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The following is a conversation with Brian Armstrong, co-founder and CEO of Coinbase, the largest cryptocurrency exchange platform with 98 million users in 100 countries, listing Bitcoin, Ethereum, Cardano, and over 100 popular cryptocurrencies.
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I recorded this conversation with Brian before this week s SEC probe into whether some of the crypto listings are securities and thus need to be regulated as such.
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As always, with conversations that involve cryptocurrency, I try to make it timeless so that the price soaring high or crashing down low doesn t distract from the fundamental technological, economic, social, and philosophical ideas underlying this new form of money, energy, and information.
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Our world runs on money, the exchange and store of value, and cryptocurrency seeks to build the next chapter of how money works and what it can do.
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Coinbase and Brian are trying to do this by working together with regulators and governments, which is a long and difficult road.
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Bureaucracies resist change, for better and for worse.
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The latest SEC probe is a good representation of this.
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It is a serious attempt to limit fraud, but one that also runs the risk of limiting innovation and limiting financial freedom of individuals.
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This is a complicated mess, and I applaud everyone involved for trying to work through it.
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I hope in the end, the interest of the individual wins.
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Decentralization, after all, is a hedge against the corrupting nature of centralized power.
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And now, a quick few second mention of each sponsor.
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I should probably go and measure the amount of hours I ve listened to, you know, exactly, or at least approximately.
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because it probably would help me reflect on how amazing Audible is.
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Some of the greatest experiences of my life have been through Audible.
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It s like a companion through different places, different time periods in history.
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The Rise and Fall of the Third Reich by William Shire.
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Just the voice actors or the voicings of that book, it just takes you to a place.
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Or Animal Farm by George Orwell.
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One really important thing that I often think about is that there is a hard-to-put-into-words difference between an interface that sucks and an interface that s awesome, enjoyable, compelling, efficient, empowering.
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And outside of security, outside of the end-to-end encryption, which I think is the thing that makes it truly amazing, they got the interface right.
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And that s not easy to do.
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And that s a big props to them.
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I really enjoy using Skiff both for email and collaborative document editing.
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But, of course, the big feature that s really important is the fact that it s end-to-end encrypted.
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Nobody has access to it except you and the people you directly collaborate with.
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That s S-K-I-F-F dot com slash Lex, Skiff dot com slash Lex.
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The next sponsor is by Optimizers.
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They have a new magnesium supplement.
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When I fast or when I m doing keto or carnivore, sodium, potassium, and magnesium are essential.
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Those are the electrolytes that make the difference between a yes headache or no headache.
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And of those electrolytes, I think magnesium is the most difficult to get right.
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and that s why I use magnesium breakthrough from Bioptimizers.
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That said,
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I do think that magnesium is the thing, in my experience, that made the difference between sort of a good fasting experience and not.
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It s much easier, I think, to get the sodium right, or at least for me, the magnesium piece was the tricky one.
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This episode is also sponsored by Fundrise, spelled F-U-N-D-R-I-S-E.
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It s a platform that allows you to invest in private real estate.
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If you re looking to diversify your investment portfolio, this is a good choice.
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Boy, is 2022 a giant mess from an economics perspective.
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I have no idea.
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You definitely don t wanna take financial advice from me, but I think diversification is still a really powerful tool to have when you re doing investment.
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and in this age of cryptocurrency and all the different options that are out there, I think it s nice to have a tool to do easy, accessible investment into private real estate.
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It replaced the multivitamin for me and went far beyond that with 75 vitamins and minerals.
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I wonder if they have an AG2 drink at some point.
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Why is it named AG1?
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Every time I look at that, I wonder.
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It s like when you do that prank on people and you release like four turtles and number them one, two, three, and five in an apartment or house, and then everyone will be looking for the number four turtle.
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So here I am looking at AG1 and looking for AG2, but
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Ag1 is enough for me.
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It s my strong grounding nutritionally in all the crazy stuff I do in terms of the stuff I eat, in terms of the mental workload and the physical workload, all that kind of stuff.
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I also take fish oil and now you can get one month s supply of fish oil when you sign up at athleticgreens.com slash lex.
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This is the Lex Friedman Podcast.
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To support it, please check out our sponsors in the description.
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And now, dear friends, here s Brian Armstrong.
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Let s start with the fact that you re a programmer.
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What was the first program you ve ever written, or the first one that you remember?
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The first memory I have of programming was probably in middle school, and I remember it was recess, and they had this time period where you could read books, and the other kids were reading comic books and stuff, and for some reason I had gotten into this idea that I wanted to get into computers, and I was playing with computers at home,
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And so I got this book, I think from the library, it was called like, How to Learn Java in 30 Days.
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So I was reading this book at like, you know, the recess, and I didn t understand anything.
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And I remember I went home and I tried to get this thing working.
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And you know, if you ve ever written a Java program, the first lines are like, public static void main string args or whatever.
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And it s just like, it s so foreign, and it s so difficult to get started.
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And so I was kind of frustrated.
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I was like, I don t understand anything that s happening in this book.
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The first, the first thing I wrote was probably just like a hello world app in Java, but it was so, I felt like I was so confused about what was actually happening that I later learned a bit of PHP and PHP was like more fun for me.
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Cause it was like, Oh, just print out what you want.
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You know, it didn t have all this complexity around it.
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So then I got more into PHP.
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I started building like some simple websites, I think learn some HTML.
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So I think that was my introduction to programming, at least the very beginning part.
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Yeah, you know, Java has a lot of, out of all the hello worlds you could possibly write, Java is the one where I think it s the longest.
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Which is quite interesting, because Java is often, at least for a long time, was used as the primary programming language to teach people how to program, or at least about object-oriented programming.
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I think most universities have now switched, in high school switched to Python.
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I m not sure if that s the case.
