Coinbase Direct Listing Discussion

Good morning. Thank you everybody for joining us on Coinbase's big public listing day. It's great to have you with us. Today I'll be speaking with Brian Armstrong and Fred Ehrsam, the co-founders of Coinbase, about the early days of the company. Then we'll bring in Emily Choi, Coinbase's president and CEO, who with Brian will discuss the future of the company and the entire crypto ecosystem that Coinbase is driving forward. Thank you also to everyone who contributed questions on Twitter. I've incorporated many of those into our chat today.

When Satoshi Nakamoto, whoever he, she, it, or they may be, published the Bitcoin white paper in August of 2008, it's hard to believe that they or anyone envisioned the incredible ecosystem that has developed around the powerful idea of a distributed online financial system. That original Bitcoin white paper outlined the principles of a cryptographically secured, trustless, peer-to-peer electronic payment system that was fundamentally designed to be transparent, censorship-resistant, and equal for all. Bitcoin set out to put financial control back in the hands of the individual. When the white paper was released in 2008, the world was gripped by a financial crisis that forced governments around the globe to inject trillions of dollars into their economies to stave off financial disaster. I wish I could say that was a once-in-a-lifetime crisis, but it plainly wasn't. In fact, financial, banking, and currency crises roil many countries around the world all the time. When I first met Brian and Fred, I heard for the first time an ambitious vision to increase economic freedom in the world. Coinbase has never deviated from this mission. Today, the company, led by Brian and President and CEO Emily Choi, lives and breathes this early ethos and is making that vision a reality. So now, Brian and Fred, welcome. Let's get started. Brian, first question for you: could you tell us how you came up originally with the idea for Coinbase?

Yeah, sure. So it was 2010 and I was home for the holidays at my parents' house, and I happened to be reading the internet, as one does, and I happened to read the Bitcoin white paper written by Satoshi Nakamoto. I remember just feeling like, wow, I can't put this down. It felt like it was the most important thing I had read in many, many years. I was kind of captivated by it. I really couldn't stop thinking about it. So I started going to some early Bitcoin meetups in San Francisco, trying to learn more about it. Eventually, I started working on a prototype on nights and weekends that would eventually become Coinbase. I remember a lot of people I talked to about it at the time thought this isn't a very good idea, this sounds like a scam, what is this thing you've gotten involved in? I remember also thinking maybe I'm too late because I go to these Bitcoin meetups and there were already a couple of other Bitcoin companies at the time. But for some reason, I couldn't stop thinking about it. I guess the thing that really got me convinced to go start Coinbase for real, and not just have it be a nights and weekends project, was that I applied to Y Combinator, got that first seed check for $150k, and that's what gave me the confidence, honestly, to go really try it and quit my job.

That's a tremendous story. What made you realize that you needed a business partner and didn't want to do this on your own?

Yeah, well, I really wanted to find a co-founder to work on this project because I felt like it would just increase the chances of success. Startups are already so risky. The default thing that's going to happen is the company's going to die. I wanted to find somebody with complementary skill sets, but who shared my passion for the mission and who had the hustle and the drive, and somebody who would just honestly challenge me and point out things that I was wrong about. I wanted to learn something from them. I was kind of doing this co-founder dating thing for about a year. I probably met with 50 different people, and none of them really turned out to be right. I was getting disillusioned, like okay, maybe I'll never find a co-founder, I guess I just got to keep making progress on this thing. And lo and behold, I think actually making progress is what caused the right co-founder to reach out to me. I posted an early prototype of Coinbase on Reddit, and that's where Fred Ehrsam first read about it and kind of cold emailed me. We ended up meeting up, so that was very fortuitous. I guess the lesson from that was, if you don't have the right co-founder, just keep making progress and hopefully the right person will find you.

Yeah, and just keep dating. So we'll come back to that first meeting in a second. But Fred, maybe we could go to you. Could you tell us how you came across crypto? You were in a very different place and setting at that time, right?

I can't resist asking: what was your reaction from your friends and colleagues at the bank at the time when you were doing this?

Yes, absolutely. Okay, so then you guys met online on Reddit, which by the way is a classic 21st century story. Then in person, I believe your first meeting was at the Creamery, a famous restaurant and coffee shop in South Market in San Francisco, across the street from what would actually become your first office. I'd love to hear from both of you, maybe starting with Brian, what were your first impressions of each other and what did you talk about in that first meeting?

Yeah, well, I had read Fred's LinkedIn, so I felt like, okay, he studied computer science and economics, kind of like me. He must be relatively smart. He got a job at Goldman Sachs. He has some financial services experience, which is pretty good because I was more of a software person. So initially, I was intrigued by that. When I met him in person the first time, I probably thought he seemed kind of guarded. We were sort of sizing each other up. I felt like this person is really ambitious, they have a lot of drive, they want to build something important in the world that helps people. I actually found him a little bit intimidating, which I've come to believe is actually a good sign in a co-founder. You kind of want somebody who challenges you and you want to not say anything stupid around them because you want to impress them. It was an interesting first meeting.

