How Brian Armstrong built Coinbase

Transcript

[Music] thank you uh you know first I just want to say uh thank thank you Brian for you know doing this I know you don't do this very often uh so it means a lot to us at the firm and everybody here they're going to come out here and uh and look there's that line that this person needs for introduction is often used with people who actually do need introducing right but Brian diesel introduction in Bellwood anyway right uh you know from co-founder and CEO find base what more do you need what more do you need there we go okay so here's what we're going to do uh Brian is going to spend the next hour with us and I have 20 25 minutes of some challenging questions right uh

we're gonna put you on the hotspot um and but honestly this is your time uh what we really want to do is uh uh you know part of this part of this whole program was to kind of get you folks access to people they remember always kind of get access to uh in other ways and just ask Brian anything so I'll go for 20 25 minutes and then you need to get asked brand questions but maybe you know right maybe Brian one good place to start off is and we've done a few of these before I don't think I asked you this um right before this you're talking about the hero's journey and every hero is in origin and as I was thinking about today what struck me was about maybe 10 11 years ago you were probably in a similar setting at y combinator so kind

of take us back to the origin of coinbase and how it how did you feel when you were in the audience in kind of a similar way as everyone here yeah so I was definitely in your shoes back in 2010 I had read the Bitcoin white paper I had tried doing a startup in the in the tutoring and education space um it was kind of like a base hit didn't really go very well and I joined Airbnb as an early employee to try to learn more about how to do a startup and so I kept thinking I really want to do another startup I want to I want to do another startup and um I eventually read that Bitcoin white paper and I started to think more and more about it so nights and weekends I was kind of working on a prototype I I wasn't sure

about myself I didn't really know if this was the thing I wanted to go do but I applied to Y combinator and that's the first time somebody actually told me maybe you're not crazy like this this whole Bitcoin thing is not complete nuts maybe we'll write you a little seed check and and get off the ground so I was this was probably 2012. I decided to quit my job join White combinator and I was exactly in maybe some some of the feelings are very similar to how you're feeling right now um I didn't I definitely didn't feel like anything was for sure I felt like this was a very high risk Endeavor um I didn't really know if any of it was going to work out I felt like maybe I have a shot at something working here but it's going to have to have to a lot

of cards are gonna have to flip over the right way and a lot of hard work is going to have to happen I was struggling to find anybody who would join my team and work with me you know the early stages it's impossible to find people to join you on these crazy Journeys sometimes um there was I almost co-founded it with one person and that all exploded in dramatic fashion you might have had co-founder issues that's like kind of the norm um finally found the right co-founder we got off from Fred ursum we got Off to the Races you know someone sued us like three weeks three three months later he was just so startups are moving from one setback to the next with enthusiasm and if it's a complete [ __ ] show and it's chaos and nothing is working that's kind of the default state

so you're doing it right if it feels like that um and basically you just don't give up like that's that's the main thing a lot of times I've seen people they TR they have an idea they have a team that comes together they launch their first thing it doesn't work you know and four months later they have some big co-founder fight and they blow up and they all they all go home and it's like well you didn't really try it you know because there's no there's no idea that works on the first try you have to put something out there and then grind it out like two or three years usually to sort of talk to your customers improve the product talk to your customers improve the product and sometimes um it never works and sometimes you break through after n number of years and the last thing I'll say and I'll

turn back to you is if you look at almost every successful startup it feels like it was an overnight success but really that's just how history gets written in hindsight like in if you talk to most of those Founders in the early days there was a period where any reasonable person would have quit nothing was working they were in credit card debt you know um like they were being sued it was like and and all of them somehow persevered and pushed through and finally found something that started to get working and then the next thing and then the next thing so we can talk about all kinds of lessons but um that's my memory of that time you know I'm not in fact that because you know we are in a you know a bad Market crypto winter whatever you want to uh call it and I want to go

back and I don't remember the you know how the market was but it's not crypto it's not a sure thing at that time we're probably far from a sure thing and you had been at Airbnb you could have kind of there's an alternative Multiverse Brian Armstrong who's like a VP of engineering at a fan company and doing pretty well so you could probably always quit and gone back to that so when you say don't give up in those first six months to a year what kept you going yeah well okay so I I don't think I was really the smartest person I met lots of people who were smarter than me I don't think I was even that good at raising money to be honest I met other people who were much better at that frederson's better at raising money than I was um but what I was was very determined

um and so I guess I guess I just made a decision at a certain point and I said you know what I'm just gonna go all out on this thing for the next two three four years and if it doesn't work I will know that I left everything on the field and I will go back and figure it out but I'm not going to quit before then and I actually made a pact with um in y combinator there was a batch a talk kind of like this and I remember somebody I think with Sam Altman he came up and was telling us how to not die or whatever and um I made a pact with one of the other uh teams there and we said we're gonna I put a calendar invite in our calendars for two years in the future and I said if we're if we're both

still working on our company two years from now we will drink a bottle of champagne together um in San Francisco Bay and if either one of us has quit they have the minute they quit in the next two years they have to buy a bottle of Dom Perignon for this other person so a lot of people quit two years into that I'd say probably like 50 60 of the companies in our batch they didn't exist anymore um and me and that other guy we actually we did drink the bottle of champagne we were both it was Founders fund which is another company that still exists and we bought the champagne well we were both still working on our company so I think we both bought whatever but it was it was just a cycle it was a psychological thing we were kind of like burn the

ships we're going all in we're not going to quit and we're going to work 110 on this every day now the other part which is and I want to tie it back to the folks here is looking back and say the first two three years of coinbase if you could have a do-over and you'll be like hey these are things that I would go back and do exactly the same way again I would change nothing and maybe these are some things I would maybe want to take back and change yeah obviously things kind of obviously worked out really well like what do we think you'd keep and what we think you would change yeah I'll start with the ones I would keep um maybe a little easier so I think one thing is that we waited to hire we were actually pretty slow to higher so I mean first I couldn't find

the right co-founder for a long time so um and then Fred Fred joined and we didn't we didn't go try to build a big team really quick I think we had raised maybe 600k in the seed round um but we kept interviewing people we were meeting people but we didn't hire anybody and we had a ridiculously high bar um we had this saying we said if you're not a hell yes you're a no and the absence of red flags in a candidate was not a reason to hire them you had to be you had to leave more excited than when you went in you had to believe that this person was way better than you at something maybe you didn't even want to work for them someday so people have these sets of questions they ask themselves so we kept a very high bar on hiring we waited a long time

