Brian Armstrong: Coinbase’s Failed NFT Launch, Thoughts on SBF & FTX, Crypto Winter | 20VC #946

1. 0:00 – 3:35

   What are you running from/towards?

   1. HSHarry Stebbings0:00

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

   2. BABrian Armstrong0:04

      Yeah. Thanks, Harry.

   3. HSHarry Stebbings0:06

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

   4. BABrian Armstrong0:27

      Mm-hmm. Yeah, well, I- I'm glad you're starting off right with the, the therapy session here. Um, you know-

   5. HSHarry Stebbings0:33

      (laughs)

   6. BABrian Armstrong0:33

      ... actually, not joke, all joking aside, I think there is a lot of psychology and therapy involved in starting a company. Um, so it's a, it's a really good question. I mean, look, I think a lot of people start off in their career, um, running from something. And I'll tell you what it was in my case. I think, you know, I was always a shy and introverted kid, and I had this fear of... It was a couple things. I felt like, you know, people didn't listen to me. They didn't maybe like... I ha- I, I felt like I have such good ideas, but I'm not like confident, I'm not articulate, and I couldn't get people to like hear my ideas. And then I think I had this like deep fear about never doing something important in my life. And I don't even know, really know exactly where that came from, but I, I was like, "I'm gonna, I'm gonna gosh darn do..." Can I, can I swear on this program? I don't know. I, I was like-

   7. HSHarry Stebbings1:16

      Yeah, yeah.

   8. BABrian Armstrong1:17

      ... "I'm gonna, I'm gonna fucking go do something great here or die trying." You know? And I, I had this real like desire to... Uh, maybe it was like a status thing or an imp- sense of importance. I just, I didn't feel important or worthwhile, like on my, you know, w- you know, on my own, which is like a deep kind of psychological thing. And then I would say that as people kind of... Oftentimes in a, in a entrepreneur's life, you, um, you grow, you see a little bit of success, and then what happens is the thing that was motivating you, which was probably like fear or anger or, you know, whatever, shame, initially, kind of starts to, uh, go away a little bit, maybe it's not 100%, and so you start to lose your motivation. And a lot of, I've seen a lot of entrepreneurs kind of go through this existential moment of crisis after they start to lose the, the initial thing that was driving them, like fear or anger, and then they have to move towards, you know, something that brings them actual joy or love or just that they're actually passionate about. And so I kind of had my own moment of that somewhere along the last 10 years, um, where I started to think, all right, what do I actually like doing now that Coinbase has been, you know, a billion dollar valuation or whatever, whatever goal I had in my mind. And I was like, okay, well, I love building things with technology. Like that's probably my favorite thing to do. If even if I was alone in a cabin in the woods for like a decade, you know, and I had no human contact, I'd probably just be building things. I don't know what I'd be doing, with wood and an axe or, um, you know, like building a garden or a road or a tree house, or like I'd be doing something and trying to make fire or whatever. And then the other thing I love doing is, is learning new things. So I'm always like curious, I'm trying to absorb new knowledge, and being a company CEO is always pushing you outside your comfort zone into new areas. And then I guess the last thing I just, I love is it makes me feel good to try to do things at scale that have an impact on, on like the big meta problems of the world. And so, you know, if I see like, oh, we went from a million people are using this to 10 million or something, it just gives me a high. I don't know why. It kind of, it gets me excited about, oh my gosh, like we can have even more impact. And some people, they don't have that. They're, they're very content having an impact with, you know, a classroom of 30 kids or maybe just helping one person that they're mentoring or whatever, and I, and they find that incredibly fulfilling, and I think that's great. For me, I couldn't, I don't get the same feeling unless I'm trying to do something at scale that has like a major impact on the world. So that's a little bit about my journey.

   9. HSHarry Stebbings3:33

      Can I ask? I'm with you.

2. 3:35 – 7:23

   Do you still feel fulfillment when you hit your goals?

   1. HSHarry Stebbings3:35

      The trouble is you never get off the treadmill.

   2. BABrian Armstrong3:37

      Yeah.

   3. HSHarry Stebbings3:37

      And what I mean by that is you get to 10 million users, or I don't know, you know, Coinbase obviously has, you know, many, many, many more. I mean, I obviously read, you know, Superbowl, it was 20 million people, you know, hitting Coinbase website. Like the scale is enormous. But then I, like I know you, Brian, like I'm probably the same. Well, what about next quarter? What about ne- what about the next month? And you never-

   4. BABrian Armstrong3:57

      Yeah.

   5. HSHarry Stebbings3:57

      ... actually sit with the happiness. Do you ever get off the treadmill, and do you worry about that?

   6. BABrian Armstrong4:02

      Yeah. So I have definitely thought about that 'cause I'm not somebody who's really good at celebrating. Um, I don't... When... Usually by the time I accomplish some goal that I've set, maybe I've worked on it for years, by the time I actually hit it, I'm usually don't, not even thinking about it. I'm like, 'cause, you know, by the time you're at like 60%, 70%, you're like, "Oh my gosh, the, I can see where this is going. Like it's gonna, it's gonna get there in the next six months or a year, just if, even if I did nothing." 'Cause the, a lot of the hard work is upfront. And so it's not like I have some kind of moment of like, "Oh my gosh, it feels so good and I hit the goal." Like honestly, I don't really feel that, but I do feel like a deep sense of fulfillment, I would say, just about if I look at where, you know, where I was 10 years ago or where I am now or a year ago, and I was like, "Okay, I feel like I'm making progress. I'm doing something good in the world." And then, you know, by the way, like obviously I take time to kind of do other things in life besides work, right? Like I, you know, (laughs) I, I work with my partner and family and friends and like just have fun. But I, I think if I wasn't working on something hard and really difficult, I wouldn't feel as fulfilled. I've tried going on vacation, you know, (laughs) and for, um, you know, after like two or three or four days, I'm just like, this is, this... I need to go read something. I need to learn something. I need to build something. Um, so it's almost like an addiction. I, I actually, I have th- I've had this thought before. I, I have no like evidence to back this up, but, um-

   7. HSHarry Stebbings5:24

      (laughs)

   8. BABrian Armstrong5:24

      ... I almost feel like some successful people, they, you know, people have all kinds of addictions, right? Social media and drugs and like various things. I happen to be addicted... yeah, soda. (laughs) Um, I happen to be addicted to building things and scaling them. Um, and sometimes, you know, I'll overdo it and I'm like, "Oh my God," like, "I haven't taken a day off in, like however long or whatever," and I'm like, "I do- I really need to balance." I'm almost over- overdoing it. So it's, it's like a form of like (laughs) addiction that I think is sort of positive for the world, hopefully. (laughs) Um, but yeah, everything, you know, look, I, I constantly go back and forth between...... look, you should have more balance in your life, and, you know, you don't have to ... What's the point of all this crazy stuff? Maybe you should have kids and," you know, I'm working on that too. Um, but then the other part of me is like, "You know what? Whatever, never stop." You know, if I find it fulfilling, I'd rather just keep building things and do that for the next, you know, 50 years or more, hopefully, if we get longevity stuff working. So, um, I, you know, I hope that ... If- if you can make work f- like, your- your career fun, you'll never work a day in your life. So it's getting ... Oftentimes when it- when it does work, it's getting to a place where, you know, I'm traveling to something ostensibly for work, but I'm having fun at the same time. I'm meeting with friends, people I haven't seen in a long time. I'll go on a hike, I'll go to dinner with interesting people. Um, you know, I think, like, Jeff Bezos had this term one time where he talked about n- it's not work-life balance, it's work-life harmony. And I personally feel that. Like, if I go somewhere for a week with nothing to do but sit on the beach, I- I find it to be, and go to museums and stuff, I find it to be, like, not that fun. But if I go to something like, oh, I mean, uh, like, I'm gonna be in Tokyo, you know, later this year or whatever, for- for work, we have an office there, and, um, you know, I can meet interesting people there and see friends that I haven't seen and having great food and ... But it's- I'm doing work mostly during the day. So that's my- that's my current approach.

