Brian Armstrong — It's Wartime, All the Time

You know, I used to think that I was better as a peacetime CEO, but I think that's not true. It's actually totally flipped. I think it's wartime all the time. And I actually realized that I like wartime. Sometimes when there isn't any kind of conflict or war going on, I get a little bored and tired and I'm just like, ah, it seems like nothing's blowing up right now. I could use a good crisis.

0:00

Today I have the pleasure of sitting down with Brian Armstrong, the co founder and CEO of Coinbase. One of your main roles and part of what I'm trying to do here with this set is crafting narratives and stories and movements that people can get behind. How did you kind of go through the process of learning how to do that and what have been the most effective ways that you've kind of learned over time?

0:20

Yeah, well, you know, I grew up as kind of like a shy, introverted kid, and I was really into computers. And in college I went and studied computer science and economics. So I always thought of myself as kind of a software engineer, not really a CEO. You know, in my mind, the CEO was someone kind of like a military general that was like barking orders to people like, charge that hill, you know, And I always kind of thought like, oh, maybe I can't be a CEO, because I didn't see myself as like that kind of charismatic leader. I was like a little awkward stumbling over my words. And, you know, I realized over time, number one, like, there's lots of kinds of CEOs and you can actually like lean into your strengths. And it turns out a lot of the great tech CEOs are kind of awkward and nerdy and a little autistic and whatever. And I also realized that, you know, you can don't try to be something that you're not. Like, people can read into that. So I would say that I'm like a well trained introvert where if you do anything like a thousand times, you'll get better at it. So I've probably done a thousand public interviews or something at this point. And I'm not the most charismatic storyteller in the world. There's kind of like the Joe Rogan CEO who can go on there and just tell crazy stories for like three hours.

0:40

And that's a far more lucky, I think.

1:45

Yeah, exactly. But I think I found my own thing that works for me and it's just about crafting the narrative of the company, which is about increasing economic freedom in the world. We think crypto is a Unique opportunity to do that. Crypto is a technology that can update the whole financial system. And it started doing it with trading, and now it's doing it with payments and borrowing and lending. And economic freedom is important. It's a necessary condition to all progress for people to be able to keep what belongs to them and actually use the proceeds of their labor. So. So anyway, we've gotten better over time, I think, at telling that story. And your work is never done because you always need to be out there preaching to the choir and refining your message and seeing what works and testing it on real audiences.

1:46

There was this funny thing that came out recently with Marc Andreessen and David Sinra where they were talking about the great leaders and the great men of the past were basically just not introspective. And when I was researching for this, I kept on coming to the conclusion that you are, in fact, very introspective, and you think a lot about how. How you have done things previously, and you're actively seeking feedback, even like, very critical feedback from people that you trust to kind of update your model of yourself. How do you think about being introspective?

2:28

Yeah. Well, I mean, I think getting feedback and introspection are a little different, but I get Mark's point, which I think is very important and Right. Which is you should just be making relentless forward progress. You know, like, don't get too.

2:55

Don't dwell.

3:09

Yeah. Don't dwell on the past. Like, if you take a loss or like, this thing didn't go your way, it's like, okay, what could I have done better? Boom. Then just get after it again and keep moving. And there are lots of people who are introspective at times. So I think, like, anything, you could take it probably to an extreme. In my experience as an entrepreneur, I was always just, like, biased toward action, and that would. Most things I tried didn't work the first time, but I was just kind of stubborn and didn't care about looking stupid. And I would just kept doing it over and over again. And you. Eventually, you rack up enough lessons where something kind of halfway works, and then it really starts to work. And even to this day, if you're not trying ambitious enough things where it might fail, then you're holding back and you're not fulfilling your full potential. So I tend to bias toward action like that. There are moments where I also sit down and I try to think about, okay, what could I have done better in that moment? And do a little journaling and stuff. But then just the next day. Just get after it and don't reflect too much on the past.

3:10

What was the last decision that you made where you kind of made a very big judgment call to just get after it?

4:07

Well, there's been some big calls in Coinbase's history that I think accidentally ended up sort of defining our brand. Right. One of them was this mission first blog post where we decided actually we're not going to do political social activism in the workplace, we're just going to focus on the mission. At the time that came out that was controversial and surprising and people thought 50% of the company was going to quit. It turned out to be a lot less than that.

4:13

5.

4:36

Yeah. And then another one was we actually ended up suing the sec. A very contrarian thing to do as a public company CEO. Most people told me not to do that, but the SEC chair at that time was, in our view, kind of unlawfully trying to kill the whole industry in the United States. And we felt like we had to preserve the industry in the United States to get at least to a better place. And we ended up winning that lawsuit. Even this current market structure legislation that's being debated for crypto today, you know, we're unafraid to stand up and say like there was a draft that got put out there, which we said, actually we think this would be bad for crypto. Here's the things that we see as issues and I think we were very respectful about it and defer to the all the hard work that the people are doing to make that go forward. But I think we're unafraid to stand up and just say what, what we think is true. If we see something that's messed up and sometimes that riles people up, sometimes I think it's our finest hour because it helps us define. It shows courage. And people, actually many of our customers, when they see me in person, they'll come up and say, thank you so much for standing up for this or that or it's like the thing that I get the most positive feedback on that really gives people affinity to the brand and what we stand for. So it turned out accidentally to be our best marketing moments or brand moments, even though they were the kind of thing a more risk averse CEO probably would never do.

4:37

Are those types of best bets and being willing to take that risk, something that you learned and got better at over time.

5:53

Yeah. So I think all leaders or people in these positions, you have to develop this judgment over time, which is because as an entrepreneur, sometimes you have a lot of Contrarian ideas. My default is kind of to question everything from first principles. And that can really piss off your teams where it's like, why are we using this HR software? This thing sucks. We should just build our own. At some point. You're like, okay, let's pick the top three few things that we want to focus on and do really unique contrarian stuff. And the rest of it, let's take the off the shelf solution. So I do think you can be contrarian to a fault and you really have to pick your battles. It's also like, if you're building an executive team and a board and people around you that are these really brilliant people with their own skill set, there's a balance where you want them to be able to come to you and tell you, brian, that's too crazy, don't do that one. Or, Brian, I think you're wrong on this. Here's the thing you're missing. So they have to be able to have enough trust to be able to tell you when you're being an idiot. But they also have to trust you enough where once in a while, if you're like, I get. I hear what you're saying and I don't want to do it anyway. And then they're like, okay, let's go that way. And they have to be willing to follow you into battle. And so I think that's like a balance that lots of employees and executives are thinking about at any given moment. And there's been times where, you know, I'm pissed because nobody agrees with me and I force it through and then I regret it later. Right. And there's been times where I forced it through and it was the best choice. So that just comes from being in the arena, getting enough experience where you start to trust your instincts versus question it.

5:59

I've noticed that if you want people to give you feedback, you have to actively give them the ability to do so. So you can't just expect them to come out and say something that they're feeling. In most cases, you have to kind of like pull it out of them at first and over time it becomes easier to pull it out. What's your kind of process for building that trust when you have some new partner?

7:30

Yeah, it's really true. I think that it's really hard to get truth out of people, especially if you're their boss. Right. There's actually a lot of instances where I think people are afraid to tell me things within the company, even though I actually would appreciate it or I try to Go out of my way to recognize people publicly who were willing to disagree and they were right or there's things that I was wrong on. And I try to surface those examples and. But you don't want it to be just like a big complaint inbox, like flowing upward. You also need to be directing the company. And so I think of it as a balance. It's like, how much are they applying pressure to you and how much pressure are you applying to them? And it should be, I don't know, roughly equal. If you're just a top down dictatorship, you're probably missing out on a lot of the value of all the smart people that you've hired. And that's a bad strategy. But if you're just sitting there with like, I'm on this feedback listening tour, you know, there's times in the past where I think I went too far with that, where I was just like, all right, I want. Everyone has a lot of emotions, like, let me go around and we're going

7:49

to do a healing circle.

8:46

Yeah, trust falls or whatever. I mean, that was a failure of leadership as well. So every day you're finding that balance.

8:47

Have there been any other really big moments where you tried to lead in a certain way and then you realized only in hindsight that that was an absolutely terrible decision and like, course corrected?

8:54

Yeah, I mean, there's times where the team has really pushed me on something like, I don't know, without naming exact names, I. There was like this company that I was like, we should just buy the whole company. Like, I'm really into this. This is a great way for us to expand. And the team kind of told me, well, here's a bunch of risks and difficulties with that that you may not realize. And there's like going to be a massive amount of overhead and cultural misalignment and we could get mired in this, like, you know, this quagmire or whatever for years. And, you know, I think they were right and like the right solution was to make a minority investment in that company so that they have to wake up every day and make sure that a thing works. We have a small piece of it, but we can stay really independent and both keep moving fast. And that was an example that came from our executive team and our president, Emily Choi, and our cfo Alicia Haas and others that they were totally right and I was wrong. So that was an example where I did course correct. But there's lots of examples like that, which it's really complimentary skill sets that make a Great team. Nobody is good at everything.

9:03

There's this idea when I was talking with Fred, your co founder, just in prep for this, he mentioned that you are very or at least at one point were very anti authority. And I find this interesting because it almost seems like the exact opposite of your actions, which are basically, you're trying to be the most regulated and compliant institution in crypto. How do both those two different ideas kind of marry in your mind?

10:05

Yeah, actually I think they work together in the sense that as an individual, I never really liked people telling me what to do. And as a company, we also want to be the most trusted brand and so we can create trust. But I can also be a little bit of an anti authority streak. I'll tell you a funny story. Like when I was a kid, for the holiday, like Christmas, you get these gifts and my mom would always say, you have to write thank you notes. And I hated this being told what to do. And so when I was probably like 7 or 8 years old one time I was forced to go write these thank you notes. And so what I did is I actually went and I wrote, I'm being forced to write this thank you note under duress. And it's not that I don't appreciate your gift. In fact, I actually do. What I resent is the fact that I'm being ordered to write this, which I think cheapens the entire idea of a thank you note signed 7 year old Brian Armstrong. And I sealed up all the thank you notes so that my mother couldn't see the contents. And I was like, all right, they're all ready to go. And so she started getting phone calls from our relatives. She said this to like 20 people. Yeah. And she's like, do you know what your son sent me? And anyway, that was a funny moment from childhood, but I realized I was never the best employee because I was always kind of wanting to do my own thing as an entrepreneur. It worked out great. But of course you have to still be willing to work with other people. If you're just by yourself and don't want to take anyone's input, no one good is going to want to work for you. You're not going to be able to build a great board and team. And Fred Wilson, who's been on our board for a long time, I think he actually figured out the secret to working with founders that have this little bit. Sometimes they have more of this anti authority streak where he would never tell me what to do, but he would kind of do the Socratic method. Right. And he would ask me enough questions where I'd get to the answer, and I would eventually think it was my idea and it wasn't quite that literal. But even if I knew intellectually what he was doing, it still helped. And he'd be like, okay, well, what do you think about this option? Do you want to work with that person? And I'd be like, oh, I have this concern. And that he'd walk me to the right answer without making it his idea.

10:27

I think a lot of people don't spend enough time thinking about how if you are trying to communicate, really what you're trying to do is translate an idea in your head into someone else's head. And a lot of people will just say, fit the world to me, and here's my idea, and you just share it in exactly the way that you want instead of actually thinking, who is the person that I'm communicating with? And how will they best interpret this idea? How do you think about basically trying to help people understand the meaning behind the thing that you're doing?

12:30

Yeah, well, you're right every time. Like, the level one communication style is to, I have a thing in my head. I will tell you about it. The level 2 communication style is to say, who am I speaking to? What's in it for them? What do they want? What are their interests? And tailor what you're saying to their interests. So it sounds trite, but it's true. You kind of really have to read that person or understand them enough to know what they want and then really frame it. Start with framing it in terms of what they want. The other trick, it sounds simple, but most people don't do it. Instead of going into a conversation and just launching into, here's all the things I want to install in your head, you literally have to start by asking them, and they will give you the answers to the test. Oftentimes, if you're interviewing a candidate and you can say, what's the most important thing to you in the next three to five years of your career? And they'll say, well, it's really X and Y and Z. And then it's like, okay, well, if we have those things, I'm going to test tailor my pitch to you now. And it's the same thing in sales, right? If you go into a meeting with a partner, don't go in there and berate them or just launch, talk at them. Spend the first few minutes understanding what they want, then respond anyway. These are simple things. But a lot of people don't do it.

