think being a crypto company actually helped us prepare a little bit for being a public company. Because the whole time we were private, people were looking at the price of Bitcoin and Ethereum and things like that every day. So they were used to seeing like the value of their, at least part of their net worth go up and down all the time.

• 21:15Harry Stebbings?

  Why is this crypto winter different to ones that have come before? The thing with crashes is you always go, it's never been this bad. And the truth is everything this too shall pass. And we just live in a continuously cyclical game too. What's different and what's the same?

• 21:29Speaker 02

  So mostly it's the same. I can tell you what we do in every cycle, right? When things are up, we basically are, everyone's focused on scaling, we're going through hyper growth. We're trying to capitalize on big opportunities. Is just throwing money at any problem because the biggest issue we have is just how to keep everything up and running. In down markets, obviously, we have to focus on managing costs rigorously, driving revenue where we can. We sometimes go clean up a lot of the stuff that we just threw money at in the crazy up cycle. And we're like, oh, that thing is over provisioned or there's tech debt or whatever. And we also make sure we invest in the future, like we need to be able to plant the seeds and do innovation in a down market. You have more time to build and innovate the things that could be really big in the next up cycle. There's a little bit of that's how we think about up and down cycles. The main thing is that the macro environment is down too. So it's not really a crypto winter, it's an everything winter, it's a macro winter.

• 22:14Speaker 02

  I don't know, I think one of the main differences is that people are not coming up to me and saying, is crypto not going to work? Or is crypto over? Everybody still seems to be pretty excited about all the use cases for crypto. Institutions are still signing up, so that's the main difference. In most prior crypto cycles, people got disillusioned about is crypto still going to be a thing? This one is not that. It's basically just, okay, everything's down in tech growth. So let's just bide our time, build great stuff and be ready for the next upswing.

• 22:38Harry Stebbings?

  Can I ask a bit of a weird and a bit of a personal one? You spoke earlier about feeling worthy in a lot of ways and then aligning that to stock prices and bluntly financial gain. How do you think about your relationship to money today? And also you watched the documentary back and you see Brian Armstrong years ago, starting in a very different financial position. How's your relationship to money changed over time?

• 22:58Speaker 02

  As a young kid, I was always interested in making money. Everything from the lemonade stand, I would read the business section a lot. This was even in like maybe sixth or seventh grade. I'd read the business section of the newspaper every day, which I think is probably somewhat atypical. And I remember even just like reading classified ads for things like houses and boats and stuff and be like, okay, if I save up my allowance, how much would it take me to be able to afford this boat or something like that, right? I was fascinated with money somehow. It was like a way to acquire resources and be able to do more things. And I was like, I want to build this building and I want to invest in this thing and I want to like, if I can hire more people. And so capital is a way to have the ability to do more things in the world. A lot of things that people misunderstand about people who've made money is that they think that they want to do it for personal consumption.

• 23:40Speaker 02

  There is some amount of that, you might want to have something that just saves you time or whatever, like a chef or something if it saves you time. But it's nice to cook dinner with your family too. So having money is a good thing, mostly because it's not that it's going to make you happier or anything like that beyond like a certain point. It allows you to do more things in the world. You can become a great capital allocator. And I think that's true no matter who you are. I talked to some scientists or whoever academics and they're very anti making a lot of money. And I'm like, what are you passionate about in life? Scientific research? Are you passionate about that park that's in your neighborhood or whatever? If you generate capital, you can clean up the park. You can fund your next experiment, like the next 10 experiments that you want to do without having to get these grants written. So capital is a way to accomplish more of what you want to do in the world.

• 24:24Speaker 02

  I think most personal consumption, unless it's there to basically help your productivity or to just give you more time with loved ones, is kind of a waste. I wouldn't spend any money on, I don't know, like Ferraris and crazy jewelry or something like I, I don't do any of that stuff.

• 24:37Harry Stebbings?

  Do you worry about with having children, you will not be able to perform at the highest level in execution? When you don't have children, you are with your partner, but you are the sole focus of your life. Suddenly like a six AM wake up and yes, you can pay for carers and nannies, but it's still fucking brutal, I've been told. Are you worried about maintaining execution perfection whilst also being a great parent?