That's true for anybody you work with. Fred, what was your first impression of Brian and what did you talk to him about?

Yeah. So there's a story about the two of you going on a co-founder retreat in Hawaii after that at some point and doing, I believe I have this right, the New York Times 36 Questions That Lead to Love exercise. Could you tell us about that and which question of the 36 made you realize that you had found what you were looking for?

Yeah, I feel like you have to go first on this because you forced this one.

Yeah, it's certainly true. We certainly see in my day job that the number of founding teams that make it to where this company has made it, where the founders are still on speaking terms, much less working together, it's just not that great. The pressures are so intense. So I think it's a very wise approach. So going into building the company, I think you guys knew early on that getting banks on board to work with a company would be a challenge and that you would face a lot of regulatory scrutiny. But did you know how difficult it would be to find a bank that would even take your deposits in the early days?

Yeah, it turns out I'm told... Go ahead.

No, I was just going to say that's exactly right about taking a trusted regulatory approach. There were a lot of tense moments with banks over the years in the early days, especially just getting things going. I remember we had raised the Series A, we had raised maybe five million dollars, we had a bank relationship, and the buy Bitcoin feature was just kind of going really well. I remember the banks calling us nervously one day, like, you guys are doing about five million dollars a day in debit through these bank accounts, and you have total raised five million dollars. If something goes wrong for one day, you are insolvent as a company. We were like, oh, I guess that's true. They said, please go raise more money and put it in your bank account, or we will not be able to work with you in the next 60 days. So that was a good forcing function to go raise the next round, and it was a good story to tell investors: we can't keep up with the demand, so please help us with more capital.

Yeah, it turns out that I'm told that the New York Times 37th question that leads to love is, do you take regulation seriously? So I'm glad you guys covered that one at your retreat. Shared values as a key part of any good relationship.

That is good. So looking back, would you guys have done anything differently in those early days if you could do it again?

I mean, a few things come to mind. I don't know what comes to your mind, but for me, I think in hindsight, we might have hired a little faster once we had clearly had product-market fit. I'm really glad we kept the team super small just to iterate towards the solution, but then once things were really growing, I almost wish we had not tried to do so much ourselves and built out a team faster. There was one other thing we did, which is early on, I kind of got this idea in my head to split into business units and try to have a bunch of products operating very independently. In some ways, that was good because we got things like Coinbase Wallet, which is a self-custody wallet with a totally different architecture. But it also created a lot of duplication of work, so we eventually kind of re-merged some of those products. I wonder if we might have lost a little bit of efficiency on that one. But these are all learning experiences. Fred, what do you think?

Brian, was there ever a time when you wanted to just give up and walk away, and if there was, what made you see it through?

Well, one thing I'm very fortunate about, looking back, is that we didn't try to ever pivot during the dark times. There were a lot of crypto winters that we went through where I think people got scared. We had close to 30% of employees leave during the crypto winter after the 2017 peak. We decided we didn't want to pivot. There were a lot of dark days, especially in the early days. There were times where there was sleep deprivation. Fred and I were getting paged in the middle of the night. The website would be offline. Some wire didn't come through. We were exhausted. Occasionally, key people would just quit at really inopportune times, and it felt like we had nobody to jump in. We got lawsuits from frivolous entities in the early days with all kinds of stuff. So there were some dark days for sure. But I feel like we were both kind of irrationally determined and resilient to an extraordinary degree. Fred and I, I remember we just had this mentality like we're either going to do this or we're going to die trying. We had a big chip on our shoulder. We were like, we're going to do this. So I don't know, that's how I thought about it.

Yeah, I'll share one other quick thought on that. I think people sometimes come and tell me, hey, I want to do this startup, and I think it's a good idea to make money. I'm always in my head like, that's never going to work because basically startups are just moving from one setback to the next with enthusiasm. Once you're three years in and it hasn't worked, and you've been sued, and your co-founder hates you, and the people quit, and you're broke, people just give up. One thing that really helped us is that we were in this because we wanted crypto to work. We wanted there to be more economic freedom in the world. When other crypto companies were pivoting and saying, you know what, I might make some blockchain software, there was this whole thing, remember, it's blockchain not Bitcoin back in the day, and people were pivoting their companies to make software for banks or something. I was never really tempted to do that because I don't want to make a company that does that. That wasn't why we set out to do this. Even if that company was successful, I probably would have just shut down the company and worked on something else rather than pivot it to that. So we were going to make the original mission happen, and that helped a lot. So start a company for something you're passionate about, not to try to make money.

Yep, that makes sense. Fred, just to close out our time with you right now, why did you choose to branch out on your own more recently, and how did you know that it was time?

Great. Thank you, Fred. Done in front of me back in a few minutes. But we're going to shift gears now and bring in our friend Emily Choi, Coinbase's President and Chief Operating Officer, to talk about Coinbase today and its journey forward. Welcome, Emily.

Thank you, Mark.

