I've had many leading experts on this show, including Matthew Walker, and they've all said the same thing about sleep. They've said it's the biggest positive investment you can make in your own performance. You can have the best strategy in the world, but if you're consistently tired, poor decision-making will follow and eventually cause other things to fail in your life. So, if you're looking to optimize your recovery, you should start looking at what you're sleeping on. Our sponsor, Helix, makes high-quality mattresses tailored to your body. It doesn't matter if you run hot, sleep on your side, or need something firm. Helix has a mattress for you. And I asked them recently to send one to a member of my team. And Juan received it. And we travel a lot. So, when he's home, quality sleep really matters. And he told me he's getting the best sleep of his life. And the data backs it up with 82% of people in a Helix study saying they saw an increase in their deep sleep. And with a 120-night trial, you've got 4 months to prove it to yourself. You can get 27% off at helixsleep.com/diary. That's helixsleep.com/diary.
Everybody I talked to actually thought it's a bad idea. Like any reasonable person would have quit. I was filled with self-doubt. And then Coinbase was valued at a billion dollars.
Brian Armstrong, CEO, co-founder of Coinbase, the largest US cryptocurrency exchange. I saw technology as a way to try to have a big impact on the world. If the thing that got you started in the first place was like fear, like fear of never being important or fear of never feeling fulfilled, you're just going to give up.
Cryptocurrency is the biggest transformation of money since the invention of paper.
Coinbase was being deemed the most trustworthy brand in crypto.
It tipped at a certain point from like, oh, this growth is really good to, okay, things are getting a little crazy here. If you kind of more than double a company in a year, you're really going to start to see a lot of stuff break.
This morning, Coinbase just telling employees in an email that it plans to lay off 18% of its workforce.
We had never done a layoff before. I had never done one. And I remember I went up in front of the company and my voice cracked. I mean, it was awful.
Oh man.
I actually think Coinbase is in deep trouble here. And let me tell you why.
The pressure and the scrutiny and the headlines. How are you dealing with your emotions? This is getting very personal.
It's a real superpower to like care less what other people think.
So without further ado, I'm Steven Bartlett and this is the Diary of a CEO. I hope nobody's listening, but if you are, then please keep this to yourself.
Brian, when I read through people's stories, there's sometimes really obvious causal factors that led them to become the people they are today. But with you, I'm more compelled by the less obvious factors. If we go back to your early years when you're a young man on the West Coast of the United States, what are the less obvious reasons as to why you've ended up where you are today and achieved what you've achieved in your life?
Great question. One of the less obvious reasons probably is that I was an introvert. I just wasn't really very good with people. I didn't really have that many friends. You know, as a young person, I was quite shy. I really found a love of computers and I liked just being by myself and playing with computers, learning about how they worked, programming. And you know in our technological age I suppose some of the people who got excited about computers early on and just found a love of building things have now become CEOs of companies which is kind of a strange thing. For a long time I didn't think I could be a CEO because I envisioned CEOs of companies as being like these military generals who barked orders at people and they were these like strong charismatic leaders. And I always felt like well that's not me. I'm kind of like an engineer. I'm kind of a nerd, you know, and what I've learned over time is now reading enough books and things historically, you know, introverts can make actually really good CEOs. Of course, by the way, there's lots of different types of CEOs. There's not just one mold. There's people who love marketing, people of operations, people who love sales, people, and then there are engineer CEOs. So that's one reason that I think it's maybe a little bit less known why I'm here. Another reason is that I just became very passionate about this idea of trying to have an impact on the world and I think it again it may have come from that introversion as a kid and I felt like hey I have good ideas but it's hard for me to get them out there and for people to listen to them and I didn't feel confident like you know speaking in some public setting or whatever. I have lots of practice doing it now, so I'm a well-trained introvert, but you know, I saw technology as a way to try to have a big impact on the world and it could get my ideas out there in a scalable way even if I felt like maybe I couldn't. And so I don't know, maybe that's another unlikely reason.
In hindsight, then going back to those early years as well, what was your luck or privilege? What were the factors that were out of your control that happened to be the case that also aided to that trajectory?
Yeah, I mean there was a lot of things that went right. So I was in a home with loving parents that were very supportive of education and my passions and interests including you know my mother worked at IBM and so we had like an early computer in our home. She was kind of an early programmer there. You know we had early access to internet things like that. I also had you know I graduated studied I studied computer science and economics and I had enough this was a very important thing I was not afraid to go try starting companies because I knew that if I failed I could actually go back and still get a job and it wasn't people always think of you know entrepreneurs oh they're such risktakers and all this stuff you know honestly it's not that risky like if you're a young person and you get a little bit of money to go start a like in Silicon Valley, people write you angel checks for these things and you can pay yourself a salary, go try it for a couple years, and if it doesn't work, you go back to a company and it's often viewed as a badge of honor that you've tried a startup, you have this entrepreneurial DNA. You're somehow more valuable inside a company. Now, if it doesn't work and you go back in many places in the world, that's not the case. You know, failure of a company is considered a badge, a mark of shame, not a badge of honor. And then I think many people don't have the luxury of being able to kind of raise these seed rounds and things like that which many places in the world you can't do that. Crypto is trying to help that by the way but in Silicon Valley you can get angel checks for things. And so I tried starting many different things over the years and it's kind of as side projects but with Coinbase specifically I didn't really I didn't even quit my job to try it full-time until I had gotten sort of an angel investment. So I was able to pay myself something. It wasn't a lot but I was able to pay myself something and risk it. Yeah.
