The Diary of a CEOCoinbase Founder: The Crazy Journey Of Building A $100 Billion Company: Brian Armstrong
EVERY SPOKEN WORD
150 min read · 30,433 words- 0:00 – 1:32
Intro
- BABrian Armstrong
(dramatic music plays) 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.
- SBSteven Bartlett
Crazy. Brian Armstrong.
- BABrian Armstrong
CEO, co-founder of Coinbase. The largest US 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 gonna give up. Cryptocurrency is the biggest transformation of money since the invention of paper.
- SBSteven Bartlett
Coinbase was being deemed the most trustworthy brand in crypto.
- BABrian Armstrong
It tipped at a certain point from, like, "Oh, this growth is really good," to, "Okay, things are getting a little crazy here." If you kind of more than double a company in a year, you're really gonna 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. And I remember I went up in front of the company and my voice cracked. I mean, it was awful. Oh, man.
- SBSteven Bartlett
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?
- BABrian Armstrong
This is getting very personal. (dramatic music plays) It's a real superpower to, like, care less what other people think.
- SBSteven Bartlett
So, without further ado, I'm Steven Bartlett, and this is The Diary of a CEO. I hope nobody's listening, but if you are, then please keep this to yourself. (music)
- 1:32 – 8:43
What made you the person you are today
- SBSteven Bartlett
Brian, I... When I read through people's, people's stories, there's sometimes really obvious, um, causal factors that led them to become the people they are today. But with you, I'm, I'm more compelled by the less obvious factors. If we go back to your early years, when you were a, a young man on the West Coast-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
... of the United States?
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
What are the, the, the less obvious reasons as to why you've ended up where you are today and achieved what you've achieved in your life?
- BABrian Armstrong
Hmm. Great question. Um, one of the less obvious reasons probably is that I was an introvert. I just wasn't really th- very good with people. I didn't really have that many friends. You know, as a, as a young person, I was quite shy. Um, 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, um, some of the people who got excited about computers early on and just lo- ha- 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," (laughs) 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. Um, of, 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 who love operations, people who love sales, people who... And then there are engineer CEOs. Um, so that's one reason that I think it's maybe a little bit less known why, why I'm here. Another, another reason is that, um, I just became very passionate about this idea of trying to have an impact on the world, and I think... And again, it may have come from that, that introversion as a kid, and I, 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, um, I didn't feel confident, like, you know, speaking in some public setting or whatever. I have lots of practice doing it now, so I can. I, I'm-
- SBSteven Bartlett
Mm-hmm.
- BABrian Armstrong
... a well-trained introvert. But, um, you know, 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 un- unlikely reason.
- SBSteven Bartlett
In hindsight, then going back to those early years as well, what was your luck or privilege?
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
What were the factors that were out of your control that happened to be the case that also aided to that, um, trajectory?
- BABrian Armstrong
Yeah. I mean, there was a lot of things that went right. So, I, I was in a, a home with loving parents that were very supportive of education and my passions and interests, including, you know, my, my mother worked at IBM, and so we had, like, an early computer in our home. Um, she, 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... I- i- 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, um, you get a little bit of money to go start a company, like, in, in Silicon Valley, people write you angel checks for these things. And you can pay yourself a salary, go try it for a couple 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, um, that you've tried a start-up, you have this entrepreneurial DNA. You're somehow more valuable inside a company now if, if it doesn't work and, and you go back. In many places in the world, that's not the case. You know, failure of a company is considered a badge of, uh, mark of shame, not a badge of honor. And then I think many people, uh, 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 it's 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'd 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. Um, yeah.
- SBSteven Bartlett
If I'd asked you then at, say, 10 years old what you, what you wanted to be when you grew up, what would you have told me?
- BABrian Armstrong
At 10 years old, I mean, I really (laughs) I really had no idea. I think the first glimmer of it that I had was in high school.And I, I had started building some websites, and I remember as a senior in high school, I went on this retreat and, uh, I had... I do remember having this thought, like, the thing that ex- 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 2,000, 2 million, whatever? And so, I do remember having sort of a... It stuck in my memory. Like that... Of all the things I've tried in my life, you know, sports and reading (laughs) and science in th- i- 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.
- SBSteven Bartlett
Just, just listening to you speak there, my, my, my brain was telling me that... 'Cause 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, be an introvert and have impact because it was the, the bridge between the, the outside world.
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
So, when that website goes live, you don't have to see these people (laughs) or persuade them-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
... but you can have your impact by, by piece of technology that's enabling something in their lives.
- BABrian Armstrong
Exactly.
- SBSteven Bartlett
You go off and study economics in university, in college?
- BABrian Armstrong
Yeah, well... Yeah. So, I had, I had been taking some programming classes, um, on the side in high school.
- SBSteven Bartlett
Why?