Okay, fantastic. So Brian and Emily. Emily, you started talking to Brian and Coinbase when crypto was experiencing a high in 2017, and then by the time you actually started at the company, crypto was going through a down cycle. Tell us, did you feel like you'd made a mistake by the time you joined?

Actually, Mark, I don't think I even told you this. It was an a16z person who introduced me to Brian. I signed my offer letter in December 2017 and then joined in March 2018. The big thing is, the answer is no. I never thought, oh my gosh, I made this huge mistake. The reason I didn't think that was because I knew that I was in this for the long term. When I met Brian, I was exhilarated by what he was talking about, and I knew that I had to be a part of it. I knew that it wasn't some short-term blip. You can't go into these things thinking that a six to 12-month downturn is going to be the thing that breaks a company or a segment. So it's been a journey, but the biggest thing for me is that the people who have been in this the longest, the Brians and Freds of the world, the Balaji Srinivasans of the world, they shrug when there's a crypto winter. They help you keep things in check and think about the long term.

That's great. Brian, it seems like you found your new Fred. Emily, tell us about how you partner with Emily today to lead operations for Coinbase.

Yeah, sure. I think companies have many founding moments, and it's true that I feel very lucky to have a new partner in running the business with Emily. My skill sets and my passions are really around focusing on product and engineering, the strategy, the culture of the company, and how do we have repeatable innovation. I feel very lucky to have a great partner with Emily in the sense that she's really running the operations of the business. She's this amazing executive that helps us have these great complementary skill sets. It's been awesome, and I think it's been a big key for our success.

Emily, how has Coinbase changed as a company since you joined three years ago?

When I joined, a lot of things were breaking because the company was growing so fast. I think the biggest change now is that we have a lot of the processes around decision-making, how we communicate with one another, and even the hiring practices that we need to be able to scale up. It was cool to actually join when things were breaking because we could see what was breaking and then we could fix it. I don't think we'd actually be in this place now where we have this foundation. An example is we love to do this thing called a RAPID for decision-making. I found in a lot of companies there's this stasis where nobody wants to make a hard decision. We have a document, it's very simple. We have very clearly who's going to recommend, who's going to agree to it, who's going to put any input in, and then there's only one decision maker. Everything's in the document, and we can take a look at it and make a decision. We actually grade ourselves on how fast we can make decisions. That's one of the things we've implemented since some of these things broke, and I think it works really well.

That's great. I should mention we are live, and I can prove that we're live: our Coinbase stock is now listed and trading. Emily, Fred, Brian, congratulations. Big moment. I have no champagne, but next time we see each other, we will pull it out for sure. So the stock is public. Emily, crypto is a global phenomenon. The opportunity for a new kind of open financial system is clearly global in nature. Coinbase has really been rising to that challenge to try to expand globally and provide services all over the world. Maybe you could take us through how Coinbase, under you, is thinking about international expansion.

International expansion is a huge focus for us. If you just look at the 10,000-foot level, our mission is to create economic freedom in the world, and we're not going to accomplish that if we're not a global phenomenon and we're not helping crypto be adopted by the entire world. Today, I think 25% of our revenue is non-US, and it's mostly in Europe. We think there's great opportunity all over the place, including places like Asia, where we're in the final legs of trying to get into Japan. We just opened in Singapore, and we have a bunch of opportunity in LATAM. We'll pursue whatever is the right strategy for any of those markets, whether it's buy, build, partner, invest, whatever it is. We're all in.

Brian, it's been really amazing. You and Fred talked a lot about the early days and the crypto winters that have happened along the way. It's been really amazing to see the public sentiment around crypto turn so dramatically over the last three years, very positive, and Coinbase has been a big catalyst for this. Two-part question for you: what's it been like watching the tide turn so aggressively after such a long period of building, and then what do you think is possible now that wasn't three years ago?

Yeah, well, we have this saying internally at Coinbase: in crypto, it's never as good as it seems, and it's never as bad as it seems. This turns out to be a simple but very powerful thing to keep in mind because it requires an incredible amount of fortitude when the whole world is saying Bitcoin's dead and what are you going to do next with your life, to keep moving forward. In the same way, when everyone is saying this is the next big thing, it's the future, you're all geniuses, we're the future of everything, we also have to discount that a little bit and say it's never as good as it seems either. So we've built this kind of resilience to that. The price of crypto has been this incredible focal point that people latch on to, and it brings in new waves of people every time there is a new cycle in crypto. It's great for getting the word out there to more and more people in the world, but it's not great in the sense that it's a little bit of a distraction from the ultimate potential of this technology, which is so much bigger. This gets a little bit to your question about what's possible now. It's true that most people coming into crypto are buying it as an investment. It's scarce, it's digital, they're hoping it'll be useful in the future. This was the early days of crypto. But now crypto has moved into this second phase where it's really crypto as new kinds of financial services. People are making new ways to do exchanges, borrowing and lending, earning money, and doing payments online. In the future, crypto is even going to be an app platform, with people building all kinds of new things: social media apps, identity systems, games, etc. The blockchains are getting more scalable, it's kind of like the internet moving from dial-up to broadband. The tools are getting more usable, kind of like the launch of the web browser, which you, Mark, played a key role in the history of. The security and privacy around blockchains are getting better, kind of like the internet had to add HTTPS with the little lock icon so people felt comfortable using it for commerce. So it's really cool to see this industry continue to evolve, and it's just unlocking more and more use cases.

