The Diary Of A CEO with Steven Bartlett - Coinbase Founder: The Crazy Journey Of Building A $100 Billion Company: Brian Armstrong

Episode Date: July 18, 2022

Brian is the co-founder and CEO of Coinbase, a company thats reached highs of a valuation of $100 billion. After an adolescence and youth searching for independence where no one could be his boss, he���s come a long way, but he’s realised he’s had to change a lot too. Before anyone had heard of Bitcoin, there was Coinbase. Taking a punt on an industry no one knew and no one understood, Brian quit his lucrative career to be his own man. No one encouraged him. No one. He’d told the idea to hundreds of people before someone told him it could work. In this conversation, Brian brought a wisdom and a nuance about how to run and build a business like very few conversations we’ve had on this podcast. If you want to know how the best in the world take an idea from drawboard to $100 billion, this is the story of how it happened. Follow Brian: Twitter - https://twitter.com/brian_armstrong Follow me: https://beacons.ai/diaryofaceo

Quick one. Just wanted to say a big thank you to three people very quickly. First people I want to say thank you to is all of you that listen to the show. Never in my wildest dreams is all I can say. Never in my wildest dreams did I think I'd start a podcast in my kitchen and that it would expand all over the world as it has done. And we've now opened our first studio in America, thanks to my very helpful team led by Jack on the production side of things. So thank you to Jack and the team for building out the new American studio. And thirdly to to Amazon Music, who when they heard that we were expanding to the United States, and I'd be recording a lot more over in the States, they put a massive billboard in Times Square for the show. So thank you so much, Amazon Music. Thank you to our team. And

thank you to all of you that listened to this show. Let's continue. Everybody I talked to actually thought it was a bad idea. Like any reasonable person would have quit. I was filled with self-doubt. And then Coinbase was valued at a billion dollars. Crazy. Brian Armstrong, CEO, co-founder of Coinbase. The largest U.S. cryptocurrency exchange. I saw technology as a way to try to have a big impact on the world.

If the thing that got you started in the first place was like fear, like fear of never being important or fear of never feeling fulfilled, you're just going to give up. Cryptocurrency is the biggest transformation of money since the invention of paper. Coinbase is being deemed the most trustworthy brand in crypto. It tipped at a certain point from like, oh, this growth is really good to, OK, things are getting a little crazy here. If you kind of more than double a company in a year,

you're really going to start to see a lot of stuff break. This morning, Coinbase just telling employees in an email that it plans to lay off 18% of its workforce. We had never done a layoff before. I had never done one. I remember I went up in front of the company and my voice cracked. I mean, it was awful. Oh, man. I actually think Coinbase is in deep trouble here. And let me tell you why. The pressure and the scrutiny and the headlines. How are you dealing with your emotions? This is getting very personal. It's a real superpower to like care less what other people think. So without further ado, I'm Stephen Bartlett, and this is the Diary of a CEO. I hope nobody's listening. But if you are, then please keep this to yourself.

Brian, when I read through people's stories, there's sometimes really obvious causal factors that led them to become the people they are today. But with you, I'm more compelled by the less obvious factors. If we go back to your early years, when you were a young man on the West Coast of the United States, what are the less obvious reasons as to why you've ended up where you are today and achieved what you've achieved in your life? Great question. One of the less obvious reasons probably is that I was an introvert. I just wasn't really very good with people. I didn't really have that many friends. As a young person, I was quite shy. I really found a love of computers and I liked just being by myself and playing with computers, learning about how they worked programming. And, you know, in our technological age, I suppose some of the people who got excited about computers early on and just found a love of building things

have now become, you know, CEOs of companies, which is kind of a strange thing. For a long time, I didn't think I could be a CEO because I envisioned CEOs of companies as being like these military generals who barked orders at people and they were these like strong, charismatic leaders. And I always felt like, well, that's not me. I'm kind of like an engineer. I'm kind of a nerd, you know? And what I've learned over time is now reading enough books and things historically, you know, introverts can make actually really good CEOs. Of course, by the way, there's lots of different types of CEOs. There's not just one mold. There's people who love marketing, people of operations, people who love sales, people the way, there's lots of different types of CEOs. There's not just one mold. There's people who love marketing, people who love operations, people who love sales, and then there are engineer CEOs.

So that's one reason that I think it's maybe a little bit less known why I'm here. Another reason is that I just became very passionate about this idea of trying to have an impact on the world. And I think it, again, may have come from that introversion as a kid. And I felt like, hey, I have good ideas, but it's hard for me to get them out there and for people to listen to them. And I didn't feel confident speaking in some public setting or whatever.

I have lots of practice doing it now, so I'm a well-trained introvert. But I saw technology as a way to try to have a big impact on the world and it could get my ideas out there in a scalable way even if i felt like maybe i couldn't and so i don't know maybe that's another unlikely reason in hindsight then going back to those early years as well what was your luck or privilege what were the factors that were out of your control that happened to be the case that also aided to that trajectory. Yeah. I mean, there was a lot of things that went right. So I was in a home with loving parents that were very supportive of education and my passions and interests, including, you know, my mother worked at IBM.

And so we had like an early computer in our home. She was kind of an early programmer there. You know, we had early access to internet, things like that. I also had, you know, I graduated, studied, I studied computer science and economics and I had, um, enough, this was a very important thing. I was not afraid to go try starting companies because I knew that if I failed, I could actually go back and still get a job. And it wasn't, people always think of,

you know, entrepreneurs, oh, they're such risk takers and all this stuff. You know, honestly, it's not, it's not that risky. Like if you're a young person and you get a little bit of money to go start a company, like in Silicon Valley, people will write you angel checks for these things and you can pay yourself a salary, go try it for a couple of years. And if it doesn't work, you go back to a company and you'll, it's often viewed as a badge of honor that you've tried to start up. You have this entrepreneurial DNA. You're somehow more valuable inside a company now if it doesn't work and you go back. In many places in the world, that's not the case.

Failure of a company is considered a mark of shame, not a badge of honor. And then I think many people don't have the luxury of being able to kind of raise these seed rounds and things like that, which many places in the world, you can't do that. Crypto is trying to help that, by the way. But in Silicon Valley, you can get angel checks for things. And so I tried starting many different things over the years and kind of as side projects. But with Coinbase specifically, I didn't really I didn't even quit my job to try it full time until I had gotten sort of an angel investment. So I was able to pay myself something. It wasn't a lot, but I was able to pay myself something and de-risk it. If I'd asked you then at say 10 years old, what you wanted to be when you grew up,

what would you have told me? At 10 years old, I mean, I really had no idea. I think the first glimmer of it that I had was in high school. And I had started building some websites. And I remember as a senior in high school, I went on this retreat. And I had, I do remember having this thought, like the thing that has excited me the most in my life so far was I had built this kind of simple website or app. And it felt like it was this really incredible feeling. I went to sleep and I woke up in the morning and I checked the stats and like, you know, 200 people or something had visited the website while I was sleeping. And I was like, wow, that was so cool. I don't know who these people are. They're all over the world. It felt like a superpower. Like if I could build something that could be working

and helping people while I was sleeping, you know, if not, if not 200 people, why not 2000, 2 million, whatever. And so I do remember having sort of a, it's stuck in my memory, like that of all the things I've tried in my life, you know, sports and reading science in school and whatever as a high schooler, that was the thing that really got me excited in a way that nothing else had at that point. So I was probably in the very early stages of discovering my passion at that point. Just listening to you speak there, my brain was telling me that, because I was trying to make this link between why being an intro listening to you speak there, my brain was telling me that, because I was trying to make this link between why being an introvert led you to technology and then also having this

sort of desire to have impact. But it sounds like there, technology allowed you to be an introvert and have impact because it was the bridge between the outside world. So when that website goes live, you don't have to see these people or persuade them yeah but you can have your impact by by a piece of technology that's enabling something in their lives exactly you go off and study economics in university in college yeah so i had been taking some programming classes um on the side in high school why i couldn't help it i i like in my free time i would just play with computers until like two in the morning three in in the morning. I was like dead tired at school every day because I was like wide awake at night'm this interested in computers, my parents were supportive of this. Of course, there was like community college classes and I went to go try to take some of those classes to learn programming.

There was I got some books from the library about like how to program Java and things like that. And I couldn't I couldn't understand any of it, but I was trying to work my way through it. So then when it came time to go to college, I was basically like, OK, computer science, that seems like the closest thing to what I'm interested in. I was also interested in business and they didn't offer a business degree. So I studied economics instead. That was like the closest thing to a business degree they offered. And that was literally my thinking. Now, of course, I had no idea that later I'd start a crypto company, which was literally the intersection of computer science and economics. But yeah, at the time I just thought I want to write software and I want to learn how to start a business.

And at some point during college, you start your first, I guess, real company. Yeah. Which is a tutoring business. Yeah. Was that, did you have grand plans of turning that into a mega, was that, or did you stumble into that? More like stumbled into it. Yeah. I mean, so as a college student, my roommates and I were always trying to think about how to make extra money. And I went around and I was looking at these on

campus jobs. So you could work at the library. There was like a coffee shop and, you know, they paid like 10, $15 an hour or something like that. And one of the upperclassmen, I remember he told me, you know, I'm tutoring this high school kid and they're paying me $60 an hour. I was like, wow, $60 an hour. It's just it was like three or four X what you could make at these other on campus jobs. So I decided to try doing it myself. I got in touch with people. I started tutoring high school kids just in like math and science and things like that.