- BABrian Armstrong
(laughs) I couldn't help it. I, I, I... Like, in my free time, I would just play with computers until like 2:00 in the morning, 3:00 in the morning. I was, like, dead tired at school every day 'cause I was, like, wide awake at night, like, playing with computers, learning about Linux and, like, all these things. And, um, school was a little bit boring in some ways. Um, so yeah, I, I basically decided, okay, if I'm i- this interested in computers... My, 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, 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, okay, 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, my thinking. Now, of course, I had no idea 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 wanna, I wanna
- 8:43 – 15:34
Lessons learnt from my first business
- BABrian Armstrong
write software and I wanna learn, wanna learn how to start a business.
- SBSteven Bartlett
And at some point during college, you start your first, I guess, real company.
- BABrian Armstrong
Yep.
- SBSteven Bartlett
Which is a tutoring business.
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
Was that... Did, did, did you have grand plans of turning that into a, a, a mega... Was that... Or did you stumble into that?
- BABrian Armstrong
More like stumbled into it. Yeah. I mean, so as a college student, um, 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, um, 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 is..." It just... It was like 3 or 4X what you could make at these other on-campus jobs. So, I decided to try doing it myself. I got in touch with some 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, 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 uni- you know, the tutors at the..." Basically university students at the university where I was, uh, 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 try to expand it to other schools." You know, eventually, over a period of a couple 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 in- but for tutoring. And, um, yeah, I got to practice, like, building web applications. Um, there was payroll and incorporation and sales and marketing and taxes and, um, it... I could never really get it to grow enormous and to ma- become, like, a really big business, which we can talk about if you want, but that was the seed of it that later became, um, a little bit more of a, a company.
- SBSteven Bartlett
Why then? Why couldn't you make it become a big business? What was the... In hindsight, the lesson-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
What was the barrier?
- BABrian Armstrong
Okay. So, we learned this sort of the hard way about creating a marketplace, which was that in this particular industry, in tutoring, a lot of times, uh, you would introduce a, a student and a tutor and they would sort of... We w- Our business w- 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'd do the... Initially the first payment, but then afterwards, they'd start paying them under the table. And so, um, we were ki-... I realized at a certain point, we were basically just getting in the way. They, they wanted us to just match them, but they didn't want us to be the, 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. Um, 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, a "real job" (laughs) . Um, and as I was going to start my ne- the real job, this was at, um, basically Airbnb where I became an early employee, I was, I was about to shut down the tutoring site and I was, like, feeling a lot of pain about that 'cause I was like, "Well, I don't know, there are still, like, 5,000, 10,000 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, like, we're not gonna be involved in any of the payments, there's no customer support. This is literally just gonna be a directory, like a tutoring directory and you can contact these tutors, you can pay them however you want, um, and I'm just gonna 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- my- my new job. I got rid of all the payments, I messaged all the people using it and I was like, "You can pay now people directly," and, um, I was gonna put up some ads and I did one more thing at the last hour (laughs) which was- which was I said, "If you wanna have, like, a featured profile as a tutor with, like, a little badge on, a featured badge and come up first in 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. Um, and so basically, I guess the lesson was (laughs) , you know, stop trying to extract value and start trying to create more value and at- at that point, I think that was only the- the only tutoring directory online that had free profiles and you could just contact the tutors, and so it actually started to grow. Later, later, uh, um, somebody ended up acquiring it for maybe, like, $2 million or something, so-
- SBSteven Bartlett
Oh, wow.
- BABrian Armstrong
... to- to me that was like, it- it was like a seven or eight year base hit (laughs) outcome-
- SBSteven Bartlett
Yeah.
- BABrian Armstrong
... where for years, like, you know, five, six years I was struggling to get anything to work.
- SBSteven Bartlett
But the- the truth is, okay, they paid $2 million for it-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
... but the lessons you learn, uh, many of those translate, uh, into the business that you went on to build in Coinbase.
- BABrian Armstrong
Totally.
- SBSteven Bartlett
What, is there anything else? Because I look at my first startup that I made out of, you know, dropping out of university then started-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
And there's so many lessons. One of them is what you've said, is I was- 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.
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
So, hearing you say that really re- 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?
- BABrian Armstrong
I mean, I think one of the big realizations I had in starting that tutoring company, which again, you can n- you can always look back and see how the- the- the pieces connect, but at the time, you're just wandering in the desert, you're lost. Like, I felt- 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, um, 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, um, going through this pro- like, incredibly onerous process to, like, set up credit card processing and then payments that I was sending out and I remember the bank called me one day and- 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, it... Like, 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, um, a real insight later when I saw the Bitcoin white paper years later I was like, "That system is broken, um, and this could be an opportunity to fix it." So, that was one thing.
- SBSteven Bartlett
What about Airbnb? So, you went and worked as a, in the product team at Airbnb?