Great. Emily, Coinbase going public on the Nasdaq is a big step forward for breaking crypto into the mainstream. What are some of the next hurdles you're looking to clear with the company?

We're mission-focused. Back to we want to create economic freedom in the world. Everything we do, whether it's the littlest seeming OKR to the biggest one, is in service of that. Whatever those hurdles are that would prevent us from doing those OKRs to get to that mission are the things that we care about. Some of that might include things like how do we make sure that regulators truly understand crypto. The genie's out of the bottle. We have to make sure that we do a really good job of helping regulators understand that crypto is actually a net positive for the world. That to me is the thing that is top of mind as we focus on making sure that we can unblock things for Coinbase to be able to thrive.

Right. Brian, final question for you guys. There are a lot of young entrepreneurs out there watching, listening to your interviews and podcasts, and following the story of the company. For young entrepreneurs out there that are thinking about building a crypto company in 2021 and beyond, what advice would you give them?

Yeah, so there's a phrase that I really like. I think Paul Graham might have been the one who said this originally: action produces information. I talk to a lot of people thinking about starting companies. There are a bunch of Coinbase employees who've gone on to start companies. Oftentimes, you're sitting there in the idea maze, and you're not sure if you try this, will it work? I almost imagine it sometimes like you're looking at a mountain that you want to scale, and it's shrouded in fog, so you can't see more than five or ten steps in front of you. The biggest lesson here is just do anything. Even if you don't know what to do, do anything, and it will produce information. Take a few steps forward. Maybe you're on the right path, maybe you're not. There were many times in our journey at Coinbase where we were frankly just making it up as we went along. We didn't know what to do. We just tried things. By trying it and having that initiative and just shipping things, building things, that instead of just endlessly debating it, that's really what allowed us to have more and more success.

That's very good advice. Great. Fantastic. Well, welcome Fred back into the live stream. To close out my section, Brian, Fred, Emily, thank you very much for your time on this very big day and actually a very big moment here while the company is becoming fully public. I think we can all agree that today is a watershed moment for the crypto economy and a time that we'll all look back in the future and recognize as a key moment when crypto came of age. To stay on our theme and keep going with today's event, next up on today's agenda, we have a panel conversation led by Fred with some early Coinbase employees that have gone on to found companies that are helping to build the crypto economy in the future. So please stay tuned.

Crypto is financial freedom. The opportunity is universal. More equitable, programmable finance. Crypto enables a more fair, free, accessible, and transparent financial system in a place that's safe and secure. I pay my barber in Bitcoin. I donated using crypto. I had to get gas and I used my Coinbase card to purchase it. I use crypto to buy my first house. Crypto is freedom. Hundreds of millions or billions of people will be able to use these systems. Crypto is the internet of money. Creating more economic freedom in the world is one of the biggest levers we have to improve societies. Crypto is the future of finance. In open source, in accessibility, in math, in blockchain, in Satoshi, in decentralization, I trust. Coinbase. Let's go.

I'm Jacob. I was at Coinbase from January 2017 to mid-2020. I started as a design intern, ended up working across the product, helped lead and start USDC. Today, one of the co-founders of Zora. We think we can build a new internet based on NFTs.

I'm D. I'm one of the other co-founders at Zora. I spent November 2017 through about March or April 2020 at Coinbase. Started as an auditor, wound up as a...

Hey, I'm Antonio. I was at Coinbase from 2015 to 2016 when I was a member of the payments team on the software engineering side. Currently, I'm the founder of dYdX, which is a decentralized exchange for advanced financial products and also derivatives.

I'm Linda. I was at Coinbase mid-2014 and left in late 2017. I worked on a number of different roles there. I was first on the investigations team and then later was a product manager for internal tools. I co-founded a crypto fund called Scalar Capital and am just really excited about investing in different exciting crypto projects.

So I joined Coinbase as a design intern. I was coming over for what I thought was going to be three months. I was building and messing around with projects on Ethereum in my final year of college and I was very active on Twitter about it. I think that's how I came across the radar of a couple of folks at Coinbase who just DMed me being like, 'Hey, we like what you're doing. This is cool. You want to come over to San Francisco for three months?' And I was like, 'Yeah, that sounds fun. I'll do that.' I told my family, my girlfriend, my friends, 'I'll see you in March.' I started in January. Yeah, weekend. I ended up signing full-time, which was a shock to everyone, but at the same time they're like, 'Okay, I guess you're doing this.'