um what else another thing we did was we I avoided going to conferences I avoided going to talks um I avoided just networking with random people like I was we were kind of obsessive all we did was we worked on the product and talked to customers um and then we did it again we worked on the product and we talked to customers and there's a lot of things you can feel like you're working in a startup that are kind of like fake work um and they're really not helping you get closer to your objective and I I'll share one little quick anecdote maybe that helps people understand that and then I'll talk about the things that we didn't do as well um so I launched the first you know version of coinbase and there was no way

to buy and sell crypto by the way in the first version of coinbase it was just a hosted Bitcoin wallet and I remember uh we put I put it on Reddit or something like that we got like a couple hundred people who came in and used it and then they would all leave and nobody was using it that's kind of the default state of every product that you ever launch is you know you get the tech crunch of initiation and then flat so following the advice of Y combinator I was like all right talk to your customers so I just emailed five of the people who signed up I was like hey I built this app can I get your feedback so I got on the phone with like three or four of them and I was like um I noticed you didn't come back why did why didn't you use the app

and the guy was like well I mean I thought the app was pretty cool but I don't actually even really have any Bitcoin I just I just wanted to check it out and I remember had this like light bulb kind of went off in my head and was like well if there was like a simple way to buy it in the app would you have done that he's like yeah probably and so I hung up and the next few months I had to start to think about how do we build a simple buy button and there was a million things that had to go into that and Bank partners and legal like licensing and all this kind of stuff but that now that kick that's when we finally got product Market fit and that was just one example of like hundreds of times where I did that and I was trying

to find something that worked something that worked something that worked so talk to your customers improve the product that's all we did and that was one of the things I would recommend um let's see what didn't work yeah look at the fun stuff yeah um let's see I think um there's periods where you know kind of the opposite of advice I just said we were we hired too fast I mean I'd say in 2021 2022 I you know we got like a little too exuberant and grew the head count too fast and so had to make some head con reductions I'd say anytime you're cut you know this is maybe a more of a scaled thing if you're if you're like two people and you find product Market fit you can you can grow 10 people or something like that in a year

so that'd be like a 5x but if you're at scale and you try to 5x I mean you're gonna completely blow up to company like all communication culture decision making will break down so I'd probably I probably would have hired slower in that kind of gross environment in the future um I mean another thing that I would say is that I feel like if I if I had if I put myself back where in 2012 knowing what I know now I feel like I might have been able to grow coinbase twice as fast okay um well there's a couple things this is like classic advice that people gave me and I thought I understood it but I didn't actually go far enough well I mean one of the things people always said was um

you know you actually have to delegate and stop like doing the work yourself at a certain point when we were like 20 people or 25 and I was basically writing code for like 60 of my time um and I was having trouble letting go of that to actually bring in other people to to go do more of the actual work and I remember one of our investors came to me one time and he's like what percent of your time are you are you spending writing code every day and I was like I don't know maybe 50 or 60 and he was like this company is never going to grow unless you unless you figure out how to delegate that stuff and um I had to kind of eventually let go of that I don't know that's that's one example that comes to mind it's interesting because I

think sometimes you know so I've seen people go the other way which is they delegate too quickly and you have to remove and they're like lose touch with the actual realities or how things work in the company yeah um okay I want to it's possible to mess it up both ways oh yeah yeah I agree oh yeah well yeah one thing I love about Brian is and by the way folk 17 the brand has a lot of podcasts and content out there and you should watch him because you are and I'm not saying just to flatter you uh you're you're kind of already self aware person and you're very transparent about who you are uh in which I think a lot of other CEOs are not which I always admire and so when you look back in that era or maybe even the last 10 years what kind

of when you look at a CEO what are skills behaviors that you were like hey you were just naturally born with and you were good at and other skills and behaviors which you maybe had to learn or hire around or painfully realize that you didn't have that because I think this is something which always been a little transparent about and always enjoyed hearing that yeah yeah sure I mean I so I think the things that I was naturally good at was I was just very even keeled so it's just kind of my personality like I mean I I feel like stressed at times for sure and I can talk about how to manage stress if people want to but um I think that the world might be blowing up and you know the site is down and like people are upset with us and we're getting sued and usually my

mindset is just like okay great like how do we solve it you know and then by the way the flip side of that is when things are going really well sometimes people are like why why aren't you happier like why aren't you celebrating and I'm just like I don't know this is my happy face whatever um so I'm just like very even keeled um and then you know I was analytical I was an engineer so those were sort of the natural things but I was not good at being a CEO in other ways I mean I had never managed anybody um and so I had to learn that and I had a number of like executive coaches and people like that who sort of helped me learn a little bit of people management um I was not I don't think I was very confident as like a public speaker or

even externally um like in fundraising situations and stuff like that I was always very I actually when I was in my 20s I went to like Toastmasters which was like a public speaking club I'm not even sure if I'd recommend it it was okay but like I was just trying anything at this at that point to try to learn how to stand in front of an audience and like speak and you might be wondering right now maybe he seems like he's speaking fine but you know I'm this is like the thousandth time I've done it over the last 10 years so it's like um you can get better anything with reps but I'm talking about early on um let's see I mean what else was I not good at um I mean nobody's good at everything so you have to find people to compliment you right like it's sort of I actually

really believe in this idea of like double down on your strengths and don't try to get good at the you know you can turn like a a d-minus into like a c plus but you can't turn it into an A so um you know that's like coinbase wouldn't have existed if I didn't find other people around me to that complimented my skill sets exactly yeah it's true for human I think the firm at ACDC like Mark Ben Chris you know one of the things like we want to find sorry Avengers and then you want to have them amplify the superpowers because I've never seen every become successful by mitigating that you know fixing their weaknesses yeah right you always try and stand out in the thing that you are really unique at yeah okay I want to get to some of the you know some of the

maybe darker moments of coinbase or you know some of the harsh militias you talk about even Keel through I guess sorry I had one final thought on that which is that I actually had like a lot of self-doubt about whether I could even be a CEO to be honest and maybe I don't know if it's helpful for people but um I mean I thought of myself as an engineer right and I was like really introverted um and I had this Vision in my head of like CEOs are these kind of like military generals that like bark orders that people and like charge that hill and this and that and there was like I always ran into these like really charismatic people and I was like mad like how do they do that and so I thought maybe I wouldn't be a good CEO but what I realized eventually was that