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Probably better, it s easier to learn.
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It makes it less scary, there s less of a hurdle.
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And certainly none of them use PHP.
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I love PHP, and I feel like it s a dirty secret I have to keep private to myself, like it s somebody I m seeing on the side or something like that, because it s just not a respected programming language, because I think there s so many ways you can write poor code with PHP, which is why it s not respected.
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Yeah, it s a scripting language more so, although of course Facebook built a huge stack on top of it and valuable company.
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I still love Ruby to this day.
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Ruby is probably my favorite language.
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Python is great too, but I just love the idea behind Ruby that it s like, let s make it easier for the human, harder for the computer, and make it a joy to be expressive and all these things.
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So I was never the best computer scientist, but I was a good hacker.
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I could rapidly prototype products and using languages like Ruby.
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Do a lot of computer science programs still use like Lisp and Scheme and things like that?
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No, no, they do for, that s like, that s if you re hardcore.
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If you re legit, you re gonna do some of the functional languages.
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I think there s a few others that popped up, but Lisp is a distant memory for a lot of people.
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That s like somebody has to like, you go to the library, you dust off the book.
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but scheme a little bit.
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I think if you re starting, I mean, there s courses about languages themselves, like programming languages.
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Lisp might be one of those, you know how there s languages that nobody uses anymore, like ancient languages?
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You might have to go to school in that same way for programming languages.
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Back in the day, we used to use parentheses.
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I, of course, still use Emacs as the editor for most things that I do, and Emacs is, you know, a lot of the customization you can do is in Lisp.
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And that s the language probably when I first really fell in love with programming is Lisp.
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Because for a long time throughout the earlier history of artificial intelligence, Lisp was the primary language, but it still had a life in the 90s and the aughts where some people would use it.
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It s such a beautiful, functional language, but it just somehow didn t pick up.
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That said, I should say, sort of push back, PHP, I feel like it s still true that most of the web runs on PHP.
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Most of the back end is still PHP.
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So if you look at, you know, it s like the stuff that people don t talk about.
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It s like, what runs most systems in the world?
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What runs most back end?
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What runs most front end?
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JavaScript.
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You know, HTML.
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The Stack Exchange surveys show JavaScript s the most popular language in the world, I think, right?
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SPEAKER_01
Oh yeah, in terms of programmers and numbers of, I wonder.
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By survey of number of programmers on Stack, Stack Overflow.
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SPEAKER_01
Oh yeah, but that s also the cutting edge, right?
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Those are the people that are just like excitedly writing code.
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That s true.
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I wonder if there s people that are just like maintaining gigantic code bases.
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Yeah.
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I feel like the amount of Java out there just running industrial systems has gotta be enormous.
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And then of course in the banking industry, finance, it s like even older stuff, Cobalt and whatnot.
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But I ve been actually looking for somebody to interview who represents Cobalt and Fortran.
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who s the figure still there that holds the flag?
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Java, founder of Java, creator of Java, creator of Python, creator of C++, but nobody wants to hold the flag for Cobalt and Fortran, even though some of the most important systems in the world still run on those, like power systems and infrastructure systems, which is fascinating.
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and ATMs and stuff like that.
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Like a lot of stuff that we rely on that just works, and the reason we don t change it is because it works well.
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It s written in languages that people don t use anymore.
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SPEAKER_00
Yeah, that d be a cool series of interviews.
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Get the stuff that s like tech that was invented 40, 50 years ago, but still is being used widely.
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I mean, Emacs is an example of that.
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Let me ask the big question of what are cryptocurrency exchanges and what s Coinbase?
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How does it work?
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Before, I ll ask even bigger questions, but it s just a nice kinda palate-cleansing question of what is Coinbase?
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Coinbase is a cryptocurrency exchange, brokerage, custodian.
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Basically, we re the primary financial account for people in the crypto economy, how they buy crypto, how they store it, how they use it increasingly in different ways.
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SPEAKER_00
We can talk about that.
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So yeah, we want to be the way that a billion people hopefully access the open financial system globally.
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How does it work?
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What s cryptocurrency?
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There s Bitcoin, there s Ethereum.
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What does it mean to be an exchange?
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What does it mean to store?
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What does it mean to transact?
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What does Coinbase actually do?
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SPEAKER_00
Okay, so basically in any given market, there s some people who want to buy, some people who want to sell, and you keep an order book of all those prices.
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Then if someone s willing to buy for more than the lowest price someone is willing to sell, then you get a trade to execute.
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That s kind of how an exchange works underneath.
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And a brokerage is kind of simpler than that.
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Even you don t have to know, look at the whole order book and everything, but you just go in there and you say, I want to buy a hundred dollars of Bitcoin or whatever cryptocurrency you get a quote.
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And if you like it, you can hit accept.
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And you know, the core things that we do to make all that kind of just work, make it seamless.
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It sounds simple on the surface is we got to, we have to do payment integrations, you know, in a variety of places around the world to make it easy for people to get fiat currency into this ecosystem.
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We have to work on cybersecurity a lot.
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SPEAKER_00
There s lots of hackers out there trying to break into our systems and steal crypto or to put stolen credit cards and bank accounts and things like that into these systems.
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SPEAKER_00
We have to integrate with the blockchains themselves, right, which are
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periodically getting updated and having various airdrops and all kinds of things.
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SPEAKER_00
So we re integrated with lots of different blockchains.
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And then we have to store the crypto that people buy securely as well.
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SPEAKER_00
So crypto is kind of like storing, you store the private keys, essentially.
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SPEAKER_00
And we ve invented a lot of cool technology about how to do that securely that helps me sleep at night as one of the largest crypto custodians out there.
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SPEAKER_00
So those are some of the pieces that had to come together to get that early, simple buy-sell experience to work.