If I'd asked you then at say 10 years old what you wanted to be when you grew up, what would you have told me at 10 years old?
I mean I really had no idea. I think the first glimmer of it that I had was in high school and I had started building some websites and I remember as a senior in high school I went on this retreat and I do remember having this thought like the thing that has excited me the most in my life so far was I had built this kind of simple website or app and it felt like it was this really incredible feeling. I went to sleep and I woke up in the morning and I checked the stats and like you know 200 people or something had visited the website while I was sleeping and I was like wow that was so cool. I don't know who these people are. They're all over the world. It felt like a superpower like if I could build something that could be working and helping people while I was sleeping you know if not 200 people why not 2,000 2 million whatever. And so I do remember having sort of a it stuck in my memory like that of all the things I've tried in my life, you know, sports and reading and science and in school and whatever as a high schooler, that was the thing that really got me excited in a way that nothing else had at that point. So I was probably in the very early stages of discovering my passion at that point.
Just listening to you speak there, my brain was telling me that because I was trying to make this link between why being an introvert led you to technology and then also having this sort of desire to have impact. But it sounds like there technology allowed you to be an introvert and have impact because it was the bridge between the outside world. So when that website goes live, you don't have to see these people or persuade them. But you can have your impact by a piece of technology that's enabling something in their lives.
You go off and study economics in university in college.
Yeah. So I had been taking some programming classes on the side in high school. I couldn't help it. I like in my free time I would just play with computers until like 2:00 in the morning, 3 in the morning. I was like dead tired at school every day because I was like wide awake at night like playing with computers, learning about Linux and like all these things. And school was a little bit boring in some ways. So yeah, I basically decided, okay, if I'm this interested in computers, my parents were supportive of this, of course. There was like community college classes and I went to go try to take some of those classes to learn programming. There was I got some books from the library about like how to program Java and things like that and I couldn't understand any of it, but I was trying to work my way through it. So then when it came time to go to college, I was basically like, okay, computer science, that seems like the closest thing to what I'm interested in. I was also interested in business and they didn't offer a business degree. So I studied economics instead. That was like the closest thing to a business degree they offered. And that was literally my thinking. Now, of course, I had no idea later I'd start a crypto company, which was literally the intersection of computer science and economics. But yeah, at the time, I just thought I want to write software and I want to learn how to start a business.
And at some point during college, you start your first, I guess, real company. Which is a tutoring business. Was that did you have grand plans of turning that into a mega was that or did you stumble into that?
More like stumbled into it. Yeah. I mean, so as a college student, my roommates and I were always trying to think about how to make extra money and I went around and I was looking at these on-campus jobs. So you could work at the library. there was like a coffee shop and you know they paid like $10 $15 an hour or something like that and one of the upper classmen I remember he told me you know I'm tutoring this high school kid and they're paying me $60 an hour. I was like wow $60 an hour is it's just it was like three or four what you could make at these other on-campus jobs. So I decided to try doing it myself. I got in touch with some people. I started tutoring high school kids just in like math and science and things like that. And it paid really well. And so my roommate and I at the time we were starting to just brainstorm like why don't we start a little tutoring company and help high school kids and their parents match with the you know tutors at the basically university students at the university where I was going to school. And so we got that going. We got maybe 10 20 of our fellow students kind of connected in and then we said all right let's make a website for this to connect even more people maybe to try to expand it to other schools. You know, eventually over a period of a couple years, this idea just kept evolving and we started to think about it as we didn't really know this at the time, but it was we were kind of making an online marketplace like Airbnb for but for tutoring and yeah, I got to practice like building web applications. There was payroll and incorporation and sales and marketing and taxes and I could never really get it to grow enormous and to make it become like a really big business which we can talk about if you want but that was the seed of it that later became a little bit more of a company.
Why then why couldn't you make it become a big business? What was the in hindsight the lesson? What was the barrier?