there's lots of different kinds of CEOs like I've now I've met CEOs that are like amazing at sales and Market they're just Geniuses on that like in marketing and then there's people who are like operational experts and then there's people who are deeply Technical and then there's people who are really charismatic leaders and so you can really be any kind of CEO you want um and it was funny for a long time I even had trouble like saying I'm the CEO like I had I just felt like weird to me I was like yeah I'm an engineer who's like currently doing the CEO job or something I had all these like weird ways of saying it and it took me like four years or something to just be like oh yeah I'm like I'm the CEO of the company and it sounds strange but anyway

you you can just uh basically make it all that stuff is really true well you know I think a lot of people you know a lot of us have some original imposter syndrome right and a lot of yeah it's gonna do was it a moment which got you to be like you know what I'm actually comfortable with this role I can actually say I'm CEO without having to think about it was that a magic moment in there somewhere or just take time I mean the thing that I realized about myself another thing is that I really like in addition to liking building things I liked learning things and the way you learn things is like you put yourself a little outside your comfort zone so I kind of treated every situation and by the way being a co-founding company or a Building Company it's constantly putting yourself

outside your comfort zone where you know you're gonna like almost every week something happens where you know I've never done it before where if I tried if I tried doing my average day today five years ago it would be like completely overwhelming um but every time you do it you get stronger and so I just I started to appreciate the idea of feeling a little outside my comfort zone like that was a good day like oh man I got to talk to you know one of the most uncomfortable thing you remember from that era where you were pushed or save your comfort zone um well so I remember like this wouldn't be like that out of the ordinary today but like at that time something that was um remember like a like a stressful day or something would be like okay my head of engineering came in and

quit and not only did he quit he's like this thing is [ __ ] up and it's never going to work and so um like this guy's quitting with me too I'm like okay great um and then um and then you got that note by the way yeah right now well yeah I mean everybody go on their own path but I mean and then you know the next thing would be like um oh the site is offline and like we just lost like forty thousand dollars uh for this customer and then um you know we just got sued by this person and um oh by the way like we have to evacuate the building and no no one got any lunch today and everyone's pissed about we don't like so just like a series of things like that

um but now you know now I'm more thinking about like Congressional testimony and you know whatever um leveled up yeah so that's how I started to think of that as like actually kind of fun in a weird way which was like learning and pushing yourself outside the comfort zone um I want to talk about you being level-headed doing your successful time because one of the interesting stuff that I want to talk about is one of the crypto Winters where you had a significant person of your company quit yeah and you know talk to us about that because that is a situation which a lot of companies do not come back from cues don't come back from what happened what did you do during it yeah well I mean you're all aware that crypto's gone through many cycles and I think that what was that period it was like 2015 to

2017 or something like that um that was a pretty long winter there and I remember a lot of the other companies in the space um they had pivoted to sort of blockchain um and they were building like software for banks and stuff like that and you know the first like year people were kind of like all right we're gonna try something after a year 18 months people started to get really disillusioned I mean people started resigning they were like even finding ways to like sell their stock in the private markets and stuff like that and um I remember I think we had about like 25 attrition that year wow 20 maybe 25 crazy yeah like it's also because the rest of the techcom industry was kind of going about normally right and yeah we're off here you know potentially in a decision where your company could have died yeah and

this is like one of the challenges of course as a Founder is like you often you know you're reading all this stuff too and you're like I don't know [ __ ] nothing's working like I'm feeling kind of down about it but then you want to kind of get in front of the company and try to put on a good face because you're kind of worried like those three people are going to quit and then like what are you going to do and um so it's this one thing I realized is like you can't just go up there and [ __ ] people because they can kind of see through it or at least for me they could um and I I realized like there's actually good power in as in a leader in being vulnerable right so I tried to just kind of lean into that and like go

up in front of the team and be like things kind of suck you know like I'm I'm not feeling good about it like this thing I saw that really pissed me off to be honest and like I'm really worried about this and and now at least they're thinking okay well at least he's not like out to lunch he's like kind of you know and and and then and then it's like don't feel like you have to have all the answers too like the leader leadership is about bringing the teams together to help so it's like so here's what we're gonna do about it I wanna I wanna meet with these five people after this and we're gonna come up with a strategy on X and then and why and sort of bring them into the solution right and say like hey I want you to come present what you

think we should do about this on Friday in other words I don't have a I don't have a [ __ ] clue what to do but like now now at least they feel involved in like coming creating the solution instead of just like everybody looking to you to be like what is Brian gonna do you know so these little things kind of helped us get through it um and frankly at that point I was like if we have to Pivot this company just build software for banks like I don't really want to do that so maybe we'll just I'd rather give the money back to the investors and just shut it down than to go do that so [ __ ] it we're staying with crypto and then it turned out to be a great decision obviously because when everybody else pivoted and then we came

out of it stronger um so one thing that also about coinbase is you know you folks are kind of expanded into multiple different categories over the years uh you know multiple adjacencies Etc and I think a lot of times you know companies the question companies have is how do I expand and expand could in any number of things it could be expand to an adjacent product line it could be a new market you know maybe a different tier any number of things so you know as you can you folks have expanded in multiple different ways over the years obviously you know the coinbase when I was rated from the coinbase of 10 years ago how did you maybe walk us through one or two key expansion and how we went about that yeah well this is always a constant topic that comes up inside companies

because it's another one of those things where you can mess it up on either side you know you can basically become so distracted that you try to do a million things and then you do none of them well and this is a common thing people say about Focus the value of focus and Steve Jobs had that great one about saying no you know a thousand times or whatever it was on the other side if the industry is really you know moving towards some new thing and you don't do it then you can be a one-hit wonder company and have basically a culture of incrementalism that we just optimize this one thing that we happen to found at work that we never get to the next thing and the next thing think about Netflix staying on DVD rentals or something instead of streaming or whatever a favorite example

you want so I realized early on that it was funny sometimes in the exact same day I'd get one group of employees telling me like why are we doing so many goddamn things like we should focus on this and then the next meeting I'd be in there'd be like how how the hell do we not have like an nft project like this is obviously like this huge thing right so we came up with this framework we call it like 70 2010 and actually we borrowed this from Google we didn't even come up with it but it's like basically a resource allocation methodology 70 of the resources are on the core thing which makes most your Revenue 20 is on these adjacent bets 10 are on Venture bets which are you know really ambitious high risk if they work it's great they most of them don't