And it paid really well. And so my roommate and I at the time, we were starting to just brainstorm like, why don't we start a little tutoring company and help high school kids and their parents match with the tutors at the basically university students at the university where I was going to school. And so we got that going. We got maybe 10, 20 of our of our fellow students kind of connected in. And then we said, all right, let's make a website for this to connect even more people, maybe to try to expand it to other schools. You know, eventually over a period of a couple of years, this, this idea just kept evolving. And we started to think about it as we didn't really know this at the time, but it was, we were kind of making an online marketplace like Airbnb for, but for tutoring. And yeah, I got to practice like building web applications. There was payroll and incorporation and sales and

marketing and taxes. And I could never really get it to grow enormous and to become like a really big business, which we can talk about if you want. But that was the seed of it that later became a little bit more of a company. Why then? Why couldn't you make it become a big business? What was the, in hindsight, the lesson, the barrier? business, we were trying to take like a 10% fee by matching these people. And we were basically trying to do all the payments through our website, like billing and, you know, with a 10% fee. And what would happen often is they would meet the tutor if, and they do the initially the first payment, but then afterwards they'd start paying them under the table. And so we were, I realized at a certain point, we were basically just getting in the way. They wanted us to just match them, but they didn't want us to be the whole billing apparatus. It was a much more of like a local repeat business in-person business. And so for years and years, I struggled

with that. There was a counterintuitive moment, which allowed me to kind of pivot away from that. So I eventually realized this thing isn't working. I need to go get a quote unquote real job. And as I was going to start my, the real job, this was at basically Airbnb, where I became an early employee. I was about to shut down the tutoring site. And I was like feeling a lot of pain about that because like, well, I don't know. There are still like five, ten thousand people every month who are kind of looking at this thing and using it. It feels like such a pain to shut it down or such a bad thing. So I was like, what if

what if I were just to put everything on autopilot? You know, we're not going to be involved in any of the payments. There's no customer support. This is literally just going to be a directory, like a tutoring directory. And you can contact these tutors. You can pay them however you want. And I'm just going to try to make it like a free thing. Maybe I'll put up some ads. And so I basically had like a week before I was starting my new job. I got rid of all the payments. I messaged all the people using it. I was like, you can pay now people directly. And I was going to put up some ads. And I did one more thing at the last hour, which was I said, if you want to have like a featured profile as a tutor with like a little badge on a featured badge and come up first and search results, then you can just pay

$10 a month. And that was it. And I basically stopped looking at the website and I went to go focus on my new job. And every year thereafter, the site doubled after I made that change. And so basically, I guess the lesson was, you know, stop trying to extract value and start trying to create more value. And at that point, I think that was only the only tutoring directory online that had free profiles and you could just contact the tutors. And so it actually started to grow. Later, somebody ended up acquiring it for maybe like $2 million or something. So to me, that was like, it was like a seven or eight year base hit outcome.

Yeah. Where for years, you know, five know five six years i was struggling to get anything to work but the the truth is okay they paid two million dollars for it yeah but the lessons you learn many of those translate into the business that you went on to build in coinbase what is there anything else because i look at my first startup that i made out of dropping out of university then started yeah and there's so many lessons One of them is what you've said is, I was so romantic about my hypothesis about what this business should be that I got in the way of what customers wanted to do.

So hearing you say that really relates. But is there anything else that you learned from that seven year first, you know, kind of messy startup that are key philosophies for you today in Coinbase? I mean, I think one of the big realizations I had in starting that tutoring company, which again, you can always look back and see how the pieces connect. philosophies for you today in Coinbase? I mean, I think one of the big realizations I had in starting that tutoring company, which again, you can always look back and see how the pieces

connect. But at the time, you're just wandering in the desert. You're lost. I felt like I was a failure. I felt like I had no idea what I even wanted to do. I didn't even know if I wanted to be an entrepreneur. It basically wasn't working. But looking back with hindsight, one thing I realized was how broken the global financial system was, because it was incredibly difficult to collect money from all these students and pay these tutors, not only in the US, but in various places around the world. And I remember going through this incredibly onerous process to set up credit card processing and then payments that I was sending out. And I remember the bank called me one day and they were like, you know, are you an aggregator of funds? And I was like, I don't even know what that is. And they were basically like

treating me like almost like I was a criminal. And what are your licenses to do all this stuff? And I was like, this is crazy. It was the hardest. One of the hardest things about that business was just to get the payments, like collecting payments and distributing payments to the tutors as a marketplace. And so that gave me sort of a real insight later when I saw the Bitcoin white paper years later, I was like, that system is broken. And this could be an opportunity to fix it. So that was one thing. What about Airbnb? So you went and worked as a, in the product team at Airbnb? Yeah. Yeah. I was a technical product manager, which basically meant I wrote some code and I tried to be a product manager. Yeah. Yeah, I was a technical product manager, which basically meant I wrote some code and I tried to be a product manager.

Yeah. Yeah, so I think I was the 40th employee at Airbnb and I basically moved back to Silicon Valley from, I was living in Buenos Aires, Argentina for a year or so, trying to figure out what I wanted to do with my life. Okay, I'm going to have to talk about that. Sure, yeah. What did that give you, that experience of travel

and going to Argentina and living there for how many years? A little less than a year, yeah. What did that give you, that experience of travel and going to Argentina and living there for how many years? A little less than a year. Yeah. What did that give you? Well, it gave me a few things. I mean, one was that I got to see what a hyperinflation economy looked like. You know, a lot of people have only grown up, grown up in a developed country. They've never experienced hyperinflation and they've never felt firsthand what that can really do for a population and people. So it really deeply affects the culture of places like Argentina. There's just there's kind of this deep distrust of the government and there's a pessimism about the future. There's kind of, you know, in countries that I think are the most forward thinking, there's a sense of optimism about the future.

Hey, we can build a better future. And there's, you know, in places like Argentina, people may disagree. My impression was that people felt like the best days are behind us and live every day like it's your last because, hey, it could all disappear tomorrow, meaning your wealth and everything, which has happened many times in their history. Also, just little things like you'd go to the restaurant the next week and the prices are higher and they put a sticker on top of the menu because the prices keep changing so frequently. It really harms like the poorest people in society, too, because they're the ones holding their wealth in cash as opposed to wealthy people can hold real estate, things that adjust for inflation. Now they can hold Bitcoin. So anyway, it gave me a front row seat into that, it probably gave me a little bit of a sense of confidence too, because I had never studied abroad or really lived in a foreign country by myself where I didn't really

speak the language very well. So there was things like that. I think I was just trying to learn how to become more independent and grow up and stuff like that. You were running the tutoring business at this point. Yeah. I mean, I was doing a lot of things. So I was running the tutoring business. I was doing some contract software development, just kind of while traveling. I us to work more remotely. And just generally people were choosing that lifestyle. When I did that, when I was 21, in the gap between my startup failing and then me pivoting into a new business, I found it quite lonely. And there was, I remember being actually on a plane flying from one country to another, Brazil to Thailand or something. And seeing this, I think it was textiles or something like this san francisco incubator

or new york-based incubator where they were building companies and i was i was living the dream in many people's eyes in these hot countries with my laptop but something inside me was like missing yeah um community a sense of shared mission whatever it is i wondered i wondered if you you can relate to that in any way or totally i i found it actually quite lonely as well so in in some ways that was the point which was to step outside my comfort zone feel like i had to make new friends in new city but yeah i mean there was a good you know maybe five six months there in buenos aires where i felt like I didn't really know that many people. I was feeling kind of homesick.

Yeah, eventually I tried to, you know, go meet some local people like expats, like various hostels. And like, you know, by the time I left, I felt like I had a budding friend group and I liked it more, but it was lonely there for a while. You said you used that time to figure out what you wanted to do with your life

as if there's some kind of system there. Yeah, well, I don't know if there's a perfect system, but I mean, I read this book by Seth Godin called The Dip. Yeah, I don't know if you've read it, but, and it's funny, I went back to read it, like, many years later, and it's actually a relatively simple book, but at that moment, in that time, that's what I needed to hear. And it's kind of a very fairly simple idea, which is that, you know, what's the thing that you would still want to be doing 10 years from now, even if you hadn't seen a lot of success, because most things in life, you know, you start off, you're a beginner, you have a fast pace of learning. It's kind of fun. But then after you, after you're a beginner, there's this dip in the middle where you're not an expert. You're not one

of the best people in the world that you're probably not making money from it, but you're not a beginner anymore. And there's like this long slog to go through the middle, you know, put in your 10,000 hours. There's lots of various people have talked about this. So I was doing a variety of things at that time. I was, I was, as I mentioned, running that tutoring company, doing some real estate investing. I was like learning martial arts and like all the various things, traveling in Argentina. And I, and I basically sat down one day, I was like, what's this, what is the thing that I, 10 years from now, I'm still going to want to do this and be passionate about it. And even if I'm not successful at it, you know, cause I just love doing it.

And like the only thing I could like really write on my list was tech entrepreneurship. And so part, part of the point of that book is if is if you're not willing to go through the dip, then quit now because it's, you know, and so I was like, do I really want to be like doing great real estate investments 10 years from now? I was like, I don't actually love real estate investing. So maybe I should just stop doing that. Maybe I should stop doing this. And maybe so it was this very clarifying moment. OK, if I want to be a tech entrepreneur, cause I had been doing that in some way, shape or form for, you know, five, 10 years, I was pretty sure I'd be wanting to do it 10 years from now. I was like, why do I live in Buenos Aires? I should go to where the, the center of tech entrepreneurship of Silicon Valley, you know, that's happening all over the world. Now

Silicon Valley is kind of decentralized, but at that time, especially. So I kind of stopped doing everything else, moved to Silicon Valley and went all in on that. And then I think within maybe seven years of making that decision, Coinbase was valued at a billion dollars. Crazy. So it did really help clarify my ambitions. And I just put it all into one thing. That is atypical. There's going to be entrepreneurs in Buenos Aires listening to this that are bringing flights to San Francisco. But it could, it could be any, like if you really want to be an actor, you should probably go to Hollywood or something. Or if you really want to be in finance, maybe go

to London, New York or anyway, I think it's not so, I don't want to say like there's one geography for everything, but there is a clarifying thing that happens if you just say, this is what is the most important thing to me. And I'm just going to try to make luck, my own luck around that. It's so true. It's something that I don't think,

especially young people think about when they're deciding making career choices. Where to live is sometimes not as prioritized as much as like, which university has the best partying or who's offering me a job right now, as opposed to that long-term horizon of like, how do I surround myself with the most talent and opportunity and funding in the case of business and inspiration and enablers for this long-term vision I have. And I spent some time in San Francisco myself, about three years. And when I come back to the UK and when I go to other cities in the UK, I've never said this before, but I see how much of a disadvantage we have in philosophy, in ambition, in funding, in talent. And it's no

surprise that most of the great unicorns are emerging out of one city in the world. That then leads you to Airbnb somehow. Through, I think you take a job first, then eventually you take a job at Airbnb. Yes, exactly. Yeah, I joined a Y Combinator startup that was really cool, but it didn't really work out. There was a brief interlude there, but basically I decided,

okay, my tutoring company is not really working. I need to, and that's when I pivoted to that thing, which had a base hit. But what I decided, all right, I need to go to Silicon Valley. I kind of want to apply to Y Combinator. It's a startup incubator. But I wasn't able to get in.