Okay. So, we learned this sort of the hard way about creating a marketplace which was that in this particular industry in tutoring a lot of times you would introduce a student and a tutor and they would sort of our business was we were trying to take like a 10% fee by matching these people and we were basically trying to do all the payments through our website like billing and you know with a 10% fee and what would happen often is they would meet the tutor and they'd do the initially the first payment but then afterwards they'd start paying them under the table and so I realized at a certain point we were basically just getting in the way. They wanted us to just match them, but they didn't want us to be the whole billing apparatus. It was a much more of like a local repeat business, in-person business. And so, for years and years, I struggled with that. There was a counterintuitive moment which allowed me to kind of pivot away from that. So, I eventually realized this thing isn't working. I need to go get a quote unquote real job. And as I was going to start my real job, this was at basically Airbnb where I became an early employee, I was about to shut down the tutoring site and I was like feeling a lot of pain about that cuz I was like, well, I don't know, there are still like 5 10,000 people every month who are kind of looking at this thing and using it. It feels like such a pain to shut it down or such a bad thing. So, I was like, what if I were just to put everything on autopilot? you know, we're not going to be involved in any of the payments. There's no customer support. This is literally just going to be a directory, like a tutoring directory, and you can contact these tutors. You can pay them however you want. And I'm just going to try to make it like a free thing. Maybe I'll put up some ads. And so, I basically had like a week before I was starting my new job. I got rid of all the payments. I messaged all the people using it. I was like, you can pay now people directly. And I was going to put up some ads. And I did one more thing at the last hour which was I said if you want to have like a featured profile as a tutor with like a little badge on a featured badge and come up first in search results then you can just pay $10 a month and that was it. And I basically stopped looking at the website and I went to go focus on my new job. And every year thereafter the site doubled after I made that change. And so basically I guess the lesson was, you know, stop trying to extract value and start trying to create more value. And at that point, I think that was only the only tutoring directory online that had free profiles and you could just contact the tutors. And so it actually started to grow. Later, somebody ended up acquiring it for maybe like $2 million or something. To me that was like it was like a seven or eight year base hit outcome where for years you know five six years I was struggling to get anything to work but the truth is okay they paid $2 million for it but the lessons you learn many of those translate into the business that you went on to build in Coinbase.
What is there anything else because I look at my first startup that I made out of you know dropping out of university then started and there's so many lessons one of them is what you said is I was so romantic about my hypothesis about what this business should be that I got in the way of what customers wanted to do. So hearing you say that really relates. But is there anything else that you learned from that seven-year first, you know, kind of messy startup that are key philosophies for you today in Coinbase?
I mean, I think one of the big realizations I had in starting that tutoring company, which again, you can always look back and see how the pieces connect, but at the time you're just wandering in the desert. You're lost. Like I felt like I was a failure. I felt like I had no idea what I even wanted to do. I didn't even know if I wanted to be an entrepreneur. It basically wasn't working. But looking back with hindsight, one thing I realized was how broken the global financial system was because it was incredibly difficult to collect money from all these students and pay these tutors, not only in the US, but in various places around the world. And I remember going through this incredibly onerous process to like set up credit card processing and then payments that I was sending out and I remember the bank called me one day and they were like you know are you an aggregator of funds and I was like I don't even know what that is and they were basically like treating me like almost like I was a criminal and what are your licenses to do all this stuff and I was like this is crazy. It was like the hardest one of the hardest things about that business was just to get the payments like collecting payments and distributing payments to the tutors as a marketplace. And so that gave me sort of a real insight later when I saw the Bitcoin white paper years later. I was like that system is broken and this could be an opportunity to fix it. So that was one thing.
What about Airbnb? So you went and worked as a in the product team at Airbnb.
Yeah. Yeah. I was a technical product manager which basically meant I wrote some code and I tried to be a product manager. Yeah. So I think I was the 40th employee at Airbnb and I basically moved back to Silicon Valley from I was living in Buenos Aires, Argentina for a year or so trying to figure out what I wanted to do with my life.
Okay. I'm going to have to talk about that. What did that give you that experience of travel and going to Argentina and living there for how many years?
A little less than a year. Yeah.
Well, it gave me a few things. I mean, one was that I got to see what a hyperinflation economy looked like, you know. A lot of people who've only grown up in a developed country, they've never experienced hyperinflation and they've never felt firsthand what that can really do for a population and people. So, it really deeply affects the culture of places like Argentina. There's just there's kind of this deep distrust of the government and there's a pessimism about the future. there's kind of you know in countries that are I think the most forward thinking there's a sense of optimism about the future hey we can build a better future and there's you know in places like Argentina my you know people may disagree my impression was that people felt like the best days are behind us and live every day like it's your last because hey it could all disappear tomorrow meaning your wealth and everything which has happened many times in their history. Also, just little things like you'd go to the restaurant the next week and the prices are higher and they put a sticker on top of the menu because that the prices keep changing so frequently. It really harms like the poorest people in society too because they're the ones holding their wealth in cash as opposed to wealthy people can hold real estate things that adjust for inflation. Now they can hold Bitcoin. So anyway, it gave me a front row seat into that. It probably gave me a little bit of a sense of confidence, too, because I had never studied abroad or really lived in a foreign country by myself where I didn't really speak the language very well. So, there was things like that. I think I was just trying to learn how to become more independent and grow up and stuff like that.
You were running the tutoring business at this point.