- BABrian Armstrong
Yeah. Yeah, I was a technical product manager, which basically meant I tr- I wrote some code and I tried to be a product manager (laughs) , yeah. Um, yeah, so I think I was the 40th employee at- at Airbnb and I basically moved back to Silicon Valley from, I was living in Buenos Aires,
- 15:34 – 21:12
How traveling shaped me
- BABrian Armstrong
Argentina for- (laughs) for a year or so trying to figure out what I wanted to do with my life.
- SBSteven Bartlett
Okay, I'm gonna have to talk about that.
- BABrian Armstrong
Sure, yeah.
- SBSteven Bartlett
What did that give you, that experience of travel and going to Argentina and living there for how many years? Three?
- BABrian Armstrong
Uh, little less than a year, yeah.
- SBSteven Bartlett
What did that give you?
- BABrian Armstrong
Well, it gave me a few things. I mean, one was that it, I got to see what a hyperinflation economy looked like, you know. Um, a lot of people who've only grown up- grown up in a developed country, they've never experienced hyperinflation and they've never felt firsthand what that, um, can really do for a population and a- people. So, I would, it really deeply affects the culture of places like Argentina. There's just, there's kind of this d- deep distrust of, um, the government and there's a pessimism about- about the future. There- there's kind of... You know, in- in countries that are, I think are the most forward-thinking, they, there's a sense of optimism about the future, like, "Hey, we can build a better future," and there's, you know. In places like Argentina, my, you know, 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 'cause the- the prices keep changing so- so frequently. It really, it really harms, like, the poorest people in- in society too because they, 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. Um, so anyway, it gave me a front row seat into that. It probably gave me a little bit of a sense of conf- confidence too, because I had never, uh, studied abroad or really, um, 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.
- SBSteven Bartlett
Y- you were running the tutoring business at this point?
- BABrian Armstrong
Yeah, I mean, I was doing a lot of things. So, I was running the tutoring business, I was, um, doing some contract software development just kind of while traveling, I was trying to build some real estate investments, um, in the- in the US. I- I was basically trying to figure out what I wanted to do with my life and there was a whole process I went through to try to figure that out, if you're curious too. (laughs)
- SBSteven Bartlett
The digital nomad piece th- which is-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
... becoming much more common these days because we've had this pandemic and we've kind of built systems which allow us to work more remotely and, but just generally people were- were choosing that lifestyle. When I- 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.
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
And there was... I remember being actually on a plane flying from s- one country to another, Brazil to Thailand or something, and seeing this, um, 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-
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
... in these hot countries with my laptop.
- BABrian Armstrong
(laughs)
- SBSteven Bartlett
But something inside me was, like, missing.
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
Um, community, a sense of shared mission, whatever it is.
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
I wondered, I wondered if you'd...... you can relate to that in any way, or?
- BABrian Armstrong
Totally. I, 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 a new city. But, yeah, I mean, there was a good, you know, maybe f- five, six months there in Buenos Aires where I felt like I didn't really know that many people. Um, I was feeling kinda homesick. I, yeah, uh, eventually I tried to, you know, go meet some local people like ex- 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, yeah, it was lonely there for a while.
- SBSteven Bartlett
You said you, you used that time to figure out what you wanted to do with your life, as if there's some kind of system there.
- BABrian Armstrong
(laughs) Yeah, well, I don't know if there's a perfect system, but, I mean, I, I read this book by Seth Godin called The Dip.
- SBSteven Bartlett
Ah.
- BABrian Armstrong
Yeah, I don't know if you've read it. But- and I- it's funny, I went back to read it, like, y- uh, many years later, and it's actually a relatively simple book, but at that- in that moment, in that time, that's what I needed to, to hear. And it's kind of a very fairly simple idea, um, which is that, you know, what's the thing that you would still wanna 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, you have a fast pace of learning, it's kind of fun, but then after you're be- after you're a beginner, there is this dip in the middle where you're not an expert, you're not one of the best people in the world at it, you're probably not making money from it, but you're not a beginner anymore, and there is, like, this long slog to go through the middle.
- SBSteven Bartlett
Mm-hmm.
- BABrian Armstrong
You know, putting your 10,000 hours. There's lots of various people who 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, "Okay, what's this, what is the thing that I, 10 years from now, I'm still gonna wanna 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, if you're not willing to go through the dip, then, then quit now, because it's, you know... And so I was like, "Uh, do I really wanna be, like, doing (laughs) you know, great real estate investments 10 years from..." 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 bec- it was this very clarifying moment. Okay, if I wanna be a tech entrepreneur, 'cause I had been doing that in some way, shape, or form for, you know, five, ten 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 is. Silicon Valley." You know, that's happening all over the world now. S- 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
- 21:12 – 25:40
Working for AirB&B and what made it successful
- BABrian Armstrong
within maybe seven years of making that decision, um, Coinbase was valued at a billion dollars.
- SBSteven Bartlett
Crazy.
