Brian Armstrong — It's Wartime, All the Time

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

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

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

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

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

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

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

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

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

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

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

Yeah. Well, you're right. Every time like the level one communication style is to I have a thing in my head I will tell you about it the level two communication style is to say who am I speaking to what's in it for them what do they want what are their interests and tailor what you're saying to their interests so it sounds trite but it's true you kind of really have to read that person or understand them enough to know what they want and then really frame it start with framing it in terms of what they want the other trick it sounds simple but most people don't do it instead of going into a conversation and just launching into here's all the things I want to install in your head. You know, you literally have to start by asking them and they will give you the answers to the test often times, right? Like if you're interviewing a candidate and you can say, you know, what's the most important thing to you in the next 3 to 5 years of your career? And they'll say, well, it's really X and Y and Z. And then it's like, okay, well, if we have those things, I'm going to tailor my pitch to you now. And it's the same thing in sales, right? Like if you go into a meeting with a partner, don't go in there and like berate them or like just launch, you know, talk at them. Spend the first few minutes understanding what they want, then respond. Anyway, these are simple things, but a lot of people don't do it.

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

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

It gets a little easier after the like 10th person that you've, you know, only ever seen online. Exactly. And there's actually something very valuable about getting in the room with these people by any way, shape, or form you can because you start to realize like they're not like on some pedestal. Like they are human and they're incredibly impressive and you can learn from them, but they're not like fundamentally they're made of the same stuff as you and you can take the best parts from them and they can be a mentor and then you can also do your own thing. So anyway, in that moment I was really just trying to like if Paul Graham tells me something, I'm going to try to do it, you know, I'm going to try to internalize it. I didn't have enough ego or too much ego to say like ah I know better than this. I'm like this guy has literally helped like thousands of companies get off the ground. If he tells me something, I'm just going to default do it and not try to be super innovative. I'm first just going to learn from the masters the best practices.

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

Yeah. Well, Fred Ehrsam, who co-founded Coinbase with me, I mean, he's a beast, you know. And there's a lot of things I saw early on as we started working together, but I think the key thing that made me I'll talk about that in a second. I think the key thing that made me want to give him more equity was, I knew we were just starting out on this journey. He had we had tried working together for a few months or something like that. And I was like, okay, this guy's the real deal. Like, this is going much better than I expected. And I knew the company was going to go through crazy ups and downs and you know if I felt I knew I was basically preempting this moment where there was going to be a big down and if he didn't feel like he had real ownership then he would probably he would bail or whatever you know and so I was like okay if this is the real deal I got to get this guy even more bought in. I like Fred Wilson's comment and it made me makes me sound like magnanimous. I think it was all mutually beneficial but that's the point of like building something with someone is you can actually it's greater than the sum of the parts of what you could do individually but yeah what I noticed with working with Fred early on because Coinbase had just come out of Y Combinator Fred was really the first person that I connected with and we were like all right let's try working together for a few weeks and he started adding value from day one I mean he had studied computer science but he also had done FX trading at Goldman Sachs he deeply understood finance he was a jack of all trades So, he was just like, I'm going to start recruiting people. I'm going to start doing customer support. I'm going to write some code. And then he also started just doing a bunch of stuff that I didn't even think of, which is like analyzing the flow of funds through the app. And he came back one day and he was like, I think we're losing money on every sale of Bitcoin, you know, and I'm like, how could that be possible? And he like whiteboarded the whole thing out. And then there was time value of money on this step and blah blah. And I was like, oh my gosh, he's right. So, that was just one example. The other big thing was his work ethic. I mean, we were there till like, you know, 1 or 2 in the morning every night. Just working crazy hours and he was all in for that. He's a very intense competitive person. And when he puts his mind to something, there's like nothing stopping him. And I think that relentless drive was really critical to Coinbase's success. And yeah, I mean, Coinbase wouldn't have succeeded, I don't think, without Fred there in the early days helping get it off the ground.