   9. HSHarry Stebbings7:18

      Uh, there's so many things that I wanna unpack there, which is why I'm so glad we ignore schedules. But like you mentioned, like, you know,

3. 7:23 – 8:52

   How to celebrate milestones without creating apathy

   1. HSHarry Stebbings7:23

      celebrating milestones that you hit. A hard thing that I have now with, uh, you know, uh, 1/100 of the team that you have, is like when you hit milestones, I want the team to be happy and I want them to celebrate them, but it's just a milestone that's been hit, back to work like 10 minutes later, guys. This is not something to ... How do you create good culture when we hit milestones, but also not create apathy that like, "Yay, milestone hit, and we can have a break now"?

   2. BABrian Armstrong7:50

      Well, okay, so I mean, just as a general answer, I would say, you know, nobody is good at everything, so that's part of being a CEO, is complimentering- complimenting yourself with people around you that are good at the stuff you're not good at. So some CEOs are really good at celebrating, I'm not, so I have people around me who are better at it (laughs) and on the exec team and like Emily, our president and COO, and- and- and various people on the people org and whatnot. So, and we also kind of defer a lot of it to managers and leaders of various products and organizations, right? Like, they all have budgets to kind of go do stuff. And, um, you know, I might be like the awkward person who like shows up for half an hour at like the massive social event, uh, 'cause I'm a little more introverted, but like, you know, I'll show up, make an appearance, but I'll let them do their thing. And like if people wanna, you know, celebrate until 2:00 AM or whatever, you know, it's probably better for the CEO to step out, um, (laughs) before things get too wild at the party. But, um-

   3. HSHarry Stebbings8:38

      (laughs) .

   4. BABrian Armstrong8:38

      ... yeah, tha- that's sort of been my approach.

   5. HSHarry Stebbings8:41

      You- you mentioned the addiction element there, and, you know, I- I've definitely had that, (laughs) you know, in- in work and not work. Um, e- there- there's also always lows with addiction, a- and kind of rock

4. 8:52 – 14:25

   When was rock bottom for Coinbase?

   1. HSHarry Stebbings8:52

      bottom. When you look back on the Coinbase journey, we see the documentary now, you know, we see it on Hulu, we see it on Amazon Prime, I think it's often humanizing for entrepreneurs to also hear, like, the not so easy times. Applying that to addiction, what- what were the rock bottom times in the journey with Coinbase that you viscerally remember?

   2. BABrian Armstrong9:10

      Yeah. So, I mean, uh, I'm glad you mentioned the documentary, we can chat more about it later. But, um, I do think it does, the documentary does a good job of highlighting the ups and downs of what it's actually like to build a company and to run a company. And so, part of the reason why I wanted to create that documentary was to sort of pull back the curtain and show people the good, bad, and the ugly, and show that it's not like we're not geniuses and we're not bad people, we're just regular people trying to build something good in the world. And, you know, you can have quirky characters and you have flaws and you make mistakes. You know, some of those that we're ... we talk about in the documentary a little bit, um, but some of the ones that come to mind, there was, um, you know, there was, uh, the Neutrino acquisition we did, which was, um, a complete ... You know, it ha- it- it basically created this whole social media campaign to delete Coinbase, there was like a hashtag trending. Um, and we talk about that stressful moment. There, um-

   3. HSHarry Stebbings9:57

      That was al-

   4. BABrian Armstrong9:57

      Tha- that was actually a moment where I happened to be in Hawaii trying to have a vacation. And what was funny, the whole thing blew up and everybody started calling me like, "Brian, you need to get ho- you need to fly back here, like, you know, later today. Like, this is an emergency." (laughs) And like ... Anyway, that was like a kind of a comical thing, whenever you go on vacation, sometimes things blow up. Um-

   5. HSHarry Stebbings10:14

      Pause on that. How did you deal with that as a leader? That is really stressful when you see "Delete Coinbase." It's, uh, you know, I've chat Emil Meikel from Uber, and obviously there was "Delete Uber." This is not an easy time. How did you deal with that as a leader?

   6. BABrian Armstrong10:27

      Yeah. Um, (laughs) okay, well, you know, one thing I've tried to figure out over time is that there's real emergencies and then there's a lot of fake emergencies. And so, a lot of times people will be calling you, you know, and, or they wanna meet with you and, as CEO, and they're really spun up on something, and they're like, "This is an emergency," right? And you have to kind of get good at determining (laughs) what's a real emergency, what's a fake emergency. Um, I'm probably a little bit too calm in these moments, almost to a fault. Like, there's certainly times where, um ... This is actually probably one of my weaknesses, like the, you know, cl- conventional CEO advice is like, you know, if there's ever something that's going viral and it's like scaring everyone, and, um, the ... You need to be out there immediately in front of, you know, the public and go on CNBC or like whatever, you know, the news show is, and restore confidence, right? And my ... What's weird is that I, in these moments, you know, there's that- that old saying about like, "A lie can get halfway around the truth of, or halfway around the world before the truth has a chance to put their shoes on." Um, sometimes I see these things like, you know, you're just going about your regular day, you're trying to build things, you're trying to meet with people, (laughs) you're trying to hire people, and then like some misinformation or whatever will just like go viral around the whole world, like while you're in a bunch of meetings or something. You pop out of these meetings and you feel like, "Oh my gosh," like, "the whole world is, uh, gone, uh, gone crazy. Okay, so what are we gonna do?" And, um, you know, you s- uh, I- I'm a- my default, almost to a fault, is like,... I am- I, I don't really feel any pressure to get out there with some kind of quick statement before we've actually figured out what are the facts, what do we wanna do about it. And I think, you know, the con- the, the way to synthesize these two ideas is you can put out a holding statement, right? So, uh, in co- this is, like, part of the value of, like, a great head of comms inside a company, is they can d- craft this piece and get, help you get to ground truth. But they can put out a statement, the holding statement, and say, "We're aware of the issue. We're looking into it. We'll have an update for you by X." Like, you know, 12 hours from now or tomorrow or whatever. And so everybody can just kinda calm down. They can take a breath. They're like, okay, they're aware of the problem. We're gonna hear what's, what they're thinking, you know? And then it gives you some time to go figure out ground truth. And it's surprisingly hard to figure out ground truth sometimes, because you, you pull a bunch of people into this meeting and you're like, "Why did we do this? What, you know, why did we write it that way?" And, you know, whenever the CEO pulls a bunch of people into a meeting, you can imagine people are a little nervous, right?