Yeah, I mean, I was doing a lot of things. So, I was running the tutoring business. I was doing some contract software development just kind of while traveling. I was trying to build some real estate investments in the US. I was basically trying to figure out what I want to do with my life and there was a whole process I went through to try to figure that out if you're curious too.
The digital nomad piece which is becoming much more common these days because we've had this pandemic and we've kind of built systems which allow us to work more remotely and but just generally people were choosing that lifestyle. when I did that when I was 21 in the gap between my startup failing and then me pivoting into a new business I found it quite lonely and there was I remember being actually on a plane flying from one country to another Brazil to Thailand or something and seeing this I think it was textiles or something like this San Francisco incubator or New York based incubator where they were building companies and I was living the dream in many people's eyes in these hot countries with my laptop but something inside me was like missing community, a sense of shared mission, whatever it is. I wondered if you can relate to that in any way or
totally. I found it actually quite lonely as well. So, in some ways that was the point which was to step outside my comfort zone, feel like I had to make new friends in new city. But yeah, I mean there was a good, you know, maybe five, six months there in Buenos Aires where I felt like I didn't really know that many people. I was feeling kind of homesick. I yeah eventually I tried to you know go meet some local people like expats like various hostels and like you know by the time I left I felt like I had a budding friend group and I liked it more but it yeah it was lonely there for a while.
You said you used that time to figure out what you wanted to do with your life as if there's some kind of system there.
Yeah. Well I don't know if there's a perfect system but I mean I read this book by Seth Godin called The Dip. Yeah, I don't know if you've read it, but and it's funny. I went back to read it like many years later and it's actually a relatively simple book, but in that moment in that time, that's what I needed to hear. And it's kind of a very fairly simple idea. which is that you know what's the thing that you would still want to be doing 10 years from now even if you hadn't seen a lot of success because most things in life you know you start off you're a beginner you have a fast pace of learning it's kind of fun but then after you're a beginner there is this dip in the middle where you're not an expert you're not one of the best people in the world at you're probably not making money from it but you're not a beginner anymore and there's like this long slog to go through the middle you know put in your 10,000 hours there's lots of various people have talked about this so I doing a variety of things at that time. I was as I mentioned running that tutoring company, doing some real estate investing. I was like learning martial arts and like all the various things, traveling in Argentina. And I basically sat down one day. I was like, "Okay, what's this? What is the thing that I 10 years from now, I'm still going to want to do this and be passionate about it and even if I'm not successful at it, you know, because I just love doing it." And like the only thing I could like really write on my list was tech entrepreneurship. And so part of the point of that book is if you're not willing to go through the dip then quit now because it's you know and so I was like do I really want to be like doing you know great real estate investments 10 years from I was like I don't actually love real estate investing so maybe I should just stop doing that maybe I should stop doing this and maybe so it was this very clarifying moment okay if I want to be a tech entrepreneur because I had been doing that in some way shape or form for you know five 10 years I was pretty sure I'd be wanting to do it 10 years from So I was like why do I live in Buenos Aires? I should go to where the center of tech entrepreneurship of Silicon Valley you know that's happening all over the world now. Silicon Valley is kind of decentralized but at that time especially so I kind of stopped doing everything else moved to Silicon Valley and went all in on that and then I think within maybe seven years of making that decision Coinbase was valued at a billion dollars.
Crazy. So it did really help clarify my ambitions and I just put it all into one thing.
That is atypical to say there's going to be entrepreneurs in Buenos Aires listening to this that are bringing flights to San Francisco. But it could be any like if you really want to be an actor you should probably go to Hollywood or something or if you really want to be in finance maybe go to London New York or anyway I think it's not so I don't want to say like there's one geography for everything but there is a clarifying thing what happens if you just say this is what is the most important thing to me and I'm just going to try to make my own luck around that.
It's so true. It's something that I don't think especially young people think about when they're deciding making career choices. They don't where to live is sometimes not as prioritized as much as like which university has the less partying or who's offering me a job right now as opposed to that long-term horizon of like how do I surround myself with the most talent and opportunity and funding in the case of business and inspiration and enablers for this long-term vision I have. And I spent some time in San Francisco myself about 3 years. And when I come back to the UK and when I go to other cities in the UK, I've never said this before, but I see how much of a disadvantage we have in philosophy, in ambition, in funding, in talent, and it's no surprise that most of the great unicorns are emerging out of one city in the world. That then leads you to Airbnb somehow through I think you take a job first, then eventually you take a job at Airbnb.