12:56

Why do you think most people get that wrong?

14:03

I think it's just lack of experience, but it takes another layer of processing in your mind. I don't know. You have to actually simulate the other person's brain in your brain to some degree. I mean, it's not like running a full simulation, but it's like a lightweight simulation and you have to predict and interpret. So, I mean, it's partly, probably an IQ thing, but that sounds like mean. I actually think lots of people could do it if they were Just practiced it a little bit more. Like, you have to not give in to your first instinct, which is just to blurt out the thing you really are upset about.

14:05

Going back to kind of the moment that you were founding Coinbase, there's this interesting video online of you and Paul Graham practicing the pitch at Y Combinator, and I think it was like 2012. What was it like doing that with him back in those days?

14:39

Yeah, well, Paul Graham's a legend. You know, I had read almost all of his writing on his public website, which is still there, and I really admired him. He was like. He's like a hero of mine. Right. And my dream was to kind of get accepted into Y Combinator. I applied several times. Like, finally I got accepted with the idea for Coinbase, and. And it was great to have access to someone like that and the other partners who were there, like, Sam Altman was running it at the time, and Gary Tan was there, and he was one of the partners, and Paul Bukai, Jessica Livingston, and many of these folks are now doing amazing things in the world, and Gary's running YC now. So I really felt like I had gone to Mecca. We were living in a golden age of innovation and software. This was my moment to shoot my shot and I was sitting around these people that were my heroes. And it's actually kind of intimidating if you're really excited about somebody and then finally you're in the room and you don't want to say something stupid or whatever. Right.

14:54

Especially the first time that you're doing that. It gets a little easier after the 10th person that you've only ever seen online.

15:50

Exactly. And there's actually something very valuable about getting in the room with these people by any way, shape or form you can, because you start to realize they're not on some pedestal. They are human and they're incredibly impressive and you can learn from them, but they're not fundamentally, they're made of the same stuff as you. And you can take the best parts from Them, they can be a mentor and then you can also do your own thing. So anyway, in that moment, I was really just trying to. If Paul Graham tells me something, I'm going to try to do it. I'm going to try to internalize it. I didn't have enough ego or too much ego to say, I know better than this guy has literally helped thousands of companies get off the ground. If he tells me something, I'm just going to default, do it and not try to be super innovative. I'm first, just going to learn from the Masters the best, the best practices.

15:57

I think the best people in history learn from the greats and copy as much as they possibly can before start innovating on their own.

16:41

Yeah, it's dangerous as a beginner to be like, you know, I'm going to do my own thing. It's like, I think that is dangerous.

16:47

It's like going into a kitchen and just starting, you know, fucking with shit.

16:52

Yeah.

16:54

Fred Wilson was talking about this in the Coinbase documentary right before you guys went public, and he said there's. He's never seen another co founder, like, give their other co founder more equity. In hindsight, in, like, retrospect, what did you see in Fred Irsham when you were first meeting him, getting to know him, building that relationship and then what made you do that decision?

16:55

Yeah, well, Fred Ursam, who co founded Coinbase with me, I mean, he's a beast, you know, and there's a lot of things I saw early on as we started working together, but I think the key thing that made me. I'll talk about that in a second. I think the key thing that made me want to give him more equity was I knew we were just starting out on this journey. We had tried working together for a few months or something like that, and I was like, okay, this guy is the real deal. This is going much better than I expected. And I knew the company was going to go through crazy ups and downs, and if I felt I was basically preempting this moment where there was going to be a big down and if he didn't feel like he had real ownership, then he would probably bail or whatever. And so I was like, okay, if this is the real deal, I got to get this guy even more bought in. I like Fred Wilson's comment, and it makes me sound, like, magnanimous. I think it was all mutually beneficial. But that's the point of building something with someone is you can actually. It's greater than the sum of the parts of what you could do individually. But yeah, what I noticed with working with Fred early on, because Coinbase had just come out of Y Combinator, Fred was really the first person that I connected with and we're like, all right, let's try working together for a few weeks. And he started adding value from day one. I mean, he had studied computer science, but he also had done FX trading at Goldman Sachs. He deeply understood finance. He was a jack of all trades. So he was just like, I'm going to start recruiting people, I'm going to start doing customer support, I'm going to write some code. And then he also started doing a bunch of stuff that I didn't even think of, which is analyzing the flow of funds through the app. And he came back one day and he was like, I think we're losing money on every sale of Bitcoin. And I'm like, how could that be possible? And he whiteboarded the whole thing out and there was time value of money on this step and blah, blah. And I was like, oh, my gosh, he's right. So that was just one example. The other big thing was his work ethic. I mean, we were there till like, you know, one or two in the morning every night, just working crazy hours, and he was all in for that. He's a very intense, competitive person and when he puts his mind to something, there's like, nothing stopping him. And I think that relentless drive was really critical to Coinbase's success. And, yeah, I mean, Coinbase wouldn't have succeeded, I don't think, without Fred there in the early days helping get it off the ground.

17:17

What do you think that he did that you just could not have done on your own?

19:28

Yeah. So I think I was definitely still a little bit in my a little more awkward engineer introvert phase. I was writing a ton of code and for half the day I'd be locked in, just headphones in and just trying to keep the site going. And I was writing a ton of code. And then the other half of the day I would try to go do all the million other things that we all had to go do. And Fred was a really nice balance to that. He was often kind of like external facing. He was really kind of like shielding me from a bunch of stuff that had to be done, where it was like, okay, I'm going to go talk to these 14 investors and I'm going to go put on a suit and talk to these regulators. And he would do anything. And so anyway, we both could do these things, but we Each played to our strengths. And eventually I stopped writing so much code, and I was like, all right, let me try to lean into that, some of these other duties as well. But, yeah, he was a perfect co founder in that sense of just willing to do anything, get shit done. And it was super collaborative.

19:32

So the exact quote is, all the decisions in the early days, me and Fred would just get in a room, hash out the options, choose the least bad one, and move forward. What were some of those decisions that you had to make that were just the least bad ones?

20:32

I mean, I remember one of them was the decision to go get a bunch of money transmission licenses. I don't know, it might sound like kind of in the weeds, but there was probably like four or five of these kind of things every week, right. That were not the easy decisions, but the hard ones. And I remember we launched the product under this legal understanding that we were not a money transmitter. But we felt as we grew in scale, we'd just get more and more scrutiny and we eventually had to go get it. And I remember we had a lawyer at that time who kind of told us, I don't think you need this. Why don't you guys just fly under the radar for a while? And we said, that doesn't sound right to us. We want to start investing in this thing now because it would increase legitimacy, it would help us land bigger clients. And they said it would take about $5 million and maybe three or four years to get money transmission licenses in all 50 states in the U.S. and we made it kind of contrarian bet at that time to actually go and do that. As a young company, it was a huge percentage of what we had raised. It was a major amount of work. Some of the states came back and said, we don't even know what bitcoin and crypto is. We're not going to give you the license. And we said, well, what if we were storing dollars? We're doing that too. Can we get the license for that? So it was such an interesting meeting of 50 different states with their own culture and everything and trying to understand. Get them to understand what we were doing. That was just one random example. A lot of it was the people stuff. It's like, okay, these two teams aren't getting along, so do we fire this one or this one or both? You know, because like, they just refusing to work with each other, so. Or, yeah, I'd say the personnel decisions were like some of the harder ones.

20:46

How did you kind of sort that in your mind and get better at making those personnel decisions over time.

22:23

I think the first thing was we had a real scarcity mentality for a while about people. And, you know, I think to a large degree that's healthy. If you find great people, you have to really work to retain them. But we were such a scarcity mindset because we started it was hard to get anybody to join. And we were in the midst of this kind of like, zero interest rate phenomenon in Silicon Valley where every engineer was getting five offers from Google and Meta, and we were this little startup, and so we were kind of walking on eggshells in some ways. And this actually created, I think, a bit of a negative cultural environment in Silicon Valley for a while, led to some of that employee activism and stuff. But we were so afraid of losing anyone that I think once we shifted a little bit, like the zero interest rate phenomenon went away, we became like a remote first company. So we have access to pools of talent in much larger segments of the world. And it allowed us to really have a healthier relationship, I think, where we said we want the right person and the right job. And if someone's not living the values or they're not collaborating well with their colleagues, we just had less tolerance for that and we were able to make quicker decisions.

22:28

I find it interesting that you worked at Airbnb directly before Coinbase, and the way that they initially figured out monetization was Brian at, like, south by Southwest, stays with, you know, a host and forgets to pay. Over the course of, like, three separate nights, he committed that he was going to bring the money the next day, forgets to pay, bringing the next money the next day, forgets to pay. And at the end, you know, the host thinks that basically the founder of this platform is freeloading off of it. And I find it funny because the way that Coinbase initially figured out monetization was also this obvious thing that was basically, what if you could just buy Bitcoin? And that wasn't the first version of the product that you released. Do you see any similarities in the story of Coinbase and Airbnb in that way?

23:31

Well, I mean, working at Airbnb, I definitely internalized a lot of lessons. That story. I actually had not heard about Airbnb, but I think there is something common amongst those two things, which is you have to just get started with anything and it's almost certainly the wrong thing. But that's okay, because this action produces information idea, right? Like if you just launch the first thing you can think of and then in the act of doing that, you will see what you should have done. And if you don't, most people fail is they actually never take the first step. They actually just, they're stuck in analysis paralysis or they're too risk averse and they never do anything. So you have to be willing to take these steps into the unknown and just try the first thing that it comes to mind and then iterate from there.

24:18

Do you have any other really good examples of times where you took action when you think other people might not have?

24:58

Actually internally at Coinbase for a long time we had just a retail product and most people know us for that. But today we actually have like a very large institutional product for crypto as well that does trading and custody and financing and all kinds of things. It's the leading product in the institutional space. So there was a moment there where we were thinking, all right, institutions are going to come into crypto, maybe we should try to launch something here for custody and trading. And we went and talked to a couple startups out there that were working on this and we got really close to actually buying one of these companies as a way to kind of start the team. And for whatever reason, it didn't quite work out with that company. And I remember thinking, we just need a bias for action. And I kind of set this crazy. It was like a Friday or Thursday night or something like that when this team kind of told us, nah, we don't want to take your offer to be acquired. And I was like, Monday, we're launching our institutional product. And people are like, what are you talking about? Like, this is going to take like six to 12 months to build it, the version one. And I was like, no, we're launching a V1 on Monday because this company turned us down. And I was kind of like, fuck them. Yeah, I was a little pissed about that. And so we basically threw together a landing page, like a marketing page. We started to sketch out what some of the backend might because we had built a lot of stuff that could be repurposed. And, and Monday morning like we announced it and it had like a page where you can, all you could do was come and sign up and be, you know, express interest. And then we went and hired like the right person to go kick it off and run it. We had more like in our New York office, we had more people with institutional connections. We tried a bunch of things which totally flopped. Like we initially went after the biggest institutions in the world, the biggest, you know, like Goldman Sachs and like black BlackRock or whatever. Yeah, and we were so unprepared for it. Like we basically failed by going after the big ones. So then we totally changed our strategy. We went after the smallest institutions, like two person hedge fund or like a couple crypto traders or whatever and family offices. And so we started to land some minnows and then we got our, like our cybersecurity systems got way better and our audits got way better and like we learned how to do a sales process with institutions that were like multi year long and then we ate like a bigger fish and a bigger fish and eventually we landed blackrock and the biggest financial institutions in the world. So that was just an example of me action, just like let's just move and launch and then iterate from there. And if you're not embarrassed by the first thing you launch, you waited too long.

25:04

Recently we got back from New Zealand, we're recording with Peter Beck at Rocket Lab and as soon we have a little bit of a fun experience there where as soon as we arrived we realized that we didn't have some very critical document that we had, apparently we were supposed to have because ChatGPT didn't tell us that we needed it. And so they immediately confiscated our gear at customs and basically no one was helpful. No one knew the process for getting our stuff back. We were told that it was going to be at least five days, maybe up to three weeks. Our shoot was in 36 hours and over the course of the next 24 hours we just pulled all these different strings, had a backup of maybe we can rent gear, all this stuff. But eventually we figured out that if we just quote unquote, semi bribed the right government person, things could just unlock and get our gear back immediately. And we did that and we got our gear back and did the shoot. Has there been any examples in the history of Coinbase where there was a completely unknown map and you just made up the rules?

