Brian Armstrong, Coinbase

(air whooshing) - How much of your job is building political power as an advocate for the crypto industry? - Yeah, I don't have to go, but I think it's worth it for the business. I don't mind going. I like doing it in some ways. I like doing it. There's some pretty interesting people there. So I'd go about once a quarter, maybe once or twice a quarter recently, 'cause we're right at the crux of this key moment for market structure legislation. But I'd say over the last few years, yeah, about once a quarter. - What's the key moment for the market structure? - Well, the crypto industry's been working for a long time on getting in the Senate. A whole bunch of people have been trying to get this piece of legislation passed. In the house, it was called the Clarity Act. In the Senate, they're drafting their own version of it. But it's essentially clarifying this question about which of these crypto assets are commodities versus securities. And someone might say, well, why does it matter? It matters because in the United States, we have two different federal regulators, a CFTC and the SEC. The CFTC regulates commodities. The SEC regulates securities. And so it turns out in the past, this ambiguity about where crypto assets set, sit between the two federal regulators, that lack of clarity was really weaponized. And by Gary Gensel, or the former SEC chair, and Elizabeth Warren, and some people like that who tried to, in my view, unlawfully kill the industry in the United States. So in other countries where we operate like in the UK, or in Singapore, they only have one federal regulator for financial services. So they actually don't care whether these are commodities or securities. It's a totally parochial issue in the United States that's kind of like this turf war between two federal agencies in the past. So anyway, we just decided we need to get legislation passed by Congress to clarify once and for all which of them go in which bucket, so that a future Gary Gensel it couldn't come in and try to kill the industry. So what was the law fair that we're trying to do? Well, okay, so long story, but essentially, this was around like the 2020, 2021 timeframe coinbase. We decided we want to become a public company. We had been operating for about nine years at that point. And we went in and went through the normal process with the SEC, you have to describe your entire company, how it works, how do we decide which assets to list, which do we not list. At that time, we wanted there to be a path to have crypto securities be traded. Simply to think of it as a, security is like a way to raise money for a company that you want to start a commodity is something that's decentralized kind of like oil or gold or copper or something like that, right? So Bitcoin is decentralized, nobody controls it. Everyone pretty much agrees Bitcoin is a commodity, but there were people issuing tokens which were raising money for different projects they were doing that were various stages of decentralization. So was it a commodity, was it a security, and then Gary Gensler, the SEC here at that time, my understanding is that, you know, he elicit with the Warren essentially decided they wanted to use this to curtail the crypto industry. And if you want to know why? Well, okay, so Elizabeth Warren is, you know, in my view, she's a socialist. She believes the government should be running all financial services. And she had essentially found a way to bypass Congress and have a lot of influence over financial institutions, big, like big banks. And she did, how would she get that influence? Well, she would appoint regulators that could essentially go in and pressure the banks to do things that Congress had not necessarily authorized. So under the Constitution, you know, only Congress is allowed to make laws, but the regulator is given some discretion about how they implement those laws. So you can imagine, let's say you're a bank and you have a, you know, your bank regulator and they come in, this is, they can choose to, you know, lose your paperwork and not approve something for 90 days or two years or five years, or they can, you can have a good relationship with them and they can approve things. So let's say they come in and they start to ask you, "Hey, are you guys serving crypto companies?" And you say, "Well, yes." And they say, "Well, you know, that's not illegal," per se, "but we're gonna have a lot of questions about that in the next exam that we do of your bank. We have deep concerns about the risk that this might introduce." You know, suddenly everyone inside the bank's getting the message real loud and clear, like, "Ooh, maybe they don't like us doing this." Now, is it illegal? No. But the bank's regulators, if they say jump, you sometimes want to say, "How high," right? And this was the kind of extrajudicial pressure that Elizabeth Warren was able to create on banks. She did, by the way, in a bunch of other industries too, like she got them to stop giving loans to like oil and gas and firearms industry and some things that she, like her own political agenda, basically. So she got kind of her hooks into these banks, had a lot of influence over them. Suddenly, crypto comes along, which is a new system operating outside of that. And she didn't like it too much. And so she asked my understanding, this is kind of what other people in the Congress told me, is that she asked her again, "Where'd it go hard on crypto?" And like, try to really curtail it in the United States. And that's what he did. He created a bunch of law fair, essentially. Like, we'd go into meet with him. We did maybe 30 times. We met with the SEC after becoming a public company, where they allowed us to become a public company. And, you know, we'd say, "Hey, we're here. We'll tell you anything you'd like to know. Just tell us what are the rules." We're here to like, "We're trying to build this industry in America. You tell us the rules. We follow the rules." That's how it's supposed to work. And they would say, "We're not going to give you any advice. Go talk to your lawyer." And then the next day, like, an enforcement action would arrive. And we'd say, "Well, what can you show us in the law? What you think we've done that's wrong?" Like, no, we're not going to do that. Like, you need to comply, like, basically delist all these assets or we're going to sue you. And so, at a certain point, we just said, "Okay, let's go to the courts and find out who initiated the legal action, then, where you-- it was actually both. They created an enforcement action and initiated the lawsuit against us. We actually sued them proactively, because they had violated another party law called the Administrative Procedure Act, where they're required actually by law to engage with the industry to promulgate rules. And they had failed to do that." Wait, how many companies sue their regulator? Very few. So this actually gets into one of the big themes of, you know, I don't know, like, me as a CEO. Like, I want to try to always do the right thing and I have a very long-term perspective. Like, I'm trying to create an important outcome here in the world, which is around increasing economic freedom in the world. So, you know, in the short term, I do this is going to hurt our company. A lot of public-market investors, they just-- this company is suing its regulator. I'll just wait and see. I'm not going to buy that stock, you know? Actually, a lot of people I talk to at that time, they're like, "Do not sue the SEC. Like, this is a bad idea." But I did-- I actually talked to a couple other financial services CEOs who had sued the SEC in one. And so I knew it was possible. You know, it's a little bit like-- you remember when SpaceX was trying to get that contract with the government? Yeah. And they didn't think it was fair how it was awarded, and they sued, and they won. Like, Palantir had to do something similar. So you don't-- you don't want to do these things half-hazardly, or-- you know, but you do-- there are moments where you have to stand up and sue the regulator or the government, and they'll actually get the right outcome. OK, so when you're deliberating on whether to do this or not? Yeah. What's the time frame? Is this a couple days, a few weeks? Like, how fast do you have to make this decision? Well, I would say that was probably over a period of like three or four months. We could tell the temperature was rising, where they were like, you're about to get sued. And we-- you know, and we were like, well, what have we done that's wrong? You haven't published any rules that we can actually adhere to. And we knew the temperature was rising, and then we sued them. They sued us. And yeah, we made a call. Yeah, the reason I asked this is because it's a great story on one of the biographies of Elon when you just mentioned this. Yeah. And in that case, it's even crazier, because you're almost like suing your customer, because Elon wanted money from NASA. Yeah. And they wind up-- there was all kinds of essentially corruption, where it's just like-- I can't remember the amount. It was 250 million, or whatever the case was. And they gave it to this other guy's company, even though-- and essentially to save this guy who used to be either a former astronaut or in-- like, working for NASA. And he's like, well, his company got a business if we don't give him the money. And Elon's like, this is insane. They can't be the way we're making decisions. Yeah, yeah. And so they tell the story, he's sitting there, and they're like, what are we going to do, Elon? He closes his eyes, and he's staking for a little bit. He's like, we have to sit in there. And they wind up winning. Founder mode, I guess. Well, you just said, like, mission driven. Like, this is what's very fascinating about you, where it's just like, well, I have a mission that I'm on. And so if you're looking at your decisions to do that lens, it kind of simplifies like what you're doing. Yeah. And I have a long-term perspective on it, too. If it's going to be short-term pain for a few years while we're going through this, but it allows the industry to actually be built in the United States and help create more economic freedom, which is the mission of the company, then I'm fine with that. I feel like, personally, I'm well off. I'm in this-- I don't have to work a day of my life. I'm doing this because I actually want to achieve the outcome at this point. And so it wouldn't have helped me achieve the outcome if we'd let this regulator unlawfully kill the whole industry in the United States. That would have just been a setback for my point of view. This happened after your public? Yeah. So you accumulated resources. The company has a lot more resources. If this would have occurred before, would you have had the money to fight it? Probably not. In fact, a lot of startups did die as a result of that law fair. I mean, he didn't just sue us. He sued a whole bunch of crypto companies and a lot of them folded. So in many ways, he actually did a lot for the economic development of places like the UAE and the Bahamas and places like that, because a lot of the industry moved offshore. But it was incredibly damaging to America. I think the total amount we spent on legal and all that was maybe in the 50 to 100 million range as a result of that law fair. On that one thing. Yeah. But the damage to the stock was probably, I don't know, 10, 20 billion, maybe more. It was a massive downward pressure on the stock for a period of a couple of years. Oh, and I should mention we won that case. It was-- so we didn't pay a single dollar in fines. We didn't have to change a single thing about the company, the judge. Actually, the SEC withdrew it under this new administration. And several judges actually published opinions saying that the SEC behaved in an arbitrary and capricious manner. So I have a nice little thing in my office commemorating that. Winning arcades suing the SEC. That's incredible. One of the things I love most about the game is the conversations I have with Brian Armstrong is how focused he is on making the best possible product he can for his customers. Obsessed over customers is a maximum that is repeated by Jeff Bezos and you definitely see that with Brian. It also is the same trait that I see in my friend Karim, who is the co-founder and CTO of Ramp. Ramp is the presenting sponsor of this podcast and Karim is one of the greatest technical minds working in finance today. Karim is obsessed with crafting a high quality product and using the latest technology to constantly create better experiences for his customers. Ramp has one of the most talented technical teams in finance and they use rapid, relentless iteration to make their product better every day in the last year. Ramp has shipped over 300 new features. Ramp is completely committed to using AI to make a better experience for their customers and automate as much of your business's finances as possible. Many of the fastest growing and most innovative companies in the world are running their business on Ramp. Make sure you go to ramp.com to learn how to help your business save time and money today. Let AI chase your receipts and close your books so you can use your time and energy building great things for your customers. Get started today by going to ramp.com. Where did you get this long term perspective from? I think it was from trying a bunch of short term things and then realizing that I started some companies in college and I realized that everything is difficult. Even if you're running a sandwich shop or something, it's difficult. You have to find employees don't shop on time and the food and the vendors and the margin compression because there's a million other sandwich shops. If you're going to do something, you might as well, it's going to take you a decade or two or three to really start to have an impact. You might as well pick something that you care about. It's the really big thing. It always bothers me a little bit when I talk to entrepreneurs and they tell me that the thing they're working on. I'm like, "Okay, what do you really want to do?" My big thing is I really want to do this. In their mind, it's a little too ambitious. It's a little too difficult. They need more capital. Part of me is thinking, "Man, you should just go for that now." You could spend the next two decades of your life working on this thing you're just talking about now. It might as well work on the thing that will actually have a major impact if it works. Are you optimizing for impact? I think so. Early on, I was kind of shy and introverted as a kid and I was a little on the autism spectrum and stuff. I think I was just trying to keep saying that. We've talked enough. You're not autistic to me. I mask it. There's not a whole masking thing. Let's talk about this. How do you mask your autism? Do you just say you're autistic because it's trending and cool enough? It's actually a good way to get an adventure check is to be on this spectrum. We're not raising money, but I'm introverted for sure, but I'm introverted too. I hate when people in the comments think I'm autistic because I read all the time. I'm not autistic. I think I'm somewhere on this spectrum. I've taken some online tests and things like that. There are things where I have difficulty reading people's faces and emotions sometimes. I can get overstimulated by loud sounds and lights. There's classic signs like that, but