um and that's allowed us to sort of have some some irons in the fire on big potential future things while also not losing focus on the core um coinbase today does have kind of a lot of products I mean it's like 10 or 12 depending on how you count it some of them are more like features and products but um I like it and for me it's exciting to like always be trying to build new things argue there's no one right way to do it I mean some CEOs would probably say we should be more focused I don't know I kind of like having the portfolio of bets and just as an example like USD coin the stablecoin um is something that you know we started with like a two-person team we just started working on that and it's turned out to be a major Revenue driver for us

in this down market so you never really know what the things are that are going to do well and and which ones that don't um so I like kind of having a portfolio okay I want to get to you know a recent years and one of the last two years when I think about coinbase one of the critical moments was your post on being a mission driven company you know doing obviously all the events of I think 2020 uh early 2020 rather so talk to us about that because I in some ways uh I think how you handle that what you went through kind of shift to the Overton window and then obviously so many other sometimes something gets memed into existence and you see other companies adapt that and I see a lot of other companies now we're like we are mission oriented Mission focused so talk to us

about what led up to that and you know what being Mission focused means yeah so some of you may end up going through this shift at your companies which is that um when we started off I mean we were 20 people 50 people you know all in in office a space like this and we all knew each other we know we knew what everyone was working on and we all felt very aligned and it's kind of like you know dunbar's numbers 150 people I don't know if you've ever seen seen that and we started to get to maybe like a little over 150 like 200 300 400 and I noticed for the first time by the way we started to be on different floors of the building or maybe even like in office in New York or like people started to feel a little divided and I

started to notice um basically like factions almost started to develop within the company where people started to say you know I'm not I'm not on team coinbase I'm on like coinbase New York uh or I'm on like coinbase uh wallet or like and they're even starting to people started to make this Swag like the t-shirts and stuff that would say coinbase wallet and at one point this is probably a little extreme but I actually banned all swag that that didn't just say coinbase like you couldn't be like I'm on like the coinbase design team or something it's like you we're all in one team right yeah they're getting ready right there yeah exactly um so if you ever see a t-shirt that's coinbase something else learn it it's more rare but um so okay so anyway you know

obviously the events of the around the world weren't happening at that point and like one thing we would always do an open q a in front of the company um kind of like we're going to do later here and when it got to be 500 people like 800 people something shifted in the company where it started to feel a little bit more like um we weren't all on the same team I was you know like some politician they were holding accountable or it became a little bit like social media or something like that where um people were chatting in slack and like just you know over text like all Nuance gets lost it's kind of like a social media flame war and basically the company kept getting into these fights and distractions and the questions that I was getting in the Q a were not about

the product we're building or the mission or um you know the challenges we were having with competition and things like that it was like it was like Brian what do you think about um XYZ like social issue in the world and you know why did somebody say this you know do you agree with it or whatever and um it became like first it became kind of uncomfortable first because like I was like this is not really related to what we're all here to work on but I guess if people want to ask about it it's fine um and then it became actually a big and bigger and bigger distraction with like basically um people fighting internally and debating all these difficult things which we're not super relevant what we were doing it culminated in a walkout um yeah and actually like maybe 400 employees like

um just basically stopped working in protest um this was due to I basically an employee kind of pinned me on the open mic and was like are we going to support BLM and I said I don't know um and that wasn't and he's like that's not good enough I need to know are we going to do it or not this was a time when every company was posting it and um I I basically deferred to answer because I hadn't like researched it I didn't know I found out later they they wanted to defund the police and various things it wasn't like a simple human right thing um and so I deferred to answer the walkout happened and I was and and then I got everybody to come back to the office but I was like something feels weird here like we're not here to solve

every social issue in the world we're here to focus on work and I eventually came up with this post which I put out there and um I knew it was going to be super controversial you know five percent of employees took the exit package okay um because that was at the time you know it doesn't get pressed the times was doing this thing it you know there's a lot going on I decided to write a post because it was not a popular thing to do I know other CEOs we both know CEOs who wanted to do that but yeah for any number of reasons so what was your psychology what led to that post yeah well I mean as a CEO you never want to like create unnecessary negative distraction for the company and I knew that this was going to be painful from the headlines and

everything but I think the thing that I also felt like we were not in alignment like I was failing as a leader because as a leader you have to provide Clarity and like this is what the company is going to be about like you can opt into that you can opt out of it but I was basically just walking on eggshells kind of like I don't know what to say to anybody about any of this stuff because I'm afraid they're all just gonna get mad at me or whatever and so I was I was neglecting my duty and I think the thing that finally pushed me over the line to do it was I realized um like I don't want a bco if this if this is the job like I don't want to basically have to just answer difficult societal questions about all these things which I frankly

don't feel qualified to talk about and and just deal with internal flame Wars like that doesn't sound fun I I came into this because I want to build great stuff that helps improve the world that's what I want the company to be about and so I was basically I was actually contemplating I was like maybe I should leave I was like I was like almost like should I resign the job is this like the job of a tech CEO today and I talked with a couple of friends of mine and they're like you're crazy like do not resign this job like if if this is making you feel uncomfortable there's probably a bunch of people in the company it's making feel uncomfortable too and you don't need to go they need to go and it was really hard to tell like what percent of the company

actually felt the same way because it was um there was a very vocal group of people who were very you know kind of leading this I guess internally and what I did actually I went and spoke with some of our ergs our employee resource groups and I basically asked them directly I was like including our black ERG I was like do you want the company to be about this or like what do you care about and they basically were like we just want to come to work and be respected and do good stuff and learn things and like and so I was like I'm not hearing this from our ergs I'm hearing it from a very vocal group of people and so my intuition was it's a small group of people it's not like 60 of the company that feels this way but it felt like 60 of the company might

quit if I did this so it was it was very scary but I basically did it because I felt like either I'm going to leave or they're going to leave and so um I decided to make it clear what I wanted to do and then turned out to be five percent of people left instead of 60. we didn't really know yeah well I think a lot of people I've seen Los so many companies now adopt that so I think we're always happy that you didn't quit um maybe you know one last question and then before I turn to the audience which is it's been an eventually learned crypto uh to put it uh mildly um just looking up on the future the next year two three years kind of curious to get your thoughts on how do you think things are going to play out