- BABrian Armstrong
So, it, it did really help clarify my ambitions, and I just put it all into one thing.
- SBSteven Bartlett
That is atypical (laughs) .
- BABrian Armstrong
(laughs) .
- SBSteven Bartlett
I think the point is-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
... there's gonna be entrepreneurs in, in Buenos Aires listening to this that are (laughs) bringing flights to San Francisco.
- BABrian Armstrong
Yeah. But it could, it could be any... Like if, if you really wanna be an actor, you should probably go to Hollywood or something. Or if you really wanna-
- SBSteven Bartlett
Mm-hmm.
- BABrian Armstrong
... be in finance, maybe go to London, New York, or ...
- SBSteven Bartlett
Mm-hmm.
- BABrian Armstrong
Anyway, I think... Uh, it's not so m- I don't wanna say, like, there's one geography for everything, but, um, 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 gonna try to make luck, my own luck around that."
- SBSteven Bartlett
Mm-hmm. It's so true. It's something that I don't think especially young people think about when they're deciding, making career choices. They don't... Where to live is sometimes not, um, 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, um, and inspiration and enablers, um, 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'd, I'd... I've never said this before, but I see how much of a disadvantage we have.
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
In philosophy, in ambition, in funding, in talent. And, um, it, it's no surprise that most of the, the great unicorns are emerging out of one city in, in the world. That then leads you to Airbnb somehow.
- BABrian Armstrong
Mm.
- SBSteven Bartlett
Through I think you took a job first, then eventually you take a job at Airbnb?
- BABrian Armstrong
Yes, exactly.
- SBSteven Bartlett
Yeah?
- BABrian Armstrong
Yeah. I, I joined a Y Combinator startup that was really cool, but it didn't really work out.
- SBSteven Bartlett
Yeah.
- BABrian Armstrong
Um, there was a brief interlude there. But basically, I, I decided, "Okay, my tutoring company is not really working. I need to..." And that, that's, that's when I pivoted to that thing which had a base hit. But what I s- I decided, "All right, I wanna go to S- I want, need to go to Silicon Valley. I kinda wanna apply to Y Combinator." It's a startup incubator. Um, but I wasn't able to get in, and so I was like, "Well, all right, let me go work at a Y Combinator company to sort of learn." And I needed... By, by the way, I also just needed to recharge a little bit, 'cause the tutoring company... I'd been living abroad. The tutoring company wasn't working. I was bar- barel- barely paying myself anything. So I was kinda 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, it, it... I hadn't seen it double every year after that (laughs) .
- SBSteven Bartlett
Yeah (laughs) .
- BABrian Armstrong
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 just, it had a really magnetic culture. Uh, 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, 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, um, the, the way that they just did product reviews was really interesting. They had an important design component to it.
- SBSteven Bartlett
If you think about now wh- why Airbnb-
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
... won in their market from what you got to see inside their walls, what would you say? So, you've, you've talked about their hiring philosophy which is very, very clear.
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
Um, but what else would you say?
- 25:40 – 32:57
The mistake a lot of entrepreneurs make
- BABrian Armstrong
you know, somehow powering through it. So, I learned that too.
- SBSteven Bartlett
I hear a lot of, um, entrepreneurs who have your same enthusiasm to be an entrepreneur, the enthusiasm you've expressed there when you leave, um, Argentina and you come back, you just wanna be an entrepreneur. You don't necessarily know what-
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
... or what industry or what problem you wanna 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.
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
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-
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
... but they don't have an idea.
- BABrian Armstrong
Yeah. Okay. Well, I mean, I, I was probably guilty of that too, where I... there was definitely a period of my life where I was like, um, "I just wanna be an entrepreneur." And I don't know. Honesty, it was probably partly ego-driven. It was partly, um, my own, like, introvert way of saying like, "I just wanna be able to have an impact." I wanted to feel like I'd done something valuable 'cause I didn't feel like valuable as a human myself. Like you can get, get into all the psychology of it, right? It's kind of a crazy thing actually to go say, like, "I have to be an entrepreneur." Because, you know, from an... if you just wanna 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-
- SBSteven Bartlett
Mm-hmm.
- BABrian Armstrong
So, to be... truly wanna 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 (laughs) .
- SBSteven Bartlett
Mm-hmm.
- BABrian Armstrong
And so, for me, reading the Bitcoin whitepaper was kind of a lucky moment because I'd foun- it tapped into something that I was really passionate about, which was basically freedom. You know, um, 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 wanna make software for banks so, like, if that's what this is all about now, I'm pretty much just gonna shut it down and give the money back, uh, to investors." Um, so I was just too stubborn. I was like, "I, I got into this 'cause I feel like this is the way to create more freedom in the world so that's what I'm gonna keep doing, um, 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 (laughs) believe me, when you're like three years in and, like, your co-founder quit and you, you got sued and you're broke and, like, um, the first three times you launch the product, nobody wants to use it and, like everything sucks and you're feeling like a failure and you're... (laughs) you know, you're just gonna give up because you're not actually doing it for, like, some bigger purpose. You're doing it 'cause you want it to feel important or something. So, it, it actually is important to pick the thing that you're passionate about, yeah.