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SPEAKER_00
And yeah, I mean, Coinbase actually has a lot of different products now.
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SPEAKER_00
So we have like an institutional product.
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We have Coinbase Commerce, which is like merchant payments, like Stripe for crypto.
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SPEAKER_00
We ve got a self-custodial wallet, which we can talk about.
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SPEAKER_00
There s all kinds of cool applications people are building with Web3 and they can access it through that.
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SPEAKER_00
We just launched an NFT product.
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SPEAKER_00
I can go on down the list we have.
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SPEAKER_00
So we re sort of like a portfolio of crypto products.
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SPEAKER_00
Now we re big enough where we can do multiple things.
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SPEAKER_00
But yeah, that s the core thing we got started with.
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And still, the majority of our revenue today is people just want to come in and buy and sell some crypto.
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And we help them do that make it simple and easy to use.
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And I ll ask you
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about wallet, NFTs, about, what is it called, the Stripe type?
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SPEAKER_00
Oh yeah, Coinbase Commerce.
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Coinbase Commerce.
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SPEAKER_00
Yeah.
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I ll ask you about all that.
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SPEAKER_01
But order books and exchange, what s the difference between that and stocks, for example, which there s also order books?
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SPEAKER_00
Yes, I mean stocks trade through order books too, so do commodities.
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SPEAKER_01
It s all a similar type of situation.
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SPEAKER_01
So when I want to buy one Bitcoin and I see Coinbase say the price of that Bitcoin is say $40,000 and I press buy, what happens?
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SPEAKER_00
Um, yeah, okay, so you ve gotten a lot, like, you know, when you press the button on your keyboard, like an electrical signal goes up the wire on your keyboard.
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SPEAKER_01
Well, that s also important, the timing, right?
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SPEAKER_00
Because it s not price fixed.
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SPEAKER_00
Yeah, that s true.
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SPEAKER_00
It s giving you a quote, right?
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SPEAKER_00
There s a whole concept of slippage.
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SPEAKER_00
By the time the quote is executed, if the price has moved too much, we may reject it.
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SPEAKER_00
There s various things like that.
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SPEAKER_00
What s the simple version I can give you?
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SPEAKER_00
We ll basically check the order book, give you a quote.
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SPEAKER_00
It s good for some period of time or for some amount of slippage.
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SPEAKER_00
what s happening is we re initiating a debit to your payment method, whether that s a credit card or bank account, or, you know, you re storing dollars or euros or something on our platform, there s various payment methods.
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SPEAKER_00
So we re basically debiting that.
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SPEAKER_00
And then we re crediting you the crypto, and we re taking a fee for it too.
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SPEAKER_00
So
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that s fundamentally what s happening underneath.
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SPEAKER_01
And then there s just some interesting slippage.
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How do you calculate how much slippage is allowed?
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SPEAKER_01
How do you know these things?
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Because order books are fascinating.
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The dynamics of that is pretty interesting from the little I know about it.
1
SPEAKER_00
Yeah, so there s a lot of people like traders who get super into this and like high-frequency traders and arbitrage and all kinds of interesting topics.
1
SPEAKER_00
Flash Boys was like an interesting book on this whole thing.
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SPEAKER_00
You want like access to information the fastest, sometimes even putting your thing in the data center right next to the thing.
1
SPEAKER_00
We don t allow that colo stuff because we want it to be more democratized.
1
SPEAKER_00
But basically, let s say we wanted to just keep it math simple.
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SPEAKER_00
We want to charge a 1% fee.
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SPEAKER_00
So if you re buying $100 of Bitcoin and we ll charge you $101, we ve presented you the amount of Bitcoin you re going to get for the $100.
1
SPEAKER_00
Now, let s say 10 seconds later, you hit accept.
1
SPEAKER_00
We go to fill the order.
1
SPEAKER_00
So it s going to be some error bound around that 1% fee, right?
1
SPEAKER_00
And if we think we re actually losing money on the trade, I think we ll often reject it.
1
SPEAKER_00
So some part of the fee
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SPEAKER_01
the slippages incorporated into that, averaged over a large number of people.
1
SPEAKER_01
It s fascinating, because even just that little detail probably requires a lot of experimentation.
1
SPEAKER_00
Yeah, and it s kind of like a giant bug bounty out there, because if you get it wrong, there s people who are going to arbitrage that.
1
SPEAKER_00
And we ve had people sort of pen test our systems in really creative ways, where like,
1
SPEAKER_00
they ll just fire, programmatically with APIs, they ll fire off a million different quotes and look for one of them that s out of bounds and then actually take that money right there.
1
SPEAKER_00
We get people doing all kinds of crazy stuff.
1
SPEAKER_01
So how do you protect against that?
1
SPEAKER_01
How do you protect?
1
SPEAKER_01
So we ll talk about cybersecurity in interesting ways, but there s a lot of clever people trying to do clever things to earn, not even just to break into the system, but to earn an edge of some kind.
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SPEAKER_01
in the system?
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SPEAKER_01
How do you stay one step ahead?
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SPEAKER_00
There s no silver bullet, it s a bunch of lead bullets, right?
1
SPEAKER_00
So it s like, you know, one thing we do is we just have good test suites, right?
1
SPEAKER_00
So you re testing every piece of code that goes out.
1
SPEAKER_00
That s like just common good best practice, but it s particularly important in financial services.
1
SPEAKER_00
Another thing we do is we hire third-party firms to try to audit this stuff and break in.
1
SPEAKER_00
Another one we do is we have a bug bounty program.
1
SPEAKER_00
So we basically pay white hat hackers to find this stuff before the black hats do.
1
SPEAKER_00
And we ve paid out lots of good bug bounties.
1
SPEAKER_00
So, you know, try all the above.
1
SPEAKER_00
And occasionally you don t get it right and you lose some money and then you fix it and you keep going.