• 25:00Speaker 02

  When I was younger, I definitely worried about this, like in my twenties and maybe early thirties, I was thinking having kids would be too much of a productivity drag. But I've basically gotten over that completely. I've seen enough people now who have kids and they're highly productive. They tell me that, yeah, it's crazy at home in the evening bedtime and in the morning, but they generally view it as incredibly additive to their life. And I basically believe it at this point. I don't have kids yet, but I think that I've seen other examples where taking care of someone or something doesn't harm your productivity. It makes your day more fulfilling and you can still be very productive.

• 25:32Harry Stebbings?

  When you think about the people who advise you on parenting, who are the ones where you're like, tell me, how do you do it?

• 25:37Speaker 02

  On the parenting thing, I've had a number of mentors just growing up with the company. These can be board members, like Fred Wilson was an investor in our series A and he's still on our board to this very day. He's been a great sounding board for me, just when I'm trying to think through something difficult and.

• 25:50Harry Stebbings?

  What's been your biggest takeaway from having Fred as a mentor?

• 25:53Speaker 02

  Oh, man. He just has an incredible ability to distill things down to the simple question. One thing I like about Fred is that he's not somebody who comes in and, "Brian, you need to do this, you need to do that." He's not pushy. He helps you get there on your own. Sometimes I'll be telling him some problem I'm having. "Ah, I don't know if I should hire this executive. This thing is good about them and this thing is bad." And he'll just ask me a question, which sounds almost too simple to work. It's incredibly effective. He's just like, "Brian, do you want to work with this person?" And he'll just leave it that hanging in the air. And I'm like, "What are you talking about? It's more complicated than that. Do you see yourself enjoying working with them or not?" And then he'll just hit you with these things and boil it down to the simplest thing you could imagine. You're like, "God damn it, I guess he's right. That's what I have to decide, right?" Yeah, so I've had various executive coaches over the last 10 years, which have been really helpful.

• 26:37Speaker 02

  A couple of those make an appearance in the documentary too. And many different board members. I look to other CEOs sometimes for inspiration. I've developed friendships with a friend group that I'm in with other CEOs that we meet up every month and...

• 26:49Harry Stebbings?

  Which are the CEOs in Spie?

• 26:51Speaker 02

  It's not really about that. I think there's a lot of CEOs that I learn from that are in my peer group or a little ahead, a little behind, whatever. I'm hearing different things from them that they're doing and I'm like, "That's a good idea. I should copy that." Toby is on our board from Shopify. There's one entrepreneur that I do think I've been inspired by. And again, I don't want to over-rotate on anything personally about their life or whatever. But just in terms of the scale of ambition and thinking bigger, I think Elon is unmatched right now. He's somebody who, I think the lessons I learned from that was like, try more ambitious things. He's trying to do things that formerly only maybe governments people thought could do, right? About building a space program or solving climate change. And I love the scale of the ambition. I think he also was not afraid to jump into hard tech problems, like not just bits, but atoms, if you will.

• 27:35Speaker 02

  I like the path that he followed where he had a pretty good exit with PayPal in software. And then he decided to double down and keep building things and try even more ambitious things, which I really respect, as opposed to some people just want to retire or whatever if they have a good exit. I think, I love that he had the ambition to keep going.

• 27:50Harry Stebbings?

  Do you feel you're thinking ambitiously enough with Coinbase today?

• 27:53Speaker 02

  Ten years ago, when I started the company, I remember thinking about this. I was like, because I had tried a bunch of startup ideas and most of them didn't work. I was like, what's the thing that I'm so passionate about, so crazy, in 10 years, I'll still be like, super fired up to be working on it. Creating an entirely new economy for the whole world is a pretty ambitious thing, one that's more free and fair and global. And that's a 100-year mission, and we're going to keep doing that for a long time. One thing we've thought about, I actually haven't shared this before, is that if somehow we feel like we're starting to make a real dent in economic freedom, would we expand the mission of the company at some point to just be about increasing freedom in the world, period? All kinds of freedom. And you could imagine, there's many types of freedom that are under threat today, right? A lot of the tools and the apps that we use, they're being run by like bigger and bigger tech companies, they're being influenced by governments, there's censorship issues, there's data privacy issues.