Yes, exactly. Yeah. I joined a Y Combinator startup that was really cool but it didn't really work out. There was a brief interlude there but basically I decided okay my tutoring company is not really working. I need to and that's when I pivoted to that thing which had a base hit but what I decided all right I want to go to I need to go to Silicon Valley. I kind of want to apply to Y Combinator. It's a startup incubator. But I wasn't able to get in and so I was like let me go work at a Y Combinator company to sort of learn. And I needed by the way I also just needed to recharge a little bit because the tutoring company I'd been living abroad. The tutoring company wasn't working. I was barely paying myself anything. So I was kind of broke. I was also just exhausted from the tutoring company just not working after so many years of trying to get it to work. And you know I hadn't seen it double every year after that that happened on the side. And so I was like, great, let me take a job at a high growth company that seems to be well-run, actually makes some money for a little bit here, save some money, and that's how I got to Airbnb. It just, it had a really magnetic culture. Even at 40 people, they were clearly on to something. It had found product market fit, it was growing quickly. And I learned a lot there. They had a really unique culture. They were hiring differently. They were really like trying to raise the bar with every hire. You know, if it's not a hell yes, it's a no. The way that they just did product reviews was really interesting. They had an important design component to it.
If you think about now why Airbnb won in their market from what you got to see inside their walls, what would you say? So you've talked about their hiring philosophy which is very clear. But what else would you say?
Well the main thing and I think by the way this is true of not just Airbnb but a lot of startups was determination. They went through a period Everybody always looks back at these startups and they think, "Oh, it was a unicorn." Like it just they found the thing and it worked. Airbnb is actually somewhat typical in this regard, which was there was, I think, at least I think like a three-year period where they were just wandering in the desert. Any reasonable person would have stopped working on this idea. It was a crazy idea. Like you're just it was like couch surfing. You're going to let strangers stay on my couch. Like that's not a business. it's like just ripe for lawsuits and you know and they were in like tons of credit card debt because they had like been trying to self-fund it you know they had launched several times and nobody was using it yeah they should have quit like any reasonable person would have quit but they didn't they kept going and they were just so because getting marketplaces off the ground is very hard you have this chicken and egg problem supply and demand and so I actually think that's a common element in a lot of like successful companies you go back there there was a period where a normal person just would have quit and they went from setback to setback to setback with enthusiasm you know somehow powering through it so I learned that too.
I hear a lot of entrepreneurs who have your same enthusiasm to be an entrepreneur the enthusiasm you've expressed there when you leave Argentina and you come back you just want to be an entrepreneur you don't necessarily know what or what industry what problem you want to solve and what always makes me feel a little bit concerned is when an entrepreneur so keen to be an entrepreneur that they'll just try and think of an idea. You took a time to go and get inspired, I guess, and to let the inspiration come to you. What's your view on that? There'll be people listening to this now that want to be an entrepreneur, but they don't have an idea.
Yeah. Okay. Well, I mean, I was probably guilty of that, too, where there was definitely a period of my life where I was like, I just want to be an entrepreneur. And I don't know, you honestly, it was probably partly ego-driven. It was partly my own like introvert way of saying like I just want to be able to have an impact. I wanted to feel like I had done something valuable because I didn't feel valuable as a human myself. Like you get into all the psychology of it, right? It's a kind of a crazy thing actually to go say like I have to be an entrepreneur because you know from an if you just want to make money or something like it's from an expected value outcome it's probably better just to like go to some early stage companies invest some equity and like or join Goldman Sachs or something right like so to be truly want to be an entrepreneur I guess you have to be well sometimes it's ego driven but I think it's your chances of success go up dramatically if you're doing something because you're actually super passionate about it and So for me, reading the Bitcoin white paper was kind of a lucky moment because I found it tapped into something that I was really passionate about, which was basically freedom, you know, economic freedom and just like how do we empower people all over the world to, you know, have access to sound money and like a decentralized open system where anybody can get access to the global financial system. That really just like resonated with me. And so I think that really helped Coinbase be successful because there were many times in our history as a company where you know like 2015 2016 like the whole industry was down for three years. Everybody was pivoting to do blockchain not Bitcoin if you remember that every like a lot of the competitors in space pivoted to make software for banks and stuff and everybody looks back at that and like wow you know Brian you never lost faith and everything. For me it was more it was simple than that. I was just like well I don't really want to make software for banks. So, like if that's what this is all about now, I'm pretty much just going to shut it down and give the money back to investors. So, I was just too stubborn. I was like, I got into this cuz I feel like this is the way to create more freedom in the world. So, that's what I'm going to keep doing whether it works or not. So, I think there is a really important element there. You have to be super into it for some reason that's bigger than just ego or trying to make money or whatever because every company is just filled with setback after setback after setback and you think you can power through it. But believe me, when you're like three years in and like your co-founder quit and you got sued and you're broke and like the first three times you launch the product, nobody wants to use it and like everything sucks and you're feeling like a failure and you're just going to give up because you're not actually doing it for like some bigger purpose. You're doing it because you wanted to feel important or something. So it actually is important to pick the thing that you're passionate about. Yeah.
You're doing it because you want to feel important or something. We were talking about how part of this sort of introvert dilemma is you can feel personal significance by creating something that has significance in the world. Zooming right to the end of the story. Has that impact you've had on the world made you feel more personally significant?