27:34

Yeah, well, I want to state for the record that we have never engaged in any bribery just to put that out there. But there are a lot of cases where the rules are undefined. That is definitely true. There's actually a lot of areas of the law that are unclear. Like if you go get legal advice and they'll say it depends, that's actually a very common answer from lawyers. So it's always a danger. If you wait for perfect clarity, you're just never going to get anything done because sometimes that comes only after the fact. Five or ten years later you'll see legislation get passed. Like we're finally seeing get passed now in the crypto space. But if you also go off and do something that is like unethical, whether it's legal or not, that is going to come back to bite you. So there are a lot of times where you have to make risk judgment calls, right? And the first test I always ask myself is, do I feel good about it? Like, would I feel good, let's say this whole thing got leaked or whatever and do I feel good about it? Would I stand like this was the right thing to do for customers or for the country or whatever it is. And so first is like that kind of look yourself in the mirror test, which I think is important. And then you have to and say, okay, well, there's gray area in the law. It's unclear, you know, what are the actual penalties if someone this case gets litigated and it goes against us, what's the upside? You know, is there this. If it's like, you know, like 100 million revenue potential and there's a 20% chance we get fined $20 million, I'm like, that's a good trade right now. If there's a 20% chance that you're going to get fined $10 billion and that could be existential to the company, then you probably shouldn't do it, right? So these are the kinds you always have to look at the upside and the downside. I mean, it sounds simple, but a lot of people don't do this. You go into a meeting. This often happens. You go into a meeting and someone's just like, I don't know, this is really risky because like X and Y and Z, I'm like, okay, those are risks. There's also a risk that we just don't do this and we completely miss the market and it impacts our market cap by $10 billion. So I actually think you're creating that risk. And so you have to reframe it in their mind of you're not just mitigating these risks, you're actually creating risks. There is a risk that this company becomes irrelevant and dies because we're being too conservative. So you have to balance all the risks, not just look myopically at one set of risks. And this is actually a rare thing. A lot of lawyers aren't good at this. The best ones are a lot of lawyers. They actually only think their job is to protect the company from some kind of case coming against them. Believe me, there's worse things in the world than having some litigation happen, which is the whole company dying or Becoming irrelevant or just never mattering, that is worse than getting a lot. So litigation is just a part of business. You have to sometimes go to the courts to figure out what the rule is because the law is not clear and that you create, you need to create legal precedent through litigation. Like, that is actually an important part of how our system works. So I think some people don't quite get that sometimes, and they think their job is to mitigate litigation. And I actually think it's to take intelligent risks that create the outcomes you want. And look at the roi.

28:28

It's almost like being a forcing function for clarity.

31:35

Yeah. And there's times where if we're not getting clarity from the law or Congress, it's important to go to the courts. Like, that is a, you know, checks and balances.

31:37

This almost kind of reminds me of the Uber lift scenario where, like, initially Uber was just doing, like, limos and black car service, all this, and then Lyft comes along and just opens it up to basically everyone. And then Uber for a while doesn't copy. And just because of that, you know, they're, they're, they could get litigated, all that. They don't copy and they just lose market share and lose market share, and eventually they just say, fuck it, we have to do this or else we're going to lose. And then only then, like, the courts start working through what was it kind of like seeing that play out. Since this is very. It feels kind of similar to the situation that you've experienced.

31:46

A lot of the crypto companies got traction being outside the US and in some ways that was a huge advantage for them. Right. Because they did feel like they could take more liberties, not follow US law, even though sometimes oftentimes US customers were actually using them through VPNs or otherwise. And so that was a, like, pretty valid strategy, I would say, like to get big fast, and then now the question is, can they try to clean it up later? We always, just because we were based in the US and I didn't want to live outside the US or go to jail, I was like, let's do it the legitimate way. That was also a valid approach, and it allowed us to land many of the largest institutions and be the trusted provider. So we consistently see our brand as the most trusted in crypto. That allows people to store more crypto with us and we plug more products into that. It's a nice flywheel that's very defensible. I think the trend that we're seeing now is toward regulatory clarity. In the US, in Europe, in Asia, everywhere really. And so in that environment, I think Coinbase wins, right? In a regulatory clarity environment, we are the trusted option. It doesn't mean we don't have competition. Others that did more of a get rich or die trying approach are now going to try to clean it up. And so we are just like any industry, we're in competition with them and competition makes us better, actually. And as regulatory clarity has emerged, we're seeing lots of other fintechs and traditional financial service companies that are not in crypto now enter into crypto and start to use crypto rails. So that's definitely increased the amount of competition. But the TAM is also just getting much, much bigger. So our goal is stay the most trusted crypto brand, store more crypto than any other company in the world, which we currently do today, plug more products into those deposits, which makes it sticky, and use the proceeds of that to reinvest in trust and growing. And if we see, as I believe is going to happen, the financial system continues this transformation to running more and more on crypto rails because they're faster and cheaper, more global, I don't see any reason why we shouldn't be the leading company in the world doing that. But it's going to be thousands of companies coming in and doing that, which is why we provide kind of products and services for them as well, like through Coinbase developer platform and et cetera, et cetera.

32:20

How do you think about like building a very trusted brand over time while maybe short term taking a bunch of decisions that could potentially like, increase growth, but because you don't take that action, you will be trusted over, you know, in the long run.

34:24

So trust can come from a lot of different things, right? It can come from having great design, it can have customer support, it can come from being based in the US and being a public company. It can with public company standards. It can come from people knowing who the CEO is or feeling like they know who it is by listening to podcasts or whatever, where people are relatively open and transparent like this, as opposed to hiding behind corporate speak or traditional comms. So there's a personality marketing aspect of companies now where people want to know who the CEO is, what do they stand for, what do they like, what do they do in their free time. So trust can come from all of those things. Now there are times where, you know, we're very tempted to, like, our competitors are listing something that's like illegal or highly risky and it's a revenue opportunity, like you said, like, it's like, okay, we're watching these things grow and our regulators are saying, you can't do it. Or maybe we do like a cybersecurity audit, and we're like, this thing could blow up at any moment. Do we really want to expose our customers to it? And there's a lot of hard calls like that that we've had to made. Meanwhile, our customers are often kind of yelling at us, saying, like, oh, you guys are so slow. Like, how could you be the last one to list this? And so sometimes I think we get it wrong and sometimes we get it right. You know, Is it like a damned

34:39

if you do, damned if you don't situation?

35:52

Sure. I mean, yeah, if you. If you lean in too early and the thing blows up and customers lose money, like 100%, they're going to be suing us. Not that other thing that just blew up because, you know, we have deeper pockets, then maybe that thing's bankrupt. Right. So you have to always look at that from a, like a, like a litigation point of view. But they're also going to say, you know, if we wait too long and it didn't blow up, like, okay, and it got more legitimized over time, why were you so late? And so that's fine. I'm not complaining. I mean, that's what it means to be in the arena, like leading companies. You got to take preponderance of input from all parties, make the tough calls and live with it.

35:54

You've got this line that I heard in the David interview where you said, if something is critical to furthering the mission of the company, you can get excited about almost anything. Whatever that thing is, what have been the things that most people would never get excited by but that you have and gotten really good at to further the mission of Coinbase.

36:30

Yeah, well, a lot of things, you know, part of my job is, like, quite fun, and other parts of it is just. It's like, that's a. That's a grind, man. Like, that's going to be brutal. Right. But yeah, you can define. You can derive some sort of satisfaction or fulfillment from it by. It's for a greater purpose. Right. An example would be in the first five years of Coinbase, I probably interviewed 5,000 people, maybe three or four interviews a day for whatever, most of the days of the year, and then five years of that. So I was so burned out on interviewing people at a certain point. That was rough. Another thing would be, I initially was really reluctant to kind of go engage on policy Work and meeting members of the government and various state or federal level. And my view was like, I just want to build great products and follow the law, and then people. I don't have to engage with the government. That was sort of my, in hindsight, kind of naive view. But it turns out anything that gets big enough is going to intersect with the government and you have to go work with them and help them understand it and really treat it seriously. And there's a lot of, like, really interesting people in government. Some of them are really smart, some of them are kind of crazy, some of them are big personality. It's just like, in business or anything. And so I actually, over time, managed to derive, like, some level of enjoyment, like, from that, I have to say. I mean, in a way, because like you said, it's helping advance the mission and it's helping get things done. Now, I don't want to be, like, so focused on policy and get, like, all these policy wins that we have to actually make sure our products are great, too. So I'm always trying to find the right balance. But that would be another, like, flying to D.C. all the time is, like, not something I initially thought I would kind of enjoy. And, like, part of me actually kind of enjoys it now, and I think I've built some great relationships there.

36:49

If you've had to think about, like, the full picture of Coinbase and what it takes for the company to win over time, what have been the areas like going into politics and basically building those relationships that you didn't even realize were part of the game going in and you had to learn that.

38:33

Some of the ones that I've thought about, like, there's a fundraising skill set, there's a storytelling skill set, which we started talking about at the beginning. There's a recruiting or slash sales skill set. And part of it is really just about good judgment about what people want in products. We try lots of ideas. Not all of them work, but we try to get more right than wrong. And you kind of have to take inventory of what are your skill sets and passions, what is the company uniquely able to do, what are the things it's not good at? And then you're kind of like a surfer out there on the water and you're looking for waves coming in and like, ooh, that's like a new technology trend is happening, or this unlock happened, or this thing's got cheaper. This law just got passed. And so you're kind of looking at the waves and you have to kind of spot a wave coming that you're like, oh, that's a good one, I'm going to paddle for it. And then you really lean in and shoot your shot. There's times where I felt like we missed a wave like that and we were chasing to catch up to it and then we missed the full power of that wave. Just to torture the analogy of wave

38:47

of swimming after a tsunami.

39:53

Yeah, yeah, yeah. So you know, that's every year you're trying to make sure you try to. You have a couple bets and you're trying to catch a couple waves and you're not going to get all of them. And once in a while you get like a really great set and it's just a good day. Other times you get your ass handed to you.

39:54

So I was thinking about this last night. Couldn't sleep at all before this interview. Basically got like two hours of sleep between 2 and 4am this morning. But at the same time that prediction markets are becoming a thing, we also have this proliferation of AI generated content. And I was finding it interesting that this seeker of truth, which is this new thing or this mechanism, is happening at the exact same time that the truth is becoming less and less obvious and less and less clear. How do you kind of think about prediction markets and AI generated content and that sort of thing?

40:10

Well, I think there was this initial panic or fear about AI generated content and we wouldn't know anything was real. That argument always seemed a little funny to me because if you grew up on the Internet, you're very used to seeing things that are not true, right? Yeah, I mean, or just bad takes on Reddit or whatever. So now I think it's kind of been like a total nothing burger. You see AI things and sometimes they're pretty funny and sometimes they're really dumb. And sometimes you see something and you're like, is that real? And then there's actually a community note or a bunch of discussion people saying, no, it's not. But this is the thing that is real behind it. So I actually think it's like not only is it totally fine, it's actually great. I think the world is more interesting because we are getting like the barrier to do creative content has gone down. And so we see more satire, we see more things that are funny, whatever. So I'm not worried about AI slop. I think that it's fine for our democracy and everything like that. And then it's interesting you're tie into prediction markets. I mean, prediction markets are a really good signal of what is true in the world. Or going to be true. I think it's much higher signal than say like traditional polling, which can be biased or certainly like mainstream media. So I do think prediction markets have a positive externality in the world of just helping people try to get truth about. Is the Strait of Hermus or whatever going to be open in a month? That's an important thing for a lot of companies. So prediction markets create a lot of value for that. I actually think that in a strange way, AI agents might be useful to resolve prediction market contracts. Because if you set up a contract today, you have to put the resolution condition is typically like, okay, of these three traditional media companies, if two or three of them or whatever report that this person won the baseball game versus this one, then it resolves. And there's a human being typically behind the scenes checking to see if that CNN published this thing. To me, that's less reliable than say you could say an AI agent. You could say, okay, between Gemini, Grok and OpenAI, I'm going to ask on this date at this time, I'm going to ask all three of these agents who won the baseball game respond with a single answer. And if at least two of three agree, that is the answer. And so an AI agent can actually have like a preponderance of evidence across the whole Internet and resolve that, I think more truthfully than one media organization, let's just say in an extreme case. So anyway, I think there is some intersection there, but I'm glad AI agents are, I think overall unnet, like AI agents are going to help us establish truth a lot more in the world, and so will prediction markets.