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

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

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

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

Actually internally at Coinbase for a long time we had just a retail product and most people know us for that. But today we actually have like a very large institutional product for crypto as well that does trading and custody and financing and all kinds of things. It's the leading product in the institutional space. So there was a moment there where we were thinking all right institutions are going to come into crypto. Maybe we should try to launch something here for custody and trading. And we went and talked to a couple startups out there that were working on this. And we got really close to actually buying one of these companies as a way to kind of start the team. And for whatever reason it didn't quite work out with that company. And I remember thinking we just need to bias for action like and I kind of set this crazy it was like a Friday or Thursday night or something like that when this team kind of told us nah we don't want to take your offer to be acquired and I was like Monday we're launching our institutional product and people were like what are you talking about like this is going to take like 6 12 months to build it the version one and I was like no we're launching a V1 on Monday like because this company turned us down you know and I was kind of like screw them. Yeah I was a little pissed about that. And so we basically threw together a landing page, like a marketing page. We started to sketch out what some of the backend might because we had built a lot of stuff that could be repurposed. And Monday morning, like we announced it and it had like a page where you can and all you could do was come and sign up and be, you know, express interest. And then we went and hired like the right person to go kick it off and run it. We had more like in our New York office, we had more people with institutional connections. We tried a bunch of things which totally flopped. Like we initially went after the biggest institutions in the world the biggest you know like Goldman Sachs and like BlackRock or whatever. And we were so unprepared for it like we basically failed by going after the big ones. So then we totally changed our strategy. We went after the smallest institutions like two person hedge fund or like a couple crypto traders or whatever and family offices and so we started to land some minnows and then we got our like our cyber security systems got way better and our audits got way better and like we learned how to do a sales process with institutions that were like multi-year long and then we ate like a bigger fish and a bigger fish and eventually we landed BlackRock and you know like the biggest financial institutions in the world. So that was just an example of me. It's like action just like let's just move and launch and then iterate from there. And if you're not embarrassed by the first thing you launch, you know it's you waited too long.

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

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

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

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

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

Yeah. Well, a lot of things. You know, part of my job is like quite fun and other parts of it is just it's like that's a grind, man. Like yeah that's going to be brutal right but yeah you can derive some sort of satisfaction or fulfillment from it by it's for a greater purpose right like an example would be in the first five years of Coinbase I probably interviewed 5,000 people right like maybe three or four interviews a day for whatever most of the days of the year and then five years of that so I was so burned out on interviewing people at a certain point like I was you

I know that was rough. Another thing would be like I initially was really reluctant to kind of go engage on policy work and meeting like members of the government at either state or federal level. And my view was like I just want to build great products and follow the law and then I don't have to engage with the government. That was sort of my, in hindsight, kind of naive view. But it turns out anything that gets big enough is going to intersect with the government and you have to go work with them and help them understand it and really treat it seriously. And there's a lot of really interesting people in government. Some of them are really smart, some of them are kind of crazy, some of them are big personalities. It's just like in business or anything. And so I actually over time managed to derive some level of enjoyment from it. I have to say, in a way, because like you said, it's helping advance the mission and it's helping get things done. Now I don't want to be so focused on policy and get all these policy wins that we have to actually make sure our products are great too. So I'm always trying to find the right balance. But that would be another like flying to DC all the time is not something I initially thought I would kind of enjoy and part of me actually kind of enjoys it now and I think I've built some great relationships there.