   7. HSHarry Stebbings12:53

      (laughs)

   8. BABrian Armstrong12:53

      And they're like, "Oh my God, this thing is trending on Twitter. You know, Brian's gonna come in and fire somebody." And I, I ... frankly, I've never done that once in my whole life. I've never fired somebody in anger in the moment, right? Like, we, we do, we evaluate people's performance over multiple quarters and things like that. But for some re- you know, it's human nature. There, there's s- so you'll oftentimes get somebody in a room, and it's h- you, you try to calm them down, and you're like, "I'm not ... this is not a blame thing. You know, no one's upset here. We're just trying to figure out what happened so we can kinda respond." And when people are triggered, they'll give you these r- "No, like, we looked. We tr- we definitely did this. We d- we checked that. We checked Y, we checked Z, and here's why we did it." And, you know, oftentimes I'll find out later, like, the story was a little more nuanced. And so I always am kinda trying to listen for, all right, but forget all that. Like, what's the piece that we could have done better? Because sometimes that's what, like, the, the world wants to hear externally. Th- they don't wanna hear all your excuses, like, you know, "Oh, we, no we thought of that, or we did this." And you know, they just wanna hear, like, "Okay, here's the part that we could have done better, and here's the part, by the way, that's misinformation." And just, if you've, if it, if it is true, the world seems to, like, believe it (laughs) and they'll go back to focusing on something else. And if you try to, like, you know, put some corporate PR speak in there about how you didn't actually mess up, um, then they'll basically ... it'll just make the mob even angrier. So, um, anyway-

   9. HSHarry Stebbings14:11

      So, I'm d-

   10. BABrian Armstrong14:11

       Yeah.

   11. HSHarry Stebbings14:11

       ... I'm, I'm so sorry. I've got to ask. You said there about real emergency, fake emergency.

   12. BABrian Armstrong14:15

       Yeah.

   13. HSHarry Stebbings14:15

       I spoke to Emily before the show, and she gave me some crackers. And so I'm gonna blame her for all of them, okay?

   14. BABrian Armstrong14:21

       Okay. (laughs)

   15. HSHarry Stebbings14:22

       Uh, (laughs) so she ... and, uh, so I'm gonna see if ... which one's a real emergency and which

5. 14:25 – 16:55

   Why didn’t Coinbase NFTs work?

   1. HSHarry Stebbings14:25

      one's a fake emergency. The NFT, um, platform launch that obviously didn't work, this was her. I blame her entirely.

   2. BABrian Armstrong14:33

      (laughs)

   3. HSHarry Stebbings14:33

      Um, uh, (laughs) like, was that a real emergency or a fake emergency? And why, in your mind, did it not work?

   4. BABrian Armstrong14:41

      Well, tha- so that wasn't an emergency in the sense of it just wasn't something urgent. Um, you know, sometimes you put out a product and you could have launched it better, but that's just like, "Okay, well, we have, you know, the next three months to kinda continue improving it, or the next three years or whatever." With the NFT launch, I think the thing that we should have done better was, um, we made a classic mistake, which is never kind of over-hype a product before you put it out there. Um, 'cause the v- the v- the version one of every product sucks, you know? I've never seen a single product in tech I've ever launched or seen anybody else (laughs) launch in their career where the, the V1, you know, didn't kinda suck. And so, um, you never wanna, like, ship, you know, ship vaporware or hype up vaporware. Like, so we, we made a mistake, which w- we started talking about th- the product and putting out screenshots ahead of time, so people's expectations were high, and like all V1 products, it wasn't, like, fully what, what they were expecting. So they were a little disappointed, but I think that's fine. It doesn't deter us. We actually have a good strategy there of, uh ... you know, like, we're basically integrating it natively into our app, just to make it easier. We're, we're aggregating listings from all the different, um, NFT marketplaces out there. So, um, you know, basically, you should be able to ... people are already buying their crypto on Coinbase. If it's ... instead of, like, having to move it to a self-custodial Chrome extension and then using another marketplace, um, you know, if you can just basically ... you've bought it and your stuff's already in Coinbase, you might as well just view the listings aggregated of all the exch- you know, the different marketplaces out there, click, click the buy button, and it's, and it's done. So we're trying to just make crypto easier to use, and NFT marketplaces are no exception. And I think that's, that's gonna be a multiyear journey for us, and we'll ... I think NFTs will come back in the next cycle. So that, that one's fine. It's not a ... that's not a real emergency.

   5. HSHarry Stebbings16:16

      When you broke the internet, um, which I totally agreed with, uh, w- you know what I'm talking about here, (laughs) um, with the politicization of leadership and that statement, real emergency, fake emergency?

   6. BABrian Armstrong16:29

      Well, that was a real emergency, but it was, um, self- it was self-induced. Uh, we, I mean, we knew it was gonna cause all hell to break loose when we put out that statement. Um-

   7. HSHarry Stebbings16:38

      Did you?

   8. BABrian Armstrong16:39

      Yeah, for sure. I mean, it's like a third, it's a third rail, hot button issue. We spent, you know, uh, I don't know, probably about a month ahead of that time just, like, drafting it, talking with the board, talking with different leaders internally. People were very nervous. Um, and some people even really begged

6. 16:55 – 18:53

   The Time Brian Broke the Internet

   1. BABrian Armstrong16:55

      me not to post it, but I was like, "I think it's the right thing. We have to do it," 'cause we're not ... we weren't aligned internally about being apolitical, and we had a small vocal percentage of the company just kind of, who thought we should be engaging in all these social issues. So it, it was a major distraction internally. That was kind of like a slow-rolling, um, emergency. It wasn't like ... well, there was a single moment where the employee walkout happened, but after that, everybody came back to work. And then it was just kind of like a s- it was like a, in the background noise, something was, like, um, dr- you know, slowing down our progress and we weren't aligned. So I knew I had to fix it eventually, and that's when we worked up the courage, put out the blog post. But you know, the- these are like ... this is just, like, um, big decisions to make in a company. That's not, like, a true emergency. I mean, the emergencies are typically like, you know, the whole, th- the whole site is down, and not just for, like, a few minutes, but, um, some kind of crazy, you know, tech debt, migration, whatever thing happened, and you need to go in and go investigate with a team. And it's like, if, if you're down multiple days or something like that, you've got ... that's a, that's a five alarm fire. Like, you need to go, uh, however many, I don't know how many alarms there's the maximum. Probably five, 10, whatever. (laughs) But you know, that, that's like, that's a true emergency, right? or if, I don't know, um, some crazy misinformation, um, is floating around, like, um, there w- like, earlier this, in 20 ... was it 20-... yeah, I think it was earlier this year, there was, like, a bunch of bankruptcy fears that were running around or whatever. And I probably shouldn't even say the B word. Everybody freaks out when, when CEOs say the B word. But, um, there, there was a bunch of that, that thing went all around the world. Th- that was, like, a true emergency, and it, just so much misinformation out there. But, um, yeah.

   2. HSHarry Stebbings18:33

      Do, do you want-

   3. BABrian Armstrong18:33

      I don't know. Those are true emergencies.

   4. HSHarry Stebbings18:35

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

7. 18:53 – 21:52

   Brian's Framework for Decision Making

   1. HSHarry Stebbings18:53

      it's an immediate decision. That's my framework. Do you have frameworks for making these decisions?