1
SPEAKER_00
So, yeah.
1
SPEAKER_01
Let s talk about cyber security a little bit more.
1
SPEAKER_01
Yeah.
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SPEAKER_01
You mentioned using stolen bank accounts.
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SPEAKER_00
Yeah.
1
SPEAKER_01
So that s another one.
1
SPEAKER_01
That s another interesting one.
1
SPEAKER_01
How do you protect against that?
1
SPEAKER_00
Okay, so fraud prevention, yeah, is a big topic.
1
SPEAKER_00
So one of the, there s a lot of things people do, but one of the things they do is that
1
SPEAKER_00
use machine learning, right?
1
SPEAKER_00
So you look at hundreds- To protect or to attack?
1
SPEAKER_00
To protect against it.
1
SPEAKER_00
So what you want to do is kind of build up a labeled data set of all the different people who have turned out to be fraudulent and good actors, and hopefully collect as much data as you can.
1
SPEAKER_00
And then you ll, you know, you might feed hundreds or thousands of these factors into your machine learning model, and it ll come back with a risk score.
1
SPEAKER_00
So, you know, an example of like the kinds of factors people create or put in there, you know, obviously, I don t want to disclose too many of them, because it s, it s, it s a cat and mouse game, but just kind of, I don t know, relatively well known stuff might be, you know, you have device fingerprints, right?
1
SPEAKER_00
So like, what kind of device are you on?
1
SPEAKER_00
And what fonts do you have installed?
1
SPEAKER_00
A lot of people who are farming lots of these accounts, they re using emulators, and like virtual machines and stuff.
1
SPEAKER_00
They re not like, you know, an average person on that device.
1
SPEAKER_00
And then you ll see sometimes like one of my favorite metrics we track for for this was called like improbable travel velocity.
1
SPEAKER_00
So we would you were tracking people s IPs, right?
1
SPEAKER_00
And you might see someone who was one day in Austin, Texas, and then like an hour later, they were in London or something.
1
SPEAKER_00
It s like, well, that s very improbable.
1
SPEAKER_00
I mean, sometimes people are using VPNs.
1
SPEAKER_00
So you got to be careful with that.
1
SPEAKER_00
Because like, there s legitimate people who use VPNs, too.
1
SPEAKER_00
But
1
SPEAKER_00
If it s not possible for them to have gotten on a plane and gotten there that quickly, then that s usually they re like spoofing a device or IP.
1
SPEAKER_00
Sometimes those are interesting factors.
1
SPEAKER_00
But yeah, if you feed enough of these in, you will... Oh, another fun one is like...
1
SPEAKER_00
Real users will type their credit card one number at a time.
1
SPEAKER_00
Scammers have a list of them and they ll just paste in a whole number.
1
SPEAKER_00
So you can look at the number of milliseconds between keystrokes.
1
SPEAKER_00
There s all kinds of stuff people have come up with.
1
SPEAKER_01
And even for travel velocity, you could probably incorporate VPNs too because there s probably a travel velocity for VPN switching too.
1
SPEAKER_01
that s human-like.
1
SPEAKER_01
If you re using legitimately VPN for something else, that might be, there s legitimate uses to it.
1
SPEAKER_01
Actually, I feel embarrassed that I don t know this, probably should, but the I m not a robot,
1
SPEAKER_00
Capture thing.
1
SPEAKER_01
Capture thing?
1
SPEAKER_00
Yeah.
1
SPEAKER_01
So that probably works in the same way.
1
SPEAKER_01
Yeah.
1
SPEAKER_01
Like how do you move your mouse maybe?
1
SPEAKER_01
Or how the dynamics of the clicking?
1
SPEAKER_01
Totally.
1
SPEAKER_01
But how does that even work that well then?
1
SPEAKER_01
And why can t it be faked?
1
SPEAKER_01
I need to look into this.
1
SPEAKER_01
Because it s such a trivial capture.
1
SPEAKER_01
It feels like it should be very crackable.
1
SPEAKER_01
And yet a lot of high security places use that.
1
SPEAKER_01
Yeah, it s really interesting.
1
SPEAKER_00
It s another cat and mouse game.
1
SPEAKER_00
So I think they ve Yeah, but it s using a lot of similar signals, like mouse movements, keystrokes, and then obviously all the stuff that comes over the wire with your browser.
1
SPEAKER_00
So like, what operating system, what fonts, you know, what headers are being sent over.
1
SPEAKER_00
And there s actually there s an old website, I can t remember what it s called.
1
SPEAKER_00
It was kind of like panoptic click or panopticon or something.
1
SPEAKER_00
But it basically was like a proof of concept site that
1
SPEAKER_00
They would just show you all the data that was kind of getting sent over with your request and say that there s only one person in the world who has this exact set of data.
1
SPEAKER_00
It s you.
1
SPEAKER_00
And so it s almost like a workaround, a clever workaround to track somebody, identify a unique person, even if there wasn t a cookie involved or something.
1
SPEAKER_01
Yeah, this is a fascinating world where you can t see anybody, you re in the dark, and yet you have a lot of signal and you have to figure out who s a real person, who s not, who s a robot, who s not.
1
SPEAKER_01
Let me step back, we re gonna jump around all over the place.
1
SPEAKER_01
Let me step back.
1
SPEAKER_01
That s why I like your interviews, you get into like technical topics.
1
SPEAKER_01
So just let s use Bitcoin as a measure of time.
1
SPEAKER_01
You started Coinbase when Bitcoin was $10.
1
SPEAKER_01
And you just mentioned an incredible system with security, with transactions, everything is thought through, there s a lot going on, but what was version one?
1
SPEAKER_01
back in those early days, the first prototype of Coinbase, what did that look like?
1
SPEAKER_01
What did it take to write it, to think through it, and make it work enough to at least make you believe that it s gonna work?