it's not debilitating at all. I actually find it to be like, it is a strength in a sense that I can just endlessly focus on interesting work almost. For 12 hours a day, I just find it to be. I wouldn't say effortless. It depends on what kind of work I'm doing. If I have to do 12 hours of people management and hard conversations, that's a good way. That's pretty taxing. If I'm just writing code or reading things on my computer or just digesting cool content on the internet, I can just do that endlessly. I wouldn't say you have to be autistic to have that, but there's certain things like that I can just find it endlessly fascinating. You definitely have the ability to say with a non-consensus opinion for a long period of time. That's the other thing, which I don't know if this is an autism spectrum thing, but yeah, I think some people are a little more concerned with social, cohesion or what other people think. There is a part of me that's just. If I see something that's just wrong and not in line with what I want to accomplish long term around civilizational progress and these things, I don't care being disliked. I don't care that much about being disliked for it. I know that it will piss people off. There are a handful of things like this that I've done in Coinbase, which I think people consistently remarked to me like, "Wow, that was really unique." To me, it didn't seem that unique, but this mission first blog post I put out where we said the company is going to be apolitical during 2021, all that madness, or suing your regulator. These are things which most people probably wouldn't do because they're afraid of being disliked. It's not that I like being disliked. It actually causes me a fair amount of stress, too, but I don't let that stop me from doing what I think is the right thing. I recently read that blog post. When you remember the context of what you were thinking when you were writing it, because you look back now and a lot of people were like, "Of course, you would just focus on the mission of the company. What is the point of having a company if you don't have a mission?" You read it today, it's fairly innocuous. But back then, I remember the response, people were going crazy. Yeah, it's really funny if you look at it now. It's like, "What's the big deal?" It's kind of a boring blog post in some ways, right? But yeah, at that time, I feel like there was this mass hysteria or something that had taken over the country. In the George Floyd thing had happened. People were COVID had happened, so people were isolated. They weren't getting in person as much with folks and feeling a sense of, "Hey, we're all on the same team. We trust each other." Increasingly at these town halls that we would host as a company, usually people would ask questions about our products and our competitors and regulators. We increasingly would be getting these questions about social issues happening in the world. In this case, police brutality with George Floyd, but all kinds of things, like Middle East or whatever, gun control. It became almost like, I realized there was this element within the company that really wanted to get in front of the company with a microphone and see if they could make the executive team squirm somehow. We had this culture of this open mic thing, but I realized that later, we actually don't really do that. We just have people pre-submit questions. If we take hard questions, but if they're way off topic or someone's pet issue, we don't entertain that. We don't allow one person to derail 3,000 other people. It was in that context that the company was going through this and somebody at a town hall asked the question, "Are we going to support Black Lives Matter at Coinbase?" I basically said, "I don't know if we know enough about it, but I'll look into it. Move on to the next question." They held the mic and they said, "That's not good enough. I need to know if we at this company are going to stand for this or not." I said, "I don't know. I haven't looked into it." It ruptured in Slack and basically 300 employees did a walk out in protest. If you remember at this time, every company in America was posting pro BLM statements. I never had a walk out of employees at the company before. I didn't even know what that meant. They all just closed their laptop in a remote environment against it. Are these not in person? This is all remote during COVID. The walk out is closed my laptop. We were from my bedroom to my living room now. I was like, "Okay, this is weird. As a CEO, I never had the confidence of the company or whatever. Now people are saying they refuse to work at this company based on my comment." I found this very confusing, actually, maybe a little of that autism spectrum. I was like, "I'm confused. This company has nothing to do with police brutality or anything. What is going on here?" We got in the room as an executive team and I asked them a few questions. People are very sensitive in this moment. They need to feel reassured about where their leaders stand. I was like, "What does BLM even stand for?" I went and looked into that. Later, I found out by the way that they support defunding the police and all these other things. It was not a very simple answer. I didn't really know what to do. After about 40 hours or so, we put out a statement and we said, "Okay. I guess we supported quality for all people and all these things." People came back to work. I felt something was deeply wrong. I felt like I had compromised something about myself and I didn't understand what was happening. I started to go talk to a bunch of employees in the company and read a bunch of these books, like Jonathan Heitz book and others, which is the Jonathan Heitz book? Something of the American mind. The Kotlin of the American mind, I think. He basically talks about how in these college campuses, there's these training activists in these college campuses and it's now spilling into the workforce. They feel that their job is not to join a company and advance its mission. They felt like their job was to join a company and hold truth to power and I could hold it to account for these broader societal issues and actually reform the company as an activist. I essentially started drafting this blog post and I said, "We're not going to do that here." We're not going to be a company that just tries to jump into whatever the current hot social issue is and make a bunch of fuel good statements without actually doing anything. We already have an important mission, which is increasing economic freedom and it takes decades of work to try to make an impact on something that big. Let's stick to the thing that we think is important in the world and outside of work, people can do whatever they want. You can go protest, you can be left or right or whatever, but just inside the workplace, we're not going to be political. It's going to focus, unless it has to do with our mission, crypto and economic freedom. It will be very political and engaging for litigation and things like that. I knew I was going to piss some people off and I actually some people when they read the draft post before I sent it, they said, "Do not post this." They begged me not to post it. - People inside your company, you sent it to other founders. - Inside the company. - Okay. - Yeah. - Did you send it to anybody outside Coinbase? - I might have sent it to the board or somebody like that. I'm not sure if I sent it to anybody. I think I might have told a few of my friends about what I was up to, but they didn't read the post. - Okay. - Yeah. And yeah, and so, I'd said to do it anyway, and I knew people were gonna upset, and so we put out this, we said, "Anybody who's not okay with this new direction." You know, I had failed to create alignment in the company about where we were going, and I was kind of walking on eggshells around whenever people would ask me this, so people were confused about where we stood, and there was maybe like, it felt like 50% of the company was against this, but I think in reality, it was like, one, it's very vocal, 1% minority, and there was other people who were sympathetic to that cause. Anyway, we put out the post, and I said, "Anybody who's not aligned with this new direction will give you a good severance package." You can fill out this form and accept it by Friday or something, and 5% of the company took the exit package. We were having bets beforehand. We didn't know. We thought maybe 50% of the company would resign or something. It felt like that was-- - What would have happened at that time if 50% resigned? - We would have built it all back, you know? And this is actually a very important point, because I think that there's a big difference between like a founder and a presider of a company, right? Like, I know that I could build it back, because I started it when it was just me on a laptop, right? And I was there when it was 10 people, and 100 people and 1,000 people. And if we need to go from 2000 to 1,000, that's not a big deal to me. You know, I could go back to being on my laptop again if I had to, right? And there's actually, there's this great Lique-1U speech that he gave, he was the founder of Singapore, you know? And I guess he was dealing with a strike that was happening, I think, from the air traffic controller or the airline or something like that. But there's this great speech, if you Google Lique-1U, Iron Invanes, you know what I'm talking about? And he basically, he says, like, in this speech, it's kind of gives me chills every time, where he's like, I sat across the table from them, and they were threatening to like shut down the airline and everything, and he said, get back to work. And, you know, or, and like, I will not allow you to bring this country down. And if you don't do it, I'm prepared to rebuild it all from scratch again. And he said, anyone who rules Singapore, you know, has to look at me and know that I have iron in my veins. Like, I will rebuild it all from scratch, right? And so I was watching like videos like that. And I was like, this is what I need to do as a leader. Like, it was very, it was very inspiring. So there are moments like that that you have to stand up and say, we're going in this direction. And if you don't, if you're not on board with it, it's okay, you can leave. But we're going this way, that's leadership. There's two interesting things that popped out and what you just said. I want to go to the long term. Again, you have this long term orientation. You mentioned multiple times in the blog post. You're like, we're trying to change, literally change the world. And that's going to take multiple decades. I want to go to that one second. But I like how you said it. I was confused. Like, what is going on here? So you're not, your first instinct when you're confused. You start reading books. You start talking to people. What do you do to try to, like, to essentially alleviate the confusion? Because you're like, oh, I don't know what's going on. I'm going to read Jonathan Hatesberg, for example. Yeah, all the above. I mean, I read books. Books are amazing. I think sometimes it can take reading, like, as you know, it's like read for eight hours to get to that one part. Oh, that's the key insight. So actually calling people, I think, is faster if you have access to them, especially earlier in my career, I didn't have access. But now I feel like I can get access to more people. And it's often just a shortcut. If you know the right person to call who's been thinking about that or working on that for 10 years, they can explain to you in 30 seconds what you need. Oh, my gosh. That's the connection, of course. So, yeah, that's exactly what I do. And I just fall in my instinct a lot of the time. Like, a lot of your job at CEO is, you know, your day can just get infinitely scheduled. And you're just like trying to hire the right people and go talk to investors and build, you know, go to product reviews and stuff. But once in a while, you just need to follow your nose. If you're like, something's bothering me, you know, it's like, I bet you're kind of always ingesting information. And once in a while, you're just like, something feels like really off over here. Like this team does, this team is rudderless, like going in no direction. Or I don't trust what's going on over here, like, you know, in this policy thing. And you can just go digging it out. And occasionally you find things and you can add a lot of value. When you say follow your nose, is this intuition? Yeah, it's intuition is pattern matching. I mean, a lot of times you're just absorbing information. Like in documents, people are writing up and Slack channels and reports and like a lot of information is just being ingested. And once in a while, you start to, you're like, that's the third time I've heard something weird about that. Like I need to go dig into it. It was actually surprised. One of my favorite conversations I've had so far for the show was with Toby Lukek. Yeah. I mean, you talked about him at lunch. And like, I always say, it's like your favorite founders, favorite founder. Like, people that really admire the way he thinks and the way he's building his company. And you would think like this German engineer, you know, it's going to be all data driven. And like, he just talked about like visualization and like-- Affirmation. Affirmation. Yeah, exactly. All intuition. It was actually surprising. It was one of the most fascinating things on this conversation. So explain the difference you thought about when you were starting the company's before Coinbase. Because you had this long-term orientation, almost from the beginning of Coinbase. But do you lack that and the other businesses that you were starting before that? It was really just by trying enough projects that either didn't work at all or were base hits that I realized everything was difficult. And I think-- so my mentality in college and coming out of college-- I knew that I wanted to be an entrepreneur. I was trying different ideas. My view was, OK, if I can get something to be paying me, I don't know, $100,000 a year passively, that would be incredible, because I could somehow free up all my time. And then I don't know what. I'd be able to be passive income, wealthy. And I could then go build something else. Or I don't know. I didn't want to have a plan after that. What year was this? Oh, I mean, this was like-- I graduated in 2005. Were you reading Tim Ferriss? Yes, Tim Ferriss had a big thing on this. Yes. There was the four-hour work week, like that whole thing. I was kind of thinking about it even before that, but the four-hour work was definitely that. Like the first company I really started in college was this tutoring company, because I had been tutoring high school kids while I was in college to make extra money. And working at the library, you got paid-- I figured it was $7 or $8 an hour. But if you were tutoring high school kids, you could think like $60 an hour. I was like, this is crazy. So I was tutoring kids for a while. And then I realized I could match my other college students with other high school kids. And so I built this simple web app, which was like a tutor finding tutor matching service called University Tutor. And I was basically building this in college with another friend of mine that roommate. I didn't think about it from first principles. I wasn't particularly passionate about tutoring or education. I was just trying to