And so I was like, let me go work at a Y Combinator company to sort of learn. And by the way, I also just needed to recharge a little bit because the tutoring company, I'd been living abroad. The tutoring company wasn't working. I was barely paying myself anything. So I was kind of broke. I was, I was also just exhausted, um, from the, the tutoring company, just not working after so many years of trying to get it to work. Um, and you know, I hadn't seen it double every year after that, that happened on the side. Um, and so I was like, great, let me take a job at a high growth company that seems to be well run,

actually make some money for a little bit here, save some money. And that's how I got to Airbnb. It's just, it had a really magnetic culture. Even at 40 people, they had, they were clearly onto something. It had, they had found product market fit. It was growing quickly. Um, and I learned a lot there. They had a really unique culture. Um, they, they were hiring differently. They were really like trying to raise the bar with every hire. You know, if it's not a hell yes, it's a no. They were, the way that they just did product reviews was really interesting. They had an important design component to it. If you think about now why Airbnb won in their market from what you got to see

inside their walls, what would you say? So you've talked about their hiring philosophy, which is very, very clear. But what else would you say? Well, the main thing, and I think that by the way, this is true of not just Airbnb, but a lot of startups was determination. They went through a period, everybody always looks back at these startups and they think, oh, it was a unicorn. Like it just, they found the thing and it worked. Airbnb is actually somewhat typical in this regard, which was, there was, I think at least, I think like a three-year period where they were just wandering in the desert. Any reasonable person would have stopped working on this idea. It was, it was a crazy idea. Like you're just, it was like couch surfing. You're going to let strangers stay on my couch. Like that's not a business. It's like just ripe

for lawsuits and, you know, and they were in like tons of credit card debt because they had like been trying to self-fund it. You know, they had launched several times and nobody was using it. Yeah, they should have quit. Like any reasonable person would have quit, but they didn't. They kept going and they were just, because getting marketplaces off the ground is very hard. You have this chicken and egg problem, supply and demand. So I actually think that's a common element in a lot of successful companies. There was a period where a normal person just would have quit and they went from setback to setback to setback with enthusiasm, somehow powering through it. So I learned that too. I hear a lot of entrepreneurs who have your same enthusiasm to be an entrepreneur. The enthusiasm you've expressed there when you leave Argentina and you come back, you just want to be an entrepreneur. You don't necessarily know what, or what industry, what problem you want to solve. And what, what always makes me feel a little bit

concerned is when an entrepreneur is so keen to be an entrepreneur that they'll just try and think of an idea. You took a time to go and get inspired, I guess, and to let the inspiration come to you. What's your view on that? There'll be people listening to this now that want to be an entrepreneur, but they don't have an idea. Yeah.

Okay, well, I mean, I was probably guilty of that too, where there was definitely a period of my life where I was like, I just want to be an entrepreneur. And I don't know, honestly, it was probably partly ego driven. It was partly my own like introvert way of saying, like, I just want to be able to have an impact. I wanted to feel like I had done something valuable because I didn't feel like valuable as a human myself. Like you can get into all the psychology of it. Right. It's a kind of a crazy thing, actually, to go say, like, I have to be an entrepreneur because,

you know, from if you just want to make money or something I have to be an entrepreneur because, you know, from an, if you just want to make money or something like it's from an expected value outcome, it's probably better just to like go to some early stage companies, invest some equity and like, or join Goldman Sachs or something. Right. Like, so to be truly want to be an entrepreneur, I guess you have to be, well, sometimes it's ego driven, but I think it's your, your chances of success go up dramatically if you're doing something because you're actually super passionate about it. economic freedom and just like, how do we empower people all over the world to, you know, have access to sound money and, um, like a decentralized open permit system where anybody can get access to the global financial system that really just like resonated with me. And so I think that really

helped Coinbase be successful because there were many times in our history as a company where, you know, like 20, uh, was it 2015, 2016, like the whole industry was down for three years. Everybody was pivoting to do blockchain, not Bitcoin. If you remember that every, like a lot of the competitors in space pivoted to make software for banks and stuff. And everybody looks back at that and like, wow, you know, Brian, you never lost faith and everything. For me, it was more, it was simple than that. I was just like, well, I don't really want to make software for banks. So like, if that's what this is all about now, I'd pretty much just going to shut it down and give the money back to investors. So I was just too stubborn. I was like, I got into this because I feel like

this is the way to create more freedom in the world. So that's what I'm going to keep doing, whether it works or not. So I think there is a really important element there. You have to be super into it for some reason that's bigger than just ego or trying to make money or whatever, because every company is just filled with setback after setback after setback. And you think you can power through it, but believe me when you're like three years in and like your co-founder quit and you got sued and you're broke. And like, um, the first three times you launched the product, nobody wants to use it and like everything sucks and you're feeling like a failure

and you're just going to give up because you're not actually doing it for like some bigger purpose. You're doing it because you wanted to feel important or something. So it actually is important to pick the thing that you're passionate about, yeah. You're doing it because you want to feel important

or something. We were talking about how part of this sort of introvert's dilemma is you can feel personal significance by creating something that has significance in the world. Zooming right to the end of the story, has that impact you've had on the world made you feel more personally significant?

Yeah, totally. Okay, so I think this is a really important topic because a lot of founders, it's stressful to run a company, right? So a lot of founders, if they do get to some level of success, they will often burn out, right? It shows up in weird ways, by the way. Some people gain a ton of weight. Some people lose a lot of weight. People deal with stress in all kinds of ways.

There's like founders I've met that get like addicted to prescription drugs or like, you know, all kinds of unhealthy things you can imagine. Right. So, um, I mean, you have to find a way to shift from like, if the thing that got you started in the first place was like fear, like fear of never being important or fear of never feeling fulfilled, you have to, at some point transition it. Once that hole is filled in your heart, I guess you have to transition to being motivated out of like joy or love or something more positive, not like running away from fear and anger. Or you're like, you're really angry at this, you know, your father or like the person who, um, you know, broke, like the co-founder who you almost was going to found with who decided they didn't want to, and you're pissed at them. So you're trying to show them up or whatever. Those aren't relevant to me, but I've heard other examples. Anyway, long way of saying you have to transition away

from fear and anger as your motivator to like joy and love and just find the thing you actually love doing in life. So for me, you know, that was like figuring out what is the kind of CEO role that I really want to have? Um, what's the thing that brings me joy? For me, it's like, I love building things with technology. I love learning new things. There are some parts of the CEO job, the typical CEO job, which, you know, lower my energy. They don't give me as much energy, right? There's like, you know, frankly, like people, I'm not the best people manager in the world, right? Like I used to have like 12 direct reports at the company and I was like so stressed.

And then now I have like four, right? And it's like, it's actually much easier for me to run the company with that. So there was a lot of things, ideas that I had in my head. I was like, well, the CEO has to do that. Obviously the CEO has to do that. And I sort of let go of some of those things over time. And I said, you know what?

I'm actually gonna focus on the things that I'm better at because they bring me joy. And I'm going to delegate a lot of the stuff which I thought I had to do. And that's actually made the company run a lot better. And it's kept me engaged in the job. Like I've been doing it 10 years and I hope I can do it another 10. And it's still fun because I've been able to delegate. Why do you have to make that transition away from fear and maybe insecurity, being the

motivator towards it being about joy and love? What's the cost if you don't? Well, I think if you don't, then once you hit some kind of level of success, whatever, however people count that, then you're not going to feel motivated anymore. And so you're just, you're going to be done. And, you know, you're going to go do whatever else you're going to do next. Like, I guess, become an investor or sit on the board, which there's nothing wrong with that either. But I just, part of me does wish that more founders were able to continue being founders and build the next thing and the next thing. I mean, we just met each other, barely know each other. But I'm guessing that you're finding a lot of fulfillment out of like running this podcast and you sort of you've you found some new level of

joy in doing that 100 so this is like your next founding moment but yeah i i think if you don't do it then you're just going to burn out and a lot of people i think who had some level of success as a founder they look back on it and they're like, well, man, I finally got that thing to some level of success and I sold the company or whatever, but I never want to do that again. Like, cause that it damn near killed me. And I was so stressed all the time. And so I've tried to make it, I need, I need to get it to a place where it's fun to run the company so that I can keep building companies for many, many decades. Hopefully that's my goal. You're describing me when you say that. So yeah, the company for seven years, but it felt like I was doing it involuntarily. It wasn't voluntary, meaningful struggle.

It was, I can't let this thing go down. I'm not enjoying it anymore, but I can't stop. And then at the point where I realized I could stop, I did immediately. In hindsight, the way around that would be to do a bunch of things involving how the company's structured and who owns it and who has control and all those things, but really trying to build a sustainable, as you describe it, like a sustainable life for me as a founder and for my team members. And that often

in Silicon Valley, when, especially when you're in high growth companies, sustainability in terms of culture is the last thing. How have you done that then? How have you tried to make it sustainable? You've talked about yourself, but how have you, how do you create a sustainable company? One that's built for 50 years or a hundred? Well, okay. So there's a lot of different elements to that. I mean, one of them is just the burnout factor with people. Let's, let's talk about that first. And then I'll come to like repeatable innovation. So from a burnout point of view, I mean, a few things that I do, for instance, cause obviously there's days where you have to like go hard and sprint. And then, but for instance, like every quarter I take a week off,

right? And I just have that pre-scheduled for the year. Cause if you just kind of wait, there's never a good time to do it. We actually tried an experiment this year where we're having, we call them recharge weeks. Everybody in the company is like taking a week off every quarter and they're doing it at the same time because sometimes if you're off, you're the only one who's taking a week off and then people are pinging you the whole time and whatever. I don't know if we'll keep doing it or not. It's an experiment, but by taking a week off every quarter, it allows me to kind of make sure that I recharge. I have time to go learn new things. And it often like sometimes, you know, I'm thinking about the business in some way, shape or form form, but that's helped make it sustainable.

Other things I've done, I've had a lot of executive coaches, different executive coaches. I have one now. There's different kinds of executive coaches. Some of them are very tactical with their advice, like their former CEOs. Others are basically therapists. Both are good and important versions to have. When I first heard that, I was like, oh, I don't want the therapist. I want like the tactical CEO coach.