I wanted to join Coinbase in the first place because I read one of your blog posts very early on. You were kind of charting the territory of early decentralized business models. I was trying to build DAOs at the time. I was like, 'Oh, this just seems like an amazing way to collaborate and create with people online,' and what you wrote kind of resonated with me. So I was trying to do my own thing. When I actually got the DM from Ben Jennings, who was the head of design at the time, I think I said, 'No, I'm all good. I want to do my own startup. I'm doing my own thing.' And then I kind of saw your blog post and I was like, 'Well, if I was going to work in crypto, Coinbase seems pretty interesting. Very strong brand, cool product.' I was like, 'All right, I'll try it out.' My honest plan was I'll go in for three months, learn everything I can about a crypto company, come back to Australia, and keep doing my startup. That did not work out. Four years later, I was still there.

Those people that graduate college and go work at Goldman Sachs... No, what are you thinking, man? This is 2015. What was the thought process for you in joining a crypto company at the time?

I remember it was like two in the morning. I was doing a work paper for KPMG by myself in the office, testing audit controls, which is just like watching paint dry. It was absolutely horrible. And I was like, 'Man, I can't do this anymore.' I logged into LinkedIn and there was a risk management specialist posting for Coinbase and it was like six days old. I was like, 'Oh man, this is amazing.' I was one of the first 10 people to apply. So instead of applying, I just DM'd the recruiter, Brett, and I was like, 'Hey man, my name's D. I wrote this white paper at KPMG that got published about blockchains. I've been using Coinbase for ages. How do I apply? What can I do?' And he was like, 'Can I call you?' And he called me and that was my phone screening. I was like, 'Oh, this is sick.' And then he was like, 'Could you come in for an interview?' And I was like, 'Well, I'm going to New York for a blockchain project.' I was actually working on a client for KPMG in New York that was building securities trading for the Hong Kong society, some crazy stuff like that. So I was flying back and forth between New York and San Francisco for all of my Coinbase interviews, including my presentation. I remember being like, 'Man, this is the most grueling interview process I've ever been through. If I don't get this, this is just some trash. I'm flying back and forth. This is ridiculous.' And then I remember walking out, flying back to New York. I had just left Dover Street Market. I was feeling myself. I had the Supreme jacket on. I called my mom and I was like, 'Mom, yo, if I get this job, it's going to change my life.' And here I am walking around the street. I was like, 'Yo, Bitcoin is the future.' And she was like, 'What world currency?' The whole thing was hilarious. And then I realized, hold on, your mom shouted back, 'One world, one currency.' No, dead ass, no gas. I was like, 'Yeah, yeah, she was tapped in.' I was walking around and then I think Jeff called me and was like, 'Hey man, I think you actually did it. You got the job. You want me to make you the offer?' I was looking at my jacket. I was like, 'This is the moment.' It felt great. That was pretty cool.

Well, what's transpired since is that we've now gone on another meteoric rise for Bitcoin and this bull run is insane. Looking back on it, I remember walking into Coinbase for the first time and being like, 'Wow, that was my first experience of a tech company.' But it felt like everything that crypto was at that moment. It felt like there was this hustle and bustle and this energy and it was booming. I remember when I accepted the offer, just looking back at KPMG, I was like, 'Well, look, we're at $19,000. Bitcoin Cash has dropped.' It felt exhilarating in a way. It was empowering to make that decision and to think that it was just a blip on the overall crypto radar. Fast forward to 2021 is pretty crazy.

I definitely never wanted to start a company ever. I was like, 'I'm going to work at a big corporation, work my way up.' Coinbase was the biggest risk for me, so starting a company was just not something I was going to do. Just the amount of really talented people at Coinbase who were leaving to start their own thing, or the sense of ownership and responsibility that Coinbase gave, just really kind of put that idea in my head. In late 2017, when the amount of interest in crypto was happening and I was spending all my spare time researching crypto, I was like, 'This would be really fun to just get to dive in full time and invest in the space.' So I kind of just decided to start a fund. It just happened out of nowhere.

Yeah, basically, I think before I joined, I actually think I straight up told you and Brian in the interview, 'Look, I want to start my own company someday.' And I thought the best way to be able to do that was not to just do it right after college. Sure, that could work, but I felt like the thing I needed was to work at a really great company, and I felt like that could be Coinbase. And it really was. I've gotten so much learning, value, and great connections out of that. It worked out better than my wildest dreams. But yeah, day one or before day one, I was just like, 'Brian, I want to start a company.' And he was like, 'Great, that's awesome. I'm excited about that. Let's think about how we can help you do that.' And that, I think, is the most positive thing about Coinbase to me. The connection after you leave, I think, is something that's really impactful and likely something not a lot of other companies have.