make some passive income, essentially, and scale it. And so it would have never occurred to me at that moment to the robot. I didn't have the wherewithal to zoom out and say, you know what? We need to become an interplanetary species. I should make rockets. I was like, what are you talking about? I'm just trying to make-- go from $60 an hour to have 10 of my friends be hired by their get jobs, too. So I went through that process, the tutoring companies its own little story. And then I tried a couple of other ideas like that after college, too. I had a couple of-- I got these rental houses in Houston and I was refurbishing them. And I was trying to build a real estate investment thing. I was doing a bunch of stuff. And at some point, actually, I remember I read this book by Seth Godin called The Dip. I don't know if you've ever seen that book. I read it a long time ago. Yeah, it's actually pretty simple book. I don't know if it would do anything for me today. But at the time when I read it, it was a pretty powerful idea. And he basically was just saying, there's a big dip between being a beginner and in the top of your field where you make the top 1%. And most people quit in the middle because it's not fun after your beginner. There's just like 10,000 hours and all these kind of things. And I remember thinking, do I really want to be doing real estate in like 10, 20 years? I was like, no. Do I care enough about education? Or I was like, I don't think that either. So I literally had like piece of paper. I was like, what are the things I am passionate enough about? Where I would do it for the next 20 years, even if I saw a little or no success. And the only thing I could think of was tech entrepreneurship. That was like the only thing I could really think of. And so that was a very clarifying decision where I decided, all right, I need to move to Silicon Valley because that's where tech entrepreneurship happens. I need to shut down all the other stuff I'm doing because those are just little short-term games. I sold off all these little rental properties. And within a few years of that decision, moving to Silicon Valley, Coinbase had been founded. And I think within seven years of that decision, Coinbase had a billion dollar valuation. It was like a huge direction in changing my life. I was just like, I know what's the big thing is longterm. And I'm going to just go all in on it. And all the decisions led to that. At the time, you started Coinbase, did you think, if it succeeds, this is something I'm going to dedicate a few decades of my life to doing even at that point? I remember I did think that. Yeah, because I tried a couple of these other ideas that were kind of-- they were difficult. And I wasn't actually passionate about it. And so a lot of entrepreneurship, you're just like moving from one set back to the next with enthusiasm whatever, there's that Winston Churchill quote. So I was like, OK, if I'm-- I realized how hard it was to do those businesses. So I was like, the next thing I try, I need to make sure it's something that I'm like, I'm really into for lifetime, right? And I had been reading a lot of books like Milton Friedman about ekko. economics and like iron, and stuff. And I was like, okay, I was getting kind of into these like free market, like libertarian ideas. And I was also living in Argentina for a year. That was a whole piece of the story. I got to see like a hyperinflation country. And-- - And you go to Argentina? - Well, women? - Well, women? - No. - No, sadly no. But it was, I needed some adventure. I didn't know what I wanted to do with my life. And so I had never traveled alone. And so I basically just went abroad and like tried to put myself outside my comfort zone. I had never been in the military. I had never traveled abroad by myself. I was kind of just reading much of books and like I need to travel the world and like see, find what I'm trying to do with my life. And-- - You want to go in the stories? - Yeah, it's beautiful. - Yeah, Argentina's a beautiful country. - Yeah, it's, well it's, I learned from an economics point of view like it, - It's not like that. - About the physical beauty. - Well, so it ties together because, you know, my understanding is actually around the year, 1900 or so, like more than 100 years ago, I think in 1908, it was like one of the top 10 economies in the whole world. It was called the Paris of South America. - Yeah, it was like the first Latin American country that had a train station. You can see it in these historic buildings. They had like massive wealth, right? From beef and copper and all these things. And then over a period of like 100 years of bad economic policy, of essentially like socialist policies of them, the government like stealing wealth from the people while claiming to help them. It's now like the 100th richest economy in the world. It went from like top 10 to hundreds. And so I was down there kind of reading, you know, I ran a mill to Friedman and seeing how hyperinflation had like decimated this entire country. And everyone was pessimistic about the future. And these once grand government buildings were just in these like states of decay, you know, with like cracks and ivy and graffiti on it and stuff. And you know, this was like around that moment where I was like, okay, the next thing I do, and he's gonna be something I'm passionate about for the long term. And within a year or two of that, I read the Bitcoin white paper. That captivated my attention. And then I think this is around. So Bitcoin white paper published end of 2008. - Yeah. - And I think you read it. - December 2010. - Okay. - Yeah. I'd just come back from Argentina. So I was in the Bay Area, deciding I wanted to be in tech entrepreneurship. I read the Bitcoin white paper December 2010. I'd gone to job at Airbnb actually, and I was seeing how money movement had was happening with them all in these different countries. And that's when I started working on the prototype for Coinbase, Knights and Weekends. - So how did they move money to all these different countries back then? - Legacy payment rails. So in the US and Europe, it was a little simpler. You could use bank transfers and so they were accepting payments in than they had to pay out to the host. In many of the countries where they operated like in Latin America, there would be some local cash pickup service that you could kind of like a Western Union, but it was different ones in different countries. And they typically had very high fees, like seven to 12%. I remember we were trying to send payouts into, I think it was Ecuador or one of these countries. And we were reading that there's like a little oligopoly of like two companies that do this in that, you know, in the region. And we were like, how much money shows up on the other side? Like what are your fees? And then we were reading through their documentation. We were like, we have no idea how, it's basically like a borderline corrupt thing. And we basically just decided to send $100. And we found somebody there like, how much money showed up on the other side? Like, you know, just to like give us some rough sense so we could tell the customer how much their payout was gonna be. I mean, it was, it gave me such a visceral sense of like how broken the global financial system is. It's like each country is its own little proprietary set of oligopolies. And imagine if like the internet worked like this, right? It's like, oh, I want to load a web page from, you know, another country and they're like, you pay a high exchange fee and it comes in like a different language, you know, and you have to wait seven days or whatever. I realized, and due to a couple of these experiences, like the Argentine experience with hyperinflation, the Airbnb experience, and reading some of these books that like the world would benefit from a global financial system that was, you know, fast, cheap, permissionless, decentralized. So there was no small group of people who could be corrupt or like put their fingers on the dials to manipulate it. And so that was what I was thinking about as I read the Bitcoin white paper for the first time. - Okay, so you have, you're building like your personal philosophy about like economics and what's important there. You know that you want to dedicate yourself to tech entrepreneurship as far as like what your career is 'cause you're gonna be passionate about that. You want to do something for a long term. And then you're also seeing this real life problem of trying to send money into all these disparate, you know, economies and countries. - Yes. - And then you start working on cornbase nights and weekends? - Yeah, okay. - Great summary, by the way. Yeah, so I kind of do that for a living. (laughing) Yeah, so this is where a little bit of that hustle and drive came in, 'cause you know, I was working long hours at Airbnb, they were like, rocket ship company, I was learning a lot, really amazing team. And, but I really wanted to build something new for my next company. I still wanted to be an entrepreneur. And so I'd worked till like 7 p.m. at Airbnb, come home, eat a little dinner. And then from like 8.30 to midnight or something, like five days a week, I would work on my startup. And you know, you always have to be very careful. You have to do it on your own separate laptop. Don't do it on company time or company property. Make sure it's separate. But, you know, I used my own laptop and sometimes on Sundays I'd work, you know, as well. And right, I'd sort of take one day off. But I was just grinding and I was like, okay, well, I didn't know where to start. So you kind of just have to start with anything, right? So, first I went and talked to a friend of mine I went to college with, we built this little Android app for Bitcoin, a Bitcoin wallet. I realized once we shipped that, we had done it the wrong way. I tried to recruit him to like leave Google and be co-found with me, he wasn't ready to do that. So I started working on another prototype that was more of a cloud-based Bitcoin wallet which eventually became Coinbase. And I had to re-implement like a whole Bitcoin node in Ruby just to try to get it to hook up to my database, you know, on all these things. So I was just doing this like nights and weekends while occasionally trying to find a co-founder, you know, going on these co-founder dates. Why did you think you needed a co-founder? Well, the main reason was that I had read a lot of Paul Graham essays from Y Comedator. And, you know, I was, I really wanted to get accepted into Y Comedator. It was like the top incubator. It still is in Silicon Valley. And Paul had these great essays. And one of them had talked about how, you know, if you look at Hewlett and Packard and, you know, Larry and Sergey and, you know, there are exceptions, but more often than not, like great founders, running a company is just so difficult. It helps to have people with some complimentary skill sets. So just to improve my chances of like getting to Y Comedator of nothing else and the company eventually succeeding, I was trying to find the right person. Yeah, it's interesting, 'cause I feel like there's always one, even if you have co-founder, it's like one, it's actually one founder. Like you could start out with two or three or four. And I know Y C's, like you need a co-founder and like that's like something that's repeated. But if you read the instrumentarist show, it's like, you know, well, you start out three or four or five. There's always one. Like there's one person that's going, that's actually driving the company. Well, you know, long, like it's like Wazniak and Jobs, right? Like, yeah. Jobs was clearly the one that had more impact over the long period of time, but they're probably wouldn't have been an Apple without Waz in the early days. Yeah. I never know exactly. And, you know, like I will say, in my case, like I tried to find a co-founder for about like a year and a half and failed. And so I eventually got the app live and got into Y Comator and there's a whole story there. Did you get into Y Comator's solar founder? So this is another interesting story. But I actually applied with this guy, Ben Rieff, who had created blockchain.info, which is now blotching.com. And we sort of, he had never heard of Y Comator, but I convinced him to fly from the UK. We met, had a coffee, and then we went into the interview, which by the way is a bad idea. You should really co-found with people you've known for a long time. So anyway, that we got accepted somehow under that premise. I don't think we mentioned about probably that we didn't know each other that long, or didn't come up in the interview, or something. We didn't hide anything. But anyway, it became clear within like three months that it was not going to work. And so with the help of YCI kind of went, you know, I had a hard conversation. Him about that, and I went through the program solo. Anyway, long story short, we went through Y Comator, raised the seed round at the end of it, and I was lucky enough to have Fred or some reach out to me. And he became the first person who I really started working with on it unofficially. And then it just started going really well, very complimentary skill sets. And I asked him to co-found. And so he became the co-founder of Coinbase. And I actually don't think Coinbase would have succeeded without Fred. If you look at the subsequent three, four, or five years, there was a lot of like near-death experiences, and he was just an absolute killer. And so it was that pairing that allowed us to really get to product market fit and like off the lunch pad into orbit, if you will. Brad Jacobs has started eight separate billion dollar companies. He said, I've come to know a lot of extremely successful people in my life. And they all have one thing in common. They think differently than most people. All of them, to a person, have rearranged their brains to prevail at achieving big goals, interbulent environments where conventional thinking often fails. What Brad noticed is that great business leaders are patterns spotters. But you can't spot patterns if you can't see all of your data. Most businesses only use 20% of their data. Why? Because 80% of customer intelligence is invisible. It's hidden in emails. Transcripts. and conversations. That's where HubSpot comes in. With HubSpot, all of your data comes together so you can see the patterns that matter. This is important because when you know more, you grow more. And that is a pattern that never fails. Visit HubSpot.com today, that is HubSpot.com. There were some funny stories from the early days of Coinbase Appear. Fred identified that you guys were losing money on every single Bitcoin transaction. Yes, that is true. How did that happen? I mean, the simple version of it is that I was a computer science major. I studied economics computer science. Fred studied the same thing, but he had gone in to work in finance after college. He went to go work at Goldman Sachs as an FX trader. And I was working as a software engineer, a slash entrepreneur, a failing entrepreneur. So I had more of that engineering brain. He had more like that finance trader brain. And so when he came in and started to analyze all of the flow of funds on every trade, he was able to map that out and do to certain time risks and things. He actually was correct that he'd map that out. And it was just a set of conditions, which I was not as