But, you know, I've found the therapist part is almost even more valuable. Let's see what else. I mean, like I have I have this kind of like morning routine where like I've noticed that my days go. I'm a lot more stressed if I just like wake up. I look at my phone. You know, I haven't really like had any breakfast or exercise or anything. And like, you know, I'm like low blood sugar. I just, everything's pissing me off. I'm like irritable. Um, and so that's just a bad way to

wake up since now when I wake up, I basically don't look at my phone. You know, I try to like do the morning routine, you know, exercise, like, um, eat some breakfast, meditate, whatever. And then, okay, now I'll start my day and like try to do that. All these kinds of things help. And I think this is important for the whole company to some degree, because a lot of new employees, especially like new grads or younger folks, like they, they actually don't know about burnout. They'll, they'll actually, you can have unlimited vacation policy and tell people at the all hands meetings, whatever, like don't wait until it's too late, you know, take time off, but they won't do it.

Like sometimes I've seen, especially high achieving people, they push himself like too hard and they'll actually quit. And I'm like, why are you quitting? And they're like, I'm burned out. And I was like, well, why didn't you take any vacation the last two years? And they're like, I don't know. And they didn't feel like they had permission because everything was so important. And so we're almost like trying to force people to take a little bit of time off here and there. But we still have a pretty intense work environment at Coinbase. I'm trying to like, you know, amp it up like we should we should be going hard, but then take periods of rest and renewal and take rest like renewal very seriously. It's actually an important skill to learn.

So, OK, so that's kind of how to like, you know, go hard for the longterm, but don't burn out. Then I think companies also need to have repeatable innovation. So what that, to me, what that means is you can't just be, have like one product that finally works and then you scale it and it kind of the S curve tapers off. And then what do you do? I think companies need to continually have like a next act, you know, and ideally like a portfolio of products or different revenue lines so that while something is going down, another thing is going up. And we do this thing at Coinbase called 70-20-10 resource allocation. So like 70% of our resources go to the core business today that's making most of the money and it's at scale. 20% of our resources go to the core business today that's making most of the money and it's at scale. 20% of our resources go towards these adjacent bets

that are like an extension of the core. And 10% go to these venture bets, which are basically like kind of crazy ideas that have a higher chance of failure. But it's, so even in up markets, down markets, we're putting 10% of our resources towards crazy, you know, potentially big things that could work. They don't. And some of them don't. And that's allowed us to build this portfolio of products. And I think

that's important for the long term sustainability of companies because it always maintains this this startup culture, this founder mindset of like it. You know, it's it's always day one. You know, never let us become complacent, try to disrupt ourselves before somebody else does and just keep building the next thing and the next thing and the next thing. Like that's, that's what keeps the company exciting. That's how you extend the founding moment, right? Like, like Zuckerberg is trying to do that now with, with the metaverse instead of just being a social media company. And so if a company doesn't have like those continually stretch and try to build the next thing i think

it just becomes a little more complacent and like good people eventually leave and stuff like that every company wants that at least they say they do yeah but then they they set up incentive structures and policies that actually act as a deterrent for innovation they disincentivize people to innovate yeah so a question i get asked a lot when i'm on stage is you know you've ran an innovative company in an in an industry like social media which is changing all the time and the tricks and tips and algorithms are adjusting how do you get your teams to and how do you align incentives and how do you really make that philosophy and culture real where people are actually incentivized to take risks and to do those 10% bets that might end up being the next AWS or the next, you know, Kindle or whatever in the case of Amazon.

Yeah, you're right. So I think that it's the natural tendency of most orgs is to not allow that. And so you have to actually fight against it as a founder or CEO. If you have somebody within the org who is kind of entrepreneurial and they try something new and it doesn't work, you know, you have to make sure that that's not like a black mark on their career advancement, right? There's a difference between they had good execution towards the wrong idea

or they had the right idea but bad execution, right? If like, I think uh you know amazon that amazon example right is like they tried to launch their own phone at amazon right the fire phone and it was this big failure but my understanding internally was like they basically pushed it was the wrong idea but they had good execution and so they didn't they didn't like fire that team because the amazon phone failed they said okay the execution. And so they didn't, they didn't like fire that team because the Amazon phone failed. They said, okay, the execution was good. You shipped a phone in a pretty small amount of time. It was toward the wrong idea. Let's what next? And that, I think my understanding is that team actually became the Kindle team, which then was a very successful

product. So it's a tolerance for failure, recognize good execution, even if it's toward the wrong idea. You know, I think some of this has to come from the founder. I don't know. I don't know if there's any other way. Like the problem is if you look at public companies that have that are founder led, they actually like outperform the rest of the S&P 500. And one theory for why that is, is that the, like the scarcest thing inside big companies is actually risk tolerance. And so founders can kind of provide that. Now you can, if you can go too far with this, right. You, we know of founders who have too much risk tolerance and have kind of blown the place up, right. We work. Yeah, exactly. And then we also

know of companies that had, you know, like not enough risk tolerance. They had a professional CEO come in, you know, I don't want to criticize anybody, but like Steve Ballmer or someone would be a classic example. I'm sure he's a smart guy, right? But something happened there where they didn't have the risk tolerance. So I kind of view my job as like a founder CEO at this point is to ensure we have enough risk tolerance to try new ideas. And then I, and then I also want to pair myself with great operators like, like Emily Choi, our CEO and president. Right. And we have a really amazing executive team. So it's the combination of like great operator, but also great founder energy, which I think is a nice combination that creates good outcomes.

If you're too heavy on one or the other, sometimes it doesn't work as well. You read this, the white paper, Satoshi's famous Bitcoin white paper, pivotal moment for you, sparks interest and intrigue while you're at Airbnb. You do something which a lot of people ask me about as well, which is when you're in a job and you have a spark of inspiration, how do you do something which a lot of people ask me about as well which is when you're in a job and you have a spark of inspiration how do you do both you've got to pay the bills on one end but then you want to pursue this idea how did you do both because you stayed at airbnb while you started developing yeah what became coinbase yeah so basically i did it on nights and weekends people don't like that answer yeah it sounds toxic it required a lot of energy i mean i basically so so first of all you need to make sure that if you are currently employed like don't build it It sounds toxic. typically, at least in the US. I don't know what the rules are in other countries. If you build it on company time on the company hardware, the company probably owns the IP. So you need to make sure you're doing it on your own computer, not during hours. So anyway, I would

often work till like 7 p.m. or something like that. I'd come home, eat dinner or something like that. And then I would work from like 8 p.m. to midnight. I would do that maybe three or four days a week on weekdays. And then on the weekend, I'd work maybe like Sunday afternoon for like seven or eight hours. So I was probably doing like 20 hours a week or something like that on what would eventually become Coinbase in my personal time. And it was hard. It sucked. I mean, I was like tired after the full day of work. It's like 7 p.m. But this is where that some of that determination comes in. Right. And I was like, OK, well, my coworkers like going out drinking or whatever. And nothing wrong with that. I did a lot plenty of that. But like in my time at that moment, in that time, I was I was, you know, my late 20s. I was like,

I really want to try to build something important in the world. Like I'm going to have to take like my own determination and turn that into this fuel to go try to build this thing. So I probably did that for like a year, year and a half to try to build the prototype of what would become Coinbase. And then I applied to Y Combinator. They eventually accepted me and wrote me the initial seed check. That's what gave me the confidence to quit my job and go full time on it. How did you maintain friendships and those kind of meaningful personal relationships at that in that time when you're working full-time during the day and then coming home and writing code where's the you know where's the time for friends and girlfriends and yeah i was pretty intense about it i i would say

i sacrificed uh friendships for it i mean it's not like i wasn't like you know um just like never responding to people but people would ping me like hey can you come out and this thing and i was like actually i remember it's a funny memory one time this guy who i really like um from work he was he's like come out to this thing we're going to this club or something and i think i literally wrote back to him i'm changing the world one line of code at a time can't hang out he's like rock on i love it um so you know i was joking or whatever i never tried that with my mom yeah yeah so you know i think i've seen this happen to various people like they get to a certain point in their life and like god damn it i'm gonna, can I swear on this program?

Of course you can. Okay. So anyway, there comes a time I've seen this happen to various people in their life. Something triggers it. Sometimes it's like, it's an age thing. They're like turning a certain age where they always thought they would have more done by then. Or they, you know, a certain, maybe someone in their family passes away and they're like,

oh my God, like time is finite. It's precious. And something happens where they're like, I'm not going to fuck around anymore. Like I'm going to get this done no matter the cost. And they just start really buckling down. They find this source of energy. And so, you know, find whatever that is for you, like the listener out there and and then go hard at it. You know, finish your book, like launch your thing,

whatever it is, the app, the startup, just start doing stuff. Like, and even if you don't even know what to do, just do anything because, you know, action will produce information. Actually, so you're just reminding me, there was a precursor to Coinbase, which was this app that I built with my friend,

which we were trying to figure out how Bitcoin works. And we built that. And the minute we shipped it, I was like, it's built wrong. And I knew the architecture was wrong. And then I knew what to do next. And so oftentimes you don't even know what to do. Just do anything and it'll help you get to the right thing. Action leads to information.

Yeah, action produces information. I've never heard that before. I stole that from Paul Graham, I think, who started Y Com commentator yeah it's so true and i will steal that from you so if you hear that in the future and without credit then you know where it's come from at that time what were you trying to build you'd read that white paper you launched that first step then after that first step you launched what were you trying to build what was the vision yeah so this was 2000 um i guess it was like 2010 timeframe. And you how old? I guess I was like 29. Yeah, something like that. So what I was trying to do, I had read

the Bitcoin white paper and I was like, okay, this is a decentralized protocol for money or something. And my thought in my head at that time was, well, there's been other decentralized protocols, like email is a decentralized protocol. You know, Git is a tool that developers use for version control. And so for email, people didn't really run their own email servers. They'd use a hosted email service like Gmail or forget they'd use a hosted service like GitHub. Right. So my thought was, OK, here's a new decentralized protocol. People are going to need like a GitHub or a Gmail type thing that does all the security and the backups for you. And it works on mobile and the web. And I was like, someone's going to build a company doing that. That would be a kind of a hard company to run because you're

going to be storing all this Bitcoin. People are going to want to hack it. And like, that's not like a weekend project. That's like a really serious responsibility. And I was had that idea in the back of my head and somehow I couldn't get it out of my head and so I just sort of started tinkering with... I wasn't even really just saying I was going to build a company yet. I was more like, I don't know, let me just try building a prototype of this to see what if, again, action produces information. And so that was the original idea.