40:40

I think it's just like the next evolution of the Internet. And the Internet was really good at expanding truth.

43:17

People forget you get biased or untrue answers from when you ask humans a lot too. Right. I mean, this is that kind of like we were talking earlier about simulating that person's brain in your brain. But when you go ask the person that question, like they're bringing all kinds of biases, misinformation. They're like, oh, I want to seem like I know the answer to this even If I'm not 100% sure. So like, we already live in a world where you have to be a little skeptical. And so I think AI agents so far are like exceeding the average human bar. So I think it's net positive.

43:22

I think it's really easy to hold other things to a way higher standard than you hold yourself.

43:53

Yeah.

43:57

If you had to look at the way that you operate Coinbase today and then you looked at your actions versus maybe a set of your peers like Sam Altman or Brian Chesky or Joe Gabia. Someone else would run their company. What do you think they'd be surprised by?

43:57

Hmm. Well, there's a common set of tactics that I think many of us use. Right. It's like we'll run an exec meeting and we do an offsite every quarter and we try to typically use okrs, and. But I think there are some differences. I'm trying to think, like, at Coinbase, the one that might surprise them the most. I mean, the most surprising thing has been some of these decisions that we made. Right. About being apolitical in the workplace, suing the SEC. I think most of those CEOs you mentioned probably wouldn't have done that, unless maybe there's a situation where they would have, but it probably wouldn't have done that under duress. Yeah. And I think those are all great CEOs, by the way. I've learned a lot from all of them. Cesky had a great thing with his founder mode that he put out, which I think articulated a lot of his philosophies. One thing we've done as a result of that is we've started hosting twice a year product showcases, like to really package up everything we worked on and tell it to the world. So, yeah, I've learned a lot from each of those folks. And most of the things they would be saying are good practice to run the company, I would probably do as well.

44:14

You mentioned that the thing that you probably fear the most or think about the most is trying to design Coinbase so that it's an environment where employees have the latitude to go pursue almost like many businesses inside of the main business, instead of just going off on their own. And you try to structure everything so that that can work. How did you kind of come to that philosophy and then, like, how do you actually implement it?

45:18

Yeah. So for folks who don't know, we have something internally called NextBets, and twice a year we have a panel where anybody in the company can come in and pitch and say, I think we should be building this. And I have one or two people that want to work on it. And you don't have to get a yes from everyone on the panel. That would be a committee, where they're like, one no means nobody does it. You don't have to go to your boss, your boss's boss, your boss's boss, all the way to the CEO. That's also a Committee in another form where one person's no kills it. And my fear was from reading things about Steve Wozniak at hp. He went famously and went to HP and said, I think we should build a personal computer. They said no. He left to found Apple. And so your best people, even junior people in the team, can really be on the frontier, coming with great ideas. Not all of them are going to be great, but some of them are really great things. And so what we've done is we've created this Next Bets program. Twice a year they can come in and pitch, but they only need to get one. Yes. So of the panel, there's different product group leaders who each have their own budget. They can decide to fund it out of their own budget. There's folks like myself, some young engineers like our president, cfo, et cetera. And so if you get any one of them to decide they want to fund it, you're greenlit. And it's kind of like coming in and pitching an internal set of venture capitalists. So that's what we modeled it after, is if you go pitch 10 VCs and you get one term sheet, you can go move forward. So it lowers the bar for these ideas to be tried. Now, we also want to make sure we don't lose focus at Coinbase. So we can't just like fund everything willy nilly.

45:41

Right.

47:08

We use what's called like 70, 2010 resource allocation. So 70% of the resources are on like our core business, which has a certain definition of scale and profitability. Make sure you keep the main thing, the main thing, 20% are on these adjacent or strategic bets that have reached a certain scale, but they're not profitable yet. And 10% are on these venture bets, the Next bets, which are typically very small teams, like two or three people, small amounts, but they're really crazy high potential ideas where it's okay if they don't work, but if the ones that do work could be really massive. And that's just been fun. I mean, it's just fun both because I get to go work with a lot of these Next Bet teams and they're just these really brilliant, potentially young people and they get to work directly with the CEO and other people in the company and then we get to try a lot of really innovative ideas. And yeah, USDC came out of that. The base blockchain came out of that. There's a really cool one we'll probably announce in a couple weeks.

47:10

So, yeah, one of the founders that I interviewed recently, he basically is A pro drone racer. So he used to be, like, the world champion drone racer. He said, when I first started the company, it was because I love making drones, and now I don't make any drones. You know, I created this thing, and now it's, you know, now I have to live with it. Was there any moment where you were building the company and realized, oh, my God, I haven't been doing the thing that I actually love for a while and, like, reevaluated your entire life and how you're operating to make sure that you're having fun?

48:08

I really loved programming, right. And coding. And in the early days of the company, I kind of built the first version of the product and was coding a lot of it, you know, so there were parts where I felt a little regret about, like, not getting enough time to do that. But I also felt like, really the thing that motivated me about it was building things, was that you could have an impact on the world. You could start to build cool stuff. And actually, I didn't have to be coding to do that. Organizing a team of people and coordinating fundraising and all these things are another form of building now. Recently I have started to get a little bit back into coding just because of the AI tools getting so great, which is really fun. But, yeah, I mean, there were certain points along the way where I would say I got burned out. Right? For sure. I mean, starting a company is a grind, right? And there's a lot of people I know who. They do it at an unsustainable pace or something about it, like, really stresses them out, and it's just unsustainable. Like, they gain a bunch of weight, they lose a bunch of weight, they can't sleep at night. And it's fine. There's going to be periods of stress, but you also need periods of renewal. How do you get it to be like a marathon pace, not a sprint? So I'd say every couple years, I think I've been building Coinbase about 13 years now. Every couple years, I'd say I hit a patch of burnout, or I was just like, oh, man, this sucks and I'm exhausted, or whatever. Something wasn't working. And usually what you have to do is change something about it. It's like delegate part of it. Stop doing something. Hire someone to do that who actually is better than you at it. Be okay with your ego saying, only I should be the one doing that. But oftentimes it's your ego talking, right? And it's like, maybe you don't have to do that like, like put someone, have someone do it who's better than you at it and let go of that. Right? Or there's different variations of it. But I also, you know, you don't want to also. It's not supposed to be like, building a company is not supposed to be fun all the time. Like, it's kind of like if you're playing a video game, right? And it's just like every level was easy, you're just clicking buttons. It has to be hard and difficult enough to be fulfilling. So I think sometimes people start to be like, well, man, I have a little bit of success and I started to make some money and man, why am I dealing with all these problems? But it can also just be very unfulfilling to sit on the beach, literally or metaphorically. And so I think it's important to still be in the arena and playing the game and trying hard stuff. And some days you're going to be like, that was exhausting and sucked. And other days you're going to get some wins on the board and you're going to look back on it over a period of a decade and you say that was fulfilling. Hopefully. I tried to do something big and important in the world. It didn't go exactly how I thought. Some stuff was harder, but we actually ended up having a pretty big impact. So that's fun. And I hope I get to in the broader sense, and I hope I get to do that for a long time.

48:35

Crypto companies have one very unique trait that almost no other company has, which is they're effectively public from day one. And what I mean by that is as soon as you founded Coinbase, you have this like real time ticker that is bitcoin, that is kind of saying, here's how hot the industry is at any given point. And because of that, you see these like violent cycles up and down from the beginning. What makes you uniquely suited to absorbing and experiencing pain and just staying at it?

51:20

Well, you're totally correct. Like, we did have a lot of that volatility before even being a public company. And I mean, there was periods of like three years of crypto winter where I remember like 30, 25, 30% of the company quit. And it was just like, they think it's over. And I'd go do interviews with like journalists and they'd be like, so now that crypto's over, what are you going to do next? So, yeah, what is it about my personality? I mean. Well, first of all, I think it's like anything you Know, if you get more reps on it, you start to. It doesn't affect you as much. Right. So it's actually kind of funny. Like, the bitcoin price just recently came down from about like 125 to like 60 or something. Now it started to go back up again. And part of me was like, man, that was a pretty mild winter. I think everybody kind of lost their mind for a bit and we saw all the same tropes come out. But part of me was like, three months, that was it. I've been through three year crypto winters. And so anyway, I think that the winters are getting a lot more mild now, which is good. I'm a pretty emotionally, I'm a pretty steady person. I don't think I feel high highs the way that some people do, but I also don't feel the depths of the lows. It's a more moderated sine wave or something. And I can kind of develop a routine where every morning it's like I just try to get after it. And usually when I wake up in the morning, I was like, I'm kind of tired and this thing sucks and I kind of have to get my mind right in the beginning of the day. And I have a routine for that where I'd do some exercise and, you know, write down what I want to get done and sort of dust myself off and be like, all right, let's get ready for that.

51:48

Do you actively just say no phone for the first, like 30 minutes or like after a workout or something like this?

53:26

Well, I think it's better to like what I try to do. I'll tell you what I try to do. And then what actually happens in practice, what I try to do and happens probably 50% of the time is that I'm just listening to. I would call it like positive learning development stuff in the morning. So it's like podcasts, audiobooks, which I can usually ingest those on some multiplier faster than reading. Actually, most people are better at reading than listening. I'm better at listening than reading. So I start off the day trying to ingest something inspiring, like educational. And then, yeah, at a certain point, usually the day gets started and you kind of jump into the flow of things. I also try to start the day really with the things that are the most important for me to get done and then dip into the flow of whatever it is, X or slack or something like that. That doesn't happen every day. Some days it's like you wake up and there's Someone, the only time you can call them is in the morning while you're working out. And I do calls in the gym sometimes too.

53:32

That's interesting. I don't know if you used to hike a lot or still hike a lot, but what has been the role of hiking in getting your mind right and thinking longer term and these sorts of things.

54:32

Yeah, I actually think just generally movement of your body is good. Hiking has the benefit of it being in nature too. So there's good studies on this where it's just like nature and a little exercise is very positive for all kinds of things, health wise. But even psychologically, I think there's actually some study I've read where there was people recovering in a hospital room and one group of people, they had a window to look at a tree or something. And then another group of people, they went on walks outside and they even did like a control test where one group of people, they had to go outside in a wheelchair. So they weren't allowed to walk, but they were allowed to be in nature and come back. So they were kind of trying to tease it apart of basically like, is it the movement? Is it the nature? Do you have to just like see a tree or do you have to be amongst the trees? They even remember and feel the trees. Yeah, I think even one of them, they had a paint. It just had like a picture on the wall of a tree. It wasn't even a real tree. And like that even had a positive benefit. Like it was something like if people were recovering in a hospital room and they even had like a picture of a tree, it actually helped.

54:43

Maybe the reason why people are so happy around Christmas time is because they have a tree in their house.

55:48

Yeah, I mean, anyway, so anyway, I don't remember the exact study results, but the TLDR I think was like all of them. Help. It's like movement helps any kind of nature, even if it's apparently it's like a picture of nature, all these kind of things help. So, you know, I think a lot about how we're really just like primitive organisms that are running this Software that's like 200,000 years old. From an evolutionary point of view, our psychology has not changed that much. The same software that was us running around as these little tribes on the savanna is basically the same thing we have today. But we also have a neocortex that can learn things in the modern world and whatnot. So you have to take care of the primitive parts of your mind and body at times. And so for me that's just. Yeah, it's movement, it's exercise, it's getting in nature. Hiking is just like a very nice way to like knock that out without, without a bunch of fuss about like, you know, scuba diving. It's like there's like a lot of gear you have to bring and everything, but if you just need to like consistently knock it out, that helps.

55:52

There's this idea of wartime CEO and peacetime CEO and I feel like, especially in crypto there's this nice oscillation of wartime. Peacetime. Wartime. Peacetime.

56:55

Yeah.