Five percent. I mean, we frame this entire moment as we're entering into an internet renaissance. That's kind of the phase that we think we're heading into. We're really specific in that choice of words because the kind of world that we're trying to help build out with NFTs is basically that I think crypto is associated with disrupting the financial system. I think that's the starting state of crypto, not the end state. Disrupting finance is like, 'Okay, great. Now we have a new way which we can create any value system that we'd like, work together on our own terms, do that all natively on the internet. Now what?' I think it's like, 'Okay, Wall Street. Cool. That is now an accessible toolkit for anyone on the internet. Now what can we do?' I think the moment we're heading into now is, 'What's the next big boss?' I think it's social media. Social media is kind of these internet kingdoms or monarchs where they're huge walled gardens that have been built out over the past 20 years and they define how we create and operate on the internet. I think now crypto is starting to eat into that or knock on those walls and go, 'Well, hang on a second. What if we can take the power of social media and instead of that being owned and controlled by these huge corporations, what if we can now start to create these new systems for ourselves, create new mediums for ourselves, and have the value and everything as part of that kind of open up?' So yeah, we're at day zero of that. I think we've only just kind of collectively woken up to the fact that we have this amazing financial toolkit, this value toolkit. How does that start to permeate into culture itself, creation of art or media or really anything on the internet? So yeah, it's five percent, if that. One percent.

Yeah, dYdX is a decentralized exchange and we focused on more advanced financial products and specifically derivatives. We've been building that out for the past three and a half years now.

Yeah, definitely. I think there are three main aspects where DeFi is important. You kind of have to realize the backdrop of how crypto started in terms of centralized exchanges, and that's why we're sitting here. But DeFi is really important for a couple reasons. First of all, self-custody. This is something that's really important for crypto. The whole point of Bitcoin arguably is be your own bank, own your own keys. But then you turn around and we saw in the very early days, or it's still to this day, in crypto 10 years later, where it's like, 'Okay, you want to actually use crypto? Okay, give your keys over to Binance or Coinbase or whoever.' It kind of almost lost the entire point right off the bat. So in DeFi, the biggest point is that you can truly own your own keys. You can truly just own your own positions. Another really important part of it is transparency. I think this is something that doesn't really exist in the traditional financial systems, where you can just have true audibility into the state of the overall health of the market. This is especially important in derivative contracts where not only when you're trading a derivative contract is the exchange you're trading on custodying your funds, it's also responsible for the entire how your contract basically works. And with DeFi, we can just code these smart contracts into code and have it live on the blockchain, have it be open source, have it be accessible to more people in more places. I think that's a really powerful thing. Finance itself hasn't really changed in a big way in the past 50 to 100 years or so, but now you can just kind of build this entirely parallel financial system just by codifying everything into these smart contracts, and that's a really powerful thing.

I think you might have walked over to me and said, 'Nice socks.' Dressed in full Yeezy attire. It was exhilarating to be on the 31st floor of the Coinbase office and you would see people who were building literally world-changing products, but they were sitting in a nook like this. Or somebody like sitting under a table in the kitchen, and they're literally working on how we roll out asset editions or how we figure out custody or all of the things that have now become this behemoth of a financial institution. We were watching people build that, but they were wearing shorts and t-shirts. There were dogs everywhere. The whole vibe felt like you were in this almost tech utopia weird moment where we could do anything, we could be anything, and the world was kind of catching up to where we were headed. That felt pretty empowering.

I remember just thinking, 'Wow, this is a pretty nice desk.' I was just really geeking out on the environment. I had my backpack on. I'm an intern. This is going to be great. I remember being shocked of being like, 'Hey, so we want to completely redesign the entire mobile app. Can you do that?' And I was like, 'Yes.' I remember I actually ended up sitting next to Brian for probably three or four months because he was very deeply involved in that whole process, going from the first version of the iOS app into the skeleton of what the app is today. I remember one of the great things of Coinbase is that it's really good at empowering people. One, finding very interesting or non-normal talent. People are just kind of found in the corners of subreddits or Twitter or all these weird wacky places on the internet, bringing them into Coinbase, and then just empowering them with these crazy ambitious projects and just assuming and trusting that you can just figure it out. So in my first three to six months, going from intern and then joining full-time, it was like, 'Yeah, okay, literally just help redesign the app that millions of people use every day.' Working directly with Brian, working with all these incredible engineers and people across the whole company. I just remember being blown away. I was like, 'Okay, this seems literally insane, but I guess it's just me and one of the designers right now. We have to figure it out.' It's very exhilarating, kind of stressful, but exciting and terrifying, which seems to be the permanent state. If it's not either of those things, then something's off.

At that point in time, I was getting very deep into early decentralized exchanges. I just got super deep into it to the point where I was like, if I get passionate about something, I don't shut up about it. I wasn't shutting up about we should get into decentralized exchange. I remember the leadership team was like, 'Okay, just let us. You can pitch it one time and then we'll hear you out.' That ended up leading to the acquisition of the Paradex team, which was a fun experience. After Paradex, I was the founding PM of USDC. So I got to work with the amazing team at Circle and helped bring the USDC stablecoin into fruition. A couple billion dollars of that stablecoin outstanding today. Now I think it's over 10 billion dollars, which is kind of surreal. I remember that was an amazing project because Coinbase was probably 500-600 people at the time and it was basically me and two other engineers. We got locked in a room for like three months and it was basically, 'Go build this.' I think that's been my favorite project I worked on at Coinbase for sure.