1
SPEAKER_00
Well, I definitely didn t know if it was gonna work.
1
SPEAKER_00
I mean, it was kind of, I felt like I was just following my gut.
1
SPEAKER_00
So, I mean, I was working at Airbnb, I was a software engineer there.
1
SPEAKER_00
project manager.
1
SPEAKER_00
I was working on some fraud prevention stuff, for instance.
1
SPEAKER_00
And I read the Bitcoin white paper in December of 2010.
1
SPEAKER_00
I started going to some Bitcoin meetups in the Bay Area, met lots of interesting people there, like crazy people, anarchists, really brilliant people, all the above.
1
SPEAKER_00
And so I started nights and weekends trying to put together a prototype.
1
SPEAKER_00
And my initial thought was,
1
SPEAKER_00
Well, you know, SMTP is a protocol that runs email and, you know, Git is a protocol for version control that people made like Gmail and GitHub.
1
SPEAKER_00
Most people don t want to run their own email server or even their own Git server.
1
SPEAKER_00
They just want to like use a hosted thing that, you know, will do all the security and backups for them.
1
SPEAKER_00
So the thought in my head at that time was Bitcoin s this new protocol.
1
SPEAKER_00
There s probably going to be somebody who makes a hosted service that does all the security and backups for you, makes Bitcoin as a protocol easy to use.
1
SPEAKER_00
So maybe I should, maybe I should make like a hosted Bitcoin wallet or something that was that was my it was gonna make Gmail for Bitcoin or something.
1
SPEAKER_00
And a bunch of people told me that was a bad idea.
1
SPEAKER_00
Like most of my smart friends who I told about it, they were like,
1
SPEAKER_00
Well, first of all, I don t really get what you re doing at all.
1
SPEAKER_00
Bitcoin sounds like a scam or something you ve gotten involved in.
1
SPEAKER_00
But then other people who understood what Bitcoin was told me they thought it was a dumb idea because they re like, dude, if you store all this Bitcoin, you re just going to get hacked.
1
SPEAKER_00
Why would you do that?
1
SPEAKER_00
And so I kind of had this thought like, you know what, I m not going to go all in and store everyone s Bitcoin.
1
SPEAKER_00
That would be too much right now.
1
SPEAKER_00
I have a job.
1
SPEAKER_00
I have a day job.
1
SPEAKER_00
Let me just make a prototype and I ll tell people this is like a beta thing.
1
SPEAKER_00
Don t put any real money in it and just see if there s interest.
1
SPEAKER_00
If I feel like I m onto something, maybe I ll go do this as a company because I really wanted to be an entrepreneur at that time.
1
SPEAKER_00
I was 29.
1
SPEAKER_00
I was almost turning 30.
1
SPEAKER_00
I always wanted to start a company, but I wasn t yet.
1
SPEAKER_00
I was an employee at a company that was great.
1
SPEAKER_00
Anyway, I had this prototype I was hacking together, nights and weekends.
1
SPEAKER_00
I actually wrote a whole Bitcoin node in Ruby, which turned out to be maybe a weird decision in hindsight because Ruby wasn t the most performant language.
1
SPEAKER_00
We ve subsequently had to rebuild that many times.
1
SPEAKER_00
Yeah, I had this hosted Bitcoin wallet.
1
SPEAKER_00
And the thing that I didn t have any users for it, by the way, I applied to Y Combinator, because I was like, maybe if somebody there writes me a check, this will like make it feel like a real company.
1
SPEAKER_00
And I was trying to find it.
1
SPEAKER_00
I was trying to find a co founder at that time unsuccessfully.
1
SPEAKER_00
So I was basically just wandering in the desert.
1
SPEAKER_00
I had a lot of self doubt about this.
1
SPEAKER_00
Because I was like, I don t know, all my friends don t think this is kind of dumb.
1
SPEAKER_00
And maybe Bitcoin is just going to get shut down.
1
SPEAKER_00
And like, this is all be some stupid thing.
1
SPEAKER_00
So
1
SPEAKER_00
There was definitely a feeling of just wandering lost in the desert, lots of self-doubt.
1
SPEAKER_00
Paul Graham and the Y Combinator group wrote me the first check after I went and interviewed and stuff.
1
SPEAKER_00
They wrote me a check for like 150K.
1
SPEAKER_00
That was the first time somebody who I really looked up to said, this is worth pursuing.
1
SPEAKER_00
Maybe you re onto something, maybe you re not, but let s at least try it.
1
SPEAKER_00
And so that was kind of what gave me the confidence to quit my job and try it.
1
SPEAKER_00
And I ll wrap the story here by saying that I found the right co-founder after Y Combinator.
1
SPEAKER_00
We still didn t have any customers.
1
SPEAKER_00
The thing that... I basically launched the hosted Bitcoin wallet.
1
SPEAKER_00
There were people signing up.
1
SPEAKER_00
I just posted on Reddit and places like that.
1
SPEAKER_00
And maybe like 100 people would sign up and then nobody would come back.
1
SPEAKER_00
And so I was like... In Y Combinator, they often tell you like,
1
SPEAKER_00
you know, talk to your customers and improve your product, talk to your customers, improve your product, that s all you re supposed to be doing, try to find product market fit.
1
SPEAKER_00
So I emailed like five of the users that had signed up.
1
SPEAKER_00
And I was like, Hey, I worked on this app, I saw you signed up, can I get on the phone with you, I get on the phone with like five of these folks.
1
SPEAKER_00
And I was like, you know, why didn t you come back?
1
SPEAKER_00
And the guy was like, well, the app was okay for a for a beta, but like, I don t have any Bitcoin.
1
SPEAKER_00
So I didn t really know what to do with it.
1
SPEAKER_00
And I remember this light bulb kind of went off my head.