familiar with. So that was a great example of just him adding value in the first probably three weeks we worked together. But that wasn't like you, it wasn't like a near death experience. No, that one wasn't near death. It was just getting the right business model and fee structure. An example of a near death experience. Well, okay. So an example of a near death experience was I think we had raised maybe the series A or something like that. Yeah. And we had found product market fit. So there were a lot of people using the site every day. And you know, we were having this huge backlog of customer support inquiries like we're going to be like every night from like 9 p.m. to midnight. We would just try to answer support inquiries because we had we didn't have a customer support team. And well, we were slowly trying to build it, I should say. Anyway, so we had like 1,000, 2,000, 5,000, 10,000 backlog of these customer support tickets and people were getting very angry about all of this because you couldn't respond. Yeah, I was one of those people. Okay. You were early early on Coinbase. Okay. Well, apologies for the lack of the customer support to the point where I was like looking up like I had a bunch of good coin on there. It was like there was an issue. And I was like, what is the address? Like I'm going to have to fly to San Francisco because these people won't respond to my email. Well, this is exactly what happened is people started showing up at the office. And we didn't really even have the address published, but there was a photo of the office and you could see in the background a couple of these buildings. And some people found that and they started showing up at the office at all these odd hours. And I remember some friend back there that had to be weirdos. Like the people that were in the crypto back then were not your normal people. I don't know. I mean, it was once in a while Fred would actually go answer the door holding like a golf club. And you know, like usually it was somebody who was like, man, why didn't my crypto hit my while and then we were like sometimes we'd write people like a physical check and like, okay, you need to leave the office. Anyway, that was the first time I had really experienced having tens of thousands of people angry at you at the same time. Because back then it was the only place where you could buy Bitcoin with a credit card, right? Like you could use or bank transfer or bank transfer. Yeah. Once we managed to get that bank partnership set up and an easy way to buy so in the US, I mean, we were we had instant product market fit and it was just like trying to keep up with the domain. Were you the first crypto company to do that in the US? Yes. Yeah. Yeah. Exactly. How did you get the bank partnership? So that's its own whole story. I mean, by the way, there was other near-death experiences around cyber events and things like that. We'd talk about if you want. But on the on the banks, yeah. So, okay, there's another interesting story where we, okay, believe it or not, the first version of the Coinbase app actually you couldn't buy or sell Bitcoin. I thought we were making a wallet for payments on the internet. And so you could store Bitcoin, you could make Bitcoin payments. And this prototype went out and I remember like a couple hundred people signed up on off of Reddit or something like that. But the app was not retaining users, right? And what they teach you in Y Combinator is like go talk to customers, give feedback and then build the product and talk to customers and build the product and just do that on repeat and don't get distracted by any other bullshit like going to conferences or whatever. So I remember I emailed like three of these people would sign up and I was like, "Kake, I built SAP and I got in the phone with you." And in the first few conversations, I was like, "I noticed you didn't come back to the app." And the guy was like, "Yeah, I mean, the app was pretty cool." But like I just don't have any Bitcoin. And I remember something kind of clicked in my head and I was like, "Well, if there was a buy button in the app, would you have bought it here?" And it sounds like ridiculous and hindsight. But at the time, this was like market research, right? And he's like, "Yeah, probably." And so I was like, "Okay, we got to make a simple way for people to just buy it here. It's not like you go to a separate exchange and then put it in your wallet for actually daily utility or something." And so then I was like, "Okay, we've got to make it possible to get bank transfers hooked up." Kind of like PayPal or debit cards. And I remember calling these different banks and saying, "Hey, I want to get integrated into the bank network in the ACH, it's called ACH in the US." And these banks were either like, "What the heck are you talking about? Like I've never heard of this thing. It sounds like a scam." Or some of them had heard about Bitcoin. I remember hung up on me. They were like, "We do not work with Bitcoin companies." Like, bam, slamming the phone down, right? And so I went to the partners at Y Combinator. Actually, one of them was like Sam Altman at the time. He was running Y Combinator and Gary Tan was there helping me and these Paul Bukhryte and these various folks. And I remember they said, "Well, why don't you go talk to Silicon Valley Bank?" We Silicon Valley Bank opens bank accounts for lots of Y Combinator companies. We have a good relationship there. So they kind of warmly introduced me to the right person. And they were kind of like, "These guys are probably crazy, but we like to help Y Combinator, so let's see what we can do." And they ran it through their compliance team and their compliance team came back and said, "We think you might be what's called a money transmitter, which means you need to have a license in the United States." And I remember getting on the phone with them and they were like, "Well, we can't open this account for you unless you can prove to us that you're not a money transmitter or you have to get a money transmission license." And the money transmission license I researched was like, it was going to cost five or ten million dollars and take about three or four years. And I'd only raised about 600K right now. So I was like, "That's not good." But they also said, "Well, if you have some legal argument that you're not a money transmitter, maybe we would allow you to get started." And I remember going to a couple of law firms and one of them agreed. He's like, "There are some arguments that you could make that you're not a money transmitter. It's a little bit of a gray area." And he was like, "I'll write you a legal opinion saying subject to the following terms that you may not be a money transmitter, but it's going to cost $30,000 for this like five-page piece of paper." And I thought at the time, I thought this was crazy. We'd raised like $600,000 and I was like, $30,000 for a piece of paper. But I was talking with my advisors at Y Combinator and they were like, "Well, if this allows you to get the bank account open and you can start to test your product idea, do it." So I paid this guy to 30 grand. We got the account open. I wrote all the code myself to do like ACH integrations and you have to FTP these files to the bank and it's like this kind of antiquated system. And it launched and it had product market fit and it just was then it was like instead of pushing a boulder up hill every day, it was like the boulder was rolling down the hill and you're just chasing it as fast as you could. So you could buy Bitcoin through ACH, through a bank transfer? Yeah. Could you use credit cards back then or no? No, I think debit card came a year or two after that. Yeah. Okay. So even that with just the bank transfer. Yeah. Flooded with customers. Yeah. And started to get some very anxious calls from the bank at certain points too because as they were like, you guys have raised $600,000 and they're like every day there's like $550,000 because we debit these customer accounts to get the money, but we had to pre-buy the Bitcoin. And so we had this cash flow issue where we were basically using our entire balance every day just to service the current demand. And I remember the guy from the bank called me a kind of frantic. He's like, "If you just have one error, you're in Solve it." And by the way, they might be on the hook for it too. We might be like at negative a million dollars and just be in Solvent and then the banks on the hook for it. And I remember the guy told me on the phone, he's like, "You need to go raise money right now and get more money in your account." Or like, "We're not going to be able to continue to serve you on this ACH network transfers." Like you were in this tiny little sandbox, but now you're suddenly growing like a weed. And I remember we took this graph of like the daily buys. We didn't even have a pitch deck or anything. And we just went out in like a week raised the next round and got like $25 million deposited in the account with a graph. Yeah. Because we ordinarily, I wouldn't recommend that, but we were sleep deprived and it was, that's all we had time to do. So we just went and we, yeah, we showed them a few pieces of data and we're like, "This is not going to write graph of demand." And the bank's going to close our account in like two weeks if we don't get some supply. That 25 million was from A16 and Ribbit. The series A was from Union Square Ventures and Ribbit. Yeah. And then A16 and Z was the B. So who was doing the graph then? Was it Union Square and Ribbit? That was, yeah. Okay. You just square ventures and was it Mickey? Yeah. Yeah, that sounds the time of the life. I like him a lot. That's great. Yeah. That sounds like something cute, dude. Yeah. Well, he was a Bitcoin leader for a long time before that. Why? Because he came. He spent the first 36 or 37 years of his life living in South America. Yeah. Ben Aswala. Yeah, exactly. The people who had seen hyperinflation countries kind of got it right away. The people who had only spent time in the United States were like, "Why would anyone use a new kind of money?" So from your perspective as was a founder. You thought your product at that point was a wallet and an exchange to buy Bitcoin. Yeah. And how long did you think that was going to be the totality of the business? We already thinking about product extension back then or no. First, I knew there was a lot of ways to die along the way, so I was just trying to get the simple thing working. I mean, we had hackers trying to break into our systems. We had engineers quitting because it was like, just overwhelming and there was too much stuff. We had, they were getting paged in the middle of the night, like three times every night, trying to keep the website up. There were, you know, these banks might just turn us off and we go out, so there was all kinds of just, I was just trying to survive like the next few months, often. You know, in the back of my mind, I knew that if we could get this thing to scale just on the first product, there's all kinds of things that this could disrupt. I mean, that's what I got excited about when I first read the Bitcoin white paper. It was like, this could be a new kind of financial system for the world that's global and fair, decentralized, more free market oriented. Anybody with a cell phone could have access to good financial services, participate in a global economy, like the government couldn't erode all their wealth, the inflation, like what happened in Argentina. So I knew that there was high potential for this eventually, but like, there wasn't too much time to think about that. We were just, there was a lot of sleep deprivation and long hours and just trying to survive to the next three months. (laughs) And how long did that period last? This is a couple of years. Yeah, I mean, I'd say like, like four or five years in, I got to, we were at a place where I felt like I could take, I know, I could take a week off and not in a place where it wouldn't blow out or something. Who's influencing your thinking in terms of like the kind of company that you want to build and the way you want to build it back then? There was a book called PayPal Wars, which talked about the early days of PayPal. And it's actually a pretty remarkable, you go back and look at what Peter Tio and Elon Max Lebcchan, all these guys were doing. David Sacks, they actually had many similar ideas to Bitcoin. They were trying to create a decentralized form of money that could be permissionless global on the internet. It, you know, because of the history of the company and how it got acquired by eBay and a lot of the people left, it ended up being more just like a checkout alternative with credit cards and stuff. But actually, having worked at Airbnb, that actually gave me a good picture into what was possible as well. Because in college, you know, I went to school at Rice University in Houston, amazing school, I loved it. And, but it didn't really have a startup environment. It wasn't like Stanford or something. And so I had never really seen a successful startup from the inside. I had tried doing my own startup, which didn't go super well. And inside Airbnb, it was like, it was like some magic was happening. Like they'd caught lightning in a bottle and things was growing like wildfire. They were the way that they hired people and had this really high bar for excellence and design and the way they did the decision making. Like a lot of things I got to see working there. And then I kind of said, okay, before in my mind, I had it kind of put on a pedestal. I was like, wow, there's like some crazy geniuses that are doing all this kind of stuff. And there's something amazing about working with, getting in the room, just so you can see how people work. And it doesn't mean that they're not geniuses. I think those guys are brilliant. It means that I got to see it and demystified it. And it made it feel possible that I could try to do something a little bit similar, right? And so there were a couple of companies like that. I mean, nowadays I would say, you know, certainly like the level of ambition, like the Elon has and these things are very inspiring. I've tried to take bits and like parts from Google, Amazon. I've sort of been a student of lots of these companies and tried to take the best. Anything from history? Yeah, I mean, I really like the Wright brothers. They're cool. You ever done an episode on that? Yeah, episode 228. I remember that one. Okay, the book by David McCullough. Yeah, I think that's the one I read. It's incredible. Incredible. Yeah. I love these kind of just like big problems like that that humanity, you know, you know that it's kind of crazy, but it's possible. And someone's gonna do it maybe in the next 100 years. And there's a few, there's a few things like that. Like longevity, we can talk about that like in the biotech space, you know, fusion energy. The Wright brothers is strong AI. The Wright brothers is crazy because that was like a centuries old problem. Yeah, like humans have been trying to figure out how to fly for centuries before these two brothers in Dayton, Ohio from correctly, that essentially saw a centuries old problem with the modest profits of a bicycle shop. Yeah. And what was fascinating about them is like most of the, I mean, they had a ton of competitors that had more credentials, more financial backing. And I think in Dayton, Ohio's book, if I remember correctly, like they solved human powered flight with like $1,500. Yeah. There was something really tiny about money. And there was people funded with like 200 X as much money. But yeah, I mean, I get very passionate about like going after one of the big ideas like that that people could go after. And I think it's actually worth everybody writing if some of those down periodically. And then see which one grabs you anything, you have something unique to contribute and just like go for it. Now, those are the big exciting ideas. So going back to where we were in the story, you're like, okay, I just need to not die. Yeah, I have something working as if I just don't die. Yeah, I can figure out other products or you know, a way to go to business in the future. Were you thinking of any other like any other specific way about like I want to build a company this way? Well, there was a few things I was thinking about. I mean, one was articulating a mission, right? That could be bigger. Writing down the values of the company, which we can talk about. Actually, we didn't do this maybe till we were a couple hundred people. 