   2. BABrian Armstrong18:58

      Yeah. Um, well, so I'll tell you early on at Coinbase, and then what we sort of have now. So, you know, early on when we were a startup, um, actually this, there's a great scene about this in the documentary (laughs) where, um, Olaf, one of the early employees, he would... I would sort of be plugged in with my headphones, like, trying to code the app, like, for five hours a day. So people were sort of instructed, "Don't bother Brian while he's, you know, jacked in or whatever." Um, but if there was some major bug on the site, you know, Olaf had this system he developed where he was like, "Is it, is the potential loss, you know, four figures, five figures, six figures, seven figures?" And so he would sort of run up to my desk if, and it was like this, and he was instructed sort of, "Don't come up to me unless it's more than, like, $100,000 or something that we might lose." And so he'd come up with a Post-it Note and be like, "Potential loss, you know, $2 million." And I'd be like, "Okay, I'm taking off my headphones. Let's go" (laughs) -

   3. HSHarry Stebbings19:48

      (laughs)

   4. BABrian Armstrong19:48

      "Let's go deal with it." So that's, we just did simple things like that early on. But as you get to be a bigger company, um, I mean, for one th- we have, like, our whole risk framework. We have, like, a risk appetite statement. Um, we have, you know, various signature authority policies about who in the company can decide to spend how much, and why and when, and, um, where we're, where we're willing to take higher risk, where we're willing to take lower risk. Um, we also use a decision-making framework called Rapid, um, R-A-P-I-D, which Bain developed. And, um, it's r- I have found it to be pretty helpful. As, as an organization gets to be more than, I don't know, 500 people where you just can't really keep track of who everyone is and what they're doing, and you don't want the CEO or the exec team to become a bottleneck. So you do have to push decision-making down in the org and get clear about what decisions they can make and what they can't. And rapids are good ways to do that, because they basically help you identify, like, who's gonna be the decider and, and then who's giving input (clears throat) . Which sounds like a simple thing, but often in big companies, you'll get these, like, kind of, um, vetocracies of there's like seven people, 10 people involved in this thing, and each one of them thinks they can veto or whatever if they don't agree. And then you, you basically end up having a committee, de facto committee, which slows things down. So you need to get really clear about defining, okay, there's gonna be one directly responsible individual to make this decision. Who is it? You try to often push that down in the org. And then you can have input from all the relevant parties. They write their input in the document so you make sure everybody feels heard. It provides a good paper trail where, like, three months later when someone's like, "What did we decide again?" you can go back to the document. Or three, you know, three years later, you're like, "Why did we decide to do that stupid thing?" You can go back and read the document and what did, what did everybody think? How did we reach that decision? So it's, it's, that's been a great tool to formalize our decision-making.

   5. HSHarry Stebbings21:30

      You, you mentioned that kind of, that the size of the company also, you know, you said post-500, obviously Coinbase is much larger, but you're also a public company now. And I spoke to a lot of your ambassadors before the show, and they, they, they mentioned this and I wanted to ask, do you enjoy being a public company CEO? Um, don't worry, it's just us. Um (laughs) .

   6. BABrian Armstrong21:49

      (laughs)

   7. HSHarry Stebbings21:49

      And, uh, and is there any elements that are, like, super

8. 21:52 – 25:30

   Pros and Cons of Going Public

   1. HSHarry Stebbings21:52

      surprising about it?

   2. BABrian Armstrong21:54

      Yeah. Okay, so this was a big question for me before Coinbase went public and I wanted to go figure out, do I even wanna be a public company CEO?

   3. HSHarry Stebbings22:01

      Yeah.

   4. BABrian Armstrong22:01

      Because I, I had sort of heard rumors about this, but it was never the highest priority for me as I was trying to build. First you have to make a company that, you know, even has the potential to go public. So what I did was I went and I talked to a bunch of CEOs before, uh, going public about, some of them were people who had gone public and they were public company CEOs, uh, founder CEOs. Others were people who decided to hand off the company and, you know, have a professional CEO come in or something like that, and, or, or just to stay private indefinitely. Um, and so I kind of got a good s- you know, different set of options. And I, and I personally decided I wanted to become a public CEO. Sorry, you wanted to say something?

   5. HSHarry Stebbings22:34

      Can I just dive in? What did you learn from speaking to them? I know you. You would have gathered all the data and inputs that you could have done. What did you learn from speaking to them and getting those opinions?

   6. BABrian Armstrong22:42

      Yeah. Okay, so I learned about th- look, there's a lot of pros and there's a lot of cons. The pros are that, uh, you know, you, it's a great marketing event for the company. You're suddenly viewed as legitimate by the world. Um, you can, makes it easier to get deals done with other Fortune 500 companies, 'cause like the Fortune 500 just wants to do business with other Fortune 500. It's kind of seen as they're more established, you know, you know the financials are audited, like, you know, they've met a public company standard. It's a real company. And so that's turned out to be very true. We've, we've been able to close deals with, you know, BlackRock, the largest asset manager in the world, and, you know, Meta, formerly Facebook. Like, we're now, we're now, especially with our Coinbase cloud business and things like that, we're now able to power things with Fortune 500, which wasn't really happening before. Um, the other thing is it's a lot easier to raise money as a public company. So, you know, as a private company, you often spend a lot of time as a CEO on fundraising and it's-

   7. HSHarry Stebbings23:36

      Yeah.

   8. BABrian Armstrong23:36

      ... it's a ton of work, you know? And as a public company, you can, you can issue equity. You can also raise debt. Um, you know, I, I was kind of surprised to learn that, like in, in 2021, um, you know, our CFO came to me and was like, "The, you know, the markets are really good. The pri- debt terms are really good. We should probably stock up, um, for the next, you know, if there's another cycle," which turned out to be very, uh, fortuitous. And, you know, so she, she basically went out, we raised $3 billion in one week. I didn't do a single meeting. Um, and we got ve- very favorable terms on this debt. And the whole reason is that we're a public company. So there's a very liquid market for, for debt for public companies. I can tell you as a, as a private company CEO, if you had ever told me, "You can do the next fundraiser without going to a single meeting," I would have said, "You're crazy," right?

   9. HSHarry Stebbings24:20

      (laughs)

   10. BABrian Armstrong24:20

       Um, and so (laughs) that, that turned out to be a big benefit. Now.... the other, I- there's definitely a lot of cons, or some cons, I should say. Um, okay, so, you know, one thing is that I've talked to some founder CEOs who've, uh, who run public companies, and they have to deal with a lot of activist, um, shareholders and investors, right? And, you know, look, this is a big topic. I think activist shareholders probably can create value in some situations, but if you're in a place where, um, you know, you're trying to get the company working, you wanna take big, ambitious bets, and activist shareholders are calling you the time or trying to do hostile takeovers of the company, or, um, they're trying to kind of force you to, you know, um, go for sort of profits and dividends mo- uh, where you wanna invest in the next wave of the growth or whatever, these can be things that are huge time sucks for the company, both for the board and for management. And so, I've hear- I've talked to some founder CEOs that just said, like, "You know, the job's not fun anymore, because I'm basically just dealing with activists all the time." Um, and so, you know, anyway, there's- there's various ways to solve that. You can get, like, dual class stock, and- and that's sort of, like, a norm that people do. Um-

   11. HSHarry Stebbings25:24

       I w- I was- I was just talking to a very close friend of mine who runs a- a- a very large public company today, and obviously,

9. 25:30 – 28:01

   How to retain morale when the stock price is down

   1. HSHarry Stebbings25:30

      their stock price is, you know, 60% down, um, and he said, "The hardest thing for me still is I have to come into the office, and everyone is just looking at their net worth going-"

   2. BABrian Armstrong25:38

      Yeah.

   3. HSHarry Stebbings25:39

      "... I'm 60% down, and the company's just the same, and just the morale sucks." And he's just like, "It's just really fricking hard having the same level of morale when everyone's just become half as wealthy." How-

   4. BABrian Armstrong25:53

      Yeah.

   5. HSHarry Stebbings25:54

      How- how do you make it-

   6. BABrian Armstrong25:54

      So, that- that was the next one I was gonna say. You- you took the words out of my mouth. (clears throat) So, of course, the downs- the other downside is people are looking at the stock price every day, and you basically get marked to market every day. (laughs)

   7. HSHarry Stebbings26:04

      Mm-hmm.