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

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

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

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

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

Yeah. So, for folks who don't know, we have something internally called Next Bets. And twice a year, we have a panel where anybody in the company can come in and pitch and say, 'I think we should be building this, and I have one or two people that want to work on it.' And you don't have to get a yes from everyone on the panel. That would be a committee where like one no means nobody does it. You don't have to go to your boss, your boss's boss, your boss's boss, all the way to the CEO. That's also a committee in another form where one person's no kills it. And my fear was from reading things about like you know Wozniak, Steve Wozniak at HP like he went famously and went to HP and said I think we should build a personal computer. They said no. He left to found Apple. And so your best people even junior people on the team can really be on the frontier like coming with great ideas. Not all of them are going to be great but some of them are really great things. And so what we've done is we created this next bets program twice a year they can come in and pitch but they only need to get one yes. So of the panel, there's different product group leaders who each have their own budget. They can decide to fund it out of their own budget. There's folks like myself, some young engineers like, you know, our president, CFO, etc. And so if you get any one of them to decide they want to fund it, you're green lit. And it's kind of like coming in and pitching an internal set of venture capitalists. So that's what we modeled it after is if you go pitch 10 VCs and you get one term sheet, you can go move forward. So it lowers the bar for these ideas to be tried. Now we also want to make sure we don't lose focus at Coinbase. So we can't just like fund everything willy-nilly, right? We use what's called like 70-20-10 resource allocation. So 70% of the resources are on like our core business which has a certain definition of a scale and profitability. Make sure you keep the main thing the main thing. You know 20% are on these adjacent or strategic bets that have reached a certain scale but they're not profitable yet. And 10% are on these venture bets, the next bets, which are typically very small teams, like two or three people, small amounts, but they're really kind of crazy high potential ideas where it's okay if they don't work, but if the ones that do work could be really massive and that's just been fun. I mean, it's just fun like both because I get to go work with a lot of these next bet teams and they're like just these really brilliant high potential young people. And they get to work directly with the CEO and other people in the company. And then we get to try like a lot of really innovative ideas and yeah, USDC came out of that. The Base blockchain came out of that. There's a really cool one we'll probably announce in a couple weeks. So yeah.

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

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

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

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

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

You know, I used to think that I was better as a peacetime CEO, but I think that's not true. It's actually totally flipped. I think it's wartime all the time. And I actually realized that I like wartime. It took me, that's probably a change that happened over the last 10 years or something or the last first five years of Coinbase. Where initially I think I was a little conflict averse and I was just kind of like walking on eggshells and let's just build and you know that had a time and place but there's a real sense of motivation and urgency that comes from wartime. I actually think competition makes us better as a company. It definitely I find it very energizing and motivating. It can make you like really pissed in certain moments too, but it's actually like very energizing and sometimes when there isn't any kind of conflict or war going on, I get a little bored and tired and I'm just like, ah, like what's you know, it seems like nothing's blowing up right now and I could use a good crisis. Now, somebody might say you're just running on cortisol all the time. And there could be an element of truth to that. But I, you know, I try to balance it with the things we talked about of like exercise and like, you know, have a wind-down routine in the evening. So you it's not just like burning yourself out like by literally being fight or flight like 24/7. But I like and I should clarify, I don't want to be like doing conflict for conflict's sake. I think that's just destructive. But if you see something that a clear problem that needs to be solved, something to fight, like fight for. Yeah. Like if you don't speak up and say something about it like then you're failing as a leader I think. So yeah wartime is great. I actually I love conflict. There's this wonderful line. I was listening to a podcast with Jessica Livingston and Brian Chesky probably year and a half ago and he was talking about how like during March in like 8 weeks 80% of the revenue disappeared and he said the worst companies are basically destroyed in a crisis decent companies survived the crisis the best companies are like defined by the crisis. I think that's probably the same thing for CEOs as well of those companies.

Yeah. Well, I talked about some of them with, you know, Mission First and SEC and everything and this market structure legislation has been a nice like good debate like where I think we're getting to a good outcome. But I'll tell you maybe like an interesting early war story that sticks with me on letting a crisis be a defining moment. Right? So, this was relatively early on in Coinbase's history. I think we were maybe 3 or 4 years in and we had built this initial custody system for crypto and the number of users was growing so rapidly that the amount of money we were storing live on the server was also growing very rapidly and there was a dangerous moment where I knew that if we got hacked based on this amount that was growing like every week there was within like 60 days the amount was growing fast enough where if we got hacked then we would be insolvent.