1
SPEAKER_00
I was like, well, if I put a buy Bitcoin button in there,
1
SPEAKER_00
Uh, would you have used it?
1
SPEAKER_00
And he was like, yeah, maybe.
1
SPEAKER_00
So then I had this, we went about the process.
1
SPEAKER_00
My co-founder at that time, we like got basically had to get like a bank partnership, payment rails, you know, an exchange, basic exchange functionality, all that stuff I was mentioning earlier in place.
1
SPEAKER_00
And the minute we launched that feature where you could just click buy, put in your bank account or credit card, buy it, buy Bitcoin, it showed up in your account.
1
SPEAKER_00
From that day forward, like the number of users started to go up like this.
1
SPEAKER_00
And so we finally had found product market fit after two years of wandering in the desert.
1
SPEAKER_01
So you weren t even thinking about to buy the on ramps.
1
SPEAKER_01
You would think it would be just a wallet, a place to store Bitcoin that you ve already gotten.
1
SPEAKER_00
Yeah.
1
SPEAKER_01
Okay.
1
SPEAKER_01
This is, I mean, because that s such a pain to do, to have to work with others to convert dollars and fiat currency into Bitcoin.
1
SPEAKER_00
Yeah.
1
SPEAKER_01
So did you, I mean, were you overwhelmed by the immensity of the task here, or were you just, you know,
1
SPEAKER_01
sort of not allowing yourself to think too deeply through this whole thing and just letting the optimism take over here?
1
SPEAKER_00
You know, I was really looking forward to like doing something crazy and like a big challenge.
1
SPEAKER_00
And I wanted to, I love kind of
1
SPEAKER_00
crisis moments like that where, you know, I m very determined, right?
1
SPEAKER_00
Especially when I get very set on something and I m just like, you know what, I m gonna figure out a way to make this fucking thing work, no matter what.
1
SPEAKER_00
And so, I reveled in that.
1
SPEAKER_00
I was sort of, I had read all these books about startups and every startup has these major setbacks and just like nothing works and so.
1
SPEAKER_00
So that was a sign that you re doing something right.
1
SPEAKER_00
I had no idea if I was doing anything right at all, but I was kind of loving the experience of it in a weird way.
1
SPEAKER_00
It felt stressful at the time, like nothing was working, but I felt like I was on the right path somehow, and so I just kept going, I don t know.
1
SPEAKER_01
What was the darkest moment that you ve gone to in your mind during that time?
1
SPEAKER_01
What were some of the tougher moments?
1
SPEAKER_01
You said self-doubt.
1
SPEAKER_00
Yeah.
1
SPEAKER_01
Have you, yeah, where d you go?
1
SPEAKER_01
Where d you go in your mind?
1
SPEAKER_01
Is there a moment where you re just like laying there?
1
SPEAKER_01
This is hopeless.
1
SPEAKER_00
Well, there s a couple moments I m remembering.
1
SPEAKER_00
I mean, so for whatever reason, I had this like big chip on my shoulder at that time.
1
SPEAKER_00
And I was like, I really want to do something important in the world.
1
SPEAKER_00
Like, you know, I could have a good life and like work for some good companies and write some software.
1
SPEAKER_00
And I m, for some reason, I never wanted that for myself.
1
SPEAKER_00
That probably would have been healthier, honestly, just to like, as an expected value outcome, that s probably a better thing in life.
1
SPEAKER_00
But I was like,
1
SPEAKER_00
I was like, man, I really want to do something important and have a bigger impact.
1
SPEAKER_00
And I was like, I was willing to sacrifice a lot for that.
1
SPEAKER_00
I was like, sleep and not going out with friends and stuff.
1
SPEAKER_00
I remember one of the just for like years working on this stuff.
1
SPEAKER_00
Remember, one of the darker moments was
1
SPEAKER_00
We probably had maybe five employees at that time.
1
SPEAKER_00
I remember a bunch of bad things happened all at once.
1
SPEAKER_00
First of all, you have to remember, at this time, we were all very sleep-deprived, which exacerbates everything.
1
SPEAKER_00
If you look at the Exxon Valdez spill and all these natural disasters, sleep deprivation is often involved.
1
SPEAKER_00
The reason why we were so sleep-deprived is not just because we were working so much,
1
SPEAKER_00
like the site would go offline in the middle of the night and we d get I get paged.
1
SPEAKER_00
I was like on pager duty.
1
SPEAKER_00
So I get woken up sometimes like two or three times a night, like have to try to fix something, go back to sleep.
1
SPEAKER_00
So in that environment, you can kind of get you can get discouraged.
1
SPEAKER_00
So one bad thing that happened was
1
SPEAKER_00
We had a bug on the website and there was thousands of people on Reddit and Twitter who were all pissed at Coinbase because the balances were showing wrong.
1
SPEAKER_00
They were just like, fuck this company.
1
SPEAKER_00
It s over.
1
SPEAKER_00
I hate these guys.
1
SPEAKER_00
I d never had this feeling of a thousand people mad at me at the same time.
1
SPEAKER_00
I feel like I m a pretty chill guy.
1
SPEAKER_00
Most of the time, people don t get mad at me.
1
SPEAKER_00
That was one.
1
SPEAKER_00
Another one was that... Can we pause on that?
1
SPEAKER_01
That s so interesting.
1
SPEAKER_01
So you were saying like, here s a dream, I m trying to create something, and now forever the reputation of this dream is ruined.
2
SPEAKER_00
it s over, that kind of feeling.
2
SPEAKER_01
Yeah, you re right, I didn t know at that time, I was like, is this the end?
2
SPEAKER_01
We re so tiny now, everybody hates us, so is it over?
2
SPEAKER_01
Yeah.