   8. BABrian Armstrong26:04

      Whereas in the private markets, you can kind of be living in a f- in a fantasy land, at least until you need to raise money again, about like, "No, we're still, we're still worth X," you know? Um, so, okay, so, one thing that I did, which I think turned out really well, was the, I think it was, like, the day after or the week after we went public, everyone's celebrating, great, great, great, and I sent out a note to the whole company, and I basically said, "Okay..." And- and by the way, this is when the stock was kind of doing super well, super high, so it's not when things were down. It was, like, when things were really good. And I kind of said to everybody, "Look, new cultural norm. We don't talk about short-term fluctuations in the stock price at Coinbase. It's a- it's a faux pas to do so, and- and just to casually mention it, you know, in water cooler conversation, and just, you know, we're all human. Like, we can't avoid seeing it sometimes, but, like, we don't talk about it, because we don't wanna have short-term thinking at this company. We wanna make sure we're building for the next decade or two or three or four." And for the most part, that turned out to be a really good thing that I think took hold within the organization, you know? Maybe if people were doing it and they're just not showing me, but (laughs) I- I actually don't really see people talking about short-term stock price fluctuations. Now, of course, even in this market where things went down dramatically, you know, it's hard not to, like, think about it a little bit, right? And so, when you're having conversations about stock-based compensation or things like that, of course you have to look at these kind of- kind of metrics. But that- that's in the context of a- a very specific group of people within the company. The last thing I'll say is that I think being a crypto company actually helped us prepare a little bit for being a c- um, a public company, because the whole time we were private, people were looking at the price of Bitcoin and- and Ethereum and things like that every day, and so they were used to seeing, like, the value of their- at least part of their net worth (laughs) go up and down all the time.

   9. HSHarry Stebbings27:46

      Can I ask, why is this crypto winter different to ones that have come before? I mean, the thing with, you know, crashes is, you know, you always go, "Oh, it's never been this bad." And the truth is, everything, this too shall pass. Um-

   10. BABrian Armstrong27:58

       Yeah.

   11. HSHarry Stebbings27:58

       ... and we just live in a continuously cyclical game, so,

10. 28:01 – 29:41

    Why this Crypto Winter is Different

    1. HSHarry Stebbings28:01

       uh, what's different and what's the same?

    2. BABrian Armstrong28:04

       Yeah, I would say, so mostly, um, it's the same. I- it's- so, I can tell you what we do in every cycle, right? When things are up, we basically are, everyone's focused on scaling, we're going through hyper growth, you know, we try and- we're trying to capitalize on big opportunities, just throwing money at any problem, because, like, the biggest issue we have is just how to keep everything up and running. In down markets, you know, obviously we have to focus on, you know, managing costs rigorously, driving revenue where we can. We sometimes go clean up a lot of the stuff that we just threw money at in- in the crazy upcycle, and we're like, "Ooh, that's a- that thing is over-provisioned," or, "There's tech debt," or whatever. We also make sure we invest in the future. Like, we need to be able to plant the seeds and do innovation in a down market that, you know, more time to build and innovate th- the things that could be really big in the next upcycle. Um, so, you know, there's a little bit of that's how we kind of think about up and down cycles. Um, but sorry, I'm missing the- I'm missing the core of your question, which was what?

    3. HSHarry Stebbings28:59

       Whi- which is like, what's different about this crypto winter-

    4. BABrian Armstrong29:01

       Oh, yeah.

    5. HSHarry Stebbings29:02

       ... compared to other crypto winters?

    6. BABrian Armstrong29:04

       Yeah, okay. So I mean, look, the main thing is that the macro environment is down too, so it's not really a crypto winter, it's a- it's an everything winter, it's a macro winter. So, I don't know, I think one of the main differences is that people are not coming up to me and saying, like, "Is crypto not gonna work," or, "Is crypto over?" Like, everybody still seems to be pretty excited about all the use cases for crypto. Institutions are still signing up at a massive rate. Um, so, uh, that's the main difference. In- in- in most prior crypto cycles, people got disillusioned about, "Is crypto still gonna be a thing?" This one is not that. It's- it's basically just, okay, everything's down in tech growth, so let's just, uh, bide our time,

11. 29:41 – 32:40

    Brian’s Relationship to Money

    1. BABrian Armstrong29:41

       build great stuff, and be ready for the next upswing.

    2. HSHarry Stebbings29:43

       Can I ask you a bit of a weird and a bit of a personal one? You spoke earlier about kind of, you know, feeling worthy in- in a lot of ways, and then kind of aligning that to stock prices, and, you know, bluntly, financial gain. One that I think about a lot is actually your relationship to money. How do you think about your relationship to money today? And also, you know, you watched the documentary back, and you see Brian Armstrong, you know, 10 years ago starting in a- in a very different financial position. How has your relationship to money changed over time?

    3. BABrian Armstrong30:09

       Look, as a young kid, I was kind of always interested in making money. Um, it's- it's interest- I, you know, everything from the lemonade stand to I would, like, read the business section a lot. This was even in, like, maybe sixth or seventh grade. I'd read the business section of the newspaper every day, which I think is probably somewhat atypical, and I remember even just, like-... reading classified ads for things like houses and boats and stuff and be like, "Okay, if I save up my allowance, you know, how much would it take me to be able to afford this boat," or something like that, right? (laughs) So, and it wasn't so much, like, I don't- I don't even, I don't own a boat today. I don't e- I don't have any desire to own a boat. But, um, it was more just, like, I was kind of fascinated with money, somehow. It- it was like, it was like a way to acquire resources and be able to do more things. And I was like, "Well, I wanna make, I wanna build this building, and I wanna, like, invest in this thing, and I wanna like, you know, if I can hire more people." And so, it's just, capital is a way to, um, have the ability to sort of do more things in the world. I d- I don't know if there's like a s- simpler way to say it than that. I think a lot of things that people misunderstand about cap- like, people who've made money, is that they think that they wanna do it for personal consumption. And look, th- there is some amount of that. Like, you know, you might wanna have something that just, um, saves you time or whatever, have like, a nice house, or a, you know, like, a chef or something, if it saves you time. But you also kinda like, it's nice to cook dinner with your family too. So it's, um, anyway, l- what am I saying? Basically, um, I, I think having money is a good thing, mostly because, it's not that it's gonna make you happier or anything like that, beyond like, a certain point, um, it's that it allows you to do more things in the world. You can become a great capital allocator, right? And I think that's true no matter who you are. Like, I've- I've talked to some scientists or whoever, academics, and they're, they're kind of like very anti-making a lot of money. And I'm like, "Well, what are you passionate about in life? You know, scientific research? Are you passionate about like that park that's in your neighborhood or whatever?" Like, if you, if you generate capital, you can do, you, you can, you know, clean up the park. You can, you can fund your next experiment, like the next 10 experiments that you wanna do without having to get, you know, these grants written, like. So capital is a way to accomplish more of what you wanna do in the world. It's not, um ... I think most personal consumption, unless it's, unless it's there to basically, um, help your productivity or to just give you more time with loved ones, is kind of a waste. So, um, like, I- I- I don't, I wouldn't spend any money on, I don't know, like Ferraris and like crazy jewelry or something. Like, I- I would, I don't do any of that stuff.

    4. HSHarry Stebbings32:36

       Do you worry that with having j- I have one thing that I worry about, but do you worry about with having children,

12. 32:40 – 33:50

    Do you worry that having kids will hurt your productivity?