It was like a hosted Bitcoin wallet instead of running one on your own computer. With a node and everything, which was complicated at the time. And when you told people this idea, what was their reaction? Because you would have had to tell a lot of people that you were building this thing with this thing called Bitcoin on a other thing which they wouldn't have understood either. Yeah. So people didn't get it at all.

I talked to some of my smartest friends about it and they were like, I don't really get this Bitcoin thing. It sounds like a scam, honestly, right? So that was not reassuring. And then I went to a couple of Bitcoin meetups, people who were really into Bitcoin. And I was like, yeah, I'm building like a hosted Bitcoin wallet,

like Gmail for email. And I remember one of these people was like, that's a terrible idea because all the people who've tried to do that, they get hacked and they lose all the customer funds. And so like, you should to do that, they get hacked and they lose all the customer funds. And so you should never do that, right? So I didn't get a lot of positive feedback.

Everybody I talked to actually thought the idea was a bad idea. Even when I had gone through Y Combinator and I was trying to raise money, I would say for every 10 meetings I did with investors, I got nine no's and one kind of, I guess like small yes. So, and that's always tough. Like fundraising is always tough, but you know, if you go to these people who you believe are like really smart people and 90% of them are telling, you know, that's like the, that's

like the best case scenario in my experience. Um, you know, the worst case scenario is a hundred percent of them tell, you know, so, but either way, it's like 90, 90% of the people telling, you know, you have to be really kind of willing to, um, not get discouraged by that. You had a co-founder for a couple of weeks during that Y Combinator process, right? Yeah. I heard that in applying for Y Combinator, you wanted to have a co-founder, you met someone quickly, and then it didn't last more than like four weeks or something? Yeah, exactly.

Yeah, so I was looking for a co-founder at that time, and Ben Reeves had created this really good app called blockchain.info at the time. Now it's blockchain.com. So I reached out to him. We didn't really know each other that well. We ended up applying to Y Combinator and sort of did this like shotgun wedding thing,

but it didn't work out. And it was like, we were about to start the program and we basically decided to part ways. So it's funny, in an alternate universe, blockchain.com and Coinbase would have been the same company. That's funny. But anyway, it obviously worked out well for both of us. Did you have self-doubt at that point?

For sure. Oh man, I was filled with self-doubt, yeah. I thought that, first of all, I thought maybe I was crazy because all my friends who I talked about this idea thought it was a bad idea. The thing that gave me a glimmer of hope was that Y Combinator decided to give me this 150 K seed check. And I really respected Y Combinator. Um, so that gave me a big shot of confidence, but you know, before that it was like, it was very touch and go. I mean, I was like, well, my, my co-founder thing didn't work out.

I don't know. Like, I'm just going to try my best here. But like this, I was like, this has like a pretty high chance of failure. What did your parents think? OK, so my parents have always people who worked at like big companies like their whole life. And I don't know if they ever really got the whole entrepreneurship thing that I was so into. When I called to tell them that I was quitting Airbnb to go start this company, they were kind of like, okay, well, we support you. We love you. Are you going to have any health insurance? That's what my mom asked, I think.

And so I think they were kind of afraid that I was doing something really stupid and reckless is my guess, but they ultimately trusted me and supported it. Probably with a lot of doubts is my guess. On that point of co-founders, I read that you eventually sort of interviewed 50 odd co-founders to try and find the right one for what would become Coinbase. What were you looking for for and what was in hindsight what advice would you give me because that's another question i get asked a lot is how do you find a co-founder and yeah so yeah i was looking for a co-founder at that time desperately and i was i'd go on these like co-founder dates you know we'd meet somebody see how it goes there they'd pitch you your their startup idea i'd tell them about mine and maybe go on a second date or

third date so none of these seemed to like really click. And I guess I was looking for someone to get really excited about my idea, but also somebody who I felt was really complimentary to me in terms of like, pushed me to think bigger and stuff like that I hadn't thought about before. And, you know, I wanted to leave feeling energized

and that I'd learned something and they were good compliment. And so I got kind of disillusioned because a number of these went on and on and on. And I couldn't, I couldn't find anybody that I really liked to join this thing. So eventually I just got fed up. And I was like, all right, you know what? I'm just going to do this thing on my own and like, and get it off the ground. And lo and behold, once I started to show some signs of progress, you know, like getting through Y Combinator, raising a seed check, getting the product. I put the prototype out there on like Reddit and the right person reached out to me.

And so anyway, I tell people that story because I think it's an important lesson, which is basically if you don't have the right co-founder, just keep making progress. And signs of success may cause the right person to find you. It needs to be public signs of success. It the right person to find you. It needs to be public signs of success. It's almost like putting out the bat signal. Like if you have like half of an idea, you can't just like be talking to your friends about it. You got to put it out on a blog post or like a prototype or get something out there in the world on Twitter or whatever, because then the other person might be out there and they won't know to find you and reach out unless you put out the bat signal.

So that's also really good dating advice. You said if you don't have a co-founder, just keep making progress and putting it out there. I guess it's true. Like in terms of people. Fitness and, you know, health and self-development. Figure out yourself. Yeah, exactly.

And you become a magnet as opposed to having to be a peacock. That's true. So, and that's much more valuable. When I think about your first tutoring company, there was that pivotal moment where you removed the payment and just kind of got out the way. And that was pivotal to the company exploding. Yeah. When you think about those early years, what was the significant step that unlocked the growth in your view? Yeah. So there was a significant moment like that with Coinbase too, because oftentimes, by the way, the first version of a product you put out, it doesn't work. In fact, that's the only thing I've ever seen happen in startups. I've never seen a startup that the very first version of their product actually worked. Sometimes in hindsight, people like to tell that story, but I think in reality, it's very rare so for us or for really it was just me initially and then it was fred urson and i

co-founding it um the first version was this hosted bitcoin wallet and so we had i posted on reddit some people would sign up but nobody would stick around and use the product so in y commentary they teach you this great thing which is don't spend your time you know like going to conferences and like trying to raise money it's like if you don't have product market fit yet talk to your customers and then improve the product based on their feedback. And then talk to your customers and improve the product. Talk to customers, improve the product. There's really only two things you should be doing in the early stage, talking to your customers and improving the product. Sounds like simple advice, but people spend so much time doing other stuff

that's actually not real work. So taking this advice, I emailed, you know, 10 of the people or so who had signed up for the product and never come back. And I said, hey, I created this app. Like, I'd love to get on the phone with you and just talk to you about it for a minute. So I remember I got on the phone with some of these people and one of them, one of them was like, you know, what do you think about the app? He's like, well, I kind of, I kind of like it, but I don't have any Bitcoin. So I just didn't come back. And I remember thinking, well, if there had been an easy way to get Bitcoin into your wallet, like a buy button or something, like, would you have stuck around and used it? He's like, yeah, probably. And so I was like, OK, let me go try to make a

simple buy button. So when people sign up, they can actually get some Bitcoin into their wallet. And it turned out that was a very hard thing to do. You had to get these bank partnerships. I had to figure out money transmission licenses. And I won't bore you with all the details. There was a lot of, you know, making things work somehow behind the scenes. But the minute that we launched at that time, I think Fred Ersum had just joined. We launched that buy button. It started to grow every day organically with no marketing or anything. And that was the minute I felt like we finally had product market fit. Over the next, let's say five, so that's 2012 roughly? Yeah. 2012. Over the next five years up until the point where Fred departs, that growth is

pretty crazy, right? For Coinbase? Yeah. I mean, it started growing organically. And we had a very good problem at that point, which was that we were basically every time someone clicked the buy button, we had to use our own capital to acquire the Bitcoin at that right at that price. So we didn't have some exposure to it going up or down. And then we would initiate a debit to their bank account. And two or three business days later, we'd get the funds. So we had basically had a working capital issue. Like we were using our own corporate funds to buy the crypto and then getting their money, the payment from the customer. And the numbers started to go

up and up and up. And I think we had raised like 600K at that time. And we were using like 550K to service the day-to-day buying on the site. And so we realized quite quickly, we're like, okay, we need to go out and raise money. And that was a good story to raise money was, hey, this thing is growing so fast that we're going to be turning away business if we don't raise some money. That's a good story to go raise money. As opposed to, you know, the numbers are kind of flat. We haven't really got it working yet. So I think it was very important that we found product market fit. Only when we couldn't scale, then we went out to raise capital what mistakes did you make as a

company in those first five years that you in hindsight go damn that's a that's a key learning yes i think if i were to go back and do it again there's a few things i might have done that would have helped it be more get to get there even more efficiently i mean one is that we actually never wrote down like the mission of the company or the values of the company early on and we were doing it all organically we were basically just hiring interviewing every single person who would join and we managed to create this really interesting culture but it was a little bit um it wasn't very deliberate it was just it happened kind of accidentally because we were just choosing

the people that we wanted to work with and we really surprised us and we're really bright in those high growth moments there's so things keep breaking yeah and processes actually need to adopt when you get as you'll know from when you go from a couple of people to then 50 to then 100 to then so just thinking if there's any advice you have for me someone i've grown a business but not in not in such a a high growth way and not in such an interesting um uncharted uncharted industry. Um, eventually your, your co-founder Fred departs. What was that like emotionally? Because I can't imagine the thought of my co-founder parting in year five. It would almost make me feel, honestly, it would have made me feel like

they were part of the reason I was doing this. Yeah. You know, that bond and that we're in this together. So how did that feel emotionally? I mean, it was awful. I cried, you know? So yeah. So I think here's the whole story. So I think really Fred, Fred was an amazing co-founder and we were building all this great stuff together. He's really a natural leader. Right. And so I was the CEO of the company, but there was times where, you know, I think he felt like he was being held back. He really kind of wanted to run his own thing at a certain point. And we were almost kind of like running it jointly at various places and at various times. And so I tried my best to like keep him engaged. And I was like, all right, why don't you go do all the external facing stuff? And what's the thing that would really excite you? Like, you know, he did a

lot of the fundraising, like he was really representing the company in the way, you know, the, the titles didn't matter. Um, but ultimately I think he really did want to run his own thing. And so he was very clear with me. He, he, we talked about it basically over the period of like a year or so, um, with an exec coach and all this. And one of the things that I think I'm most proud of is that he and I are still like really good friends, probably best friends to this day. Whereas a lot of co-founders, when someone does leave, there's a blow up.