- SBSteven Bartlett
You're doing it because you want to feel important or something. We were talking about, um, how part of this sort of in- introvert's dilemma is you can feel significant, personal significance, by creating something that has significance in the world.
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
Zooming right to the end of the story, has, has that impact you've had on the world made you feel more personally significant?
- BABrian Armstrong
Yeah, totally. Okay, so I think this is a really important topic 'cause a lot of founder... 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? Um, it shows up in weird ways, by the way. Some people gain a ton of weight. Some people lose a lot of weight. Some... people deal with stress in all kinds of ways. I've... there's like founders I've met that get, like, addicted to prescription drugs or like, you know, all kinds of unhealthy things you could 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... uh, once that hole is filled in your heart, I guess. You have to f- transition to being motivated out of, like, joy or love or something more positive, not like running away from fear and anger where you're like... you're really angry at this, you know, your father or like the person who, um, you know, broke... uh, like the co-founder who you almost was gonna 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 wanna have? Um, uh, what's the thing that brings me joy? For me, it's like I love building things with, with technology, I love learning new things. Um, there are some parts of the CEO job, the typical CEO job, which d- you know, lower my energy, they don't give me as much energy, right? There's, like, you know, frankly, like, peop- I'm not the best people manager in the world, right? Like, um, I used to have, like, 12 direct reports, um, at the company and I was, like, so stressed. And then now, you know, now I have, like, four, right? And it's like, it's actually much easier for me to run the company with that. So, um, 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 when... and I said, "You know what? I'm gonna actually gonna focus on the things that I'm better at 'cause they bring me joy, and I'm gonna 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, and it's kept me engaged in the job. Like, I'm been doing it 10 years and I hope I can do it another 10, and it's, and it's still fun because I've been able to delegate.
- SBSteven Bartlett
Why'd you have to make that transition away from fear and maybe insecurity being the motivator towards it being about joy and love? What- what's the cost if you don't?
- BABrian Armstrong
Well, I think if you don't, um, then once you hit some kind of level of success, whatever, however people count that, um, then you're not gonna feel motivated anymore, and so you're just... you're gonna be done. And, uh, you know, you're gonna go (laughs) do whatever else you're gonna do next, like, I guess become an investor (laughs) or sit on the board, or whate- which is nothing wrong with that either, but I just... I j- part of me does wish that more founders were able to continue being founders and build the next thing and the next thing. Um, I mean, w- we just met each other, we 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-
- SBSteven Bartlett
100%, yeah.
- BABrian Armstrong
... you've, you found some new level of joy in doing that and-
- SBSteven Bartlett
100%.
- BABrian Armstrong
(laughs) Yeah. So, this is, like, your next founding moment, but, yeah, I, I think if you don't do it, then you're just gonna burn out and, and a lot of people, I think, who had some level of success as a founder, they look back on it and they, they're like, "Well, man, I finally got that thing to some level of success and I sold the company or whatever, but (exhales) I never wanna do that again."
- SBSteven Bartlett
Yeah.
- BABrian Armstrong
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 ne- I need to get it to a place where it's fun to run the company
- 32:57 – 38:30
How to build a sustainable company
- BABrian Armstrong
so that I can keep building companies for many, many decades hopefully. That, at least that's my goal.
- SBSteven Bartlett
Y- you're de- you're describing me when you say that. So-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
... I built the company for seven years, but it felt like I was doing it, um, involu- it wasn't, it wasn't voluntary meaningful struggle.
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
It was, "I can't let this thing go down."
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
"It's not... 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 in- involving the, you know, the... 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.
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
And that, uh, often in Silicon Valley when... especially w- when you're in high-growth companies, sustainability in terms of culture is the last thing.
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
How have you done that then? How have you tried to make it m- 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 100?
- BABrian Armstrong
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. Um, and then I'll come to, like, repeatable innovation. Um, so from a burnout point of view, I mean, a few things that I do, for instance, um, 'cause obviously there's days where you have to, like, go hard and sprint and then, um... 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 kinda wait, there's never a good time to do it. Um, 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 y- 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 you... whatever. I, I don't know if we'll keep doing it or not, it's an experiment, but I... by taking a week off every quarter allows me to kind of make sure that I recharge, I have time to go, um, learn new things, and it often, like... sometimes, you know, I'm (laughs) thinking about the business in some way, shape, or form, but it's like... Yeah, that, that's helped make it sustainable. Other things I've done, I've had, um, a lot of executive coaches, different executive coaches, I have one now. You know, it's fun- there's different kinds of executive coaches, some of them are very tactical with their advice, like, they're former CEOs. Others are basically therapists. (laughs)
- SBSteven Bartlett
(laughs)
- BABrian Armstrong
And, like, you know, both are good and important versions to have. Um, when I first heard that I was like, "Oh, I don't want the therapist, I want, like, the tactical CEO coach." Um, but, you know, I've found the, the therapist part is almost even more valuable. Um, let's see, what else? I mean, like, I have, um... I have this kind of, like, morning routine where, like, I've noticed that my days go a lo- I'm a lot more stressed if I just, like, wake up and I look at my phone, you know, I haven't really, like, had any breakfast or exercised or anything and, like, you know, I'm, like, low blood sugar, I just... everything's pissing me off, I'm, like, irritable.