    1. HSHarry Stebbings32:40

       you will not be able to perform at the highest level in execution? Like, you know, when- when you don't have children, you are with your partner, but you are the sole focus of your life. Suddenly, like a 6:00 AM wake up, and yes, you can pay for carers and nannies, but it's still fucking brutal, uh, I've been told.

    2. BABrian Armstrong32:59

       Yeah. (laughs)

    3. HSHarry Stebbings32:59

       Um, "Are you worried about maintaining execution, perfection, whilst also being a great parent?"

    4. BABrian Armstrong33:06

       Um, you know, I would say like, when I was younger, I definitely worried about this. And I f- like in my 20s and maybe early 30s I was thinking like, "Yeah, having kids would be, um, too much of a productivity drag," and you know, uh, but I- I've basically gotten over that completely. I've seen enough people now who have kids and they're highly productive, and they tell me that, um, yeah, I mean it's crazy at home in the evening, bedtime and like, in the morning, but they generally view it as incredibly additive to their life. Um, and I basically believe it at this point. I don't have kids yet, but I think that i- you know, I've seen other examples where taking care of someone or something actually doesn't harm your productivity. It makes your, it makes your day more fulfilling,

13. 33:50 – 36:15

    Who are your mentors?

    1. BABrian Armstrong33:50

       and you can still be very productive.

    2. HSHarry Stebbings33:53

       Who do you learn from? Who are your mentors?

    3. BABrian Armstrong33:57

       Um, well, as-

    4. HSHarry Stebbings33:58

       When you think about, when you think about the people who advise you on parenting, who are the ones where you're like, "Tell me, huh, how do you do it?" (laughs)

    5. BABrian Armstrong34:05

       Oh, well, okay. On the parenting thing, I mean, I, just through f- various friends and contacts, coaches, you know, our executives, um, our board, I've seen en- enough. That's where I'm kinda seeing those and just various conversations. Um, you know, I've had a, I've had a number of mentors just kind of growing up with the company, and these can be board members, you know, like Fred Wilson w- was an investor in our Series A and he's- he's still on our board to this very day, and he's b- he's been a great, like, sounding board for me, just when I'm trying to think through something difficult. And, um, you know, uh-

    6. HSHarry Stebbings34:37

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

    7. BABrian Armstrong34:40

       He just has an incredible ability to sort of distill things down to the simple, the simple question. And one thing I like about Fred is that he's not go- he's n- not somebody who comes in and you're like, "Brian, you need to do this, you need to do that." He's not like pushy. You know, he basically, h- he helps you get there on your own. And so sometimes I'll be telling him, like some problem I'm having, like, "Ah, I don't know if I should hire this executive. Like, you know, this thing is good about them and that person's b- this thing is bad," and like, you know, and he'll just ask me a question which sounds almost too simple to- to work, but it's- it's incredibly effective. He's just like, "Well, Brian, do you wanna work with this person?" And he'll just leave it, that hanging in the air, and I'm like, "What, that seem, what are you talking about? That's not the, that's not what I'm g- it's, it's more complicated than that." And he's like, "Is it? I mean, do you see yourself enjoying working with them or not?" And then (laughs) you know, he'll just like, he'll just hit you with these things and kind of boil it down to like the simplest thing you could imagine. You're like, "Goddammit, I guess he's right." Like, "That's kind of what I have to decide, right?"

    8. HSHarry Stebbings35:40

       (laughs)

    9. BABrian Armstrong35:40

       Um, yeah, so I- and I've had various executive coaches over- over the last 10 years, uh, which have been really helpful. A couple of those make an appearance (laughs) in the documentary too. Um, and many different board members. You know, I look to other CEOs sometimes for inspiration. I've b- j- developed friendships with people that, um, kind of a friend group that I'm in with other CEOs that we sort of meet up every month.

    10. HSHarry Stebbings36:04

        Oh, which, which o- which o- which other CEOs inspire you?

    11. BABrian Armstrong36:06

        Sorry?

    12. HSHarry Stebbings36:07

        Which other CEOs inspire you?

    13. BABrian Armstrong36:10

        Well, okay, so I mean, look, th- I always hesitate to answer this question a little bit

14. 36:15 – 37:45

    Which other CEOs inspire you?

    1. BABrian Armstrong36:15

       because I think if you say s- if you say a name, someone's like, "Oh, this person wants to be like that person," right? Um, it's not really about that. I think that there's, there's a lot of CEOs that I learn from that are kind of like, I would say, sort of in my peer group or a little ahead, a little behind, whatever. But they're, I'm hearing different things from them that they're doing and I'm like, "That's a good idea, I should copy that." There's a bunch of peop- you know, Tobi, uh, is on our board, from Shopify, and, um, I don't wanna say the names but in, in our friend group, you know, there's- there's a number of people there that I try to learn from.Um, I would say, you know, there's one entrepreneur that I, I do think I've been inspired by in a, in the sense of like... And again, I don't wanna over-rotate on anything personally about their life or whatever, but just in terms of the scale of ambition and thinking bigger, I think Elon is kind of unmatched right now, I have to say. So, he, he's somebody who... I think the lessons I learned from that was, like, try more ambitious things. You know, he's trying to do things that formerly only maybe governments, people thought could, could do, right? About building a space program or, you know, solving climate change. And I love the scale of the ambition. I think he also was not afraid to sort of jump into sort of hard tech problems, like not just, uh, bits, but atoms, you know, if you will. Um, I, I like the path that he followed where, you know, he had a pretty good exit with PayPal, um, in, in software, and then he decided to double down and keep building things and try even more ambitious things, which I really respect, as opposed to, you know, some people just want to retire or whatever if they have a good exit, I think. And I think... I, I love that he had the ambition to keep going.

15. 37:45 – 40:20

    Are you thinking ambitiously enough with Coinbase today?

    1. BABrian Armstrong37:45

       Um, yeah.

    2. HSHarry Stebbings37:46

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

    3. BABrian Armstrong37:50

       (laughs) So, you know, look, 10 years ago, um, when I started the company, I, I remember thinking about this. I was like, "What..." Because I had tried a bunch of startup ideas and most of them didn't work. And I was like, "What's the thing that I'm so passionate about, it's so, it's so crazy that I will, in 10 years I'll still be, like, super fired up to be working on it?" And so, you know, obviously creating an entirely new economy for the whole world is a pretty ambitious thing. (laughs)

    4. HSHarry Stebbings38:12

       (laughs)

    5. BABrian Armstrong38:12

       Um, you know, one that's more free and fair and global and, um. And so, you know, look, that's a, that's a, that's a hundred year mission, um, and we're gonna keep doing that for a long time. And the mission of Coinbase is to increase economic freedom in the world, and that's something I'm really passionate about. I have a whole spiel on that about why economic freedom is so important. You know, one thing we've thought about, I- I actually haven't shared this before, is that if somehow we feel like we're starting to make a real dent in economic freedom, would we expand the, the mission of the company at some point to just be about increasing freedom in the world? Period. All kinds of freedom, right? And you could imagine, there's many types of freedom that are under threat today, right? Um, there's, you know, people, I feel like th- A lot of their, th- the tools and the apps that we use, they're being u- you know, basically run by, like, bigger and bigger tech companies, they're being influenced by governments, there's censorship issues, there's data privacy issues. And we've seen the rise of things like, you know, Signal and WhatsApp with encrypted messages that 10 years ago that was considered like, oh, if you were using encrypted messaging, you were a terrorist or something. Now, it's, it's like the norm and it is the expectation. People don't want to have their stuff floating all over the world in plain text. And you could imagine all the layers of the stack, um, from the browser to where you store your data, like Google Drive and Dropbox, there should probably be a, like a decentralized private version of that using, you know, Filecoin or whatever. Um, you know, you could imagine internet service providers, like, we're seeing more decentralization of that, I think, with things like Starlink and whatnot. You know, even computer ha- like, the operating systems, uh, mobile and, um, desktop, and increasingly VR, AR, and the hardware itself, you know, these are all things which can be, um, they can have pressure points where, uh, bad actors can basically inject themselves in there. And so how can we kind of decentralize and increase freedom a- across all these dimensions? The freedom stack, if you will. So look, we're not g- we're not changing the mission anytime soon, but that's one thing I've thought about over time is, Coinbase is starting with financial services, arguably one of the most important, if not, not the most, like, foundation of freedom. Like, if you, if you can't, like, store your own wealth in a way that it can't be taken from you, then you probably don't have freedom aro- in any other thing. Um, but if you have that, then how do we add in other layers of