And it's like, I think we both realized at a certain point, it was like, actually the more important thing to preserve here is the friendship. And so he was great about it. He was like, I want to make sure the company is in a good place. It doesn't need to happen.

There's nothing soon here happening, but I do eventually want to transition. So over a period of a year, we talked about it. And then when he finally told me he was ready, I cried. It did feel like, you know, I was losing kind of half the company, the founding moment of it. And I remember, so then we had to go in front of the company

and deliver the news. Oh man. So we talked to the board and everything like that first, but I remember the day we had to go tell front of the company and tell deliver the news oh man so um we talked to the board and everything like that too first but we went i remember the day we had to go tell the company and you know i i wasn't normally i wasn't getting nervous talking to the company like you know first company's two people and then it's five then it's 10 and then it's 50 then it's 100 200 so you sort of get to build up your tolerance and like okay i could go talk to the company of 150 people or something but this time i had to go up there and and like, OK, I could go talk to the company of 150 people or something.

But this time I had to go up there and tell them the co-founder was leaving. And I remember I went up in front of the company and my voice cracked like I was like a 14 year old, 13 year old, whatever. And then my my leg was like shaking. You know, sometimes you get like enough adrenaline if you're like you're nervous that you're like you're in a way like, oh oh my god it's so embarrassing like i had to like walk behind the podium so nobody could see my leg shaking and my voice is cracking and i'm like god i'm fucking i'm messing this up you know like because i'm supposed to be projecting confidence and like no it's not a big deal we're gonna get through this and i'm just like coming across like this prepubescent kid you know um so everybody of course is like kind of shocked and they could people were like i could

tell you were really scared brian i was like shit okay i didn't really announce that very well um and of course like you know 48 hours went by like everybody freaked out and then it was like 48 hours later it was like all right let's get back to work you know and of course it wasn't as bad as i thought but yeah that was a really scary moment. And then basically I had to transition from running the company with like, all right, Fred and I, let's get in a room and decide it to, okay, let's actually build an executive team around me to have a more like professionally run company, if you will. So it ended up being like sort of a second founding moment of the company. And I realized this later, actually companies have many founding moments and you can just keep building.

What situation was the company in now, again, in hindsight at that stage? Because I heard in 2017, things were a little bit messy and you'd brought in this executive team to kind of help you, you know, solve some of those problems. But when, at the point when Fred left, what was the state of the company? So he left it as the market was swinging up and that was conscious on his part. He wanted to make sure it didn't harm the company as he left.

So yeah, the challenge after that was like, okay, go build an exec team. And a lot of founders have gone through this. It's quite hard. So if the company is growing 50% a year or something, you can oftentimes promote people from within who are kind of learning on the job and just take on more and more responsibility.

We, in these, crypto is so volatile. It'll go through like 500% growth in one year and then negative 100% the next year. And it's like, so I felt like I was in over my head, like all these junior people who had joined early on, we were all in over our head. We were like, so we basically went out to seek more experienced executives to come in.

And that was in itself, its own crazy process with lots of learnings. Because whenever you bring in a bunch of high powered executives, you know, sometimes you get people who butt heads, right. And it's hard when like taking a new team, they have to build trust. And oftentimes the team is often like kind of dysfunctional until

like they go through enough together. So we had some good blowups there. Um, there was some executives like left or were fired. And like, um, you know, I had to like basically learn how to work with more seasoned executives and people who had run massive things before. And, you know, I guess one lesson I learned from that, and this is kind of personal to me, there's different people find different things that work for them. But, you know, I realized I wanted to work with people who were not just really brilliant, but like also really humble because I'm not really like a combative person by nature. Like some people, some companies have this culture where they love to hash things out and debate it. And like, that's, that's like a really good conversation where like, you kind of get into it and you're like, you know, but I'm,

I'm more of like, I want to think about what you said and like come back and more collaborative. So I'm not really, I'm a little bit conflict averse. So anyway, I started hiring more for like people who are bright, but humble, collaborative. I mean, the risk of that, by the way, is you can get into a little bit of like a yes person culture where everyone's afraid to disagree or something. That's also not good. But it took me a couple iterations to kind of find my style there. And now it's working great like the exec team is super um competent and high trust and collaborative um and i think it's like a it gives us a lot of benefits as a company because there's like basically no bs politics stuff it's just like we're just getting work done have each other's back and we have you have to constantly tend that

and nurture it like with these exec offsites and stuff but yeah there were some learning pains there when when crypto went through that first well not the first but that real that sort of with these exec offsides and stuff. But yeah, there were some learning pains there. When crypto went through that first, well, not the first, but that real, that sort of 2017 bull run where everything was going up, how were you feeling as the CEO of Coinbase? Coinbase is exploding. I remember that's when I first downloaded Coinbase

and became a Coinbase customer. How were you feeling as CEO in terms of optimism for how long that moment was going to last? Did you have a suspicion that in 2018, I Like there was, you know, I remember I'd go to some events and it was like, everybody was coming in, launching some ICO and, um, people would like come over and like, want to take selfies with me and then like post the stuff on Twitter. And like almost implying I was like endorsing the project. And then, um, I remember like weird stuff happened. Like I was living in this apartment building in San Francisco and this guy who like worked in the building came to me one day and he's like, this package arrived for you, sir. And, uh, sir, I just have this question, like which crypto should I buy? And I

was like, I don't, I don't, this is getting really weird. Like I don't, I don't give any investment advice or whatever. And, um, yeah, so basically it started attracting in like people who were just trying to get rich quick or scams and all this stuff. And so, yeah, I started walking around with like a security guard. We had like some over-exuberant customers. It was weird. Tell me about that because I was thinking we've had some FinTech CEOs here

that have built disruptor banks out in Europe. So Monzo, Starling Bank, et cetera, even Klarna, I guess that's not a bank, but Klarna, the CEO of Sebastian here as well. Security is not something that most CEOs have to think about. But when you're dealing with money, as Tom told me from Monzo, you get a lot of unhappy people because you're, you know, sometimes you have to freeze funds and things like that. Yeah. Well, okay. So I think, I mean, if at a certain size of company,

it's almost inevitable for every CEO. It's not just, it's just not just money, but I do think that we probably started a little earlier because, um, because it was crypto is money. Um, and yeah, I mean, it's, it's also just a law of numbers. Like if you're running an enterprise, a SaaS, a B2B business, something like that, you might have thousands of customers or maybe a hundred thousand or something. But if you're running a very popular consumer app

and you get into the millions or, you know, Coinbase has like maybe like a hundred million verified users now. If you just think about it statistically, I mean, you know, like, like one in a hundred people in society has some form of schizophrenia, right? Maybe one, one out of 10 of those, like, so one out of a thousand people in society has a form of mental illness. That's just like, you know, could be potentially dangerous or they can become obsessed with things irrationally or whatever. And so if you have 100 million customers,

like there's going to be enough people. It's part of it is just like a law of large numbers. But, you know, I don't want to overstate it. Like it's not, I don't, it's not like a huge burden on my life. I feel safe and I'm able to keep functioning and stuff like that. Yeah.

Another thing most CEOs don't have to contend with is building a business in such a volatile market. So when in 2018, the market comes crashing down, the crypto market comes crashing down. Talk to me about what leadership lessons you learned through that. What I can only imagine as being a pretty awful period. Yeah, so 2018, everything was coming down off that high of 2017. And I had been through a couple cycles like this, but each one was getting bigger and bigger. And it was tough.

I mean, in the following, I think, year or so after that crash, I think we might have had like 25% of the company leave or something, right? Really? Yeah. So there was a lot of attrition. There were people who had joined and they thought, hey, this is a rocket ship. It's only going one way. And then when it was down and lots of negative news headlines come along, you know, the news

always focuses on things that are not always, but often focuses on things that are too short term. When it's going up, they're like, this is your genius and your future. Everything's the future. And then when it's down there, like this is never going to, it's failed. And neither one is true, right? Like reality, you have to zoom out to kind of look at reality. But one thing I realized was that I felt this overwhelming pressure as CEO was like, oh shoot, like every, every week I've got to get in front of the company and like put on a good face and like create some sense of optimism, right?

The reality was I was kind of feeling shitty about it too. And so it was a little inauthentic for me to go up there and try to just be super positive or something. And so one leadership lesson I learned during that moment is that great leaders are often vulnerable. And so it's actually a much more powerful leadership style, I think, to just go up there and say how you actually feel, which you might be able to go, you might go up there and say something like, I feel like shit today, you know, like this thing's down, like this person quit, whatever it is. Now it helps if you, if you can then use that as a moment to like bring the team together. And it's not like you have to solve all the problems as CEO. It's like, we use a lot of we language, right? It's like,

I don't know how you're feeling. I feel like this, that that's going to take a little bit of the tension out of the room. Cause they're all probably feeling it too. And they're like, okay, great. This guy's like not a robot. He like kind of gets it too. And it's like, okay, so what can we do about it? Like, well, we all need to figure out how to solve X. X is a pretty big problem right now. We all need to figure out how to solve Y. So what can we do about it? Like, well, we all need to figure out how to solve X. X is a pretty big problem right now. We all need to figure out how to solve Y. So what are we going to do? Like this week, I'm going to host this meeting

with so-and-so in this group. And like, we're going to come, I want you to all bring your best ideas about how we're going to solve X. We're going to pick one and we're going to go double down on it, right? So now it's like you're turning this authenticity, this candor and you're making everybody

a part of this solution. It's not like, hey, everybody look to Brian, like he's got all the answers, you know, this like Messiah complex or whatever. Like, no, it's like the strength comes from the team. It's not just like me trying to carry the whole weight of the world on my shoulders or something. So that was a good leadership lesson for me.

How would you deal, you've been through, you know, these crypto winters and your company got so big that it went public. And then when you become a public company and you're almost seen as the poster child of the space in many respects, at least that's always been my view of Coinbase. There's been many, many exchanges, but the number one one, the one that's the famous one, the poster child is Coinbase, the pressure and the scrutiny and the headlines and the fake news and all of it that you must be, have thrown at you. And then all the, you know, the internal problems of just running a business anyway. How are you dealing with your emotions? Yeah. Okay. Wow. Deep question. So let's see. I think. Because you're human.