'Cause this all happened organically in the beginning or just who we were hiring and the culture sort of formed organically. But after we got a little bigger, we started to think about, all right, let's formalize it. I wasn't gonna be able to be in every single interview indefinitely, right? So, okay, the values, the mission, when did you arrive at the mission? I don't remember the exact year, but it was at least a few years in. We started to really think about it. And you know, for me, it was not just like getting people to use crypto or something. It was like, well, why do we want that? And it was because it was enabling everybody to own their own wealth in a way that couldn't be taken from them, go try to attempt more ambitious things in life. It was kind of like a foundation, basic property rights is what they'd call it in economics, right? And if you had sound money, basic property rights, low friction to trying new things in the world that might benefit people and actually be able to keep the upside of it, you'd have more people trying attempting this. That very much appealed to me. We sort of take this for granted in the United States that usually the money is just not gonna get taken out of your bank account or something like that. But in many places of the world, that's not true, right? There's people like where the government will actually do seizures. The Cypress actually did this recently in the past where they like took a bunch of money out everyone's bank accounts to like cover debt. There's refugees that have to flee borders in various times in history where the other wealth gets confiscated. There is so much bureaucracy and corruption in places like Argentina to even start a company. It's like, it's a huge black market and there's just, yeah. So and by the way, people can't, they can't get access to loans or anything like that. Like, one of the major ways people build wealth in the United States is you buy a home, you get a mortgage. Only wealthy people can really buy real estate in Argentina 'cause you can't get a mortgage and you have to pay cash. So there's all kinds of ways that this is just hernicious and it decelerates progress essentially. So I was trying to think of a pithy way to articulate that and I wrote down this increased economic freedom in the world mission. And it's a little wonky sometimes people don't know what exactly it means and they have to go read about it. But it does encompass what we're trying to do and I think crypto is the best technology to increase economic freedom. - How are you recruiting talent back then? And were you sitting in on every single interview? - Yeah. So I mean, the very early days, it was just like me going to meetups and trying to get anybody interested and come in interview. It was like cold messaging people off LinkedIn. It was reaching out to people who had worked with in various contexts. - Why did it have to be outbound at that point? - Well, first of all, crypto was like a very niche thing. Like we were not a hot company at Y Combinator. We went to the demo day that they do where we raised like the 600 K seed round. And but there was lots of companies that raised like multi-million dollar rounds and beyond. Like we were kind of middle of the pack somewhere maybe a little below in terms of how hot the company was. So the only people we managed to actually convince to invest or to join the company were people who had already gotten excited about crypto for some reason. And then they met us and they're like, okay, this is semi-legit at least. Like they've gone through Y Combinator. They have this product that's working. They've had some early investors like Union Square Ventures. And so we got some of these, like the first five of them people who joined were like crypto zealots who just thought we might be a good company to bet on. As the company got bigger, we hired recruiting teams and the whole thing. We were competing with big tech in San Francisco, which was during the zero interest rate phenomenon, it was like fierce, the competitive. We eventually brought open to other offices, hired some remote workers, hiring as its own the whole topic. Yeah, well I'm curious. I can't have found any other, I talked to my friend Karim, founder of RAMP about this, Daniel, I found her Spotify. They both think about it in the same exact way where they hire for spikes. Yeah, one of benefits of being a founder of like companies. Big companies try to manage the middle. They don't want that high highs and low lows and Daniel and Karim are both like, no, I want the best, the person that is the best in the world at this one tiny little thing and that's all I want them to do. And I'll deal with their usually excessive or extreme personality traits on the other side of that. Yeah, I totally agree with that. I mean, that's like, we were looking at people's past work. And not necessarily their resume or, you know, if they showed up in the interview and it was like, wow, I learned something. I left the interview with more energy than I went in. They're like a very efficient communicator. And then they can point to things that they've done which are like real outliers of success. But like, oh, that's awesome. Or maybe we've seen their work previously. These are people who we would hire. I mean, there's many examples of this. Like, you know, you talk about some of their personality quirks and like, apologies for the Boston is like this genius guy who was our CTO for a while. And he, he like did so many amazing things. And he's like very eccentric. Actually, the very first hire at Coinbase was this guy Olaf Carlson. We outside of Fred and I as the co-founder. And we were trying to hire this customer, some of them to come in to run customer support because of the backlog I mentioned. And I remember it came down. There was two finalists. One of them was this guy who had run a team at Google AdSense. And on paper, he was like, he's guy to work at Google. He's like, he'd run a big team of like 20 or 30 people. I was like, very credentialed. But you just in the interview, it was just like, it was kind of low energy and like not exciting for some reason. Even though on paper, he was like super qualified. And Olaf came in and his prior job was he was a lumberjack. Literally, literally. He had just graduated college. He had written his thesis in college on Bitcoin. And then he did this kind of like walk about sort of spirit quest thing where he went for like a summer. And he was like, he was a lumberjack. So he came in and he looked like super disheveled. And he'd like threw on some like ill-fitting suit. He'd bought like on the way to the interviewer. Because he only owned like lumberjack clothing. But the guy was just like super bright, super passionate, super young, super, super hungry. And we're like, screw it. Like let's just give this guy a shot. Like it's going to be, it was just exciting to like talk to him about crypto. And he crushed it. So he, he went on and founded like a, he's like a billionaire. He's created like a crypto venture fund. So like these were the kinds of bets that we wanted to make. They were people who were entrepreneurial. We've had a lot of good success with that. I know Toby talked about that recently on the podcast too. And they were people that were just like high agency, smart, get shit done. And they, even if they were totally unqualified in paper. And those were some of our best hires. So I was reading a ton of the Bitcoin subreddit back then. Yeah, like around this time. And am I wrong? Where are you getting like a lot of shit? Because you know, everybody's like, this is decentralized. And you're like, well, no, I'm like actually trying to build like the real business here. Like, yeah, did you have an issue getting talented people to work for you? Like because you were kind of, this is it. You might be autistic. You might be right. Because you're interested in this like weird Bitcoin thing way before the people are. And then not like that, you're like, bucking the trend in this weird subculture too. Yeah, I mean, so people did often ask that. They're like, well, it isn't the whole point of Bitcoin to be decentralized. And I was like, yeah, it uses a decentralized protocol. We just want to make it easy for people to access it. So you can choose the user company. But they're, you could use it any company. Like as opposed to let's say visa, like the only way to access the visa network is through one company visa. But like email is a better analogy. Email is a decentralized protocol. But you can use Gmail or Outlook or whatever. So at least there's like choice. But even going beyond that, because for years, we heard that as a criticism. So we said, all right, let's make a self-custodial wallet too. Like if you want to custody your own crypto and not have to trust us at all, we're going to put out a wallet for that. And so we have a successful product now to own our self-custodial wallet. I think both are important. The centralized product gives people a lot of ease of use. Like if you forget your password, your money's not gone, that kind of stuff. And it also allowed a lot of big institutions. Like most of the money in the world is like something like 80% or 90% of it's all tied up in financial institutions. It's not retail people. And so when we went with institutions, and we're like, self-custodial wallets, that sounds super scary. We're not going to do that. So they wanted these kind of enterprise-grade custody solutions. And we've been very successful building those kind of things for banks. That decision was based on the responsible marketers that was decision you made before and then brought that decision to the market. The one around institutions, specifically, was based on conversations with them. Yeah. And the retail customer, though, I would say that was made prior to customer-- that was my intuition. So we've got to make this simple and easy to use and trusted. And the average person is not going to know how to run a self-custodial wallet on their laptop. The tech has gotten better and better where account recovery and these things are now possible. But at the time, it was very scary. If you lost-- many people had this happen, sadly. If they lost their password or something, trying to custody their own Bitcoin, it was gone. There's many, many, many self-stories about that. Yeah, it's funny. Because there's a parallel here when Steve Jobs had that observation. He's like, well, the first thing we're making in Apple is for hobbyists. But he's like, if the amount of people that want to put together on computer, it's like, as opposed to the ones that want to go to the store, you just treat it like you call it the appliance. He's like, wanting to make a personal computer as like a appliance. That market is 1,000 times bigger. And why it being millions of times bigger, actually. But his idea was the easier I make it, the bigger the market gets. I think that's right. And it's fine. A lot of these products start off with hobbyists who love the tech for the tech sake, and they want to take it apart. But ultimately, what crypto is going to do is just going to update the financial systems. People have better financial services. Many people are going to use it without even knowing they're using crypto. They're just going to say, I don't know. I just want to send money to my family, abroad, or whatever. And instead of paying 11% at Western Union, I just want it to arrive instantly for free or whatever. And they're going to use stablecoins for that, right? Or if they want to get a loan, and it's just using DeFi, it's cheaper, lower rate. And they can get approved in 30 seconds. It's like, that's easier than calling a bank and filling out all these forms, right? So Coinbase's app actually has evolved. I mean, fast 40 to modern day. Like, we are now, you can trade at any type of asset, not just crypto assets, you can trade stocks, and commodity and prediction markets. And then you can get a loan. You have a Coinbase card. You can spend, we're just trying to build better financial services now. And actually, that's where you started to get into like multi-trillion dollar market. Yeah, you call it the everything up? The everything exchange. Yeah, yeah. Yeah. Yeah, it's in a super app. Maybe that's, yeah, you combine the two. Yeah, okay. This is not like a plan from the beginning. Like, Bezos had the everything store. That was the codename of Amazon in Disha, like in the hedge fund that's fun else. So he kind of had that master plan at the beginning, even though he started with books. Yeah. But that was not the case with Coinbase, correct? I felt like more and more of the economy was going to run on Bitcoin, because it was just faster, cheaper, more global. I didn't, I couldn't have for seen all of the things that happened. But I didn't foresee stablecoins. I didn't foresee prediction markets. Like, I just knew that we had a foothold with something everybody really, like Bitcoin turned out to be the best performing asset class of the last decade. And so a lot of people wanted to buy it and hold it and we were these way to do that. That was a wedge into the market to start to then update all kinds of financial services. And that's how it happened. I didn't have a complete picture of that from day one. That I think that would be intellectually dishonest for me to say that I knew exactly how that was going to play out. But I had a, I knew that the potential of it went way beyond just like, buying Bitcoin or something. I was like, this could power the global economy, because it's just better than like having certain countries printing their own money or like super high fees in each country. Like we need a, we need a native financial layer to the internet that's truly global and decentralized and like a bigger and bigger share of GDP could run on that over time. I knew it was massive. I just didn't know exactly how it would play out. Hey, real quick, I've started a newsletter for this podcast that you might find. Interesting. So how do you think about running the company now? How's it organized? Well, there's lots of ways you can answer that question. So I have a really amazing president and COO Emily Choi. She really does. I'm going to do a lot of things. It's an amazing combo of skill sets. I actually think