uh what interests you what excites you just your thoughts on the future broadly next few years yeah well I think um this is like obviously a difficult period in crypto where FDX blowup has caused a lot of regulatory scrutiny people are feeling kind of down the headlines are bad it's actually probably the best time to build in down markets I'm a big believer in that typically in every down Market you know a lot of people who are in it for the wrong reasons they kind of get out so we wanted to get rich quick or whatever but the builders keep building and then usually the seeds of the next upswing get planted in these down periods so I'm super bullish about it what I'm trying to do right now at coinbase is make sure that we have some portion of the team who's dealing with

some of the regulatory policy stuff and I can talk about that for a minute but I also the other part of the team I'm like don't get distracted by all this negative stuff and like we need to keep innovating and that's why we've been launching things like bass you know the L2 that we put out and um you know we we just acquired like one River digital assignment we're trying to keep doing stuff to show that there's progress happening in this industry and it's we're not going to let the haters get us down so to speak um but yeah we need to as an industry we need to go figure out the policy side and I think that the good news is that from my time in DC and I know in recent Horowitz is spending a ton of time there as well they're strong bipartisan support to get

clear crypto legislation passed that would allow this industry to exist here in the US and flourish which is really good um but there is a there is an element um in in DC that is sort of trying to take capitalize on this moment some of it's some of it's positive some of it's negative some of the positive side of it is like okay let's make sure consumers are protected and there's not too much risk in the system the negative component of it is some people think crypto is all bad and they're they're just misinformed or ignorant or have their own motives I don't really know why but they actually want to use it as a moment to attack crypto and so we need to basically make sure that the 50 million or so people in the United States who have used crypto help elect representatives that are going to you

know advocate for their beliefs and and for this technology so we're trying to get the the crypto Community organized in a democracy you know the government works for the people not the other way around so as long as people keep using crypto and benefiting it from it you know eventually the government is going to get to the right place so we launched this thing crypto 435 which is sort of referring to the 435 congressional districts around the U.S but we're trying to get the the crypto user base more and more engaged like call their Congressman show up at these Town Halls you know donate 100 bucks and like in the in the 2024 midterm sorry 24 elections we're going to see I think a number of seats get decided by the crypto vote and that's like kind of going to be our moment as an industry where we grow up

and we're taken seriously in DC and what about the technology and product side for crypto what excites you industry next few years oh man there's a lot of stuff I mean um I'm bullish on decentralized social I think yeah yeah I think um we need to get decentralized identity decentralized identity is great like once you have the profiles you can connect in the social graph I think D5 gaming is is cool I think just getting the scalability of the chains to improve where every transaction by default is like a penny or less like the layer two stuff is really good um we need to get the market structure even more developed with derivatives and things like that more in the centralized space but I mean the decentralized stuff is even more exciting for the long term

so yep okay that's enough from me okay I want to hear from folks here lineup and yeah offline all the hard stuff oh wow let's go hey go for it web 2.5 gaming economy platform in Phase One um so I'm Canadian you're American my question is uh in 2023 do you think the US is the best country to build a web 3 startup or is it Singapore or Dubai or something like that that's a great question I that's exactly the kind of question I'm hoping people go ask at these town halls for the next Congressional elections but um

ah the man depends probably what crypto app You're Building I mean the US has a great set of infrastructure and an investors so you can get access to Capital things things like this of this event right here but I don't know I mean like every Financial Hub in the world is trying to attract crypto talent and crypto companies like in the UK like Rishi sunak the PM is he's just like super positive crypto like Hong Kong Singapore you know the EU just passed the legislation the UAE is super positive so I'm bullish on America long term but um it probably depends more like where you

live and where your network is I'm not sure I would relocate to go to start the company there but the US is not looking amazing at the moment from a crypto regulatory point of view thanks uh and for the record if we raise in the U.S and move to Dubai we're not rugging anyone thanks okay you know I I would say that I look I'm an American citizen like Joseph I'm immigrant I love this place and I think like all of us we want to see it but you know I was in Dubai a couple of weeks ago for the very first time and I was just blown away by the crypto energy and so I some folks I was like man I'm just blowing the energy you know the the government being so into it and uh there are a lot of other interesting places but like I said you

know like we're here in the US and hope this works out here all right thanks hey Brian thanks for sharing your perspective today I was just wondering can you comment on the significance of base for coinbase itself and the broader crypto industry yeah well base is the layer two that we launched recently and I mean the significance of it is that we're trying to help crypto be more scalable and more usable so um obviously layer two's help with scalability there's a few from the usability point of view there's a few things that we can do in our own apps and Suite of products that I think just try to lower friction so for example maybe with USD coin we could have transaction free payments or you know if we integrate um L2 into like you know our nft platform or into the DAP Marketplace or

just sort of we want to make the default of everything be fast and um and cheap and so hopefully that'll enable a whole bunch of applications with um with an L2 that we have a little bit more input on even though it's it's decentralized thank you hey Brian Lewis here from Shield security I wanted to ask you about coinbase nft and where that fell in the you know priorities do you see you guys copy from Google was that like Adventure bets um and where where do you see coinbase their position in nfts long term yeah coinbase nft was definitely a venture bet and um it still is actually I'm pretty bullish on nfts long term I think there's a ton of stuff I don't

know if you're working on an nft thing but um I know that recently there's the market has shifted in nfts a little bit towards these more Pro Trader tools like like blur um but I think the utility case for nfts is probably pretty massive going forward I think it could be um in decentralized Social where every post is an nft or you could imagine new forms of like Spotify or YouTube or Instagram where every every image or video or audio is is a nft you know like concert tickets um and D5 gaming like the in-game assets so even just like getting access to this building like people's badges or I don't know various things um could be pretty credentialing universities even like scientific

research like licensing things these could all be done with nfts so yeah we're going to keep investing in nfts at coinbase and um just try to make it the main thing we're doing is that you know typically what people would do is like buy crypto and coinbase move it to a self-custodial wallet with a browser extension and then they would do something with nfts and like it's actually pretty amazing how many people used it given that there was that many steps if we can make it where you just you already have your crypto and coinbase but you click one or two more things and you can just do it right in the app that that's obviously easier but we want to make it easier for any any adap to be used inside coinbase as well so it's not like um we want to embrace the third-party ecosystem essentially