2
SPEAKER_01
Nobody told me this before starting a company, that a bunch of people will hate you for this, which is a very counterintuitive thing, because most companies, I think, are doing good things in the world, at least you re trying, right?
2
SPEAKER_01
And so even if someone s trying, but they re failing, I m generally rooting for them, at least you re trying, right?
2
SPEAKER_01
But that s not the case at all.
2
SPEAKER_01
And most founders I ve known have gone through this too, where they re very surprised at the amount of hate that they get.
2
SPEAKER_01
And I think it s actually a muscle you can build, your tolerance to it.
2
SPEAKER_01
because you go talk to somebody who s like, for you it feels terrible because you re at the center of this storm, but then you go talk to your family or some other person, they re like, dude, I didn t even hear about that.
2
SPEAKER_01
They re just busy in their own life, and so they have no idea that you had all this negative press or whatever it was.
2
SPEAKER_00
Can I once again linger on that?
2
SPEAKER_00
Yeah.
2
SPEAKER_00
There s an interesting person I d like to bring up, just as an example, Bill Gates.
2
SPEAKER_00
Yeah.
2
SPEAKER_00
So he gets a very large amount of hate on the internet.
2
SPEAKER_00
And there s something about him, this is me talking, not you, that he seems out of touch about that hate.
2
SPEAKER_00
I believe, at least in my understanding, with the resources he has, he s trying and is actually doing a lot of good.
2
SPEAKER_00
and yet there s a gigantic amount of hate, conspiracy theories and stuff like that.
2
SPEAKER_00
And it feels like that s the case because he s somehow out of touch with people.
2
SPEAKER_00
So I wonder how you stay in touch with the voice of the people without being destroyed by the outrage.
2
SPEAKER_00
Is there any wisdom you have to that?
2
SPEAKER_00
Or?
2
SPEAKER_01
I don t know about wisdom, but I ve thought about this too because
2
SPEAKER_01
Yeah, you want to always be open to feedback, especially from people who have like your best interests at heart, right?
2
SPEAKER_01
And if you can become isolated from it and just like, you know, surrounded by yes people.
2
SPEAKER_01
And I mean, who knows, maybe, maybe like she and Putin and people like that are in situations I have no idea.
2
SPEAKER_01
But if you listen to too much of it, and you just try to please everyone, you ll never get anything done.
2
SPEAKER_01
And I mean, most of the best leaders are people who
2
SPEAKER_01
They can act when they believe that they re doing something net positive for the world and humanity, and they actually don t really care if they piss off some portion of the people.
2
SPEAKER_01
Almost anything you re gonna do of significance in the world today is gonna piss off 5% of people, maybe 49% of people or whatever, maybe 60%, I don t know.
2
SPEAKER_01
So you never wanna become so surrounded by people who just work for you and will say yes, and then you think like, well, I m a genius and that s how you become a dictator or whatever.
2
SPEAKER_01
But you also can t care so much about what people think because then you ll never do anything that s truly authentic to yourself.
2
SPEAKER_01
One other thought on that, by the way, I think it s a really good question.
2
SPEAKER_01
So I ve thought about this a lot, like why, you know, people generally kind of hate on Zuck and they hate on Bill Gates and they hate on, they don t really hate on Elon.
2
SPEAKER_01
Well, actually Elon has a lot of haters too, but it s a different thing.
2
SPEAKER_00
This is measured, this is measured.
2
SPEAKER_00
I was looking at some surveys.
2
SPEAKER_00
So I think Zuck is the most, so loved and hated, right?
2
SPEAKER_00
Yeah.
2
SPEAKER_00
Zuckerberg is the most both loved and hated.
2
SPEAKER_00
He s the most hated.
2
SPEAKER_00
And then I think it s Bill Gates and Elon is down there.
2
SPEAKER_00
I think it s like 40% hate Zuck, people asked.
2
SPEAKER_00
And then Elon is in the double digits, but low double digits.
2
SPEAKER_00
And so it s interesting.
2
SPEAKER_00
You just look at this data, ask yourself why.
2
SPEAKER_01
Right.
2
SPEAKER_01
So I ask myself this sometimes too, because I don t claim to know any of these people well, but like I ve, I ve met them briefly.
2
SPEAKER_01
And I, my impression is that they re actually all smart people trying to do good things in the world.
2
SPEAKER_01
So there s not too much difference there despite public perception, perception.
2
SPEAKER_01
So why is it that some are really hated and some aren t?
2
SPEAKER_01
I mean, it s a complicated question.
2
SPEAKER_01
Um, obviously, you know, Zuck and his Facebook got blamed for the whole election thing and all that didn t help.
2
SPEAKER_01
Um, social media has gotten a lot of pressure just from like, you know,
2
SPEAKER_01
hey, why aren t you solving all of society s tough problems?
2
SPEAKER_01
It s like, well, they re just one company.
2
SPEAKER_01
But one thing I ve noticed is that, you know, a lot of these people, they re a little, they have like Asperger s, right, a little bit.
2
SPEAKER_01
And sometimes, you know, people with Asperger s don t really emote in the same way.
2
SPEAKER_01
And so I think it s almost a form of like, like, bias against their cognitive
2
SPEAKER_01
type or something, which is like, that person doesn t emote right.
2
SPEAKER_01
I don t trust their intentions.
2
SPEAKER_01
And the other thing I ve thought about too, is that sometimes I think some leaders, you know, like maybe Zuck or Bill Gates, they can come across as like a little bit PR rehearsed.
2
SPEAKER_01
Like they re basically, they re giving the PR approved answers where Elon just says whatever he thinks like to a fault.
2
SPEAKER_01
So even if people hate what he says, they re like, at least I believe it s authentic.
2
SPEAKER_01
So I ve always thought about that too for myself.
2
SPEAKER_01
I m like, how do I, because you can, you can fuck it up on both sides, right?