the lot of enterprise value can get generated when you pair a technical founder with a great operator. If you have just an operator, they can make the company very efficient. This stereotypically everyone is different. But if you imagine only an operational leader, the company will run very efficiently, but they'll miss their next wave of innovation or something. If you have only a founder, sometimes they blow the place up because they're always trying to do some crazy new thing. I think there's a really healthy balance of those two things. There are other companies where traditionally, Zuckerberg and Sheryl or Sam Berger, whatever kind of classic thing you want to look at. I'd say even at Google, there would probably Eric Schmidt and Larry played that role. With Sergei. There's examples like that in history. I think, anyway, it's generated a lot of value for Coinbase to have Emily and I both there. You get the most energy when you're working on products. I don't mind going and doing some policy. Try to get legislation passed. You don't mind it. There's times where I felt like, it's like draining to go to DC and I have to go meet with all these politicians. I actually don't mind it now in a weird way. There's so many interesting people in DC. There's big personalities. We got to go into that. Because you said that earlier. I got to ask him about this. That is shocking to me. Yeah. That you find them interesting. Well, one thing I learned about my motivation is that I can get excited about anything that helps advance the mission of the company forward. If you look at what I'm actually doing, it's like, really not fun, like grind stuff. It's just like, like review 300 resumes or something. Or there was a moment where we like, we didn't have the right finance leader and I was like going to all these meetings with accountants and stuff. And I was like, I took a class in college on accounting, but I'm like not an accountant by any stretch of the imagination. And you know, I was like, if this is what is necessary at this moment to get the financial statements to a state where we can close this round or whatever, it's generating value in the company. So I try to derive my sense of motivation from that. And a lot of times the thing I'm doing is like, actually like the gnarliest problem in the company. It's like, oh, these two teams are super pissed at each other and both the leaders are threatening to quit. And you know, or I have to go shut down this whole thing and like we're gonna lay people off or whatever. Like usually it's the worst thing you're trying to cycle. You don't wanna wake up and do. But I find a sense of, it's not, I'm not a massacist about it. Like a lot of times it's draining, but I derive a sense of fulfillment from it. I'm kind of like, okay, this is moving the ball forward. At least I did something useful today. I like that idea of like essentially searching for bottlenecks in the company. Yeah, like that's a great, actually Elon frames of what is the limiting factor at any given time. And I go dive deep on that. That is a very great principle. I'd say the last thing is just, we try to push down to such you're making in the org, right? It's hard to do, but that's like, make clear DRIs of each of these different things. And just try to amp up the pace of execution, right? I've just, it's hard to do as the company gets bigger 'cause you have more stakeholders and all this, but it's like, okay, single decision maker, push it down, and just give people short time frames, like knock out a decision, unblock this, go, go, go. And I try to be a little bit of like, the pace car for that and provide risk tolerance to the organization when needed. Like, let's say somebody comes and says, "Hey, I think we should try this thing." And it's kind of a crazy idea, but if it worked, it'd be amazing. I like, it'd be like a 20X outcome, but it has like a 20% chance to success, which you should take that bet all day long, but most companies are risk averse. They won't do something that has a 20% chance to success. And I'm like, go for it. If it fails, it's on me, you know? And I try to just give people like air cover for those things. So that's a little bit of like, the decision making, how we do that. What other elements of the company you think are like a reflection of your personalities to founder? I mean, just the fact that we have like, you know, five product groups, like that's probably a little bit of the reflection of my, I always want to build new things, almost to a fault. And I actually, we have a lot of good systems in place to be rigorous about, okay, let's, resource allocation is very important. You don't want to get too spread to thin, but I keep having like, ambition to go build new things and new categories. - In the age of AI that actually might be like, more valuable. How so, what do you think? - Because if you have lower cost to trust. - Yeah, if you have all these ideas, and usually you can strain, you know, by time or resources or actually physical people to go and implement all these ideas coming out of your head. - Yeah. - And now you have, you know, on tap, on demand, intelligent like co-workers. - Yeah. That's true. The cost to get a V1 running is now much, much lower. - Yeah. - And we are seeing that internally. Now to take some, see something through through is still, you know, intense amounts of work. But yeah, we think a lot about resource allocation where you can have like a two or three person team try these ideas internally. And then if it only if it starts to work and hits key milestones, like then do the series a, you know, internally. So we try to treat it a little bit like venture capital. And the hard part is-- - Is it still language you use inside the company? - Yeah, really. Yeah. Like one of the key things we did actually, was that twice a year, any employees can come pitch and say, hey, I think we should be doing this and I have the team to go do it. And in most companies, you have to get your boss to say yes, your boss is boss, your boss is boss, all the way up to the CEO. So you have to get like five yeses in a row, which is basically a committee. And if one person says no, it won't happen, which means the company's risk of worse. Well, we've tried to set up internally as we call these next bets, but you can come in and pitch. So each of the product group leaders has their own budget. You know, I'm there, see a foes there, like Emily, maybe one or two like really talented young engineers. And if you get any one of us to say yes and fund it out of your budget, your green lit. So it's kind of like coming in and pitching it like 10 venture capitalists, she almost inverted it. Yeah. So you only need to get one yes if someone wants to fund it out of their budget, which is, yeah, and there's actually been examples where I voted no on something and turned out to be a massive success. And an example of that is like USDC, which is the stablecoin. I actually embarrassed to admit I voted no on that idea. Luckily, somebody else funded it out of their budget and it's I think in 205 we did like 800 million revenue off it or something. It was so it tells you, you know, sometimes good ideas can come from anywhere. It's like actually, you know, reading about Steve Jobs and Wazniak, that Wazniak, whatever he went to his employer, HP and total hand, we should make a personal computer. They said no. And then he left the found apple. So many such cases. Yeah. I always have a little of a lot to try to give away the idea for Walmart. They said no. Yeah. So I always have a little bit of that fear in the back of my mind of like, there's brilliant young engineers inside Coinbase. I want to make sure they can come and pitch and somebody, even it's not me, funds it. How much time do you spend on Coinbase marketing? Are you interested in that at all? You guys are doing very unique things around marketing. Yeah. Thanks for noticing that. I mean, I wish I could take more credit for that. I actually think it's the team entirely. They come and show me the things that they're doing. And I definitely, the only thing I'm doing is I'm trying to give them air cover to try crazy stuff. And basically whenever they show me something like that's awesome, like run with it. And whereas I think most organizations would be like a little too cautious or hesitant. But yeah, what they're doing with like putting QR codes in the Super Bowl or they just did this karaoke thing. It's a Super Bowl or I don't know. They're trying more ambitious ideas, which I like. It's also a lot of marketing now is, it's actually more like content on the internet than like your typical brand ad running on TV. And just like a very simple thing actually was, I remember we were putting our earnings calls, as public company you put out your earnings, they're usually kind of dry and boring, like these analysts tune in, listen to these calls. You're on like a conference call. It was using this like really ancient technology and this ancient vendor that we were using. And I remember I was always so bored on these earnings calls. I was like, man, how do we spice these things up? Just do something more interesting. And I remember some of the people that kind of financed teamwork, like Brian just like stay on script. It's supposed to be boring. Just report the numbers. Like that's all we're doing here. And I was like, no, like this is a marketing moment. We're supposed to be selling some stock, right? Let's go out and tell the story of the company. And so anyway, just in like this recent earnings, we put together like a pitch deck. Kind of like we were going and pitching when we were a private company. And I was like, I want to just like run through the deck and like make a video of me. And then we put it on the website and one of the guys on our marketing team paired it. Have you seen those videos like vertical video where I saw this? The guy, like the guy is running through the game collecting coins. And they realized on short form that you can have somebody speaking, but then if you put something, somebody like playing a video game or whatever the case is, are going through a maze, the retention goes to the roof. Yeah. And so that's like we have these like young internet native marketing people. They're not like, you know, people who made ads for Coca-Cola or something. They're just like, they're just like people who live their whole life on the internet and meet like meme culture and all this kind of stuff, right? And I mean, somebody could reasonably say, well, Brian, are you trying to turn the company into a meme stock or something? And I'm like, no, not really. I think we're building something very serious and important as like an institution that's going to stand test of time. But we do need to get the word out in the way that people actually consume content today. And frankly, I think our shareholder letter is brilliant. I get a lot of good feedback on it from like the biggest funds at fidelity and all these kind of folks. So I'm glad we're putting out a shareholder letter. But 99% of people aren't going to read our shareholder letter. They're going to see some clip on social media about the company and that's kind of how they're ingesting their information. So how do we speak in an internet native way? And that is marketing. Everything is marketing. Yeah. Content. I mean, everything's fun. I like that you had this. I'm going to do, I have to do the calls anyways. Like why don't you actually make them interesting? You said, you know, you have to get attention. People have to pay attention to like what we're doing. Or they're not going to like kind of serves the mission too. There's a great maxim from David Olgovie about this. He says, you can't save souls in an empty church. Yeah. So you gotta like, you know, say they're soul. You got to get their attention first. You got to get them in the door first. Yeah. Well said. How do you compose your shareholder letters? Because I'm going through this right now. I just reread for Warren Buffett's shareholder since the last one is out. But that was the best marketing that he ever did. And the amount, every year, each year took them about seven months of him. And I think her name is Carol Lumis going back and forth. And you read them and they're technically about a public company, but they're fascinating. He's essentially, he thought about it as like, he's just teaching. How do you compose your shareholder? Yeah. So that's a great point. Actually, Bezos did that too. He's got some bangers. Buffett. Bezos says, she buffets different. Because it's like 70 years or whatever Bezos, I think, did it for 21 years. He distilled it on the maximum. So the last shareholder letter was like differentiation is survival. But I think those are probably the best technology company shareholder letters that I've ever seen. Ever heard? Yeah. I mean, I think that those guys are putting in a level of craft into those. And probably was a product of their time. I think the way people consume this has changed as we talked about. Our shareholderLiters.com/sports. are good. I think they're like really just reporting the numbers primarily right now. So they're kind of written for analysts, whereas I think the Bezos and the Buffett one might have been written for more like teaching people about business. I think Bezos was teaching his very interesting philosophy. Yeah. And searching essentially using that's like almost like a tuning fork till like I'm putting this out and the right shareholders for me in this weird strategy I have will respond to this information. Yeah. I wonder if you could do the same though. It's a great point. I hadn't thought about it. I mean, we could put more of like, I don't know, my philosophy in it. I think what I want to try is actually going through, for me the medium of just talking through a deck and like getting me talking about it can be a little bit easier. There is something powerful about forcing yourself to sit down and really distill it to like in writing, which can be clarifying. So I'll say about that. You said, do you prefer being prompted? Like when you said it's better if I said like we could a deck, but let me just film, just film me going through the deck. Yeah. I don't want to just like read, I'm not reading the deck, but I want to tell you, it'll help me clear from my thinking like, okay, here's the mission of the company. What are we building? We're just building better financial services with crypto. How do we measure our progress on that? Here's our key metrics. It's growing trading volume market share and it's like the transaction volume and the assets on the platform. We have a whole theory about how we're growing that as the most trusted brand. And then, okay, you can also just go through a bunch of objections people commonly would bring up, right? And like, okay, let's have a slide and address that and that. And then you can take submitted questions too and you can kind of riff on those. I think that that's a good format for us to play with, but you bring, I hadn't really thought about the Buffett and the Bezos analogy on the shareholders. Those guys went deep. That was actually that was very atypical. Yeah, I would argue that the Buffett shareholders is the most successful example of content marketing in history. If you think about like what it did for his reputation, the fact that then he got access to proprietary deal flow as a result of that. So