My favorite was definitely the first key generation ceremony. I felt like I was in some cross between crypto meets Mr. Robot meets the ultimate adrenaline rush. I remember being in the office at like 11 and literally hearing Zach, who was the crypto engineer at the time, playing the Mr. Robot theme song, doing a dry run. We were packing all the bags that we had to take to this undisclosed location. We were all in three different Suburbans. It was insane. We set up a Faraday cage in an apartment, ripped the Wi-Fi out, and I remember being in this tent with no Wi-Fi, no cell signal for six or seven hours, listening to stories from Julian Bourie, one of the early security engineers. It was just insane. For me, that was as deep crypto as I could get. We were generating the keys for the cold storage system at Coinbase for the first time. We were ever going to use this new system. That was like hacking the mainframe. And Julian now is literally working on the firmware that will go into your brain in Neuralink. Insane. That was definitely the most core to Coinbase in my early tenure. I felt like I was actually contributing to something that was really going to impact or matter to the company. It was the first time I got to cross over into the real crypto inside of things where I was like, 'Oh man, this is the team that's actually building the systems that I use every day.' Which is pretty dope.

Yes. So I joined mid-2014 and the price of Bitcoin was $600 around there, and then it crashed to $200 for a while and it stayed there for a very long time. I remember just the headlines in the news where Bitcoin is dead, no one's interested in Bitcoin. I remember people actually texted me like, 'Hey, I saw Bitcoin's not doing well. Are you okay? Do you want to come back to finance?' So I remember that was a weird time. But internally, I didn't feel that at all. There was so much excitement. Every time you talked to someone, they were super passionate about Bitcoin, really saw the future of what this could be. Back then, it was a lot of focus on merchant adoption and how Bitcoin was peer-to-peer cash and it would be really cheap and instant. So I remember that huge onboarding of all these giant named merchants, and I thought that was really cool. But over time, the narrative progressed into digital gold, so that was a very different shift in focus. And that was definitely wrong in retrospect. It was way ahead of its time. Bitcoin is a medium of exchange, absolutely. And then Ethereum, when that came along, was really interesting. My husband Will and I used to go down to Palo Alto and attend these Ethereum meetups. There would be five or ten people there and they were crazy, super interesting, talking about DAOs and all these things at the time. We both just got super deep down that rabbit hole. I just remember thinking that was a really different moment, and I was really excited when Ethereum got added.

I might not be the whole crypto anarchist side. I do think that traditional finance will still exist, but I think that a lot of people who are excluded from the system will actually be able to participate in this open financial system. I think that people will be able to get loans through DeFi and not have to send all this paperwork over to this bank and then get denied after a one-month process.

Anyone can access DeFi. Right now, the system requires you to put up collateral in order to get a loan. But I actually think over time, we're going to have decentralized reputation and identity where people can just build up their reputation on the blockchain. I'm super excited that you can have people who are just really good members of the community and who've shown their work over years actually be able to take out loans and not have to go through the banking process. So I'm super excited by all the things that are enabled that are just past what even exists in traditional finance. When you combine with NFTs and DAOs, we're going to have things that you've just never seen before in societies.

I guess there's two things. I think Coinbase, my favorite product there, is USDC because it's taking all the powerful things of Coinbase and very meaningfully bringing it into DeFi. You literally have a US dollar that is powered by everything that crypto gives you. It's transparent, it's programmable, and it lets you build things like dYdX and all of these other protocols on top of it. So I think one of my favorite things in DeFi is Uniswap, which has a weird history as to why these socks are tied to it. Uniswap is kind of fascinating because it feels like the spiritual successor of Coinbase in a lot of ways. It's an exchange, but it is community-owned, entirely permissionless and protocol-based. Any developer on the planet can get the power of the New York Stock Exchange or Coinbase with a single function call in like 12 lines, depending on gas price. Uniswap to me actually feels like the progression. It moves us away from what is money itself or currency. Currency is a medium of exchange. What is Uniswap? It is literally a medium of exchange. To think about that, Uniswap lets you move from any token to any other token seamlessly. It'll use the function to go, 'Well, this is the real-time price between these two things.' If you think about why money was invented in the first place, it was like, 'Well, bartering is kind of hard. What is the real-time price between this loaf of bread and this bunch of rocks I need to build my house?' You can't figure that out. Money kind of served as the medium of exchange there. Uniswap is like, 'Well, what is kind of liquid?' This was not why it was created, but I think it's where it's taking us. Now you can have a literal medium of exchange between any two tokens, and those tokens can represent physical objects like a pair of socks that was tokenized. These socks, there were only 500 created. You needed to buy this socks token, you redeem it, which means you burn it, and you get a real pair of socks shipped to your house. What that means is kind of crazy because you have the real-time price of these pair of socks, which when they started was I think a couple of dollars, and now it's anywhere between $90 to $110,000, which is just ridiculous. Those are some expensive socks. Very expensive socks. We should never redeem these ones. But you know, that's where we are.

I unfortunately have worn my Uni socks too. Regrettable.