16. 40:20 – 41:07

    Barriers Coinbase’s Transition from Economic Freedom to Freedom

    1. BABrian Armstrong40:20

       freedom around, you know, speech and other things?

    2. HSHarry Stebbings40:22

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

    3. BABrian Armstrong40:36

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

    4. HSHarry Stebbings41:02

       I want to move into a quickfire, Brian. I could, uh, go off piece all day, but I'm gonna say a short statement

17. 41:07 – 41:41

    Hard Part of Brian’s Role at Coinbase

    1. HSHarry Stebbings41:07

       and you give me your immediate thoughts. Does that sound okay?

    2. BABrian Armstrong41:09

       Great.

    3. HSHarry Stebbings41:10

       Okay. So what's the hardest element of your role with Coinbase today?

    4. BABrian Armstrong41:15

       Um, right now in this moment, it's basically... I don't know if it's the hardest thing, but the, the thing that... It's just keeping everybody in the boat, you know? It's like telling some of the war stories about, "All right, we've been through four of these cycles, you know, don't get disillusioned, don't get discouraged, you know, don't pay attention to the negative headlines too much. Um, keep our heads down, keep building great stuff, manage costs, keep innovating, and we're gonna come out of this way stronger than we went in." Like, Coinbase pulls ahead in down cycles,

18. 41:41 – 44:11

    Coinbase’s Biggest Missed Opportunities

    1. BABrian Armstrong41:41

       so I have to keep telling that story over and over again.

    2. HSHarry Stebbings41:43

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

    3. BABrian Armstrong41:50

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

    4. HSHarry Stebbings42:34

       Do you blame yourself for that? I mean, the numbers were so stratospheric, you kind of had to to serve the demand.

    5. BABrian Armstrong42:40

       Yeah, I mean, look, (laughs) bl- I don't really like blame as, like, a thing. Um, I think there's just a learning opportunity in, in everything. You, you know, you have to have accountability, of course, but I don't... It doesn't really accomplish anything to, like-... dwell on it, or like self-flagellate or whatever. Um, so I, I think, you know... Look, if you put our, our mi- uh, put our mindset back in that timeframe, we, you know, we were on track, we d- we did do, we did 7 billion in revenue, 3 billion in profit. Um, we literally had a line out the door. The biggest problem the company had was we couldn't onboard customers fast enough, and customers were super upset that they, it was taking them so long to be a, to onboard. This was on, more like the institutional business. And then our retail customers were just like, "We want all of these things that you don't have, and just take our money if you have 'em, but if you don't, like, we're gonna go somewhere else." So, it made total sense. I mean, we knew, if you, if you more than double head count in a year, you're really flirting with danger in terms of like, communication might break down, you know, um, culture could break down. This is a common thing, and we knew it. And we sorta consciously took that bet when we said, "Well, we don't know when this is gonna end, but it would be irresponsible to, like, limit growth in this moment and not hire now." I think in the, in the process, we ve- we moved to being a remote first company with COVID. It un- it unleashed a hiring, um, bottleneck that we had when we went to being remote, 'cause of course the top of the funnel grows like 100X of the number of people who can work at the company. And our hiring engine started to fire on all cylinders, um, (laughs) so it did get a- it did get a- like too far ahead of us,

19. 44:11 – 45:06

    What breaks first when you scale too fast?

    1. BABrian Armstrong44:11

       I think. And, um, that was something in the next upcycle. I, I think we won't make that a mistake again.

    2. HSHarry Stebbings44:16

       What broke first?

    3. BABrian Armstrong44:18

       In terms of growing head count that fast?

    4. HSHarry Stebbings44:20

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

    5. BABrian Armstrong44:29

       Yeah. Um, let's see. I think decision-making often breaks, where it's not clear who's deciding what. That's a big one. Um, you get pockets of weird behavior in the company as well, where, um, you'll, you'll jump in and you're like, "Wait, why are, they're doing what? Why are people doing that inside this company?" You know, it doesn't make, it's not aligned with our culture or whatever. And, you know, it's just a, it's just because we have people who are, they've been here two months who are hiring someone new, right? And like they're, they haven't fully absorbed the culture themself. Um, I do think the way that process is managed and how things are communicated, that, that will

20. 45:06 – 47:43

    Brian's Opinion on FTX

    1. BABrian Armstrong45:06

       often break down too. So, um, yeah. All those things.

    2. HSHarry Stebbings45:09

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

    3. BABrian Armstrong45:13

       (laughs)

    4. HSHarry Stebbings45:13

       ... what do you make of it?

    5. BABrian Armstrong45:14

       Like so, look, see, lots of things. I mean, I think Sam is a brilliant guy. I've got a chance to talk to him on a number of occasions. I think he's done a really good job of kinda generating interest in the company with his public persona, (laughs) which is something that, you know, as more of an introvert, I, I don't love doing that as much. I, I think it's... You know, look, the press can be fickle too, right? They can build you up and tear you down, so I think it's, it's, it's a little dangerous. But, um, I think he's done an incredibly effective, uh, getting more interest on the company there. They've moved very quick... I give them a lot of points for execution, speed of execution, I think, um, especially with a small team. I mean, uh, frankly this is a little bit what Coinbase was like in the early days, maybe 2014, '15 when we had, you know, 300, 500 people. It was easy to just know what everyone was doing, we all were in one location, we were executing super quick, right? And so, part of this transition, you know, I, I could've basically decided to keep the company that size and, and focus on our core product of retail trading. But I really decided, you know what, I want Coinbase to be a multi-product company, um, I want us to grow into these different customer segments. You know, we have like this massive, um, business for institutions now. And we have Coinbase Cloud, and we have, um, commerce and wallet and, and NFT and all these things. So, I basically made a conscious decision that said, "I don't just wanna have our one core retail app, I want us to be a multi-product company, a generational company." And so I made the difficult choice, look, we're gonna grow this thing. We're gonna have different leaders of different products, there's gonna be more complicated org structures, we're gonna have multiple geographic locations all over the world. And so it's definitely more complex, and part of that is slow th- you do slow down. I put out a blog post about, um, you know, operating efficiently at scale, which is all the things that we're doing, um, to try to get to that next level. So, um, anyway, that's a little bit of the contrast, but I think generally, I think both FTX and Binance have been really good at execution and, um, you know, they've taken a different risk posture, I would say, internationally as well, which, you know, we'll alwa- we'll see, have to see what happens with that. But, um, Coinbase is basically sort of taking a more, we're more trusted, you know, compliant, secure, whatever, we're trying to be an easier to use product in many cases as well. We're not really necessarily trying to build for, um, like somebody who just wants to do pro trading, although we have really good pro trading, trading features. We also make it easy to do all the other stuff you wanna do in crypto, right, around Web3 and NFTs and, and, um, and DApps and things like that. So, that's a little bit of the contrast, but I generally have nothing but respect for those folks, and I think that the more the merrier. This is about growing to pie 100X about, rather than any kind of

21. 47:43 – 51:39

    Brian's Regrets in Communicating with Regulators

    1. BABrian Armstrong47:43

       competitive thing short term.