Yeah, totally. Okay. So, I think this is a really important topic because a lot of founders it's stressful to run a company, right? So, a lot of founders if they do get to some level of success, they will often burn out, right? It shows up in weird ways, by the way. Some people gain a ton of weight. Some people lose a lot of weight. Some people deal with stress in all kinds of ways. I've There's like founders I've met that get like addicted to prescription drugs or like, you know, all kinds of unhealthy things you could imagine, right? So, I mean you have to find a way to shift from like if the thing that got you started in the first place was like fear like fear of never being important or fear of never feeling fulfilled, you have to at some point transition it once that hole is filled in your heart. I guess you have to transition to being motivated out of like joy or love or something more positive, not like running away from fear and anger or you're like you're really angry at this you know your father or like the person who you know broke like the co-founder who you almost was going to found with who decided they didn't want to and you're pissed at them so you're trying to show them up or whatever. Those aren't relevant to me but I've heard other examples. Anyway, long way of saying you have to transition away from fear and anger as your motivator to like joy and love and just find the thing you actually love doing in life. So for me, you know, that was like figuring out what is the kind of CEO role that I really want to have. what's the thing that brings me joy? For me, it's like I love building things with technology. I love learning new things. There's some parts of the CEO job, the typical CEO job which, you know, lower my energy. They don't give me as much energy, right? there's like you know frankly like people I'm not the best people manager in the world right like I used to have like 12 direct reports at the company and I was like so stressed and then now you know now I have like four right and it's like it's actually much easier for me to run the company with that so there was a lot of things ideas that I had in my head I was like well the CEO has to do that obviously the CEO has to do that and I sort of let go of some of those things over time when and I said you know what I'm actually going to focus on the things that I'm better at because they bring me joy and I'm going to delegate a lot of the stuff which I thought I had to do and that's actually made the company run a lot better and it's kept me engaged in the job like I've been doing it 10 years and I hope I can do it another 10. It's still fun because I've been able to delegate.
Why do you have to make that transition away from fear and maybe insecurity being the motivator towards it being about joy and love? Why what's the cost if you don't?
Well, I think if you don't, then once you hit some kind of level of success, whatever, however people count that, then you're not going to feel motivated anymore. And so you're just you're going to be done and you know, you're going to go do whatever else you're going to do next, like I guess become an investor or sit on the board, which there's nothing wrong with that either, but I just I do part of me does wish that more founders were able to continue being founders and build the next thing and the next thing. Um, I mean, we we just met each other, barely know each other, but I'm guessing that you're finding a lot of fulfillment out of like running this podcast and you sort of you've you found some new level of joy in doing that.
So, this is like your next founding moment. But yeah, I I think if you don't do it, then you're just going to burn out. And a lot of people I think who had some level of success as a founder, they look back on it and they like, "Well, man, I finally got that thing to some level of success and I sold the company or whatever, but I never want to do that again." Like cuz that it damn near killed me and I was so stressed all the time. And so I've tried to make it I I need to get it to a place where it's fun to run the company so that I can keep building companies for many many decades hopefully. That that's my goal.
You're describing me when you say that. So the company for seven years, but it felt like I was doing it involuntarily, it wasn't it wasn't voluntary meaningful struggle.
It was I can't let this thing go down. It's not I'm not enjoying it anymore, but I can't stop. And then at the point where I realized I could stop, I did immediately. In hindsight, the way around that would be to do a bunch of things in involving the you know how the company is structured and who owns it, who has control and all those things. But really trying to build a sustainable, as you describe it, like a sustainable life for me as a founder and for my team members. Yeah.
And that often in Silicon Valley when especially when you're in high growth companies, sustainability in terms of culture is the last thing. How have you done that then? How have you tried to make it sustainable? You've talked about yourself, but how have you how do you create a sustainable company, one that's built for 50 years or 100?
Well, okay. So, there's a lot of different elements to that. I mean, one of them is just the burnout factor with people. Let's let's talk about that first. Um, and then I'll come to like repeatable innovation. Um, so from a burnout point of view, I mean, a few things that I do, for instance, um, because obviously there's days where you have to like go hard and sprint and then, um, but for instance, like every quarter I take a week off, right? I just have that pres-scheduled for the year because if you just kind of wait, there's never a good time to do it. Um, we actually tried an experiment this year where we're having, we call them recharge weeks. everybody in the company is like taking a week off every quarter and they're doing it at the same time because sometimes if if you're off, you're the only one who's taking a week off and then people are pinging you the whole time and whatever. I I don't know if we'll keep doing it or not. It's an experiment. But by taking a week off every quarter, it allows me to kind of make sure that I recharge. I have time to go um learn new things and it often like sometime, you know, I'm thinking about the business in some way, shape or form, but it's like yeah, that that's helped make it sustainable.