I think that gives you a glimpse of where DeFi is heading. It's kind of funny because we have to describe DeFi in the terms of the prior financial system. It's kind of like trying to predict Facebook in the 1990s internet. It's like, 'Well, you can be your own magazine and you can publish your own images.' It's really clunky to get a sense of publishing and creating your own magazine is like, 'Well, that's my Instagram profile.' The fact that we still have to describe a lot of the actions of crypto using traditional nomenclature kind of tells you just how early it is. There are new words that come out of it, like minting an NFT. That's a new phrase that gives you a sense that there's an entirely new thing happening here. But when we talk about exchange, it's very early. Staking, farming.

No, no, no. I feel the same way. I thought there was no way in hell. No chance. Everything prior in crypto, I feel like has grown out of the existing crypto user base. And then all of a sudden, I feel like the crypto insider community had this funny moment where it was like, 'Wait a second, it turns out that not that many people are that interested in this weird new idea of money. It turns out everybody's interested in art and culture.' That's literally the whole population. So there's been this funny inflow.

Well, I think I was too early. I was super excited by NFTs and I was like, 'Oh, everyone's going to collect these in-game items. They're going to be swapping them, wearing them with skins, displaying them in VR.' I was kind of way too ahead of it and it took several years for it to actually play out. DeFi really took off during that time, so I was like, 'Oh, maybe no one cares about this.' But I'm super stoked about NFTs, especially on the gaming side. I really think that there's a lot of cool things you can do, like virtual lands, owning and developing real estate in virtual lands. That's so cool. And being able to rent out your items to other people. I just think there's so much design possibilities there, and I'm really bullish on that space.

With NFTs and where we're headed with this whole explosion of NFTs and ownership, now you can be your own publishing house, your own gallery, your own marketplace. It's really an extension of the spiritual philosophy that powered Bitcoin in the first place. It's just now that the 'be your own fill in the blank' happens to intersect with media and culture. NFT is really a genuine paradigm shift in owning information, owning media on the internet itself. It's turning into the atomic unit of the internet in a lot of ways. The fundamental problem it solves was that pre-NFTs, pre-crypto, the way that you would capture and extract value from information would be to restrict access to it. For you to generate money from this blog post or from this video, you had to put it in a walled garden that was built out of advertising or subscription or pay-per-view. The paradox was build a walled garden that fit every single person in the world inside of it, which is kind of the social media platforms that we see today. It was mostly those platforms that would capture the value from it. You post for free on Instagram, you get paid in likes and followers back, but the advertising revenue goes to the platform itself. If you're big enough, maybe you get pennies on the dollar, but that's a very select few number of people. With NFTs, it's the complete inversion. You can make that piece of information and media entirely free, universally accessible to the internet, but still own it as an asset and capture that value. That is probably much more in line with what the internet should be: free and accessible information.

I think a lot of people are going to be using crypto on a daily basis and just not realize it. It's going to be pretty abstracted away. Anyone who wants to use it and participate in crazy things like DAOs and forms of organization with people of the world that are anonymous, I think that they can totally join that system. There will be really popular groups that are formed around that. But otherwise, I'm really excited when this does get abstracted away. Everything's way more efficient, accessible, global. I think it's going to touch upon all types of industry, not just finance too. It's hard. It's really hard to build a lot of these things from a technical perspective. It's hard to build network effects from zero, so it takes time. But if we're talking about 20 to 25 years from now, I think it's not unreasonable that we could have built, collectively in the space, an open financial system for the world. I think the ramifications and the benefits of that are massive, and I'm excited to work towards it.

It's kind of an impossible question. In a way, we're 30 years into the internet and I don't think anyone could really articulate what the internet is going to be like in 30 years. I mean, you can, but it's crazy. I guess crypto as an ownership system and value systems generally, I think what that means fundamentally is how do we work together? How do we decide what is valuable to create, to own, to work on? So to sketch that at a high level, it's like any group of people no matter where they are on the planet, if they share a common view or have an idea for what the world can be, there is this value system and toolkit which means that they can congregate around that idea and can work on that together. They have the tools of finance to bring that capital together. It could be 10,000 people on Reddit or a mix of people on Twitter or whatever. If they have a shared idea of what the world can be, they now have the toolkit of what you would associate with a startup, but now that is native to the internet. So if a group of people on every corner of the earth want to go create a new village or fund the studies of some new crazy speculative area of science or fund an education system or literally whatever, I think you should be able to just create together on the internet and do whatever you want. It could just be you as an individual, but ideally, you've got a crazy idea. There's probably a thousand people like you across the planet that have that same idea, and now you have a medium to work together and do that.

Yeah, it feels like if the internet was a revelation in humanity's interconnectedness, like I could see myself in my common person because I could now see all people at all times, it feels like crypto is kind of an evolution in our interoperability and the ability for us to coordinate as humanity and as society. In that coordination, being able to produce real world outcomes that are beyond just the internet. I mean, look at we could build cities. We could physically manifest things with this sort of coordination opportunity that we have now that I think we haven't seen ever for humanity. Which is pretty powerful.