    2. HSHarry Stebbings47:44

       You mention kind of regulation there. Miki Malkaroff's, what are your biggest mistakes or regrets in communicating with regulators?

    3. BABrian Armstrong47:52

       Um, you know, I can't think of too many. I, I do think Coinbase in the early days, um, you know, we decided to reach out to regulators and just proactively be a, um, a friend to them and, you know, try to be helpful and then like follow their, their instruction, things like that, which was a unique thing at the time. I feel really good about that decision. I think it's created... Um, it's definitely caused us to be able to operate slower at times, I would say, which has been unfortunate for customers in certain cases. There's no doubt that, like, going that path takes longer and it's more work, but I, I think and I hope that it'll be a competitive differentiator long-term. Um, believe me, there's, there's some moments where we're frustrated about that and we're like, "Okay, we're the, you know, the regulated public company here, like following all the rules, but why are w- why are we getting the scrutiny for this when there's like crazy stuff happening out there in the world?" But, um, you know, that's, I don't think anything's like we're getting is that unfair. Um-... I got, I don't know. Th- there was, there was a little, like, tweet storm I got into with Gary Gensler, and like, look, I'm, I'm not, like, happy with how he's, um, you know, doing things in the US right now. I think that he had a major opportunity to come in and actually, like, clearly regulate the industry, and publish clear rules, and say, "This is a security, this is not." Work with the CFTC and other areas of government to kind of create a clear framework which protected consumers, go after the fraud, and all that stuff, but then allow this industry to grow in, in a regulated environment in the US. I don't think he's really done that. So I've been pretty frustrated, and, and I haven't found him to be cooperative in, in some of these conversations. Whereas, um, you know, I think we're trying to do the right thing, and we're just, we're happy to engage. But it's been very hostile for some reason. Um, then, you know, but all that being said, do my tweet storms help the situation? I, I don't know. I think that it's important... This is where, like, we often struggle as a company, where, you know, 95% of the time, I think being the most trusted brand in this space is about working with the government. And I'm, I'm happy to show up in D.C. anywhere, and I work with people, and we, we, we, 95% of the time we're aligned, there's reasonable people in government, and we can kind of work all these things out. 5% of the time, I think we actually have to make a stand and protect our customers from bad government, which is a, which is a contrarian thing about how to be the most trusted brand. It's not about always working with government, 95% of the time, yes. 5% of the time, it's about protecting our customers from bad government. And you've seen us do that in a couple cases, like with the Tornado Cash situation, where we're helping fund some lawsuits that we think there was, there was overreach. Although, we, we're happy to work with Treasury and OFAC, and we do that all the time.

    4. HSHarry Stebbings50:20

       W- what is bad gov-

    5. BABrian Armstrong50:20

       Same thing with the SEC. I, we found the SEC staff to be incredibly easy to work with. Um, but sometimes engaging with the chair has been, um, a counterproductive exercise.

    6. HSHarry Stebbings50:30

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

    7. BABrian Armstrong50:36

       Yeah. I mean, ultimately, in a democracy, right, the, the government reports to the people. Like, w- we are, the people are the e- the electorate, the board who elects these people. And, you know, and by the way, the elected officials sometimes appoint these, these heads of regulators, 'cause the regulators are not elected themselves. Um, but yeah, sometimes we see bad policy come out of the government that, um ... I, look, I don't think that's the majority case, right? Like I said, 90, I'd say 90, 95% of the time, this is not a US thing, by the way, all over the world, we generally get to reasonable answers with regulators and policymakers, and I think those are really strong relationships we have. But 5, 10% of the time, when we see something come out that is, it's actually harming crypto, it's not, uh, in a way that doesn't protect consumers, it's treating, um, crypto on an unlevel playing field with traditional financial services, we see sometimes overreach. You know, there's people who somehow get the idea in their head that crypto is only being used by bad people, and they don't realize a lot of the facts. And so, um, yeah, we've seen, we see bad policy proposed. And in that case, we, I think we have an obligation to push back.

    8. HSHarry Stebbings51:36

       My friend, I'm in the UK, we've had three leaders in about

22. 51:39 – 53:12

    What does Coinbase look like in 10 years?

    1. HSHarry Stebbings51:39

       three months. So don't worry-

    2. BABrian Armstrong51:40

       (laughs)

    3. HSHarry Stebbings51:40

       ... I, I know about bad government. Final one for you, Coinbase in 10 years, what does that look like?

    4. BABrian Armstrong51:46

       Well, anybody can, anybody can guess. I mean, it's, uh, the future is, is a little hard to predict. But look, I, here's one vision I've had for it, which is that, um, I think Coinbase Global, the parent company, um, is starting to become more like a hold- holding company over time. And we have this portfolio of different products, different customer segments that we s- serve. And they're all, um, highly aligned, but increasingly, I think over time, they'll get m- less coupled. And there's gonna be an aspect of decentralization, if you will, to these different product groups or eventually business units. Um, so we're, we're on a path to do that now, where like, we're generating P&Ls for each of our product groups. We have clear leaders of each. We're deferring more of the decision-making to them. And I could see that evolving over time, where in 10 years, I mean, who knows? You know, it's k- it's kind of become in vogue to change the name of the parent company, like Alphabet or Meta at a certain point, 'cause you actually want to distinguish it from the core retail brand, which helped get you there. So-

    5. HSHarry Stebbings52:39

       Are y- are you gonna become Base, and then like-

    6. BABrian Armstrong52:43

       (laughs)

    7. HSHarry Stebbings52:43

       ... Coin and Bridge?

    8. BABrian Armstrong52:43

       Um, look, I-

    9. HSHarry Stebbings52:45

       I think that's quite te- I, I, I like that. That wasn't a b- lo- laughable matter. I was gonna charge you for my branding. (laughs)

    10. BABrian Armstrong52:50

        (laughs) Uh, many different names are possible, I suppose. But, um, it, look, it isn't, this isn't something that's like near-term, or I haven't really thought about it that seriously. But, uh, in 10 years, who knows? I think co- the parent company will be more like a holding company, and, and we m- and who knows, we may even change the name at some point, but, um, to reflect that. But that, that's a long-term vision.

    11. HSHarry Stebbings53:09

        Brian, listen, I can't wait to see the documentary. I'm so excited

23. 53:12 – 53:49

    Brian's Documentary

    1. HSHarry Stebbings53:12

       for that. Thank you so much for joining me today. And as always, I love the chat.

    2. BABrian Armstrong53:16

       Yeah. Thank you. It's on, um, if people are curious, it's on YouTube, Amazon Prime, um, Apple TV, Hulu, and, uh, would love people to check it out. It's, it's a story about a founder's journey, and so it's perfectly aligned for your audience. Um, we tried to show the good, bad, and the ugly, all the quirky characters, what it takes to actually build something that goes from, you know, me on my laptop to being a public company. And, um, parts of it are embarrassing, uh, but parts of it are awesome, and I hope people enjoy it.

    3. HSHarry Stebbings53:47

       You are a hero, my friend. Thank you so much for that.

Episode duration: 53:49