57:04

Do you enjoy when everything is going well or do you enjoy kind of when there's something that is like this absolute top priority where if you don't get it done like today or this week or this month, everything's fucked. Like which part of the cycle do you enjoy the most?

57:04

You know, I used to think that I was better as a peacetime CEO, but I think that's not true. It's actually totally flipped. I think it's wartime all the time. And I actually realized that I like wartime. It took me that's probably a change that happened over the last 10 years or something. The first five years of Coinbase where initially I think I was a little conflict averse and I was just kind of like walking on eggshells and let's just build and that had a time and place. But there's a real sense of motivation and urgency that comes from wartime. I actually think competition makes us better as a company. Definitely. I find it very energizing and motivating. It can make you like really pissed in certain moments too. But it's actually like very energizing. And sometimes when there isn't any kind of conflict or war going on, I get a little bored and tired and I'm just like, ah, like what's, you know, it seems like nothing's blowing up right now and I could use a good crisis now. Somebody might say you're just running on cortisol all the time and there could be an element of truth to that. But you know, I try to balance it with the things we talked about of like exercise and like, you know, have a wind down routine in the evening. So it's not like burning yourself out like by literally being fight or flight like 24 7. But I like, and I should clarify, I don't want to be like doing conflict for conflict's sake. I think that that's just destructive. But if you see something that clear

57:19

problem that needs to be solved, something to fight after, like fight For.

58:46

Yeah. Like, if you don't speak up and say something about it, like, then you're failing as a leader. I think so, yeah. Wartime is great. I actually, I love conflict.

58:49

There's this wonderful line. I was listening to a podcast with Jessica Livingston and Brian Chesky probably a year and a half ago, and he was talking about how, like, during March, in, like, eight weeks, 80% of the revenue disappeared. And he said the worst companies are basically destroyed in a crisis. Decent companies are, you know, survive the crisis. The best companies are, like, defined by the crisis. I think that's probably the same thing for CEOs as well. Of those companies, what have been the biggest, like, defining moments of crisis for you?

58:58

Yeah, well, I talked about some of them with, you know, mission first and SEC and everything. And this market structure legislation has been a nice, like, good debate, like, where I think we're getting to a good outcome. But I'll tell you, maybe like, an interesting early war story that sticks with me on letting a crisis be a defining moment. Right. So this was relatively early on in Coinbase's history. I think we were maybe three or four years in, and we had built this initial custody system for crypto, and the number of users was growing so rapidly that the amount of money we were storing live on the server was also growing very rapidly. And there was a dangerous moment where I knew that if we got hacked based on this amount that was growing every week, within 60 days, the amount was growing fast enough where if we got hacked, then we would be insolvent.

59:29

It'd be more money than in your bank account.

1:00:24

Yeah. So it'd be game over. Right. And you're always just trying to, like, how do you not die and make it to the next step of the game? So if you just don't die, sometimes in business, that's enough to succeed because everyone else dies. And so this was a moment where I. I didn't really know how to build. I mean, I studied computer science. I'd studied, like, taking a class in computer security, but I was not, like, an expert in cryptography or anything like that. Right. And we didn't have that many people in the company yet. It was either. It was pretty still relatively small team, relatively junior team. So as I often do when I'm trying to, like, figure it out, I think, like, who, Who. Who would I know in the world that could help with this? Right. So I called two people, and they were both cryptography experts. Actually, one of them was Zuko, who later created zcash, one of Them was this guy, Ryan Lackey, who's like a security professional. Really interesting dude. And I called both of them and I said, we need to build this next generation cold storage system to store a ton of crypto. Number one, what's the right architecture to build it? And they gave me their opinion on that. And then I said, number two, how long do you think it would take to build it? And both of them said something like this would take a team of 10 people about two years to build it. And I was like, well, we have about 60 days. And by the way, it's really just me and this one other guy. We don't have a big team. And so they were like, wow, that sounds really challenging, but let me know if I can help. Good luck. So this was one of those kind of crisis moments where it could have ended the company, but it actually turned into a defining moment because what we did was we sat down and this was like myself and Charlie Lee and Craig and a couple other early employees. And we said, we're not going to be able to do a perfect system that a giant company would be able to do, but we can do a pretty good system. And a lot of engineering is trade offs, right? It's like, okay, what would get us 80% of the solution for 20% of the work here? The remaining 20% that's not there? Can we live with that? Can we mitigate that risk? How might we mitigate it? And so we actually sat down within like three or four or five days. We had designed what we thought was their next architecture. We started to go and code it up. We then had the challenge of trying to transfer all of the old system into the new system. And I remember as we were racing the clock towards this 60 day mark, we were all pretty sleep deprived. And if you study how accidents happen in history, like the Exxon Valdez spill and even the Challenger explosion, and a lot of these things can be traced back to sleep deprivation as one of the contributing factors.

1:00:25

I mean, Brian Johnson literally has this graph where it's like decision making quality over the course of a day. And it's just.

1:02:53

Yeah, yeah. So I remember we were sitting there and we were about to like, okay, we need to do the initial transfer into this new system and let's do a small amount. Like, let's transfer like $1 or something. And I remember I was like, we need to pair. We're going to sit side by side and pair, program every single keystroke because we're both sleep deprived and we need to check each other's work. It's kind of like co pilots in the airplane, you know, you like double check the work. And so we transfer, you know, we transferred like a dollar and we waited to confirm that, okay, nothing exploded. Let's do a hundred dollars, let's do $1,000, let's do a million dollars, you know. And I remember we started this migration. We're like, okay, let's go home and like sleep for a little bit and make sure and come back. And we started transferring, like really big numbers. And every one of those was scary because, like, if one of them had gone wrong and there were a bunch of hackers trying to break into our systems at this time, you, like, we didn't know could one of our laptops have malware on it? So we were doing some of the key signing, like totally offline, disconnected from the Internet with these like brand new laptops we had just brought out of the bag that we were pretty sure had not been compromised, like this kind of stuff. And so it was nerve wracking. And we got it all transferred, like nothing blew up. And I just remember being like, so relieved. And we just went home and finally slept like 12 hours. The main lesson of that from my point of view is that, number one, I look back on that as one of the most important moments in my career. It showed me that we were capable of more than we thought. On shorter timelines, we were able to do great work. And I'm really proud of it too. And so now there's been many stories like that inside Coinbase where different teams have risen to the challenge. And I often find sometimes teams are really scared. If you go in there and you're like, okay, we need a solution to this within this amount of time. And they're like, why are, you know, why is everything so urgent? Why are you cracking the whip, Brian? Not everything is just like a made up deadline. You know, this is like so. And look, there is an element of truth to that. Like, some things require great craft and you don't want to just be like, if you force everybody to do artificial deadlines, you'll get like really shoddy product coming out sometime. So there's a lot of truth to that. But it's also true that people are capable of more than they think and the problem will expand to the amount of time that you give. Right? And so it's great if you come up with a goal and even if you don't hit it. Exactly. The fact that you had that goal means you're going to be a lot closer to it than you would have otherwise. So, yeah, there's moments like that that we're defining that required us to make it a defining moment of the company, our finest hour. Instead of end of the company with

1:02:58

podcasting, it's kind of this magical thing where, for this shoot, this is a huge thing that we have to pull off, and we have a deadline. And it's very clear because your schedule is. It's either you're here and there's something, or there's nothing. And it's the same thing. When I was interviewing Peter Beck, he said if rocket launches didn't have the payoff of seeing the rocket actually go up and work, no one would work on it because it just sucks most of the time. How do you think about trying to find those critical milestones almost where you can rally the entire company? You can't have. Even if you manage $500 billion, eventually it gets boring. And so you have to kind of create, here's the next goal. Here's where we're marching next. How do you constantly try to find that next marching post?

1:05:36

Yeah, well, that's part of what was so great about the moon landing is that it had such a clear moment defined in everyone's mind. Visually, it's like, did the guy walk on the moon or not? Like, you know, if you did it and it was a big one, most companies don't have that. Right. And so most companies are on some kind of cadence. Like, they're putting out a new car every two years, or like, a piece of software is like, shipping continuous updates every week, now every day. And so one thing we try to do is have, like, an operating cadence to the company where, for instance, now twice a year, we're doing these product showcase events. And so those are great moments to, like, you know, ask everyone. Like, okay, that thing is six months away. Let's write the headline. Like, what do we want to be able to announce on that day for our customers? And then it's like everyone can rally behind that. And even things which launched a few months earlier, we still haven't told the world about it in an adequate way. We need to package it up. And like, so those tend to be great milestones. You can do annual planning processes and OKRs and quarterly business reviews and things like that. But I think having those public moments helps rally teams.

1:06:17

Part of the reason why I was initially thinking doing a crazy set in costume design and all this stuff is because of some of the things that you've done publicly to communicate better with your shareholders and stakeholders. One of the things that I saw, like, a month ago was a earnings call where I saw, like, Subway Surfer underneath. And I was kind of blown away when I saw that. It's very interesting over time, like, what have you learned on the communication side and, like, how to communicate what you're working on and why you're working on it?

1:07:18

Yeah, Well, I think one thing I've learned is that the world is so noisy with all these ideas. People, really, you're lucky if you can install one idea in their head about what you're up to. Right. And so you have to make it a lot simpler than you think. Sometimes people get up there and they say, well, we're kind of trying to do this. We're also trying to do that. And it's part of this broader thing here. And so a lot of this is kind of comms 101. But you can kind of boil it down and say, what are our priorities this year? It's 1, 2, and 3. Try to only have 3. Don't have 5. And don't, every time you say it, try to say it in the exact same way, the exact same words in the same order and make it shorter. There's a difference between saying something that's like six words versus two. Like, the two is easier to stick in people's minds. And if you want to stick in people's minds, it helps if they hear it multiple times, but it helps if they hear it from multiple different people. It helps if they hear it in multiple formats. So they might hear me say it on a podcast or at a company town hall, but they might also see it posted in Slack in writing or an email. And they might not just hear it from me, but they might hear it from their manager or, like, you know, so it's really about, like, how do you install those ideas in people's heads? And it's the same thing for, like, from a customer or external comms point of view, not just internally. How do you make it digestible and simple and memorable? And then people can. If you poll, like, a random person on the street, like, what do you know about this company? I was like, oh, don't they do X? And you'd be surprised sometimes because you're trying to put out all this complicated stuff, and the only thing they can remember is, oh, that's like the place you buy Bitcoin. So you have much fewer opportunities, store these ideas in people's heads than people think.

1:07:45

Yeah, I remember this. I Think it was a story about Steve Jobs, and I forgot who the other guy was, but Steve was trying to explain a computer or something, and there was a whole bunch of different ideas. And this guy turned to Steve and he wads up all these pieces of paper and he takes five pieces and he throws them at him. And Steve doesn't catch any of them, and then he wads up one and he just throws it at him and he catches it immediately. And it's easy. And that, I think, is kind of the same idea around ideas. It's very easy for people to digest one thing.

1:09:26

A physical demonstration can stick in people's minds in a brilliant way, too. That's a great point.

1:09:53

Have you ever done any physical demonstrations other than a massive marble bitcoin?

1:09:57

Well, I remember, for instance, we had one product showcase where we were announcing all this stuff, and I thought, oh, this is going to be the big headline. This is going to be. And it turned out everybody just really liked the Coinbase credit card that launched. And it partly was because I think on video, we were just like, yeah, like, look at this. And then they could hold it, and then they saw. They're like, oh, it looks really cool. And it's like a physical artifact, like, stuck in people's minds.

1:10:04

You've got this idea where if you're trying to come up to speed on any industry, whether it be, like, longevity or something else, you'll basically get a group of the best experts that you can find in a room, like at dinner, together, and talk with them. How do you kind of think about coming up to speed on just coinbase? Like, when you're thinking about entering some new industry or doing some new thing, how do you rapidly get that mental model in your head of what good looks like and what you should be going after?