if you don't feel people are reading the shareholder letters, how do you think they're consuming information about public companies then? Well, I think there are a number of analysts that are reading the showletters. I don't want to say there's none, but I think most people like retail investors, even people who aren't specifically tracking public company stocks, like in that level of detail, they're consuming podcasts, they're probably listening to your podcast. They're reading social media like X, they're reading blog posts, substack. I think some of them still read traditional media, but that's doing the link, especially amongst people under say 65 or something. Every company is a media company. Now you should be publishing your own content, direct to your own blog, social media, some companies have their own podcast. I don't, you never should be going like through, I really don't like this idea of putting information out of the company through a traditional journalist who's going to bring their own bias and filter to it. So you know, we founders have been telling me that recently. Why do you arrive at that conclusion? Well, part of it was just having, I mean, we talked about the mission first blog post. One of the like formative experiences I would say as a CEO was that after that happened, several traditional media organizations wrote just very negative and false stories about us. And it just made me really appreciate like how they're not doing journalism, like in the traditional sense of the word that I think of it, which is to go report the facts and investigate things which need uncovering in the world, which is a very important thing. They're actually more like political propaganda machines. And if it doesn't fit their narrative, then they'll put out stories which are fake misleading. I shouldn't have been surprised. There's like a long history of this going back to like, you know, yellow journalism and Joseph Pulsitzer. Yeah, exactly. Because people give me shit because I don't read the news at all. Yeah, I just read old books and then talk to founders now, like essentially my entire media diet and then Ellen, like talking to Ellen's. Yeah. And they're like, you're not informed. I was like, have you read William Randolph her spography? Did you read Joseph? Like who invented yellow journalism? Just read anything that's happening now. You arrive from those two, exciting, Christian America. Those are the two most influential and powerful, you know, people media. And they literally change the way that newspapers and the written texts came out to make it intentionally more salacious and more exaggerated. Yeah. What did he, what did he, her say like you provide the photos, all provide the war or something? Yeah. And so anyway, I think most people have become aware of this now. Like the trust in traditional media is kind of at all time and lows. So, you know, luckily things have moved on. I, you know, anyway, I think it's social media has its own challenges too about misinformation and whatnot, but at least like you can just go direct and put out whatever you want to say and people like it or don't. It's fine. And then, you know, I think it's good to talk to new media as well. And anyway, that was a formative experience. And I actually think it was very liberating in a way. Actually, I think everybody at some point in their life should get New York Times to write a hit piece on them because you stop fearing it and you start realizing, okay, I'm just going to do whatever I think is the right thing to do now because I'm there's not like some terrible thing that could happen to me anymore. Like it doesn't matter. Like once, once they try to, once they try to do it and it doesn't do anything, you realize, oh, okay, I'm not trying to optimize for optics here or doing something that looks like, that looks good. Why don't I actually just do the thing that I think is good? Regardless of how people perceive it. And that's very liberating. I hope more people experience that. When did you go through that? It happened in many small ways as Coinbase was growing. Like we'd see articles come out that was like, what? That's not that's not right. What are they talking about? And they wouldn't post a correction. Sometimes you get these calls from journalists that were like, I'm posting this in four hours. Like, will you comment? And we're like, what? This is totally false and for me, what are you talking about? So it was just this kind of annoying text that was always happening on the company. But what really I think radicalized me on it was post that mission first blog post. Like several organizations, but the New York Times in particular, I remember they they basically put a team of people I was later told by insiders. They're like, go just go dig up dirt on this company and write negative articles about them. They had the headline written before they even had found anything. And they wrote articles kind of implying that we were like racist and we were like, you know, underpaying certain minorities and things. False, it was false information. And, you know, that that's just like this basically was like pissed me off. And I was like, okay, I don't really want it. They're not engaging in good faith. Like these are, they're so biased. They don't even realize it. And they have some political agenda. It's not really, it's not really journalism. It's like a political propaganda company or something. So that was frustrating. And yeah, it shifted my point of view to go direct. You had a unique experience because you're building a company, but you're also starting at the very beginning of an industry. I think like the, I was thinking what you earlier say I was like the analogy is kind of that's a six in my mind. It's like the early American automobile founders. It's like I have to learn how to build a car company, but we're building an industry simultaneously where like if you start a software company today, like you're not building the software industry software. It's been around. What was that experience like? It's a really good point. I mean, Henry Ford, you probably know about it, right? It's like when that cars came out and then people were like freaked out about your cars are going to scare the horses. Yeah. Yeah. And like some, wasn't there some law that I remember Mark and Jason told you about this where like when automobiles first came out in cities, there's somebody passed a law. You had to like run in front of the car with a flag. Yes. So it's not just like scare the horses. So yeah, that inherently if you are crypto is a brand new industry. It's updating all financial services. And it's like that Gandhi quote, you know, like first ignore you and then laugh at you and they fight you. And then they could write your Davos and wave their finger for it. Then you win. So we're at stage three. They're they're now there's a little bit of fighting happening, but actually honestly most of the big banks and financial institutions are embracing crypto and like five of the, you know, G-sub banks and the world, the largest banks are working with us now in crypto integrations. If you look at their LinkedIn posts, they're all hiring crypto and people, product managers and engineers. So it's working. It's up and we want to work with all of them. This is like a little blip on the policy radar. That's just a little negotiation happening. Peter Teal says you have to be contrarian, but right to be an entrepreneur. So you have to be comfortable looking stupid for like a long time when I was calling those banks and saying, Hey, we want to work with a company. We want to do this and they would hang up on me or you know, I'd go pitch the 30th, the venture investor and get a no or the, you know, the thousands employee we tried to hire or whatever. Like we're willing to be misunderstood for a long time and then you slowly start to have these breakthroughs and a lot of the best, you know, if you look at like Uber, you know, they were fighting for a decade to just be like, yeah, it's actually better and safer than a cab and then trench interest were fighting them right or Airbnb with the hotels, you know, self-driving cars like everything that's truly innovative and breakthrough is going to upset an entrenched incumbent eventually intersect with the government and just piss off some some segment of the population who are kind of like, how dare you question the status quo, you know, and the right brothers, I mean, when they came out with the airplane, nobody believed that for like for years. I mean, you know, you read the biography. They went to the United States government or like we have this, we've created flight, you know, they thought it'd be celebrated and they were like, they had to go to Europe. Yeah, they went to Europe. They were doing these demonstrations and like, this guy's field in Ohio and almost they'd be like three people watching them. Yeah. And it didn't wasn't there was that famous quote from the war department. They said, we see no military application for the airplane in 40 years later at one World War two. If I remember that, I read the book in probably six years, I actually reread it again, doing an underup set on it. But I think it was like the French government was their first, yeah, the first person to actually buy it for the military. Yeah. So it that's the nature of innovation is like you have to be willing to be misunderstood. And then the key part is you have to also be right. You can't just be throwing out crazy ideas which are wrong and great. Yeah, but for them, so they're creating an industry and a company. Yeah. But they actually didn't create the most successful company. That's true. In that industry where you did, it's true. Well, I think Orville and Wilbur were more like, well, Wilbur died prematurely. I think from like, I forgot consumption or maybe tuberculosis. I forgot what it was. Yeah. I died like 45. Orville lived for a lot longer. But they were, basically, they created the industry and one of the first your companies, but then they were overtaken in a way that you have not been. Yeah. So not to torture this analogy too much, but I think of Wilbur and Orville as kind of like inventors. The equivalent in this case would be like Satoshi Nakamoto or someone like that. Brilliant. You know, whoever they are, there's actually, there's an interesting documentary coming out in this soon. You know, whoever those people are, they're probably like innovators, scientists. I don't consider myself really a scientist. I'm more like an engineer and entrepreneur. So I recognized early what was happening with the invention of Bitcoin. But I didn't invent Bitcoin myself. You know, I did not discover flight like the Wright brothers. So I don't, I always had a lot of respect for people that are, like, you know, Edison and these people, right? Like, because they're actually on the frontier of making scientific breakthroughs. Who knows? Maybe this would happen at some point, but I don't think I'm going to be the person to make a scientific breakthrough. What I am going to do is have an instinct or a nose that like something interesting is happening here and it's created an opportunity and I can go commercialize it with a really successful company. Yeah. I mean, Edison was obsessed with commercialization though. He said that he didn't want to invent anything that didn't sell and that sale is proof of utility. He has a great line on that. So you have your mission recording base, but you said your natural incarnation is to work on multiple things. Right? Yeah. You started another company. Yeah. You want to talk about this? Yeah. Sure. So I mean, broadly, I want to accelerate civilizational progress in the world. That's kind of my personal mission. So I think economic freedom is foundational to that with crypto. When Coinbase went public and you know, it got some liquidity from that. I was also just thinking like, okay, what are the other big problems in the world? Like in hard, hard tech, not just software that might require more capital that I could try to help with. And I started thinking, you know, so the big ones that in my mind were like AI and crypto are probably the two biggest right now. Then of course, there's fusion energy, brain machine interfaces, space. And I felt like, okay, there's good teams working on all of these and I'm not sure what I unique I have to add. The other biggest one I thought of was longevity. Like, how do we start to reprogram our own biology to enhance what it means to be human at some point? So I started hosting these dinners. I didn't see teams working on that that I thought were credible. In fact, you know, the longevity space has had like a lot of snake oil type stuff. It's like pretty, you know, tracking some unsavory characters, a little bit like crypto for centuries. Yeah, for centuries. For sure. I reached out to a couple of friends of mine who had done their biotech, CEOs, or PhDs and started to host some dinners. And this is a good way just to learn too is like try to see if you can convene some of the top people in the room and just go around the table and ask them what's the most interesting thing on the horizon that's underfunded or under invested in? We hosted a couple of these dinners. I was lucky enough to do this with a friend of mine Blake Byers who eventually co-founded this company with and one of the topics they told us about was epigenetic reprogramming, which is the ability to reprogram cells and you can restore function they had when they were younger. There were some early breakthroughs that had happened in different labs. One example of this was Shrinya Yamanaka who won the Nobel Prize for reprogramming skin cells into stem cells. I think you got that in 2005 if I'm not mistaken. I started to feel a little bit about epigenetic reprogramming like I did about Bitcoin when I first read about the Bitcoin white paper. I was like, how deep does this rabbit hole go? If you can actually reprogram cells, turns out our cells are much more plastic than people realized what could be possible with that. Through a series of these dinners, we met the other co-founder Jacob Kimmel and Greg Johnson and created this company. It's called New Limit and it's a longevity company searching for novel therapies that can reprogram your cells to restore function they had when they were younger. It's been going about three or four years now. We've demonstrated successfully reprogramming human cells for the first time to restore function. It's a discovery platform that's testing tens of thousands, eventually millions of hypotheses and high throughput screens across lots of different cell types. It's using AI to prioritize those screens and the first drug can that's going to go into clinical trials probably next year. So it's gone faster than I thought. Actually, I committed a hundred million of my own money to it to help it get off the ground and it's subsequently raised more money from others as well. And I thought it was going to be like a pure research thing for maybe five, six years or who knows. It turned out the scientific progress happened a bit faster than we thought and we're ready to go to clinical trials now with the first drug candidate. Hopefully there'll be three, four, five drug candidates over the next five years. Do you think you'll continue to start more companies? I do. Yeah, I mean, both within Coinbase, like there's lots of these product groups and