thank you yeah hey Brian uh thanks for the thought so far uh Curious how coinbase balance is uh straightforward bets and pragmatism uh versus kind of taking stances on things that you really believe in um staking as an example and even using like Mev boost yeah yeah um so there's definitely you know there's a okay where do I start there's when you when you get to be in your earlier Stage Company I think that you don't really have resources to do too many things so you probably just want to have you know if you're like 10 people or something you probably just want to have like one thing the CEOs give like we're going here but as we got to be a bigger company I realized um

good ideas were coming from various places and actually like there was too much going on where I couldn't even keep track of it at a certain point you know once you're like a thousand people or the industry just got bigger and bigger I couldn't read all the research papers like anything even close to that so there's a great stories in history like for instance Steve Wozniak he was an employee at HP and I guess he went to his boss and was like hey I think we should make a personal computer and his boss said no and so he co-founded apple and so we started to have this like coinbase Mafia out there like people building different and I was like okay that's great first of all we want to support that like but if they want to build stuff internally let's make sure we're not like missing

out on good ideas so we basically created um a forum internally where people can come pitch twice a year and say this basically if they want to get funded new Venture bets internally and one of one of the key things about that is like you know I don't want to have it be a committee like designed by committee um where it's like okay you need to get all six people on the panel to vote Yes and you get your thing funded basically if any one of the people and they're they're all they're like different VPS and stuff like that who have their own budget any one of them can basically say all right I'm gonna Champion that and and fund it out of my own budget and so you only need to get one yes and we're trying to make it a little bit more like

pitching a bunch of venture capitalists like so that's a longer con that's a much bigger topic about how big companies manage to do Innovation but some of it has to come bottom up it can't just come from the CEO yeah excellent talk my name is Isaiah also from Shield um my question is is twofold actually so the first one is when what were the what were the design criteria that you used um at the time when you found a coinbase as opposed to maybe found finding like something like a unit swap given you had read the Bitcoin white paper like what were the what were the trade-offs or what were the does like the design criteria and the second question is for a Founder now in 2023

um how should we think of you know developing you know either the approach of going talk to customers build products versus worrying about kind of the the protocol token incentives for perhaps a community-based approach that can create a more decentralized system um yeah yeah got it so yeah you're right I mean the design um when we were getting started there was really just Bitcoin that was the only thing and you know I kind of realized there was going to need to be like a more centralized bridge between Trad fire and this this world so the architecture decision was a little simpler when I was getting started but you're right now a lot of this these tools have become decentralized and if I understand your correct your

question correctly it's basically like how to think about how decentralized should your product be today or something like that is that do I have that right yeah because I feel like a lot of times sometimes you'll talk to some people you're like oh like is it decentralized enough but ultimately I and I do think perhaps like you're just thinking about how do we actually solve a problem and and create value and whatever path that like the company should become based on like where we are at this point in time is really where we should we should go with that but it's it's not uh exactly clear um you know if perhaps focusing on the ecosystem is it a distraction or is it actually worth spending more time even if it's not maybe leading to paying customers today yeah no I totally get it

I mean that's that's probably a little bit specific to each company and I hesitate to give some general advice but I think you basically need to find The Sweet Spot of like be on the frontier where you're building something novel but don't go so far that it's like impossible to get anything done because the tools are so nascent and like um that you just don't actually end up creating customer value but you can definitely play in that space a little bit like I'm pretty sure a lot of these apps that are sort of web 2.5 you know it's like okay let's let's have a smart contract or like let's you let's have something tokenomics related but shoot like the image the video uploading thing just doesn't work in a decentralized way yet and there's a few things on the horizon you know try to see if you can

take a day or something and build a quick prototype and if if none of it's really ready with ipfs or whatever just like ah screw it we'll put it in a AWS for now and try to fix it later I mean oftentimes you end up building stuff and you're like we'll fix it later and then like 10 years later it's still running the same way so you always have to be a little careful that but I I has I don't think I have anything like I can nail down without more details on the specific example actually I think there's a couple of failure modes I think we sometimes see uh one is you know somebody's building a product and they're getting the crypto incentive wrong you know uh what the protocol incentives are I often see the reverse where sometimes the doctor or founder and they'll spend a lot of time thinking

about the incentives you know uh the tokenomics ETC but they haven't talked to like an actual human being and like what you know at the end of the day you know somebody has to go deliver food or do the thing and you know and so they spend all of them only on the you know the protocol design and I think the both failures in both modes yeah I'll probably one of the things I like about forecaster not just because you know we're involved with them because I think one thing Dan Romero coinbase Mafia by the way uh he's done a great job of it's starting to balance both he spends a lot of time talking his customers DMS them Etc and then you know trying to map that on to the crypto incentive side so that's I that's an example I think I'm trying to strike a balance we've never

seen failures on both sides yep thank you thank you hey Brian Brandon here thank you for the talk I think your story is incredibly inspiring especially as a technical founder and kind of uh a leader in the industry so thank you I got a lot of questions I'm gonna keep it brief the first is you talked about the power of Delegation how you might have been able to accelerate had you delegated earlier but you also talked about hiring slow so what is ultimately the right answer in terms of being able to do delegation while at the same time not bringing in too much head comp the second question is now that you have delegated effectively do you still get the same fulfillment as when you used to merge the pr and make the product better yeah great question so thanks for

calling that out as I was saying it I was like I think I just contradicted myself but you're right um Okay so don't hire too quickly I think is really good advice especially pre-product Market fit right um if you just sometimes people are like well we don't have product Market fit we need more people and they hire more people and everything actually goes slower instead of faster so I like keeping teams super small like you know two people three people no more than five kind of pre-product Market fit and once you get product Market fit though and that you know that the boulders rolling down the hill instead of you pushing it up and you're like oh my God like you know you'll you'll know it'll be like backlogs and thing you know like

outages and like the scaling issues will be your biggest thing instead of like getting anybody to come care um that's when you probably need to start delegating more but um yeah it's there isn't it's complicated because there's also a failure mode of bringing in like a senior exec or someone like too early into a company where that can have like a 50 50 hit rate and you'll have to part ways with a lot of people some of them will stick and some of them won't um and so you can you can also delegate to people from within who are showing promise right and develop internally which is a better default probably way to start um okay so that was the first question what was the second one the second question was as a technical founder now that you have delegated effectively do