• 28:38Speaker 02

  And we've seen the rise of things like Signal and WhatsApp with encrypted messages, that 10 years ago, that was considered like, oh, if you were using encrypted messaging, you were a terrorist or something. Now, it's like the norm and it's the expectation. People don't want to have their stuff floating all over the world in plain text. And you could imagine all the layers of the stack from the browser to where you store your data, like Google Drive and Dropbox. There should probably be like a decentralized private version of that using Filecoin or whatever. You could imagine net service providers, we're seeing more decentralization of that, I think, with things like Starlink and whatnot. Even the operating systems, mobile and desktop and increasingly VR AR and the hardware itself. These are all things which they can have pressure points where bad actors can basically inject themselves in there. And so, how can we decentralize and increase freedom across all these dimensions, the freedom stack, if you will?

• 29:23Speaker 02

  We're not changing the mission anytime soon, but that's one thing I've thought about over time is Coinbase is starting with financial services, arguably one of the most important, if not the most foundation of freedom. If you can't store your own wealth in a way that it can't be taken from you, then you probably don't have freedom in any other thing. But if you have that, then how do we add in other layers of freedom around speech and other things?

• 29:41Harry Stebbings?

  A final one for the quickfire. What is the barrier to that transition from financial freedom to freedom? Is that just pure adoption from like consumer side adoption? Is it pure cash and resources to do multiple things at once? What is the barrier to that transition?

• 29:54Speaker 02

  It's basically capital, kind of like what we were saying earlier. If you acquire more capital, you can do more ambitious things. So I think that we need to stay focused for now on financial services and what we're doing with economic freedom. And then you could imagine like as we scale the company, there'll be opportunities for building new things, investing in things, buying other companies, and there could be a larger vision there over time.

• 30:12Harry Stebbings?

  I want to move into a quick fire, Brian. I could go off piece all day, but I'm going to say a short statement and you give me your immediate thoughts. Does that sound okay?

• 30:19Speaker 02

  Great.

• 30:19Harry Stebbings?

  Okay, so what's the hardest element of your role with Coinbase today?

• 30:22Speaker 02

  Right now, in this moment, it's just keeping everybody in the boat, telling some of the war stories about, all right, we've been through four of these cycles. Don't get disillusioned, don't get discouraged, don't pay attention to negative headlines too much, keep our heads down, keep building great stuff, manage costs, keep innovating, and we're going to come out of this way stronger than we went in. Coinbase pulls ahead in down cycles, so I have to keep telling that story over and over again.

• 30:43Harry Stebbings?

  With the benefit of hindsight, what are the biggest missed opportunities that you didn't take but you wish you had taken?

• 30:49Speaker 02

  One is that I think from an international expansion point of view, we probably took too much of a US focus or US lens on international. I think we've seen in the market that companies that basically served a bunch of countries out of one favorable region and launched things like derivatives and things like that, just products that weren't really allowed in the United States. They saw really good growth in the last cycle from that. So that was one thing we were probably late to the game on. I think we've got a good chance to fix that, though. Let's see what else. We overhired, I would say, in 2021. That was a mistake.

• 31:17Harry Stebbings?

  Do you blame yourself for that?

• 31:18Speaker 02

  I don't really like blame as like a thing. There's just a learning opportunity in everything. You have to have accountability, of course, but it doesn't really accomplish anything to like dwell on it or like self-flashlight or whatever. So we put our mindset back in that timeframe. We literally had a line out the door. The biggest problem the company had was we couldn't onboard customers fast enough. And customers were super upset that they was taking them so long to onboard. This was on more like the institutional business. And then our retail customers were just like, we want all these things that you don't have, and just take our money if you have them. But if you don't, we're going to go somewhere else. We knew if you more than double headcount in a year, you're really flirting with danger in terms of communication might break down, culture could break down. This is a common thing. We knew, and we consciously took that bet. And we said, we don't know when this is

• 32:00Speaker 02

  going to end, but it would be irresponsible to like limit growth in this. Moment and not hire. Now, I think in the process, we moved to being a remote first company with COVID. It unleashed a hiring bottleneck that we had when we went to being remote. Because of course, the top of the funnel grows like 100x of the number of people who can work at the company. Our hiring engine started to fire on all cylinders. It did get like too far ahead of us, I think, and that was something in the next up cycle. I think we won't make that a mistake again.