Other things I've done, I've had um a lot of executive coaches, different executive coaches. I have one now. You know, it's there's different kinds of executive coaches. Some of them are very tactical with their advice, like they're former CEOs. Others are basically therapists. And like, you know, both are good and important versions to have. Um when I first heard that, I was like, "Oh, I don't want the therapist. I want like the tactical CEO coach." Um but, you know, I've the therapist part is almost even more valuable. Um let's see what else. I mean, like I have um I have this kind of like morning routine where like I've noticed that my days go a I'm a lot more stressed. If I just like wake up, I look at my phone, you know, I haven't really like had any breakfast or exercised or anything and like, you know, I'm like low blood sugar. I just everything's pissing me off. I'm like irritable.
Um and so that's just a bad way to wake up. Since now when I wake up I basically don't look at my phone you know I try to like do the morning routine you know exercise like um eat some breakfast meditate whatever and then okay now I'll start my day and like try to that all these kind of things help and I think this is important for the whole company to some degree because a lot of new employees especially uh like new grads or younger folks like they they actually don't know about burnout they'll they'll actually you can have unlimited vacation policy and tell people at at the all hands meetings whatever like don't wait until it's too late, you know, take time off. But they won't do it. Like sometimes I' i've seen especially high achieving people, they push themselves like too hard and they'll actually quit. And I'm like, why are you quitting? And they're like, I'm burned out. And I was like, why didn't you take any vacation the last two years and they're like, I don't know. And they they they didn't feel like they had permission because everything was so important. And so we almost like try to force people to take a little bit of time off here and there. But we still have a pretty intense work environment at Coinbase. I'm trying to like, you know, amp it up. like we we should we should be going hard but then take periods of rest and renewal and take rest like renewal very seriously. It's actually an important skill to learn.
So okay there so that's kind of how to like you know go hard for the long term but don't burn out. Um then I think companies also need to have repeatable innovation. So what that to me what that means is you can't just be have like one product that finally works and then you scale it and it kind of the scurve tapers off and then what do you do? I think companies need to continually have like a next act you know and a port ideally like a portfolio of products or different revenue lines.
Um so that while something is going down another thing's going up and we we do this thing at Coinbase called 702010 resource allocation. So like 70% of our resources go to the core business today that's making most of the money and it's at scale. 20% of our resources go towards these adjacent bets that are like an extension of the core and 10% go to these venture bets which are basically like kind of crazy ideas that have a higher chance of failure. But it's so even in up markets down markets we're putting 10% of our resources towards crazy you know potentially big things that could work. They don't and some of them don't. And that's allowed us to build this portfolio of products. And I I think that's important for the long-term sustainability of companies because it always maintains this um this startup culture, this founder mindset of like it, you know, it's it's always day one, you know, never let us become complacent. Try to disrupt ourselves before somebody else does and just keep building the next thing and the next thing and the next thing. Like that's that's what keeps a company exciting. That's how you extend the founding moment, right? like like Zuckerberg is trying to do that now with with the metaverse instead of just being a social media company. And so if a company doesn't have like those continually stretch and try to build the next thing, I think it just becomes a little more complacent and like good people eventually leave and stuff like that.
Every company wants that. At least they say they do.
But then they they set up incentive structures and policies that actually act as a deterrent for innovation. They disincentivize people to innovate. So, a question I get asked a lot when I'm on stage is, you know, you run an innovative company in an in an industry like social media which is changing all the time and the tricks and tips and algorithms are adjusting. How do you get your teams to and how do you align incentives and how do you really make that philosophy and culture real where people are actually incentivized to take risks and to to do those those 10% bets that might end up being the the next AWS or the next you know Kindle or whatever in the case of Amazon.
Yeah, you're right. So I think that it's a the natural tendency of most orgs is to not allow that and so you have to actively fight against it as as a founder or CEO. If you have somebody within the or who is kind of entrepreneurial and they try something new and it doesn't work, you know, you have to make sure that that's not like a black market and on their their career advancement, right? There's a difference between they had good execution towards the wrong idea or they had the right idea but bad execution, right? If um like I think uh you know that Amazon example right is like they they tried to launch their own phone at Amazon right the Fire phone and it was this big failure but my understanding internally was like they basically pushed it was the wrong idea but they had good execution and so they didn't they didn't like fire that team because the the Amazon phone failed they said okay the execution was good you shipped a phone in a pretty small amount of time it was toward the wrong idea let's what next and that I think my understanding is that team actually became the Kindle team which then was a very successful product. So um it's a tolerance for failure recognize good execution even if it's toward the wrong idea.
Um you know I think some of this has to come from the founder. I don't know. I don't know if there's any other way. Like the problem is um if you look at public companies that have that are founderled, they actually like outperform the the rest of the S&P 500. And one theory for why that is is that the like the scarcest thing inside big companies is actually risk tolerance. Um and so founders can kind of provide that. Now you can you if you can go too far with this, right? you we know of founders who have too much risk tolerance and have kind of blown the place up, right?