- SBSteven Bartlett
Mm-hmm.
- BABrian Armstrong
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..." Th- that... all these kind of things help. And I think this is important for the whole company to some degree 'cause a lot of new employees especially, uh, like, new grads or younger folks, like, they, they actually don't know about burnout. They'll, they'll actually... you can have a... unlimited vacation policy and tell people at, 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, I've seen, especially high achieving people, they push themself, 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, they, they di- they di- they didn't feel like they had permission 'cause 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, 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, okay, there's... so that's kind of how to, like...... you know, go hard for the long term but don't burn out. Um, 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-
- SBSteven Bartlett
Mm-hmm.
- BABrian Armstrong
... tapers off, and then what do you do? I, I think companies need to continually have, like, a next act, you know, and a port- ideally, like a portfolio of products or different revenue lines, um, so that while something is going down, another thing's going up. And we do, 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 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, I think that's important for the long term sustainability of companies 'cause it always maintains this, um, 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 a company exciting, that's how you ex- extend the founding moment, right? Like, like Zuckerberg is trying to do that now with, with, uh, 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
- 38:30 – 43:18
How to incentive your team to take risks
- BABrian Armstrong
and stuff like that.
- SBSteven Bartlett
Every company wants that.
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
At least they say they do.
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
But then they, they set up incentive structures and policies that actually act as a d- deterrent for innovation. They dis-incentivize people to innovate.
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
So, a question I get a- 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 in- incentives, and how do you really make that philosophy and culture real where people are actually incentivized to take risks-
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
... and to, to do those, those 10% bets that might end up being the n- the next AWS or the next, you know, uh, Kindle or whatever-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
... in the case of Amazon?
- BABrian Armstrong
Yeah, you're right. So I think the, it, it's a n- the natural tendency of most orgs is to not allow that, and so you have to actively fight against it as, 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 and that on their, 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, um, like, I think, uh, you know, Amazon, Amaz- Amazon example, right? Is like, they, they tried to launch their own phone at Amazon, right? (laughs)
- SBSteven Bartlett
Mm-hmm. Yeah.
- BABrian Armstrong
The Fire Phone, and it was this big failure, but my understanding internally was like, they basically pushed r- it was the wrong idea but they had good execution. And so they didn't, they didn't, like, fire that team because the, the Amazon phone f- uh, 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-
- SBSteven Bartlett
Oh, wow.
- BABrian Armstrong
... which then was a very successful product. So, I, um, it's a tolerance for failure, recognize good execution even if it's toward the wrong idea. Um, you know, I think some of this has to come from the founder (laughs) , I don't know, I don't know if there's any other way. Like, the problem is, um, if you look at public companies that have, that are founder led, they actually, like, outperform the, the rest of the S&P 500. And one theory for why that is is that the s- like, the scarcest thing inside big companies is actually risk tolerance. Um, and so founders can kind of provide that. Now, you can (laughs) , y- 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?
- SBSteven Bartlett
WeWork (laughs) .
- BABrian Armstrong
Yeah, exactly. Um, 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 wanna criticize anybody-
- SBSteven Bartlett
(laughs)
- BABrian Armstrong
... but, like, 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, um, enough risk tolerance to try new ideas. And then I, and then I also wanna pair myself with great operators like, like Emily Choi, our COO and president, right? And I... We have a really amazing executive team. So, it's the combination of, like, great operator but also great founder energy, uh, which I think is a nice combination that creates good outcomes. If you do, if you're too heavy on one or the other, sometimes it doesn't work as well. (paper rustles)
- SBSteven Bartlett
There's something a lot of you don't know about me. Last year, I co-founded a company called Third Web and most of my available time right now is spent building Third Web. So, what is Third Web? Third Web makes it really, really easy to build Web3 applications, and today's guest is one of the most famous CEOs and founders in Web3, and we actually have a really strong relationship with his company, Coinbase. So it felt somewhat fitting to introduce Third Web to you in this episode just for a couple of seconds. Since we launched Third Web, the growth has been insane. The world's biggest brands, sports teams, creators, gaming studios, and hundreds of funded Web3 startups have all used Third Web to power everything that they want to do in Web3. NFT drops, packs, DAOs, you name it, Third Web powers it. In the last two months alone, the number of active projects using Third Web tools has doubled despite the bear market. So, if you're an entrepreneur, if you're a brand owner, if you're a Web3 developer, or just someone that's interested in Web3, which is, in my opinion, the next major technological shift that will impact all of our lives, kind of like social media and Web2 did, then you can start building that future today using Third Web. Check out thirdweb.com for more. The link is in the description below.Let's get back to the episode. (paper rustles) You read this, um, the White Paper, Satoshi's famous Bitcoin White Paper, pivotal moment for you, sparks interest and intrigue while you're at, um, Airbnb. You do something which a
- 43:18 – 59:00
My journey starting Coinbase
- SBSteven Bartlett
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 wanna pursue this idea. How did you do both? 'Cause you stayed at Airbnb while you started developing-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
... what, what became Coinbase.