• 32:24Harry Stebbings?

  What broke first?

• 32:26Speaker 02

  In terms of growing headcount that fast?

• 32:27Harry Stebbings?

  Yeah. Is it the communication? Is it the accountability, the culture, the like resource allocation, like just too much? What breaks first when you have such heavy growth?

• 32:35Speaker 02

  Decision making where it's not clear who's deciding what? That's a big one. You get pockets of weird behavior in the company as well. You'll jump in and you're like, they're doing what? Why are people doing that inside this company? And it's just because we have people who are, they've been here two months, who are hiring someone new. They haven't fully absorbed the culture themselves. I do think the way that process is managed and how things are communicated, that will often break down to, yeah, all those things.

• 32:58Harry Stebbings?

  What do you make of FTX? Many of your investors asked me to ask this. What do you make?

• 33:02Speaker 02

  Lots of things. I think Sam is a brilliant guy. I've, I've had a chance to talk to him on a number of occasions. I think he's done a really good job of kind of generating interest in the company with his public persona, which is something that as more of an introvert, I don't love doing that as much. The press can be fickle too, right? They can build you up and tear you down. So I think it's a little dangerous. But I think he's done incredibly effective at getting more interest on the company there. I give them a lot of points for execution, speed of execution, especially with a small team. Frankly, this is a little bit what Coinbase was like in the early days, maybe 2014, 15, when we had 300, 500 people. We all were in one location. We were executing super quick, right? Part of this transition, I could have basically decided to keep the company that size and focus on our core product of retail trading. But I really decided, you know what, I want Coinbase to be a multi-product company.

• 33:45Speaker 02

  I want us to grow into these different customer segments, but we have this massive business for institutions now. And we have Coinbase Cloud and we have commerce and wallet and NFT and all these things. I basically made a conscious decision that said, I don't just want to have our one core retail app. I want us to be a multi-product company. And so I made the difficult choice, we're going to grow this thing. We're going to have different leaders of different products. There's going to be more complicated org structures. We're going to have multiple geographic locations all over the world. And so it's definitely more complex and part of that you do slow down. I put out a blog post about operating efficiently at scale, which is all the things that we're trying to get to that next level. That's a little bit of the contrast. I think both FTX and Binance have been really good at execution. They've taken a different risk posture, I would say internationally as well, which we'll see, have to see what happens with that. But Coinbase is basically taking a more.

• 34:28Speaker 02

  We're more trusted, compliant, secure, whatever. We're trying to be an easier to use product in many cases as well. We're not really necessarily trying to build for like somebody who just wants to do pro trading, although we have really good pro trading features. We also make it easy to do all the other stuff you want to do in crypto, right? Around Web three and NFTs and DApps and things like that. So that's a little bit of the contrast, but I generally have nothing but respect for those folks. And I think that the more the barrier, this is about growing the pie 100x about rather than any kind of competitive thing short term.

• 34:54Harry Stebbings?

  You mentioned kind of regulation there. Mickey Malkaros, what are your biggest mistakes or regrets in communicating with regulators?