Yeah, exactly. Um and then we also know of companies that had, you know, like not enough risk tolerance. They had a professional CEO come in, you know, I don't want to criticize anybody, but like like Steve Balmer or someone would be a classic example. I'm sure he's he's smart guy, right? But something happened there where they didn't have the risk tolerance. So I kind of view my job as like a founder CEO at this point is to ensure we have um enough risk tolerance to try new ideas and then I and then I also want to pair myself with great operators like like Emily Choy our COO and president right and we have a really amazing executive team. So it's the combination of like great operator but also great founder energy which I think is a nice combination that creates good outcomes. If you don't, if you're too heavy on one or the other, sometimes it doesn't work as well.
You read this um the white paper, Satoshi's famous Bitcoin white paper, pivotal moment for you, sparks interest and intrigue. While you're at um Airbnb, you do something which a lot of people ask me about as well, which is when you're in a job and you have a spark of inspiration, how do you do both? You've got to pay the bills on one end, but then you want to pursue this idea. How did you do both? Because you stayed at Airbnb while you started developing what what became Coinbase.
Yeah. So basically I did it on nights and weekends.
People don't like that answer.
It sounds toxic.
It required a lot of energy. I mean I basically so so first of all you need to make sure that if you are currently employed like don't build it you know on company hours and don't build it on the company laptop. There's a lot of um IP litigation that has ended you know for some people has ended badly because the company actually owns it typically at least in the US. I don't know what the rules are in other countries. Um, if you build it on employee on company time on the company hardware, the company probably owns the IP. So, you need to make sure you're doing it on your own computer, not during hours. So, anyway, I I would often work till like 7:00 p.m. or something like that. I'd come home, eat dinner or something like that, and then I would work from like 8:00 p.m. to midnight. Um, I would do that maybe 3 or 4 days a week on weekdays, and then on on the weekend, I'd work maybe like Sunday afternoon for like seven or eight hours. So, I was I was probably doing like 20 hours a week or something like that on what would eventually become Coinbase in my personal time. And it and it was hard. It sucked. I mean, I was like tired after a full day of work. It's like 7:00 p.m. But this is where that some of that determination comes in, right? And I was like, "Okay, well, my co-workers like going out drinking or whatever." And and nothing wrong with that. I did lot plenty of that. like in my time at that moment in that time I was I was you know my late 20s I was like I really want to try to build something important in the world like I'm going to have to take like my own determination and turn that into this fuel to go try to build this thing. So I probably did that for like a year year and a half to try to build the prototype of what would become Coinbase. Um and then I applied to Y cominator. They they eventually accepted me and wrote me the initial seed check. That's what gave me the confidence to quit my job and go full-time on it.
How did you maintain friendships and those kind of meaningful personal relationships at that in that time when you're working full-time during the day and then coming home and writing code? Where's the, you know, where's the time for friends and girlfriends and boyfriends?
Yeah, I was pretty intense about it. I I would say I sacrificed uh friendships for it. I mean, it's not like I wasn't like, you know, um just like never responding to people, but I people would ping me and like, "Hey, can you come out and this thing?" And I was like, actually, I remember it's a funny memory. One time this guy who I really like um from work, he was he's like, "Come out to this thing. We're going to this club or something." And I think I lit I literally wrote back to him ch I'm changing the world one line of code at a time. Can't hang out. He's like, "Rock on. I love it." Um so, you know, I was joking or whatever. a child with my mom.
Yeah. Yeah. So, you know, I think I've seen this happen to various people like they they get to a certain point in their life and like god damn it, I'm going to [ __ ] Can I swear on this program?
Okay. So, anyway, there's a there comes a time I've seen this happen to various people in their life. It's something triggers it sometimes. It's like it's an age thing. They're like turning a certain age where they always thought they would have more done by then or they, you know, a certain maybe someone in their family passes away and they're like, "Oh my god, like time is finite. it's precious and something happens where they're like, I'm not going to [ __ ] around anymore. Like, I'm going to get this done what no matter the cost. And they just start really buckling down. They find this source of energy. And so, you know, find whatever that is for for you, like the listener out there, and um and then go hard at it. you know, finish your book, like launch your launch your thing, whatever it is, the apps, the startup, just just start doing stuff like and even if you don't even know what to do, just do anything because you know, action will produce information.
Um actually, so you just reminded me there was a precursor to Coinbase, which was um this app that I built with my friend uh which we were trying to figure out how Bitcoin worked and we built that and the minute we shipped it, I was like, it's built wrong and I knew the architecture was wrong and then I knew what to do next. And so often times you don't even know what to do. Just do anything and you'll find you it'll help you get to the right thing.
Action leads to inspiration.
Yeah, action produces information.
Action. Never heard that before.
I I I I stole that from uh Paul Graham I think who started Y Cominator. It's so true.
and I will steal that from you. So you hear that in the future without credit then you know where it's come from.
At that time what were you trying to build? You'd read that white paper. You you launched that first app. Then after that first app you launched. What were you trying to build? What was the vision?