- BABrian Armstrong
Yeah. So, basically, I did it on nights and weekends.
- SBSteven Bartlett
People don't like that answer.
- BABrian Armstrong
(laughs) Yeah.
- SBSteven Bartlett
It sounds toxic.
- BABrian Armstrong
It required a lot of energy. I mean, I basically f- so, so first of all, you need to make sure that if you are currently employed, like, don't build it, you know, on company hours, and don't build it on the company laptop. There's a lot of, um, IP litigation that has ended, you know, uh, eh, for some people has ended badly because the company actually owns it, typically. At least in the US, I don't know what the rules are in other countries. Um, if you build it on employ- 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, I would often work till, like, 7:00 PM or something like that, I'd come home, eat dinner or something like that, and then I would work from, like, 8:00 PM to midnight. Um, I would do that maybe three or four days a week on weekdays, and then on, on the weekend I'd work maybe, like, Sunday afternoon for, like, seven or eight hours. So, I was, 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 w- and it was hard, it sucked. I mean, I was, like, tired after a full day of work, it's like 7:00 PM, but this is where that, some of that determination comes in, right? And I was like, "Okay, well, my coworkers are, like, going out drinking or whatever," and, uh, and nothing wrong with that, I did a lot, plenty of that but, like, in my time, uh, at that moment in that time, I was, I was, you know, in my late 20s, I was like, "I really wanna try to build something important in the world, like, I'm gonna 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, um, and then I applied to Y Combinator. They g- 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.
- SBSteven Bartlett
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-
- BABrian Armstrong
I was-
- SBSteven Bartlett
... girlfriends and boyfriends?
- BABrian Armstrong
Yeah. (laughs) 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, (laughs) just, like, never responding to people, but I, people would ping me and like, "Hey, can you come out" and this thing, and I was like... Actually, I remember (laughs) , 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 lit- I literally wrote back to him, "Ch- I'm changing the world one line of code at a time."
- SBSteven Bartlett
(laughs)
- BABrian Armstrong
(laughs) "Can't hang out." He's like, "Rock on, I love it."
- SBSteven Bartlett
(laughs)
- BABrian Armstrong
Um, so, you know, I was joking or whatever and, um-
- SBSteven Bartlett
I'm gonna try that with my mom. (laughs)
- BABrian Armstrong
Yeah. (laughs)
- SBSteven Bartlett
For sure, yeah.
- BABrian Armstrong
Yeah. So, you know, I think, I've seen this happen to various people, like, they s- they get to a certain point in their life, they're like, "Goddamn it, I'm gonna..." Fuck, can I swear on this program?
- SBSteven Bartlett
Of course you can.
- BABrian Armstrong
Okay. So, anyway, there's a co- there comes a time, I've seen this happen to various people in their life, I, it's 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 gonna fuck around anymore," like, "I'm gonna get this done what, 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, for you, like, the listener out there, and, um, and then go hard at it. You know, finish your book, like, launch your, launch your thing, whatever it is, the st- the app, the startup. Just, 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. Um, I, I actually, th- so th- you just reminded me, there was a precursor to Coinbase which was, um, this app that I built with my friend, uh, which w- we were trying to figure out how Bitcoin worked, and we built that, and the minute we shipped it, I was like, "I've, it's built wrong." And I knew the architecture was wrong, and I, then I knew what to do next, and... So, oftentimes you don't even know what to do, just do anything and you'll find, you'll, it'll help you get to the right thing.
- SBSteven Bartlett
Action leads to inspi- information.
- BABrian Armstrong
Yeah, action produces information.
- SBSteven Bartlett
Action, never heard that before. It is so true.
- BABrian Armstrong
I, I, I sto- I stole that from, uh, Paul Graham, I think, who started Y Combinator.
- SBSteven Bartlett
Yeah, I know.
- BABrian Armstrong
It's, it's so true.