you still get the same joy and fulfillment as when you used to actually ship the code yourself oh it's it I I definitely feel a lot of enjoyment and fulfillment from it it's um it's different though I mean so occasionally I'll still jump in and try to write some code like during a hackathon or something or actually the team sort of threw me a bone during the base launch where they were like you should do the final PR and like yeah we'll merge it wink wink yeah yeah I like kind of dusted off barely got that one going but um so I what I enjoy is actually I with our Venture bets I get to like find that same satisfaction of working on brand new stuff with new teams um they they actually removed my GitHub access because

um you know like we have all these like hackers trying to break into my stuff and they're like let's minimize your attack surface area so like I don't I don't even have access to a lot of stuff is it a polite way of saying like Brian your court sucks but we don't yeah there was probably that reason they just didn't want to tell me but um yeah but I have to say it's very fulfilling on the other side as well because the cool thing about it is just like we get to try stuff um you know I'm always learning new things so as long as it's advancing the business that's kind of what I get my enjoyment from it's one sort of mental shift on this is like sometimes I have people come in the company and they're like oh like I'm a really good react native engineer or

whatever I'm like okay that's great but like you figure out the way to add value to the company drive your sense of fulfillment from what moved us closer to the mission not like did you get to use your favorite tool and I try to do that as a Founder too like sometimes the job sucks right it's like I'm literally just um like we don't have any early on we had no like we couldn't hire any good Finance people I was like oh my God I need to like learn accounting like how to read a balance sheet in an income statement and just or literally I was just like ordering food for the team or picking up trash on the floor like whatever so do whatever is the most important thing that helps them move the business forward that's what you should drive your value from and I so I can get

that from coding but I can also get it from almost anything else thank you just on the delegation Point how do you know when you've delegated too much and we're too removed from the details and something yeah working because I've seen a lot of Founders one trap where there is the app series bcdc or something working somebody said you should get an adult exec right you get like seasoned person who looks talks a particular way and then it's not working for a reason and then you spend six months a year you're removed from the details and you don't have the good feedback loop because you don't actually know what's happening have you dealt with that how do you deal with that yeah you're right man I'm gonna contradict myself again here but I think you're right like micromanaging is actually kind of underrated um there's sort of like a meme in

Silicon Valley that you know good managers delegate and I may have just fallen into that trap a little bit myself I think I was trying to make an adjacent point but anyway it's very true like so what I actually like to do now is um dive if I there's not I can't possibly be micromanaging everything there's way too much stuff but what I do is I basically just try to gather info on like progress updates everything's how's it going and basically once in a while I'm like I'm there's smoke over here something's it's going too slow I'm getting weird answers um two people just transferred to another team they don't like them and I'm like okay micromanage I'm gonna go down and and keep digging until I find out like what the issue is here and usually you have to it's usually like

you need to change a person you need to change the strategy um you know you need to go do surgery on it and then like I'll go micromanage the next thing and so there's actually it's almost like that eye of Sauron or whatever like just whatever is like the biggest issue something something's [ __ ] up in your company at all times it's just like okay what the f and I'm just going to dive into this over here so that's fine ah hi I want to say thank you for sharing uh and I'm Nikita from chain Patrol and actually worked at coinbase before this uh um I want to ask um in the early stages of hiring your team uh what did your team composition look like and was there anybody that you

kind of like any roles or people that you brought on that like maybe like initially you didn't think were gonna be like that important but like turned out to be like really impactful hmm well I mean the classic just to start with the basics I mean Engineers right like if you're building something in crypto you probably need people can write the actual code it's it'd be hard to just like Outsource all that or something um there was I don't know if this is helpful like one the third employee that we hired um was this guy Olaf Carlson we who went on to create um polishing capital and things and he was a really unique person I mean he he was totally unqualified on paper um he was actually previously a lumberjack uh and he was this like

spiritual kind of guy he'd written his thesis in college on bitcoin and then he decided to have like a walkabout type spiritual experience and he was a lumberjack for like a summer but then he he came in and interviewed and basically the what we're interviewing for at the time is we needed somebody to do customer support and uh it wasn't so much that he was like qualified to do that he was just like super hungry and smart and uh brilliant and he was like I'll do anything like this is the future and he was it was like he had this really infectious energy and I realized um we we sort of took a long shot on him and gave him the job and he turned out he crushed it and then he went on to do a whole bunch of other things inside coinbase but the thing that I realized

about that was that startups um you know like you need to develop a sense of optimism internally because what you're trying is crazy and it's really difficult and there's just going to be all this setback after setback and so once in a while I would see a startup where like there's somebody who's just kind of negative and um my instinct is was always as a Founder I was like we need to cut that out like right away so I'd just go talk to him like what we're trying to do is really hard like this is contagious and I can't have you recruiting people into your negativity and so this is like last chance like help us move forward or you know and if it ever didn't work out I I would exit people

um because if you don't believe you can actually accomplish something in the future like and someone's recruiting you into their thing like you're not going to do it thank you hi I'm nitya building uh capsule uh I really resonated with what you were talking about from going with uh like the fire alarm and lunch being a problem to like Congressional hearings like what is your general approach been to growth as well as kind of making difficult decisions growth in terms of like me as a leader or um yeah um so I mentioned executive coaches I would say there was a handful of periods actually I'd say for most of coinbase I've had some kind of executive coach

I've tried maybe like three or four different ones over the years there's some of them are like former CEOs who can um give you more tactical advice and others are like therapists honestly um and actually both are really useful uh you know it's um part of the whole challenge of being a Founder is like managing your own psychology right and and dealing with um all the kind of difficult feelings that come with that and also just like the motivation and what you often find is like you know every two years or so I'd start to feel burned out I'm like oh man like this is you just wake up in the morning like I don't know this is like rough I don't want to get out of bed and like you know and you can a lot of Founders struggle with this like I've seen people

like you know gain a ton of weight lose a ton of weight like get addicted to prescription drugs like um develop all kinds of like coping mechanisms like self-medicating things right um and so what I would try to do is every two years I'd talk with these coaches and I'd be like okay what is the part of the job that you're getting energy from what's neutral and what's what's negative and and then oftentimes you take the stuff that's negative or neutral and you try to like hire someone to give them that responsibility or um just stop doing it entirely and see what happens you know or random things like that um and there's always going to be some part of your job that's like stuff that you don't love that I don't it's not to say like the whole thing is supposed to