I think it's fun. Like, that's the most fun thing in the world is building companies that try to have positive impacts in the world, try to be useful and I'm getting slowly better at it over the decades hopefully. And learning a lot of painful lessons along the way and so yeah, I don't want to get distracted and have too many things. Each one of these is really difficult, but I do think over the coming decades I hopefully all start more companies. Do you think Coinbase is the last company you'll be CEO of? That's a tough question. Let me tell you why you think about it. Let me tell you why I ask because I was shocked when I was talking to Toby. Yeah, he's like, he says something. I think it was on the episode that if AI, like the advancements in AI weren't happening right now, he thinks he wouldn't be the CEO of Shopify anymore. Yeah, I was surprised you from saying that too. I heard you say that. I don't feel the same way he does about that. I think, I mean, AI is changing everything about how we work and lots of things in financial services. We haven't talked about that. We need to talk about this. Sure. Yeah, after let's go there next. Yeah, yeah. So let me forget. I want to continue to be in Coinbase CEO for a long time like Bing CEO. Yeah, I find it well, I always clarify. I find it very fulfilling, which means that it's sometimes very stressful. Sometimes it's super fun. Sometimes I just get my ass kicked. And I'm like, oh, man, that was a rough day. You're just going, going and doing the hardest things that get escalated to you because nobody else in the company. But that's what creates fulfillment. It's a little bit like playing a video game or something. It needs to be a really hard level. It's a little outside your comfort zone for you to feel like, whoa, okay, I beat like I was right at the limit of my ability. When you're having these very stressful times in your life based on work, what do you do to decompress or to take time away? I think it's a very important topic because a lot of founders, the other founders that were in my YC batch that I went through, I saw many of them burn out within three, three, four years. They would either, it manifested in lots of different ways. Some of them would gain a bunch of weight. Some would lose a bunch of weight. One of them had, they were like, had hair falling out. I was like, bald before starting to go, but they were like literally clumsome hair were falling out because of the stress. Some of them got like addicted to prescription drugs like, oh, so dealing with stress as a founder is actually a very important topic because you need to eventually, you can burn the candle at both ends for a period of years, but eventually you'll burn out. You need to make it sustainable to have the impact you want to have over a period of many decades, hopefully. The kinds of things that I baked in as a routine, and I'd say every couple of years, I felt like I hit a patch of burnout and I had to change something up. I either have to delegate more, stop doing some piece of what I was doing, have fewer direct reports, and then have a routine around sleep, exercise, and nutrition, basically. In some form of, you can call it meditation or prayer, in the evening, you can go in the sauna, or in the morning, you can just sit there and meditate for one minute or whatever it is. I have a pretty strict routine when I'm in work mode around sleep, exercise, what I eat, and then just like wind down time in the evening. And then, you know, on the weekends, I mixed it up and I'm like not so strict about things, but I even just wear the same thing every day, right? So I'm pretty rigorous about that. And I mean, I basically am just in this routine of get enough sleep, wake up, lift heavy things, and do zone two cardio, and like meditate for a few minutes and then get after it. What's your wind down time at night though? It's basically like, you know, I've been in love making. No, it's been, don't look at screens, would be the main thing, right? Like you're, if you're looking at work stuff on your laptop or your phone, and like even something you just glance at for a second, it can like piss you off. And then if I try to just go right to sleep after working, I have like stressful dreams about work, and I just don't get well, well rested. So there does have to be like, I think up here, it's like how long is this wind down time? Oh, like an hour. Okay. Yeah. Before bed. Yeah. Okay. Yeah. And you can read, watch stuff, sauna, whatever. Yeah. Before we go to how AI changing the way you're working inside Coinbase. Yeah. Question for what I was thinking about was, what's the distribution of time between Coinbase and your other company? Well, Coinbase is my full time job. So it's like 99%. Yeah. I mean, if you looked at how you're spending time between the two companies. Yeah. Well, when New Limit was just getting started, I was spending more time with them. like 5-10% of my time, but, and, you know, I jump in whatever needed, but I'm primarily an investor and a board member there, and I'm helping with some of the operational pieces and helping them raise money and things like that. But, yeah, Jacob Kimmel is the president operating that company day to day, and he's crushing it. He's incredibly talented CEO and business person. I talked to, sorry, I should say, scientist and business person. Yeah, I talked to Palmer lucky about this because that's something I asked him. So, if you have three companies, he's like, no, I really have like one. He's like 99% of my time is on Android. And then he said it's something fascinating. He's just like wakes up every day and tries to think of like the highest leverage thing he can do for that company. Yeah. Even if it's stuff he doesn't want to do, which is very interesting. That's exactly right. It's like, it's so easy to get caught up and just doing short term things, but you have to start your day, usually with the thing that sucks, that you, it's the most important thing and it's usually it sucks. Yeah. So how is AI changing the way that you're working? In going based? Well, lots of ways. So some of it is similar to other companies and some is different. The parts that's similar is like more and more code is being written by these agents more than 50% now. Customer support increase, I think, is about 60% answered by agents now. Are you building your own tools or are you using other people's tools? Both. We're using vendors. We have a lot of custom models internally as well. We're testing different use cases. For instance, I'm around compliance automation. We're building a lot of stuff in-house design. Totally. You can really quickly, rapidly prototype stuff and get it out there. We're even using it within our finance function and like, you know, I'll do FPNA and build models and things like that. So it's widely, even like decision-making in the company, the key was getting a lot of our data ingested like all the Google docs and the Slack messages and the GitHub commits and the Salesforce. And now, like you can ask it really great questions. Like, what should I be more aware of as CEO? And it's like, did you know this team is not aligned on the strategy? I was like, actually, I didn't know that. So it's just something you build yourself. There's a team internally working on this and there's a couple of vendors. So there's one called Libra Chat that's open source. You can connect all your internal data to. There's other vendors out there like Glean and Slackbot and different. We're testing three of them or so right now. We've got to have Gemini's doing a bunch of stuff like Google. So we're testing all of them to see which ones employees gravitate towards, basically. That's, I would say, current best practice amongst a lot of tech companies. Not super unique to crypto. The thing that's more unique to crypto is that these AI agents are increasingly needing to do payments to get work done and we're giving them all stable quit wallets. So you can imagine like in the traditional financial world, like you and I can go get a credit card or something where we have to be identified as a human. But if you're an agent trying to get work done, you either have to bug your human every time to like, will you approve this purchase? Or if you want to increasingly these agents you can tell them, go do this overnight or the next two hours week, whatever, and get work done. They might need to spin up AWS resources or get through a paywall on the internet to read some research paper or buy a domain name or whatever spin up a marketing program. If you really want to treat them almost like their own digital employees, they need to have a corporate card kind of thing and traditional corporate cards can't be issued to non-human entities. And so we're giving them stable quit wallets. They're doing a lot of machine-to-machine payments. This is all very new in the last few months because it's been getting a lot of traction. So that's pretty exciting. We built a couple of tools that allow any agent to get a stable quit wallet inside it. How are you using them personally? AI agents? Or-- AI agents, any kind of tools? Well, I've been using Cloud and Codex a little bit just to learn the current development tools. I've been speeding that up locally on my laptop just to make sure I understand the current best tools the developers are using. Toby actually writes a lot of code still in production. It just came, you just see the treat today. Yeah, yeah. I dabble, but I do not write that much coding production. I have to admire him for that. As a CEO, the main thing I use it for is research essentially of just like, okay, help me understand this and this how this works. And then draft this for me. And internally, with these data report repositories now connected in, I can use it for decision making. And we actually-- like we use our decision making framework and there's a row now for the AI agent to write in their input. And it's kind of nice to compare it to the other people on the team. Those are the primary ways I'll use it today. I'm still a little confused. Tell me about the base app. Yeah. I've watched the presentation. So I've talked to you about it. I'm still confused. Yeah. OK, well, the simple way to think of it is the base app is the self-custodial version of Coinbase. We launched a new version of it recently, which frankly, was kind of polarizing. Like we put it out. And it was trying to do something kind of novel on the social front. And I don't think it quite works. We got a bunch of feedback from the community about that. Was this the tapping thing? Well, you could double tap to buy any post. Yeah. I understand that. But then each post almost had its own market cap. But then what happens? Well, it was interesting. So every post had its own coin. And also every creator had its own coin. It was optional for the creator. But what happened is if you bought a post, some of the economics would flow back to the creator. We thought maybe each post would have this up and down, like it would have residual zero value. It turned out like many of the posts had a couple thousand dollars of value or something at the terminal end of it. And people were thinking of it as a way to, I guess, reward and thank the creator, but they also own some of the creator coin. Long way of saying, I think something is going to work in this space around, they call it social fire or these kind of social media tokens. I don't think the tokenomics has not quite been figured out yet where it needs for the people investing in them. It needs to have some sort of durability to the-- they have to believe, OK, David Centra is going to continue to make great content into the future. And he's relatively undiscovered now, but he's going to be much bigger in the future. A company or something. And they would want to own your creator token and be some value and maybe a revenue stream would accrue to them over time, depending on your ad revenue. You'd have to come up with something like that that I think is a little bit more durable. In the current incarnation, it wasn't quite there, in my view. So we tried as an experiment, didn't quite work. The app is since pivoted to really just be more focused on trading and being like a self-custodial version of the Coinbase app. So we're starting with that for now. But I do think something in the social token space will eventually work. What else has been on your mind outside of Coinbase? And is it new limit? Yeah, new limit. Well, there's another project that I invested in helped get off the crown called Research Hub, which is trying to accelerate scientific research. They're trying to find novel ways to go to raise the funding problems in science or a whole thing in replication issue. You can talk about that if you want. I think through my family office, I'm making various investments in companies that I think are doing innovative stuff on the frontier. I think sometimes about what are the other big ideas that could really unlock progress? One other idea I'm interested in is actually like special economic zones in the US or elsewhere, where there's such a morass of red tape, both federally in state and local, to try to innovate sometimes that it's hard to get off the ground. Right? That money transmitter license thing is an example that I mentioned where you need like $5 or $10 million just to get the licenses. And I sometimes entrepreneurs can find a creative way around these things in the early days. But for instance, look at like, I don't know, nuclear energy, right? It's basically impossible to get a nuclear power plant. Oh, I shouldn't say impossible. It's very difficult right now. And if you had these special economic zones, like actually China's been very successful with this. They have like Shen Zhen is a special economic zone, essentially right or like Hong Kong or in the UAE they have these. And there's been examples of these around the world that have been unlocked a ton of value. In my ideal world, you'd have like 10 plots of land, like take federal land in the US and designate them as special zones. So you could have one that's, hey, this is in this sandbox, you can iterate on nuclear reactor design. In this one little area, you know, we're good. Okay, maybe something bad will happen, but it's contained in this area. We need to be on our front foot and like innovate there. Or have another one for biotech, like accelerated trials or another one for crypto or another one for drones. There's just like drones flying all over within this zone, you know, outside of traditional FAA rules and like allow people to really innovate and build startups. And if they get a product working through that rapid innovation in a, in a regulatory sandbox, they can then go apply for the license federally and then serve the rest of the US market. But the problem is it's like, it's such a high barrier to entry to even try to get started in some of these markets with these new technologies. Anyway, I think special economic zones could be cool. I might work on that at some point. I love the idea of just lowering the barrier, barrier of entry to innovation and entrepreneurship. Brian, this is awesome man. Thanks for taking the time to do it. Thank you. I appreciate it. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review and make sure you listen to my other podcast founders for almost a decade. I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through founders.