• 35:00Speaker 02

  We decided to reach out to regulators and just proactively be a friend to them and try to be helpful and then follow their instruction, things like that, which was a unique thing at the time. I feel really good about that decision. I think it's created, it's definitely caused us to be able to operate slower at times, I would say, which has been unfortunate for customers in certain cases. There's no doubt that going that path takes longer, but I think and I hope that it'll be a competitive differentiator long term. Believe me, there's some moments where we're frustrated about that. Okay, we're the regulated public company here, like following all the rules, but why are we getting the scrutiny for this when there's like crazy stuff happening out there in the world? But I don't think anything we're getting is that unfair. There was a little like tweet storm I got into with Gary Gensler and I'm not like happy with how he's doing things in the US right now. I think that he had a major opportunity to come in, clearly regulate the industry,

• 35:44Speaker 02

  publish clear rules and say, this is a security, this is not. Work with the CFTC and other areas of government to create a clear framework, which protected consumers, go after the fraud and all that stuff, but then allow this industry to grow in a regulated environment. I don't think he's really done that, so I've been pretty frustrated and I haven't found him to be cooperative in some of these conversations. Whereas I think we're trying to do the right thing and we're just, we're happy to engage, but it's been very hostile for some reason. But all that being said, do my tweet storms help the situation? I don't know. I think that this is where like we often struggle as a company where 95% of the time, I think being the most trusted brand in the space is about working with the government. I'm happy to show up in DC, anywhere and I work with people and we, 95% of the time we're aligned. There's reasonable people in government and we can work all these things out. 5% of the time, I think we actually have to make a stand,

• 36:30Speaker 02

  protect our customers from bad government, which is a contrarian thing about how to be the most trusted brand. It's not about always working with government, 95% of the time, yes. 5% of the time, it's about. Protecting our customers from bad government. And you've seen us do that in a couple of cases, like with the tornado cash situation where we're helping fund some lawsuits that we think there was overreach, although we were happy to work with Treasury and OFAC and we do that all the time. Same thing with the SEC. We've found the SEC staff to be incredibly easy to work with, but sometimes engaging with the chair has a counterproductive exercise.

• 36:58Harry Stebbings?

  What is bad government? That's when it's like their actions don't produce good results for consumers.

• 37:03Speaker 02

  In a democracy, right, the government reports to the people. The people are the electorate, the board who elects these people. And by the way, the elected officials sometimes appoint these heads of regulators because the regulators are not elected themselves. But yeah, sometimes we see bad policy come out of the government. This is not a US thing, by the way, all over the world. We generally get to reasonable answers with regulators and policymakers. And I think those are really strong relations we have. But five, 10% of the time, we see something come out that is it's actually harming crypto in a way that doesn't protect consumers. It's treating crypto on an unlevel playing field with traditional financial service. We see sometimes overreach. There's people who somehow get the idea in their head that crypto is only being used by bad people and they don't realize a lot of the facts. We see bad policy proposed and in that case, we I think we have an obligation to push back.

• 37:44Harry Stebbings?

  My friend, I'm in the UK. We've had three leaders in about three months, so don't worry. I know about bad government. Final one for you, Coinbase in 10 years. What does that look like?

• 37:53Speaker 02

  Anybody can guess. Here's one vision I've had for it, which is that I think Coinbase Global, the parent company, is starting to become more like a holding company over time. And we have this portfolio of different products, different customer segments that we've served. And they're all highly aligned, but increasingly, I think over time, they'll get less coupled. And there's going to be an aspect of decentralization, if you will, to these different product groups or eventually business units. We're on a path to do that now. We're like, we're generating P and Ls for each of our product groups. We have clear leaders of each. We're deferring more of the decision making to them. And I could see that evolving over time where in 10 years, who knows? It's come in vogue to change the name of the parent company like Alphabet or Meta at a certain point. Because you actually want to distinguish it from the core retail brand, which helped get you there.

• 38:32Harry Stebbings?

  You're going to become base and then like. I like that. That wasn't a laughable matter. I was going to charge you for my branding.

• 38:38Speaker 02

  Many different names are possible, I suppose, but this isn't something that's near term. I haven't really thought about it that seriously. In 10 years, who knows? I think the parent company will be more like a holding company and who knows? We may even change the name at some point to reflect that, but that's a long term vision.

• 38:50Harry Stebbings?

  Brian, listen, I can't wait to see the documentary. I'm so excited for that. Thank you so much for joining me today and as always, I love the chat.

• 38:56Speaker 02

  Yeah, thank you. If people are curious, it's on YouTube, Amazon Prime, Apple TV, Hulu. And I would love people to check it out and I hope people enjoy it.

• 39:06Harry Stebbings?

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