Yeah, of course. OK, so I think one of the most important things I totally didn't realize this before starting a company, but it turns out one of the most important things, skill sets to kind of develop as a CEO of a startup is that. You have to be willing to ignore a lot of noise, both positive and negative, right? Because if people on the way up are telling you how brilliant you are and you kind of get caught up in like going to the speaker circuit and like, you know, then you're going to fall even harder when they turn on you. And then everybody either gets built up or taken down and it's just driving headlines, right? So you kind of can't believe it on the way up because then you won't believe it on the way down either. I totally

didn't realize that by starting a company, I thought most people would generally be rooting for you. And, you know, but there's people out there rooting for you to fail, which is a weird thing. They're kind of dealing with their own maybe stuff about success or I don't know what it is. But you have to learn how to just tune all that out. So I mean, like, frankly, I just don't don't read like a lot of news anymore. I kind of think of it like sugar. It's addictive. And can you consume it in small quantities responsibly and like eat a couple bites of dessert or something like, yes. But you have to be really careful because basically the kind of anger, fear, outrage, whatever, you know, is an addictive thing. By the way, it's not just mainstream media,

like social media has some challenges with this too, right? I think it's actually a little hypocritical, like mainstream media is always criticizing social media for misinformation. And it's like, it's pot calling the kettle black or whatever. It's like the same thing happening there. So I literally try not to read it a lot of this stuff. Um, so once then, once you developed your own sort of psychology about it, now you have to insulate the team from it because they'll, they'll go after your team. And, um, so you need to kind of continually be preaching this to the team about like, you know, be an independent thinker, right? Go develop your own source of truth, like by going to the root of it, like don't, don't be listening to mainstream media or social media, whatever, when things are up or down, you have to curate, you have to use that stuff in moderation, like, like sugar or something.

It's not actually, they're, they're trying to sell their own product. And one of my friends has this great saying, it's like only a half truth can go viral. Like if it's, you know, that triggering or whatever, that's like, oh, like it goes all around the world. It's half true at best. And so you have to remember that whenever you see anything out there.

What are the things that still penetrate all of that resilience though there's because there's things in even me that i i i understand all of that um as i was saying to you before we start recording i became a dragon in dragon's den so i got much more scrutiny than i've ever got from headlines i'd read about my family that i don't have my girlfriend i'd done this that you'd think i was running guantanamo bay the way that they described my former business, all these things. And although I knew I was resilient and although I knew everything you've said, and I put these processes in place where I don't see notifications, someone tweets me, I probably don't even see it. It doesn't come up. Never read the replies. Yeah. I don't have

them on. I turned off all notifications too. That's, that's a really good one. Like, but what pierces you still? still? What still moves your mood? So there's something every year, at least, that it's the next level that it's going to test you, right? And, you know, oh, man, what was it? Most recently, there was like, I don't even know if this was real or if this was like short sellers like putting fake information out there.

But there was some like petition that some some employees put together or something and like i saw your response yeah i got irritated by it and i like wrote some stuff on twitter about it but that that that bugged me for a bit because it was like um okay like you're gonna attack the executives like it's not even their fault like you know whatever blame me so um i'm trying to think what there's always something new it's like you know a lot of blame me. So I'm trying to think what, there's always something new. It's like, you know, a lot of people probably would be okay with, oh, there's some, somebody saying something stupid on Twitter or whatever, but they really respect X, you know, maybe it's like the New York times or something or whatever. Right. And they're like, well, that's, that's

like a, and so then you get your first like negative article, like that has false information in it, in the New York times. And then you're like, well, that just shattered my reality of like, even that could happen. Like, so man, and there's like, what else is like not accurate in the New York times or pick, pick any other, you know, Fox news, like whatever, you know, even one of the ones that really got to me was, um, I always felt like, okay, we have these kind of people who are upset with us outside of the company, but the company is one team. Like we're all, and then when I started to see, like, sometimes there were people in the company kind of turning on each other. I was like, man, that, that one really bugged me. Right. So think about, um, if you think about companies that have gotten to really big scale,

it makes all your problems look small by comparison. Okay. Like, like look at Mark Zuckerberg, right? I mean, the amount of negative news coming out on that guy on a daily basis. Right. Um, I think that, I think like the Russian government, like just put him on some like, um, list of like sanctioned people or something. Like there's people of tons of death threats, you know, like, um, there's, there's always another level it can get to that's just like, anyway, I, I, what I've realized about a lot of people who I think are building important things in the world is that they've developed this like high disagreeableness muscle where they've recognized like they're not going

to make everybody happy and they've made peace with it. Right. So they realize at a certain point, like whether I do the thing that I think everyone's going to like or everything that is more authentic to me, someone's going to be pissed no matter what. So at the end of the day, I'm just going to do the thing that I think is the right thing. And they've leaned more into authenticity instead of trying to say what they think people want to hear and that does require you to have some amount of thick skin some kind of high disagreeableness and then they can actually do even more interesting stuff because they're they're being themselves instead of trying to be liked my success and my building my personal brand and getting millions of followers online it scratched that itch in an unhealthy way that we described earlier it kind of made me feel

it gave me external validation which felt like it was filling me up it's probably sugar or something and then the problem is if you if you were that type of person when you when you do reach that height you get more public scrutiny it matters more to you because validation was your driving force this whole time yeah so is there an element of that with you? Because you are an introvert that wanted to have significant, be significant because of that early upbringing, that it might be psychologically more difficult to deal with because significance and fitting in, I guess, was so paramount to your initial motivation.

Totally, yeah. I mean, it can be very addictive also just to be liked and and the adulation and everything so the minute something starts to happen that you realize people aren't going to like you for your temptation is to try to preserve it now you have something to lose like i'm gonna lose these followers or i'm gonna you know um whatever it doesn't it doesn't even matter, but it always feels serious at the time. So I definitely had to grow through that. I don't know. I think I'm still growing through that. I would like to get to a place where, you know, you don't want to, you don't want to become like

isolated to a place where you're not listening to anybody. Cause that's also really bad. So you, you do want to, you need people who can keep you grounded, like your, your family, like your friends, whatever. And people who around you who will tell you when you're being an idiot or you're just wrong. And so like, you don't ever want to get to a place where I listened to nobody. Right. But a lot of people, you want to be around people who have your best interest at heart that listen to them or people who've already done what you're trying to do it. Like, listen, that's good advice. But a lot of the people who are just trying to take shots at you to build their own whatever in life, you need to build the ability to ignore them. And it's a real superpower to like care less what other people think. At least people who don't have your best interest at heart.

Having worked in social media over the last 10 years, I maybe in my seventh or eighth year noticed a really interesting thing that happened. Organizations, as Endelman say when their trust reports were once black boxes which is the reputation of the organization the image was written on the outside of the black box of the organization by the marketing department of pr we moved into this world where then our glass boxes the world can see inside all of your employees have smartphones and they can take pictures and write reviews and and so organizations now um had to. And one of the things that I've seen, just as an observation, is CEOs being out there in the public eye, overly out there in the public eye. I'm thinking Elon. And the antithesis of that might be Zuckerberg, who basically hid for 10 years.

And the media shaped him as a soulless data-stealing robot. And then you've got Elon, because he's smoking weed on jerogans podcast you can say whatever you like about him i think i know him right i have my own reference point and my point here is about transparency and even doing things like this for me i don't know how you feel about this but for me if i was running a big organization i'd be doing a lot to make sure that the public had their own reference point of who i am how does does that all sit with you? Because that seems to be the only defense against the media writing your narrative. Yeah. So I've thought about this a lot and I'm not sure I have the perfect answer, but so I think there's a spectrum. So on one side of the spectrum, like you said, you can actually, Zuckerberg is somewhere in the

middle to me, but to be truly isolated, I think like Larry Page, for instance, he was very reclusive almost never gave interviews right elon is kind of out there doing a lot more interviews and he's just like literally says whatever he thinks i think you know right on twitter did you see zuckerberg's 2019 facebook post which one he did the post i think was 2019 maybe 2017 that sounds better 2017 he did a post saying that he's basically hidden away for that whole period of time. And his New Year's resolution was to come out of his bunker. So he did a period of hiding out and like, yeah, yeah.

So, I mean, I think a lot of CEOs struggle with this because, you know, I think a lot of people realize like it sucks to be famous. So, you know, when I was a kid, I would hear people say that or something. I'd be like, yeah, whatever, easier for you to say. But there's a lot of downsides, right? I mean, people in the media or publicity can be like this, this cruel beast, right?

If you feed it, it just wants more and more and more. So I think there are advantages to having a public profile. Like it helps you recruit people. If someone attacks the company, you have your own direct audience to like get the, the, the message out the truth. So there's definitely like benefits. And then there's drawbacks because now, you know, maybe your kids need security or whatever, or just, um, you know, someone's going to come up to you in a restaurant when you're trying to have a thing with your family or whatever. So there's real downsides to it. Um, I think for me, I'm trying to find this

reasonable middle ground where like I turned down 95 percent of media. I really want to talk to people like that are doing what new media, right, like like this, like podcasts or or YouTube or really just have conversations with people that I think are interesting and I like, that get messages out in sort of unique ways. And I like having some amount of following if I ever need to set the record on something. But I don't want to become famous, actually. I'd rather, if I could avoid that, I would prefer it. I think it's sort of an acceptable negative of building something interesting in the world, but it's not actually a positive.

Interesting. And one of the things you talked about was that, who knows whether it was real or not. There was a, I want to give context to the listeners who don't follow you and might not have seen that. There was something written up that said internally an employee was petitioning to have someone else

removed internally whether it's true or not we don't know it was taken down um you responded to that on twitter yeah you also said to me that you were in a bit of a bad mood when you responded to that on twitter yeah how do you feel in hindsight about all of that and did you did you learn anything about company culture or changes that needed to be made or give me your reflections on that yeah so you never know if you're doing the right thing right um one argument would be that there's just unnecessary i could have ignored it and um there's people who never even saw it and there was and they read my tweets and they're like oh what's going on and now i gave even more attention to it right yeah um on the flip side there was a bunch of people who reached out to me.