1:10:25

Yeah. So I think that being able to convene some people for dinner is underrated. I mean, it sounds simple, but a lot of people don't do this. They're sitting around thinking, like, man, I wish that I could create a company in this space or do a great podcast or make a great film or whatever they're trying to do. And you can read a bunch of stuff on the Internet. You can read books. Like, that's great as a starting point, but there's something magical about reaching out to whoever you can get to show up, even if you're early in your career or later or whatever, and just say, hey, I want to talk about this. You're interested in it. Will you come to this dinner? Because Think about that. It's much harder to call somebody randomly and be like, do you want to co found this thing with me? Or do you want to make a film with me? And they're like, no, I'm already making films. I do my own. But people will say yes to a dinner more easily than they will say yes to, like, I will leave what I'm doing in the world and come, you know. And it's also more interesting than sometimes just reading books because, like, books are written typically about stuff that's already happened. And you might have to read, like, for eight hours, like, read a book to get like, oh, there's one nugget in there that's relevant to me. But in a dinner in a captive setting, you can actually direct it to where you want to go. And so you get. It's a lower threshold for people to say, yes, okay, I'll come to this dinner. There's other interesting people. There's a. And you can really just go around the room and ask everybody, what do you think is the most exciting thing happening in this field right now? Or whatever you want to talk about? And most of the stuff you hear people talk about, you'll be like, I know that one, or, that's not interesting to me, or, this person's bad at communicating or whatever. And you're kind of. Honestly, you're kind of evaluating each of them a little bit, like, who raised your energy the most? Who could I see myself working with? And then you'll see, like, a little piece of the puzzle here and a little piece there. And sometimes you leave the dinner and you're like, oh, it was a waste of time. Nothing interesting happened. Other times, after a week or two, you're like, somebody calls you back and like, you know, that dinner made me think of this, and you said this, but I actually think the other piece is this. And so something starts to happen in the world when you convene a group like that. Yeah. And I've seen examples of that now where, you know, you can actually really make progress towards starting a company just by hosting a dinner. It's like a very lightweight step for people to start to make progress.

1:10:49

I also kind of love that because it's a little bit. That whole action produces information. There's also this other idea of, like, action produces action. And so if you just kind of are the activation energy for some new idea to be spread and some new gathering to happen. Yeah, that can just be like the first domino in a sequence of other dominoes.

1:13:00

Well, I did that recently I was. I started thinking about, you know, gene therapies are getting, like, more and more prevalent. And I was like, who's actually working on genetic editing of embryos? Right? Like, this is a controversial topic, but, like, for disease prevention, most Americans are for it. It's taboo. So most people would be afraid to do it. But in my entrepreneurial brain, I'm like, okay, there's an opportunity there. It's like, clearly something that could benefit the world, but people are afraid to do it. That's kind of my sweet spot. And that was the first thing I did. I was like, all right, let's organize a dinner. And reached out to a bunch of scientists, people that had interest in this. I actually put out a Google form on X And I think 120 people applied, and my chief of staff helped me screen a bunch of them and we invited a bunch of them from different parts of the world, had hosted a couple of dinners like that, and actually, like, two companies came out of it. One of them I invested in. So that was just a recent example.

1:13:15

You have this idea of basically wanting to make sure that the people that are going to work directionally on what Coinbase could evolve into, stay inside of Coinbase and do it internally at the company. For the companies that aren't going, or completely different missions and should be started as separate entities, how do you decide who to back, why to back them, what missions to focus on?

1:14:11

Well, I mean, I should mention inside Coinbase, we have the next best program I mentioned to do internal innovation, but we also do external innovation. I mean, so we have Coinbase Ventures. And if employees want to leave to start companies, we'll often put a check in there too. So we're open to all of those. And oftentimes it makes sense to do it internally because you get the distribution of the Coinbase. But if it doesn't make sense, if you want to leave, we're also supportive of that. And then just more broadly, your question about, like, how to decide who to work with in these other areas, like, if it's not related to crypto or financial services at all. I've done some as a separate company. And how do you decide who to work with? It's a lot like who to hire as well. It's like you're looking for people that are high agency, great communicators, high integrity. They raise your energy when you meet with them, they're bringing new ideas to the table. Part of it is like just going off of excitement. It's like when you Meet with one of these people and you're like, that would be awesome for the world. And this is a fun and interesting conversation. I kind of want to have more of conversations like this. Yeah, let's put a check in and see what happens. It can literally be that simple because if you're excited about it, other smart people are going to be excited about it. That is like half the battle to just getting the right group of people in the room to sometimes go try something really ambitious and fun and crazy.

1:14:30

I've seen multiple interviews where you talked about going on a week long vacation. And I kind of want to know at what point does Brian Armstrong decide to go on that week long vacation? And then how does your psychology change from the first day on the beach to the seventh day where you feel the anxiety of wanting to get back to work?

1:15:46

Yeah, well, this is one of those things about like making it sustainable. Right. To be able to do this for the long term. So I actually, I schedule four weeks a year in advance. They're scheduled because if, if you just kind of wait, oh, I'll go when there's time. There's never like a good time. So you kind of have to schedule it in advance. And some of those weeks it's just like it's the Christmas holiday or something. Other weeks it's I'm going to some conference or something that's like kind of work, but kind of not other ones. I'm like, truly the other two. I'm usually taking like a real vacation, like family and stuff. Yeah, I mean, it's true that my psychology is like really messy on some of those trips actually, because sometimes at the beginning I'm like, oh, I'm exhausted. This would be a good moment to take a break. But usually within two to three days I start to get anxious that I'm not. I actually kind of want to start thinking about work and doing different things again. And I will often end up reading a bunch of interesting stuff, calling random people about ideas and starting to think about the future and come back with better ideas. Right. So that's kind of the purpose of vacation. But honestly, like sometimes half the vacation, I don't know. The way that some people do vacation is you wake up early and you go on this to this museum and this touristy thing. I actually really don't like doing. I don't like doing touristy stuff.

1:16:06

I hate tours.

1:17:30

Yeah. So what I usually do is I like sleep in, go to the gym, have an amazing brunch, maybe do like one hike or Thing like that for the day. But the rest of the day, I have quiet, unscheduled time where I'm just reading interesting things, calling people, thinking about the future, writing ideas down. So I use it as a moment to. Yeah, I guess, yeah, think about what to do next.

1:17:32

What's been the best thing that's come out of one of those vacations?

1:18:00

Well, I mean, again, an example is what we just talked about, actually. Like, the embryo editing dinner kind of came out of that. It was just like, I was just reading a ton of stuff about this and is it ready? And I was calling random people and like, why has nobody tried this? Have they tried this? Did it work? Did it not work? Like, really, why is. You know, these are the kind of conversations I was having. Then I was like, all right, I just got to do a dinner next, so kick that off, kick that X post off. And like, and that's an example. But it's really just kind of following your nose. Like, whatever you get excited about, go read about and then see if you want to take some action.

1:18:03

You've mentioned multiple times in this conversation, this idea of finding people and like, surrounding yourself with people that give you energy, just kind of like light your fire. What's been the best way that you have found those types of people?

1:18:35

So part of it is just like in a normal recruiting function, you can have people that are aligned to what you want and they can go and source a bunch of people and they can bring filter and then bring the top people in. So that's like a normal hiring process. I think that you can also try to attract entrepreneurial energy into the company by doing the things I mentioned, like next bets, and if someone leaves, like, Coinbase Ventures will maybe put a check in. So cultivating. A lot of the people that raise my energy the most are really entrepreneurial, right? They're like high agency builders trying to create the future. Like all the stuff that you're, you know, putting out on this, on this podcast and, like, teaching people how to be relentless, right? It's like, that is such a critical skill set. So it's attracting entrepreneurs into the company. Actually, I think, like 3 or 4 of the executive team now are founders that got acquired in and that's been like, really fun to work with. I think the other way you can do it is like putting out the bat signal, right? Which is like, basically on social media or X or your blog or whatever, podcast, wherever you want to. I think in any given time, you should be blasting out the things that you're most excited about in the world. And then the right people will sometimes pop up and find you and you gotta give them an opportunity to do it though by saying publicly what you're interested in. So that's probably the other way. These dinners, it can turn into dinners, it can turn into like if you're just randomly in some city, like go meet with these people, go give a talk somewhere and say something contrarian but. Right. And like see who shows up these kind of things.

1:18:47

I kind of want to touch on this idea of proof of work.

1:20:18

Money is the ultimate proof of work, by the way. It's like literally you did a bunch of hard stuff and you got money and then it's like anyway, proof of work.

1:20:22

So something that I've kind of recently come to the conclusion is the proof of work is just like one of the most valuable things in the world and yet most people under prioritize it. And so proof of work is not only that you did not only take action and do things, but also share the thing that you did. And it's kind of funny how far you can get by literally just like the first interview that I ever did was over Zoom and it looked horrible and I didn't know at all what I was doing and my computer battery overheated and shut off and all this stuff. And now we're, you know, recording this two and a half years later. Two and a quarter years later, yeah. And we've gotten almost to the best in the world on some metrics in that time and we'll keep on going.

1:20:30

It's been amazing, the access, like the people. Yeah, you're doing something right for sure.

1:21:08

Thank you, Brian. Yeah. How do you kind of filter for that proof of work and make sure that not only are you like saying this is what we're going to go do as a company and this is what I care about, but also this is what we are doing, like have

1:21:12

done, you know, in terms of hiring people or in terms of, for example,

1:21:24

Elon is like, we're going to go to Mars and we're going to go build the Mars base. And the proof of having a starship actually land back and get caught is like a massive just oh my God, this is actually happening. They're able to do something that no one else. You've never seen it before. It changes the way that you think.

1:21:28

Well, you're right. I think all successful people, you want to sort of leave a trail of these remarkable moments, good work basically, that people can see. And it's Self evident, right? It could show up in revenue numbers, could show up in stories like that. When I told about rebuilding our cold storage system in 60 days, sometimes there's really iconic moments like starship landing or getting caught in the mecha arms or whatever in hardware. Sometimes those are. It's a little easier to see an anduril drone blowing something up or something that's proof of work. That's a really nice visual. Sometimes in software you don't get quite those killer moments with hardware. So you have to show it in numbers. I think you can show it quantitatively like this graph is going up. You can also show it anecdotally with like, let's talk to this person who is able to like send money to home to their family without like paying 10% fees. Right. So you want to touch both like the quantitative brains out there and the emotional brains and like get a message for everyone in that. And yeah, that's one way to think of it.

1:21:46

On that same kind of note, the idea of emotion and touching people emotionally, making them feel things, how do you actually do that? What is going through your head when you're saying this is the message or thing that I want someone to feel? How do you actually go about doing that?

1:23:03

Well, I think I'll give an example which is for us, our mission is increasing economic freedom in the world. We need to make that tangible to people and have them feel something about it. So we often end up talking about how money is really freedom. If you want to be able to go where you want to go, create the companies you want, have freedom of transportation and congregation and movement, you need money to be able to do that. And money has been getting less free over time. Right. There's more intermediaries that can block transactions. The value of your currency might be getting eroded due to inflation. There's a lot of people in the world who have their assets like frozen or seized or things get blocked for various reasons. And to have a sense of agency in the world and the ability to accomplish what you want to do with your own hard earned money. I should say money is a important tool to have freedom on as well. So that's part of what we're doing at Coinbase is like giving people financial freedom and economic freedom with these tools and with crypto that's updating the financial system. And we try to do this through some of our brand advertising at times where we'll tell people stories about what it means to have to break free and have like live outside the matrix and not be an npc, and be able to actually have control of your own life and keep the upsides of your labor and try to create a better life for you and your family and your. Your community. It's a luxury that we have in certain ways, but most people in the world don't have. And so that's an example of touching on the emotional aspect of what we're building. Not just literally. Our transaction time went from 120 milliseconds to 20 milliseconds. That's selling the data. You also have to tell the story about what it's actually creating in the world.

1:23:21

Do you know the logic behind this or the reasoning behind this set?

1:25:19

Well, I think you said it was Game of Thrones, right? Is it the bank? What is it not the Iron Bank.

1:25:22

The Iron bank abroad, yes.

1:25:26

Okay.

1:25:27

But basically the idea was, I came across this idea that you've shared, which is Coinbase is trying to update the financial system. And I thought to myself, even before Lulu reached out, I was thinking to myself for probably two months, ish. And then she randomly texts me on Twitter and she's like, do you want to do an interview with Brian Armstrong? And I was like, yes, but only if we can do it under these conditions. Which was like, in a bank full on top of the world's largest bitcoin. And she thought that was funny and wasn't totally serious. And then here we are. But my goal with this was basically showcase what old finance looks like and also celebrate the reason for founding Coinbase, which is basically to buy bitcoin and kind of marry the old with the new. So it's kind of like a baton passing.