- SBSteven Bartlett
Mm-hmm. And I will steal that from you, so-
- BABrian Armstrong
Okay. (laughs)
- 59:00 – 1:06:49
Mistakes & key learnings when starting up
- BABrian Armstrong
out to raise capital.
- SBSteven Bartlett
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"?
- BABrian Armstrong
Yeah, so 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 th- 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, we wanted to work with and we... really surprised us and were really bright.
- SBSteven Bartlett
In those high-growth moments there's so m- things keep breaking-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
... and processes actually need to adopt when you g- as you'll know from... when you go from a couple of people to then 50, to then 100, to then... so I was just th- thinking if there's any advice you have for me as someone... I've grown a, a business, but not in, not in such a, a high-growth way and not in such an interesting, um, uncharted industry.
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
Um, eventually your, your co-founder, Fred, departs.
- BABrian Armstrong
Mm-hmm.
- SBSteven Bartlett
What was that like emotionally? Because I can't imagine... the thought of my co-founder par- uh, parting in-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
... 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.
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
You know, that bond and that we're in this together. So, how did that feel emotionally?
- BABrian Armstrong
Yeah. I mean, it was awful. Um, I cried. You know? Um, so, yeah, so I think... here, here's the whole story. So, I think really Fred, um, Fred's an, was an amazing co-founder and we were building all this great stuff together. He's really a natural leader, right? And so, um, I was the CEO of the company, but there was times where, you know, I, I think he felt like he was being held back. He, 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, 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 wanna 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, um, whereas a lot of co-founders when someone does leave, there's a, 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 wanna make sure the company's in a good place, doesn't need to happen any... and there's nothing soon here happening, but I do eventually wanna transition. So, over a period of a year, we talked about it, and then when he finally told me he was ready, I cr- I cried. Um, it did feel like, you know, I was losing, kind of, half the company the s- the f- founding moment of it. And I remember... So, then we had to go in front of the company and tell, deliver the news. Oh, man. So, um, we talked to the board and everything like that f- 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.
- SBSteven Bartlett
Mm-hmm.
- BABrian Armstrong
Like, you know, at first, the 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, saying like, "Okay, 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 f- 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 just, like, you're... Anyway, I was like, "Oh my God, this is so embarrassing." Like, I had to, like, walk behind th- the podium so nobody could see my legs shaking and my voice is cracking, and I'm like, "God, I'm fucking... I'm messing this up."
- SBSteven Bartlett
(laughs)
- BABrian Armstrong
You know, like, 'cause I'm supposed to be projecting confidence and, like, no, it's not a big deal-
- SBSteven Bartlett
(laughs)
- BABrian Armstrong
... we're gonna get through this, and I'm just, like, coming across like this prepubescent kid, you know (laughs) ? Um, so everybody, of course, is, like, kinda shocked, and they could... People were like, "I could tell you were really scared, Brian." I was like, "Shit, okay. (laughs) I didn't really announce that very well."
- SBSteven Bartlett
Mm-hmm.
- BABrian Armstrong
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 it... and of course it wasn't as bad as I thought, but, yeah, that wa- that was a really scary moment. And then... and 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, um, to have a more, like, professionally run company, if you will. So, it... it ended up being, like, sort of a second founding moment of the company, and I, I realized this later, actually, companies have many founding moments, and you can just keep building.
- SBSteven Bartlett
What situation was the company in now, again, in hindsight-
- BABrian Armstrong
Yeah.
- SBSteven Bartlett
... at that stage? 'Cause I heard in 2017 things were a little bit messy. And, and you brought in this executive team to kind of help you, you know, um, solve s- some of those problems, but when... at the point when Fred left, uh, what was the state of the company?
- BABrian Armstrong
So, he, he left it at... as the s- market was swinging up, and that was conscious on his part, he wanted to make sure the company was... it didn't harm the company as he left. Um, and so yeah, the challenge after that was, like, okay, go, go build an exec team. And a lot of founders have gotten through this. It's, it's quite hard. So, if, if a company is growing, you know, 50% a year or something, you can oftentimes promote people from within who are kinda learning on the job and just take on more and more responsibility. We... in the... in these... cry- crypto's so volatile, it'll go through, like, 500% growth in one year and then negative 100% the next year-
- SBSteven Bartlett
(laughs)
- BABrian Armstrong
... 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, we vent... basically went out to seek more experienced executives to come in. And, um, that was i- in itself its own crazy process with lots of learnings, 'cause whenever you bring in a bunch of high-powered executives, you know, sometimes you get people who butt heads, right?
- SBSteven Bartlett
Yeah.
Episode duration: 1:45:10
Install uListen for AI-powered chat & search across the full episode — Get Full Transcript
Transcript of episode TB0yceuXmrI
Get more out of YouTube videos.
High quality summaries for YouTube videos. Accurate transcripts to search & find moments. Powered by ChatGPT & Claude AI.
Add to Chrome