There was very positive. It was like, I'm glad you're just, you know, saying it like it is. It's like it shows who you really, what you really care about. And you're basically communicating to the rest of employees. Like if you're unhappy about something, like there's a right forum to do that internally. It's not, this is harming the company. And so you're, anyway, a lot of people liked it. Some people didn't like it at all.

So did I do the right thing? I have no idea. I'm just like making this up as I go. And I kind of like try things and I see how they go. One thing I will say is that something that's polarizing is not, that doesn't make it the wrong thing to do. What makes it to me the right thing to do, the wrong thing to do is whether it was authentically true. So I don't know how I would do it again next time. I guess

maybe I would do it with a cool head and see if it still felt authentic and then go from there. Polarizing. Another thing that when people talk about company culture, people give, people that I've been around point to Coinbase as an example of is you coming out and saying that Coinbase wouldn't tolerate politics and other divisive topics being discussed on company channels in the workplace. This is a big...

I've had conversations this week with my companies where they've talked about Coinbase and the example you've set because of things that have happened over the last couple of weeks in politics around in America. Tell me why you made that decision

because I once upon a time when we had Brexit in this company allowed my office to get overrun with anti-Brexit flags. And I actually regret that because a week later, an employee pulled me aside and said, I'm actually pro-Brexit.

And the whole week I felt like the office wasn't a safe place for me to exist.. Yeah. So you, you set out a stance, which I've not, I saw you do it first. I'm not sure if any other companies have done it, but publicly you were the first to say no politics at work. Yeah. Yeah. I mean, I think other companies are doing variations of that. So it's not entirely original, but yeah, I did put it out in a way that was public and got a lot of attention. So I don't know, I don't know what to say about it. I think it's it started. It starts from a very good place, which is people want to have a safe space at work. They want to have a place where they can just be just very divided and people are upset with each other all day instead of like working towards the common mission that we all kind of signed up for. They're actually just upset with each other and arguing over things which we don't really have very much impact over, like bigger, broader societal issues outside of our mission. This is not just Coinbase. This is happening broadly across a lot of tech and all companies, really.

It's not just even a tech thing. It is more pronounced certain places in the world. It's not a broad thing geographically. It's very pronounced in some cities, especially in the US, but I guess probably somewhat here as well. So not as much. Yeah, I remember our Ireland office,

like there were some people who messaged me during all that and they're like what is you just said like we're going to work on work do work at work like what's what's so controversial they didn't it didn't make any sense um so it was it was largely a thing that happened i think in the bay area in the u.s and a couple other cities like maybe brooklyn portland places like that but um look i i don't you know in some ways i'd rather coinbase was like known for our product innovation and stuff. This is a weird one because like we've actually been pretty, become kind of well known for this stance and others have emulated it. But the thing that really made me finally get the

courage to do it because I didn't really want to make a public stance about this or whatever. I just wanted everybody to get back to work. But the reason I did it was that I felt like I had been a bad leader. Basically, I had let this kind of misunderstanding accumulate inside the organization where people thought that it was okay to like come to work and just debate endlessly these things or like at the Q&A that we would host every week or two, there would be a lot of questions that were not about our product or the regulators or the future of the company. It would be about like these broader societal issues. And these kind of these brush fires kept erupting in Slack channels and things. And so, oh, and I think I reached a place where I was like, I don't think I really want to be the CEO of this company if like this is what the CEO job entails is kind of like getting put

on the spot with like these crazy difficult sidle questions every week. I kind of want to just build cool stuff with technology and work on our mission. And so I actually contemplated briefly. I was like, am I the one who's like just not suited for this job? And maybe this is how companies are run now. And a bunch of, I talked to a bunch of friends of mine and people and they were like, no, like if, if that's how you feel, there's probably a bunch of other people in the company who also feel that way. And like, you started this company, you don't need to go, they need to go. And so it was, I realized I was like,

either I'm going to resign or they're going to need to resign. And so at that point I was like, all right, they need to resign. So we made an exit package available. Like I clarified the stance of the company, 5% of the employees opted into that package and left. And then after that,

it felt like the company was much more aligned and we were all able to move towards the mission. So it was cool to see some companies emulate it afterwards. And there's probably a less dramatic way to do it, you know, if you kind of said it that way from the beginning. But yeah, that's where we are. One of the things that I really wanted to ask you about, because from reading your blog post, you have a very clear strategy and perspective on this and I also see this in hindsight as being the single most important thing that I ever had the responsibility of doing and getting right which is hiring people um I I fucked up for the first three years I hired

inexperienced people that were cheap and that I felt I could manage because I was 21 or 20 so I hired a bunch of you like you want a job you want a job you want a director, director of this. Yeah. My biggest mistake. I only learned when I hired someone good and I saw the net impact they had and the fact that good people then hired good people. What advice would you give to people that are hiring now and how important do you consider hiring to be? Super important. I mean, actually in Coinbase's values, the number one value is top talent in every seat because it really everything in the company comes back to people. Like if you want to have a big impact, you need to have generate a bunch of revenue and profit. If you want good revenue

and profit, you make good products. If you make good products, you have to have good people to build them. So it's actually everything comes back to people. So, yeah, I mean, it's interesting to hear that you learned that lesson the hard way. I've hiring is super hard. Sometimes the only way to learn a lesson is to actually go make the mistake and do it. But the mistake that a lot of startups make, I think, is that they hire too fast. They treat the absence of any negatives as a reason to hire, whereas it should be not just the absence of negatives, but a hell yes. Meaning like I learned something from this person. They they're way better than me at something at least. You know, I left the interview with more energy than when I went in. I, you know, you can de-risk a lot of early hiring also by just having people come in and like try

working together for a week or two. Interviews are actually really kind of a low signal thing. You have to get real. Some people are actually really kind of a low signal thing. You have to get real, some people are great interviewers, like maybe 5% of people can really assess someone in an interview. Most people aren't that good at it naturally. And so you can basically use references or what we did in the early days of Coinbase,

we actually just had people try working with us for like a week or two. A lot of people can't do that because they have an existing job, but some people can. And you'll know within a week or two, like this person basically delivered a bunch of stuff. They got a bunch of stuff done that was useful and helped move the ball forward. Or they didn't. Like it needed me or someone else to come in and edit their work or curate it. And like, it's not to oversimplify it, but basically

like if the person can get a lot of stuff done that advances the mission, then you want them on the team. And if they can't, you shouldn't have them on the team. And that's basically what makes great companies is like, you have a bunch of people aligned toward a big impactful mission who can actually get a lot of stuff done every week. And, um, you know, you share some values in common and then everything else, they can be quirky and weird and different. And like from every background and walk of life and like everything else can be different but if you have those pieces right they get a lot of stuff done towards the mission and they're aligned then you got a good company you said about growing too

fast i saw you post recently that you'd grown the company too fast over the last couple of years and that you were having to cut back about 18 of the workforce yeah emotionally in those moments you those moments, you know, the statements where you were very transparent, you were very honest, you didn't have to publish that to the entire world, but you did. Emotionally, what are those moments like? Does it get any easier for you to cut back the workforce when you signaled in the memo that you take responsibility for that as well? Like you weren't skirting blame or anything. Yeah. So there's always something challenging every year that like really puts you out, puts you outside of your comfort zone. And that's part of what I like about running a company is like you're constantly learning.

So, so this year that was one of the things was like, we had never done a layoff before. I had never done one. And yeah, it did kind of suck to look back and say, I actually made the mistake. You know, we were everything, everything crypto was so up and up and up last year that it felt irresponsible not to keep hiring more people because we had like lines out our door, you know, virtually of like customers trying to sign up like institutional clients and new products and competitors and all these different markets. And we were like, we're just being reckless and irrational not to keep building the company with all this revenue we're generating. And so, but I think we found the breaking point.

And basically if you kind of more than double a company in a year, you're really going to start to see a lot of stuff break. The culture erodes, decision-making is unclear, communication channels break down. And so we definitely like exceeded that threshold last year in 2021. And early this year, we were on a pace to kind of keep growing too quickly. So, you know, it really kind of is a bad feeling to look at a problem and say, oh, I made a mistake. But the only worst thing that is to like bury your head in the sand and pretend that you didn't make a mistake because you don't want to admit it or whatever. And so facing reality while it was deeply unpleasant and it was really unpleasant for the people that

parted ways with the company, it was the right thing to do that. Now we have the ability to kind of learn how to operate really efficiently at this new size, 5,000 people, still a lot, get a ton done with that. And we got the cost structure to a place where we know that we can not only have enough cash, but like really thrive in this recession we're all going through at this point. And whether that lasts one year or three years or four years, whatever, we're now, we've set the company up to ensure that it has a better chance of accomplishing the mission long-term. So in a way, although it was a super hard decision and it was tough for a lot of people involved, it made me feel good that we did the right thing.

This is an interesting question that I just had when I was just thinking then. Because of this, you know, from my perspective, I'd call that stress. Sometimes stress is great, but there's a lot of volatility in the markets and those tough decisions. If you view happiness as like a concoction of,

as like a recipe, and there's lots of ingredients that go into making us happy. What ingredients in your happiness recipe do you think you need more of? Like today, personally, for me? Oh, wow. I mean, so I think, this is getting very personal.

I think, you know, people are get happy with like health, wealth, relationships, things like that. If you don't have your health, it's hard to really be happy. You can't really do anything. You don't need to be wealthy, but you need to have some level of security where you're like, I'm not worried about like being hungry tomorrow or something. Right. And then relationships account for a lot of happiness. I think, um, family, like romantic leave, personal friendships. So, um, I mean, it's kind of, it's, I'm like almost 40 and I think I'm thinking at some point I won't have kids. So that's probably like, that's probably an area, but otherwise I think,

yeah, I feel quite happy about relationships in my life. Um, personally, professionally, romantically, all that stuff. So yeah, I didn't think you were going to go there, but yeah, there you go. I feel the same way. I've had, I've not had enough balance in my life. So my big next chapter is, um, allocating enough time to my girlfriend and being, I said it on stage today, being a dad and those things and prioritizing that knowing the importance of it even though i can't track it it's not revenue so yeah we have a closing tradition on this podcast where the last guest leaves a question for the next guest they don't know who they're writing it for okay um their

question was what is the belief that you hold that most people disagree with you on? Give you some time. Well, I mean, one kind of contrarian view that I have that I think most people would disagree with is that I think a lot of regulation is well-intentioned and it actually causes more harm than good.