1:25:28

Yeah. I mean, I should be asking you how to tell the story in a way that resonates with people emotionally. I think you're bringing together a lot of key pieces of it here. So thank you for putting this cool vision together. I mean, that's made out of granite, I'm told.

1:26:09

Marble.

1:26:23

Marble, okay.

1:26:23

Yeah. It's going to be in your house. If you want it, it's yours now.

1:26:24

We might put that in our office, actually. I think that would be sick.

1:26:28

I was trying to create a full statue of satoshi, but the problem is people won't intuitively get satoshi. And so I was like, well, what's the next best thing? And I was like, we could create a massive bitcoin. I think the best founders are able to figure out, how can I build a company where at any given moment, I'm having a lot of fun and I'm setting extending the goal posts out so that you're on this infinite game. How are you kind of designing today so that you have those future milestones where you're really excited to wake up in the morning and tackle them well.

1:26:30

Okay, so we have the things that we're excited about right now like let's say next three, four years and I'll try to touch on the big long term picture. So there's a few things we're focused on right now. One is the everything exchange. So everything, every asset class is coming on chain and it's going to be stocks and commodities and crypto and prediction markets and FX and everything is now going to trade like 247 globally democratized access and I think that's the future of all trading and value exchange. Okay. Then we're seeing stablecoin payments just take off in a massive way. That's like the second big use case for crypto. So we're making a bunch of investments there and now you can send money instantly anywhere in the world for like less than 1 cent in one second. Right? Anywhere in the world. So that's powerful. And we're going to see AI agents start to do a lot of machine to machine payments and a bunch of cool stuff's happening there. And then we're seeing that more of crypto in the financial services is moving on chain into these decentralized protocols like decentralized exchanges defi and that's a big with our self custodial wallets. These allow us to operate in more emerging markets like and get how do we get a billion people on chain? I think we're going to have to be self custodial wallet. This is like our base app and we're doing a base chain. And so those are like our three big priorities right now. And I think long term, you know the mission of the company is really about increasing economic freedom in the world. So how could we actually like bend the curve on economic freedom in a bunch of these countries? Because everybody has a smartphone now, they have access to the Internet now, they have access to sound money global payment system. They can invest in assets, get access to like high quality investment assets. They can get a loan, they can do capital formation to start a business in a way that's much more efficient. I think ultimately like we're kind of unbundling money from the state if you will. And I think there could actually be eventually communities, cities, societies, countries. Like this is kind of the network state idea where actually governance might get updated where I think there could be physical territories, different places in the world that are pro freedom special economic zones, if you will. Things like Prospera, which we're an investor in, that are actually like the governance from a voting point of view is done on chain. Land rights is all carved up and tokenized, so title exchange and all these things are more efficient. Mortgages and the entire economy kind of runs on blockchain. And I think that would be a cool longer term vision of I hope we get to make like a crypto city or some special economic zones in the US that would really unlock innovation. It's not just for crypto, by the way. I actually think we want these sandboxes of innovation for lots of things. Like in biotech, how do we run accelerated clinical trials like operation warp speed, but do it all the time. How do we have a special economic zone to develop nuclear power or fusion energy in a way that doesn't get blocked by the Nuclear Regulatory Commission? Or a place where you can just build data centers unfettered, you don't have to follow federal law, but within that sandbox you can do much faster iteration or drone deliveries. There should be a bunch of these special economic zones. They worked really well in Shenzhen and China and Dubai and Singapore and Hong Kong. The US should have a number of these that would be fun to really work on. And can you imagine dropping into some kind of. It would be a Tokyo in 100 years from now. It'd feel like cyberpunk. Yeah, it would feel like a very different culture, like Burning man meets Tokyo or something. And you could drop in there and feel what it's like to be in a city or a society that really is not encumbered by so much red tape.

1:26:59

If you look at Zipline, they kind of took the same model where you can imagine Africa is like a special economic zone, where suddenly you're able to fly the drones without the FAA worrying about it too much. And they did exactly what you're kind of describing, except for, you know, over there where they basically just gathered a bunch of flight time and data. And I think they had like 50 million flight time miles or flight miles before they even went and did their first flight in the US commercially. And FAA just basically went over there, looked at their data, you know, Kenya I think was like laughing at them because they were like, this clearly works. And we've been using it for the last 10 years and what are you guys doing? And then they came back and suddenly they're operating. I think they've got their like third major Hub just turning on now, but I think that's kind of, like, countries is kind of the special economic zones right now.

1:30:37

You're right. I mean, Zipline is an amazing company. And you're right. Like, it's kind of. I mean, it's great that Rwanda, like, allowed them to be that special economic zone. Rwanda is kind of like the Singapore of Africa, not Kenya. Yeah, yeah. Well, they might. They might be in Kenya, too. But anyway, these special economic zones have been very helpful, and it's a shame that they had to, like, leave the US to do that. I mean, we should have those in the US as well.

1:31:22

This is something that I've never heard someone in crypto talk about. I've never heard you talk about it. The Silk Road 2013. What was it like operating a crypto company as that was getting raided, like, shut down?

1:31:47

You know, at that time, we were always trying to make crypto more legitimate, Right. And unfortunately, like, crypto did attract a variety of people that were doing scams and different things. Mount Gox had blown up. That was like, a setback for about a year. It really put a chilling effect on the industry. But we knew that the technology had a lot of potential, and this was like a blip on the radar, and so we just wanted to power through it. So at that time in San Francisco, I remember there were people telling me about how they were using Silk Road. And actually one of the security guys on our team, he actually sold some brownies on Silk Road just to test it out because we wanted to understand it. And people kept messaging him, like, are these, like, magic brownies? And he's like, no, they're just regular brownies. Like, do you want them or not?

1:32:01

You know my mother's recipe.

1:32:46

Yeah, exactly. And so he was trying to just, you know, learn about it because we thought, like, this could be a better way to do all kinds of commerce on the Internet. So, you know, they were selling mostly illegal drugs, but we wanted to kind of understand it a little bit better, so employees were testing it in a legal way. But I remember seeing the news come out that Ross Ulbricht had gotten caught. And he was sitting there, right in San Francisco. Like, he was at, I guess, like, a public library when he got caught. And it was like, right down the street from where I live or something like that, Right? So in a way, I was like, wow, San Francisco really is the center of innovation, I guess, in all ways, at least at that time. Now I think it's decentralized a bit. But part of me Was also like, man, I get where he's coming from as kind of like a libertarian minded thing. It's like, do you own your own body? Like, yes. Okay. Should you be able to put anything you want in your own body? I guess I get the libertarian argument, but he also, you know, we live in a society of laws and he was like very clearly breaking the law. So there was all these claims. The story just got weirder and weirder. Right. Because it was like claims of this assassination marketplace, which is very unclear if that ever really happened. I don't think it did.

1:32:47

It's a good story.

1:33:57

Yeah. And then the federal agents were corrupt that were investigating him. I mean it just got weirder and weirder. And so anyway, it was another one of those early days of crypto that what I've noticed is that anytime there's a new technology trend, it attracts kind of outlier people. At the beginning. It can be really entrepreneurial people who are ready to go commercialize it. It can attract sometimes bad actors or kind of crazy people. And this is true of lots of technology. I mean technology is just a tool. Fire can be used to heat your home or burn down a home. What I often see is that people in society are just fearful of new technologies. But I think that technology is unapologetically net positive, as is capitalism and all these things. So I think that we have to lean in on technology and actually try to use it for good. It's arguably the thing that has helped humanity the most. Even going back to invention of the wheel and fire or the shoes on our feet are technology. Eyeglasses are technology. And they become more commonplace in society over time. But our lives are immeasurably richer today than they were hundreds of years ago where people were died of disease and they were cold and they were hungry and a lot of these problems have gotten better in the world. It's all due to technology. So I actually think if you want to improve the world, you should lean in and try to create companies with technology. You can run for office or something like that. But I think the highest ROI way to improve the world today is to start technology companies.

1:33:58

It's ironic. I've thought a lot about capitalism and I think I'm the most capitalist person I know. And counterintuitively I've created effectively a non profit where we basically create as much goodwill as possible and give it away for free and try to make things as legendary as possible. Just maximizing for basically love and people brand over time.

1:35:37

You don't sell Ads, right?

1:35:57

I mean, there's no ads, there's no search.

1:35:58

This podcast is operating at a loss. I mean, you're investing a lot in it. Like, do you want it to be positive from a revenue from a profit point of view or do you think it's actually you're. I don't. Are you post economic, you're just ready to give back to the world to create more companies? Or like what's, what's the, what do you want to do?

1:35:59

It's, it's funny because it's all about the timeline, right? Like how, what, what timeline are you operating on? And most people will say, most people, if they've read lots of books and studied lots of great founders, they'll say like, I'm a long term thinker, I'm longer term oriented. And I've actually never explained this camera ever. But if you actually think about what that means to be actually long term oriented, you can create like each one of my interviews I think is worth about $100 million to me. And it's $100 million I can't capture today, but it's something I can capture like eventually. And it may be $100 million that's created in the world. Like people go start more companies or they work on more important missions or these things and it's like the first domino and that just kind of butterfly effects out. But if I am just basically able to make the best thing possible, then continue doing that, continuing leveling, leveling up over time. You'll just create this network effect of, well, just goodwill and serendipity. And the vast majority of people will like, almost everyone that comes in contact with Relentless will get some value from it if they like it. And then I will never ask for anything in return. And then there will be a few people where they just like love it so much that they're just compelled to help it and want it to continue. And my thinking is effectively like that tsunami metaphor is you just want to create as much momentum as possible and if you have enough, it's this flywheel that won't stop. So this is a way to achieve that.

1:36:16

Yeah, I mean, you literally might help create thousands of companies. And then I think you're right, it's important to just give value and not, you don't have to necessarily require it immediately, some compensation. But some of those companies are going to come back and they're going to want you to invest, they're going to want you to help get their mess. Something good is going to come out of it.

1:37:37

Yes. And that's the funny thing about ads is I think of them as like, basically you're harvesting the goodwill that you created. And so if you really want to maximize for goodwill, you just say no and you just say like, has there ever been a single scenario where I was watching a video and I liked the ad in the video? Like it added to the content and I haven't come across a single one except for Between Two Ferns, if you've ever watched Zach Alphagon.

1:37:56

What was the ad though? I don't remember the ad.

1:38:17

He was interviewing Hillary Clinton. And then it's like kind of like a bit and it's like a five minute video. And mid interview he says, and just a quick ad break. And it was a Donald Trump ad and that was hilarious. That added to the comedy, was very funny. On a slightly more serious note, you seem to me to be a very disciplined person. Like what is your biggest vice? What is the thing that you can't stop doing even though you know it's bad for you?

1:38:19

I think you're right. I actually have become quite disciplined as a way to make work sustainable over time. So when I'm in work mode, I can be a little bit rigorous about these things. So I really wear the same thing every day when I'm in work mode. I try to get up at the same time, do the same exercise. I vary the exercises, but do exercise and then get after it. So even what I'm eating, you can get very efficiency, focused and optimized, which I like in terms of especially once you have a little bit of money, you can have a driver, you can have every meal made for you, making sure your macronutrients are dialed in. You can really go pretty far with this and I think that's good. I also think there's times on the weekend or if I'm taking time off with my family or whatever, I'm just try to not be so rigorous all the time. So wear something crazy or fun or whatever. So I definitely try to balance that a little bit. But I'd say overall I'm pretty disciplined. You're asking what my vice is? I mean, I do think actually work is a form of addiction. Right. I would say I probably have a healthy degree of workaholism. Okay. So early on I thought of what it is actually, I think early on I found that my brain was just very drawn to certain video games and you know, like Starcraft II or Polytopia or some of these things where you're like collecting resources and building things and harvesting and moving to the next thing,

1:38:45

managing an economy and managing the growth of the civilization sort of thing.