be fun but um you know things like that helped me develop a lot as a leader so I would say that was that was part of it um and sorry what was the second part of your question oh I was gonna ask how you make difficult decisions uh um okay so we actually developed well we didn't develop it we stole it um we borrowed it this idea uh there's a decision making framework that we use internally it's called Uh rapid and we brought it from I think Bain came up with this but a bunch of companies use it and um one thing that's really interesting is when you have a tough decision to make or a company has a tough decision to make what often ends up happening is like people all get in a room or there's like a bunch of one one-off phone calls

happening and people's tensions kind of get high and at the end it's like who who's even in charge of this and someone's trying to veto it and you know then they we revisit the decision two weeks later because everyone's still pissed and like so there's just chaos when when these decision-making things happen so what this this system rapid I mean you can go read about it but it basically it tries to choose up front Okay who is the decider everybody has a role you're a decider you're giving input you're an agree whatever and then what it does is it it forces everybody to write their stuff in a their input in in a document so another issue is people don't feel heard right and they're like well you decided that before you even came and talked to me like and people get upset about all this stuff so it's

like okay right everybody write what you think in the document and then we're going to meet and we're going to talk about it and we're going to everybody's read the document so nobody nobody can say well I wasn't heard it's like you you were at the meeting everybody read your thing in the document right so we've all read it and what I ask people to do is like be candid too because another thing that happens in these companies is like someone's there and they like oh I think Brian thinks this so I'm going to say the same thing right and all these like weird silly things happen anyway you can go read about it uh at the end the decider writes their decision people who don't agree disagree and commit um now you've got a paper record of it you can go back and look at it six

months later when someone inevitably is like why the hell are we doing this stupid thing you're like well where's the rapid document you can read it see who decided maybe we were wrong maybe we were right um that that's been a helpful one for me so thank you so much yeah last two questions hi uh Jay from ethanid I was curious how you knew that Fred was the right person to found the company with yeah oh man that's a good question um so I think that um you want to find somebody who intimidates you a little bit um and what I what I mean by that is that um you want to be like a little bit afraid that you're about to say something stupid because um you know that's to me that's sort of a sign of like mutual respect almost of

like wow I really trust that person I'm they're going to make me want to try harder because like they're they're like excelling and they're they're really impressive in various ways I remember um so Fred and I he he had reached out when he saw the Prototype and we started he just came in and tried working together for a little bit I remember um after a few months like some some interesting stuff happened where um like I remember one day he came to me he was like I've been I've been reading through all the stuff we've been doing about how to make this buy Bitcoin feature and um I'm pretty sure we're going to lose money on every trade and I'm like how can that be I don't that can't be right and he like walked me through it on the Whiteboard and I was like oh my God he's right and um so

I would say people who are who challenge you on your ideas and occasionally they um they're right or they change your mind um that that's a good sign and um if you're if you haven't found a co-founder my best advice is like just keep making progress and eventually signs of success will cause the right person to show up like before I before coinbase got actually officially into YC and you know before I met Fred I I think for like a year or two I was like trying to find a co-founder and I just completely failed like and I was I tried co-founding with a couple people like this one guy for briefly and it didn't work out um and I was just like this sucks like I'm never gonna find a co-founder and um but getting into YC launching the Prototype and like randomly Fred

messaged me one day so like yeah just don't stop making progress and eventually the right person will reach out to you thank you Ryan all right come on hey um David from disco here um I'm curious um what you're most excited for in decentralized Social and also how you see the opportunities for coinbase as a sort of mass consumer app in that space yeah well I mean that's a big topic so I think decentralized social is pretty cool from a few a few different angles one is that there's a lot of you know it allows people to avoid censorship right it allows people to build different uis that um like if you have if you want to have like a safe mode that tries to

filter out a lot of like um you know difficult content or whatever you want to call it then you should be able to have that if you want to just look at the raw stream of stuff I think you should also be able to see that so it it allows people to sort of um for information to be free from like a freedom of speech point of view I think it's really powerful from a um you know not having all your stuff owned by big tech companies point of view it's really powerful um I think I don't know my guess is it'll it'll unlock new types of business models for creators as well so that's pretty cool but honestly this is like something that I'm spending like probably two percent of my time thinking about it if you're in that space here some of you all here

are probably actually further along than I am on it thank you yeah I think the two the most important thing for the decent and social partner is like one obviously kind of you know censorship antisense system that's interesting but there was an error maybe 10 12 years ago when you could build apis you had apis on pretty much every social media company and you could build clients experiences and be really bent away from that right because of the ads based model and the kind of the centralized effects of these companies and for me if you look at something like a forecaster or lens or there's a bunch of others the idea that anybody can go build a client or go build an experience with no permission uh that is really really critical uh the fact that you can actually have the right to exit so you can sort of it's

really you know what I think the internet should have been going all the way back like when we're teenagers like anybody who built on top of sntp or anybody could build a Twitter client for a period of years or a Facebook client so it's kind of that appeal of permissionless innovation which I think like super interesting yeah but it feels it feels totally right to me I actually can't predict exactly what's going to happen there but something about it seems awesome which is which is a good indicator of like a fruitful ground for ideas kind of the early energy of like 2004 or 2005 Ajax web 2 or the 90 yeah right it has kind of the same energy I don't know and of course it's super early and you know who knows what's going to happen but it does have that sort of that nerd energy which I

love yeah okay I think there's a lot of questions in the audience before I let you go maybe what is maybe one parting thought you have for this these four a lot of them are super early in their Journey badly started the company some of them are further along what is like one final thing you'd like to tell them hmm um well I already told you my nugget about like don't die basically and just um you need to grind it out like two three four years to like see if something breaks through otherwise you haven't really tried it so that's the first one I guess the last one I'll leave you with is like this is a great phrase which I like which is action produces information so sometimes if you're you can't really see that many moves ahead on the chess board

and you're like I don't know he's like these these centralized social or gaming gonna be big or whatever it's like if you don't know what to do just like do anything because um action will produce more information so just like build something it's almost certainly the wrong thing but by by the fact that you just built it you then will see oh I should have done this or somebody reaches out to you and like your app sucks but I wish you had done why or like you know just action-produces information keep moving you know startups are like sharks if they stop swimming they die so yeah don't die buildings ladies and gentlemen I'm sorry [Applause] [Music]