1:40:17

Yeah, actually the game civilization, highly addictive to my brain, where it was like, that was one of the only times in my life where I was like, the sun would be coming up and I'd still be playing and I'd be like, oh, shoot, I have to go to class in a few hours or whatever. So what I realized is, like, okay, if my brain is just like hyper drawn to like certain things where I can become fixated on it, how do I channel that into something positive in the world? Because I didn't necessarily want to become like a pro starcraft player or something like that. Although that's fine if people want to do that. But I wanted to try to say, okay, how could I do this to try to build something cool in the world? And so actually, business does a lot of that same thing in my brain that the game Civilization or StarCraft does, where you literally are like, you're harvesting resources, investing it in the new thing. There's some competitive aspect of it, but you can actually, you can win. And anyway, the timelines are longer in business. Like, you might invest in things which take years to pay off, decades even, whereas the game can give you like a quick hit. But I've noticed, like, I just feel a little guilty or lazy. Like, if I'm. If I'm playing games too much, then I'm like, why don't I actually try doing this in the real world, which is like the ultimate game. And so I think that's been a healthy reframe. But just the final thought I had on this is I actually think a lot of people are born with predispositions to different addictions. And unfortunately, a lot of them are the unhealthy ones that we think of, and drugs and alcohol and whatever, social media and all these things. So I think some people are lucky enough to be born with an addiction that outputs some kind of value in society. And part of that is luck. But it's also, you can try to take the things which are vices and turn them into strengths in some cases. I don't want to say everybody can do that. That sounds like it kind of trivializes it. But I think in some cases you can take something that your brain is unhealthily drawn to and try to channel it into a positive thing. Like, there's a doctor I was talking to recently, he's like, I have ocd and it's like really detrimental in my personal life. But he's a dermatologist, so in his professional life, it's a huge asset. Like, his patients love it. He has so much attention to detail. He'll make sure everything. Little thing is perfect or whatever, so. So you can try to channel these weaknesses into strengths.

1:40:21

I find that so funny to say that because, like, for a vice that might be, you're consuming a bunch of content, you're watching a bunch of movies, a bunch of shows. And I was thinking to myself as we were building this probably a week ago, and we were just setting everything up, I was like, I have got to be the only person that's ever prepared for an interview by watching Game of Thrones. Watched the first three seasons of prep.

1:42:28

Yeah, yeah.

1:42:50

And then we did a bunch of it. You know, listen to a bunch of your interviews, and then you don't have to know that much. It's interesting to see how people spend their time because normally I would think it's absolutely nuts to build this sort of set for something like this, but then you just look at how people spend their time and it's like they clearly love stories. They love to see real things.

1:42:51

Have you ever watched Band of Brothers?

1:43:12

No.

1:43:13

Okay, great TV show, hbo. Anyway, I feel like I've learned a bit, bit about business from watching that show, strangely enough, because there's certain moments where you have to go deliver hard news to this person that they're not going to be the one leading this invasion, and their skills are needed elsewhere, which is kind of a polite way to say them, you're not up to the job or going and telling this group of people, I'm about to ask you to do something which is terrible and unthinkable, but you need to get it done. So as a younger person watching the show, I remember thinking, watching it and thinking like, wow, okay, that's a. That's how you have that conversation. That's a moment of leadership. How would you say it? And like, you don't want to be like, you know, you're not in a movie in real life, so you can go too far with these things. But there are certain scenes of like, negotiation and films where I'm like, I remember watching that. And Game of Thrones has lots of stuff. I don't know if there was a specific one I took. Took inspiration from. Probably not. But yeah, Band of Brothers is great. You should watch that.

1:43:14

This was, my initial idea, was copying like what I'd imagined the 17th century Rothschild's bank might look like. But then I Was like, this is a very clear example that like I searched up the Rothschilds and I was like, there's no obvious. Like, this is the set for it and it's just such an obvious set in Game of Thrones. But we're not going to go so far as like me offering you a bank loan. On camera. There is too far.

1:44:11

Yeah. By the way, the modern day banks in a digital economy with crypto, they actually look like distributed sets of data centers. And the data centers have like biometrics and people with guns guarding them and like cool things like that too. So this is.

1:44:35

That's pretty badass.

1:44:49

Yeah. Like the old school physical vault is kind of fun, but in a digital world it's. Yeah, it's data centers and armed guards and biometrics.

1:44:50

In the Coinbase doc as well, Fred's parents were talking about him just playing video games for hours and just not being able to pull him away from video games. Did you guys bond over video games somewhat?

1:45:00

Yeah. I mean, we would play like Halo sometimes, like late in the evenings and stuff. But honestly, Fred is like too good at most video games where it's just,

1:45:09

it's like, it's not fun. Yeah, there's like always winning and there's like, you never win.

1:45:16

We would play like three on one with him versus in Halo and he'd still crush us instead of certain. And he's like so competitive that he's like, he wins and then he's not. He just rubs it in your face and stuff. So like I realized at certain point we had to. I actually told him at one point, I was like, for the relationship, we're only gonna do co op games going forward.

1:45:21

So yeah, we need to win together.

1:45:40

Yeah. He hated that. He's like, what's the point if you're not competing and like, you know, taking people's souls or whatever.

1:45:41

Fred also had another thing. When I was talking with him, he said, you are the king of never leaving a meeting without next steps.

1:45:46

Yeah.

1:45:55

Why do you do that?

1:45:56

Yeah, Well, I mean, meetings can be really inefficient and ineffective if just a bunch of people come in without a clear objective and you talk about a bunch of stuff and no clear decision is made. And so you just all leave and then you go. Nobody follows up and does anything. Right. So oftentimes we'll be sitting there at a meeting and there's like a hard call and everyone's, you know, I try to just prompt the room with that. Right. What are the next steps? What are the Action items. This is one of my favorite things to say. He's right. And we actually try to write them down and look at them in the meeting. Oftentimes people are like, oh, cool. Like, I think we got it and we'll, we'll follow up. I'm like, do you got it? Let's look at it on the screen right now or in person. Who is going to do what by when? And it's like, sometimes people write these things that are a little bit too wishy washy for my taste, where they're like, follow up on this press release or something. And I'm like, what does follow up mean? That's a very weak word. Right? Do you want to publish it by this date? Do you want to review it? Yeah, let's make something more concrete. And so, and then you have to identify who as well. Who's the DRI for this? Other times people are like, I don't know, we're all going to kind of work together on. I'm like, no, you can all give input, but there's got to be one person who owns this. So we literally sit there and what is the person's name? What do we want to get them to get done? And what's the target date? And then if we don't leave the meeting with that, it wasn't a useful meeting.

1:45:58

Is this something where you actually track it on, like you say, okay, X person said Y, they were going to do Y by X, you know, Z date. Or is this something where I know. I don't think Elon actually keeps track. But that's. This is exactly what he'll do too, is he'll like sit around a table, hear the company updates from all the different people, and then they'll each tell him what they're going to do. And as long as all those things are hit, there's no issue. And then if there isn't, you know, and he just keeps it in his head and he's apparently that's like one of the things that he's best at is just keeping a whole bunch of different names of people and what they've said they were going to do and by what day.

1:47:17

So this is a great point because I've tried to play with this as well. There actually is in the latest template that we use, so you're recording what did you get done last time versus what you said you were going to do. Then you talk about what do we want to get done next time? That's where you fill in the action items. And I have never found a perfect system to enforce the tracking meaning, like, what did we decide in this meeting, who's going to get what done by this date? And let's actually lock it into some database or something that they can't edit it later. And then when they come back the next time, it's like this system is producing. Here's what they said they were going to do. It can't be like edited retroactively. We're not that rigorous. These are typically documents that somebody could, they could delete a line and honestly would I remember all of them? Maybe not. I mean, I think I have a good general sense of what people are agreeing to and I can always go look back at the history of the document. A lot of times you can actually use AI now to basically give you just say, look at all the things that we agreed in the prior meeting and then does it match what's here? And so we're playing right now with getting AI generated summaries of what were the things we said we were going to do and did we do them and who and what and by when. So I think AI can help with this, but I've never been able to get it super rigorously tracked. I think it's more of like, yeah, I'm trying to keep it in my head as best I can.

1:47:52

Is there any areas of the business that you actually want to remain not entirely analytical and slightly fuzzy?

1:49:06

Yeah, I mean you can definitely over process, make too much process around these things. So an example would be this past year, I think we acquired 10 companies or something and we looked at probably 50. I didn't look at all of them, but the team did. And there was a point where I was like, we need to have a structured way to look at these deals. What is the revenue multiple and what do we think is the upside potential? And give me a 1 to 5 score on the synergies and like the cultural differences and the risks or whatever. And so we almost have like a pipeline of deals and we can have some sort of apples to apples way to look at like, okay, this one is like a premium to our multiple, discount to our multiple, like sort of common things. But I realized at a certain point that might be useful as like a first pass. But you're missing the forest through the trees. If that's the way you look at these. Like a lot of it comes down to like, are the people great and do you think there's something you can really build together that's going to be like a 10 or 100x, whether it's a 10 or 15x multiple in revenue is kind of like less relevant than what can you actually build together? And does it feel right? Is that like, oh, yeah, that's a. Hell, yes. Maybe you overpay for that deal. It doesn't really matter.

1:49:13

Yeah. This reminds me of Steve Jobs and Apple. Reacquiring Steve Jobs for half a billion dollars or whatever it was. And there was Next was doing whatever Next was doing, but effectively they bought Steve Jobs for half a billion dol. And the value that was created at Apple after Steve Jobs came back was worth many, many, many multiples of that. And if you were trying to look at any of the normal traditional revenue, that sort of thing, metrics, you would have come to the wrong conclusion.

1:50:30

That's a great example. You do oftentimes end up buying a company for a single person or a couple founders. And that's rough because it pisses people off sometimes on your existing team who are like, man, I don't make that much money. What does this mean? Should I quit and go do it? And it's like, well, you could, but you also have to quit and build something successful and then maybe you get acquired back. But I think that it can. Often those are the ones that are surprising to people. Sometimes a great person can be worth a lot.

1:50:57

When you look back on the acquisitions that worked out the best and you kind of do a blended. Here's all the net results of this acquisition is the very best acquisitions in Coinbase history, the ones where you had a founder that turned into an executive. And it's just an absolutely killer executive at Coinbase now. And it's not even like, forget what the company was actually doing, it's just that one person.

1:51:25

Yeah, those have definitely been some of the best ones at the people aspect of it. And there's been others that I think have been big wins on the product as well. But they all came with great people. Now that you mention it, yeah, I think you're right. It's a good. It's a good heuristic.

1:51:46

All right, let's end it on. United States was on a gold standard until 1971. Then things decided to change, flipped a little bit. Now we're moving, I think, towards a bitcoin standard. Tell me about that.

1:52:01

Yeah, well, I think a lot of people, they feel like our current financial system is just clearly the best thing and it's been around forever and it hasn't. I mean, if you study the history of money and like Niall Ferguson has like a great book on this. You know, our current monetary system, where we have all these central bankers in different countries around the world, has really started around 1971 when Nixon went off the gold standard. It's scary because if you look at the history of civilizations, when they disconnect their currency from hard backed commodities like gold, they tend to overprint, they have high inflation, they eventually lose the reserve currency status. And so there's a big open question now about how America is going to survive or thrive or whatever in the next coming decades, now that it's not on a gold standard. Right. And democracies around the world are struggling with these deficit spending and high inflation, including the US at times. Although I think this current administration has gotten a lot of the inflation down, which has been really great to see. So in one sense stablecoins and crypto are just further strengthening the dollar in every way. They're exporting the dollar all over the world and creating a lot of demand for US Treasuries. And I think that's an incredibly positive thing. And then I think bitcoin, I think of it as a check and balance on deficit spending for the dollar. If we can keep the dollar inflation relatively low and deficit spending relatively low, then I think the dollar will remain the reserve currency and it'll thrive. And a world where America is free and dominant, I think is a better world than some of the alternatives. But I also think that if people, whether the United States or other countries, lose that discipline, fiscal discipline, Bitcoin is the new gold standard. And this is probably a contrarian view, but I think that the economy is, the financial system is shifting, it's being updated in real time. Bitcoin is provably scarce, it's decentralized, it has some of the properties of gold, but it's also better than gold in that it's more portable and divisible. And we now have a great store of value in Bitcoin. We also have a great medium of exchange with stablecoins. And crypto is just going to keep updating the whole financial system. And that's the key transformation that coinbase is leading.

1:52:12