2
SPEAKER_01
Like if you just come out and you re like saying whatever stream of consciousness, you ll often end up like pissing off people on your team or like saying, tripping over some like regulation that you, you know, um, there s all kinds of things about running a public company.
2
SPEAKER_01
You know, you can t say certain stuff.
2
SPEAKER_01
But if you re too PR approved in your answers, nobody trusts you, what you re saying.
2
SPEAKER_01
And so, anyway, this is something I think about a lot.
2
SPEAKER_01
I don t think I have the right answer, but I m trying to find that balance.
2
SPEAKER_00
And more and more with the internet, there s a premium on authenticity, just like you re saying.
2
SPEAKER_00
People really, really appreciate that.
2
SPEAKER_00
So for leaders, it s a challenge to be, how do I make sure I m authentic, but also don t say stupid shit?
2
SPEAKER_00
And so that s an interesting thing.
2
SPEAKER_00
I ve noticed that just having interacted with a bunch of leaders, that you have to be careful how much you surround yourself with PR folks.
2
SPEAKER_00
Because the best, I would say, let me just say a nice thing about marketing and PR folks,
2
SPEAKER_00
the best marketing folks are extremely good.
2
SPEAKER_00
So they understand exactly what great marketing is and great PR.
2
SPEAKER_00
It s authenticity.
2
SPEAKER_00
It s revealing the beauty.
2
SPEAKER_00
As opposed to PR and marketing out of fear.
2
SPEAKER_00
Oh, don t say that, don t say this, don t say that.
2
SPEAKER_00
Because then you start living in this kind of, that pushes you towards a bubble where you can t express your beautiful quirks and weirdness and all that kind of stuff.
2
SPEAKER_00
And also the cool, the beautiful things about what you re doing.
2
SPEAKER_00
I find like, especially with the tech thing, like even like Coinbase, the way to reveal the beauty of it is not only by showing all the things you could do with it, but showing that there s great engineering going on underneath.
2
SPEAKER_00
So letting the nerds shine too.
2
SPEAKER_00
It doesn t have to be like these kind of commercials where it s like, you know,
2
SPEAKER_00
a happy family using Coinbase to send a transaction about flowers for mom or something like that.
2
SPEAKER_00
It could be also gritty stuff and real stuff.
2
SPEAKER_00
That s a general observation I made.
2
SPEAKER_00
But you said you were talking about dark moments and that there s people on the internet that were pissed off that the site was down and you said there might be something else.
2
SPEAKER_01
Yeah, so sleep deprived, like a bunch of people on the internet were pissed at me, the balances were fucked up, like people were tweeting the company s over, just give the money back, whatever.
2
SPEAKER_01
And then, oh, yeah, somebody posted.
2
SPEAKER_01
So we had all this, we didn t, we started to get all these customer support inquiries.
2
SPEAKER_01
And like, we only had, like a few people at the company.
2
SPEAKER_01
And so we were backed up maybe like 20,000 support requests.
2
SPEAKER_01
So people couldn t get ahold of us.
2
SPEAKER_01
So somebody posted my cell phone number on Reddit and they were like, they re like, if you need to get ahold of the CEO, whatever, because everyone s upset about where their money is.
2
SPEAKER_01
So I remember we re in the office.
2
SPEAKER_01
It s like, it s like late at night.
2
SPEAKER_01
We ve been working like 12 hours.
2
SPEAKER_01
We re all sleep deprived.
2
SPEAKER_01
I m trying to, I m trying to hack and like get this bug fixed.
2
SPEAKER_01
And we all need like food at the office.
2
SPEAKER_01
And so my phone, my phone has been blowing up all day because someone posted my phone number on the internet.
2
SPEAKER_01
And there s like a guy, there was a guy like trying to deliver food and I needed to answer my phone to like get the food from downstairs.
2
SPEAKER_01
So I was like, shit, I got to just see who if that s him.
2
SPEAKER_01
So I started answering the call.
2
SPEAKER_01
And it s like,
2
SPEAKER_01
Is this Brian? 
2
SPEAKER_01
I m like, nope, wrong number, click.
2
SPEAKER_01
I pick up the next call.
2
SPEAKER_01
When I finished the call, another call was coming in.
2
SPEAKER_01
I was like, I m a reporter from Japan asking about security.
2
SPEAKER_01
Nope, wrong number, click.
2
SPEAKER_01
Finally, I get the delivery guy downstairs, bring the food up.
2
SPEAKER_01
We re all surviving to fix this bug.
2
SPEAKER_01
I remember there was just basically a point that night where I was like, fuck, I need to just... I basically just curled up on a ball on the floor, and I just cried for a little bit.
2
SPEAKER_01
I think I let myself just kind of wallow in self-pity, kind of took a nap for about five minutes, and I was like...
2
SPEAKER_01
let s fucking solve this.
2
SPEAKER_01
And I like, you know, stopped being like a little whatever and like got back up.
2
SPEAKER_00
Sleep deprivation combined with just the stress and the pressure of the site going down and everybody wants the site to be up, just the pressure from people and the number of users is growing and growing and growing.
2
SPEAKER_00
So that pressure is just mentally, mentally tough.
2
SPEAKER_00
Yeah.
2
SPEAKER_00
What was your source of strength during that time?
2
SPEAKER_00
Like somebody that patted you on the back and said, we got this.
2
SPEAKER_01
Yeah.
2
SPEAKER_01
Well, it definitely helped to have a co-founder.
2
SPEAKER_01
So, you know, there s like that old saying about, it s better to be in a great relationship than to be single, but it s better to be single than to be in a bad relationship.
2
SPEAKER_01
So co-founders actually blow up a lot of companies too.
2
SPEAKER_01
But when you find the right co-founder, which I was lucky to find with, with Fred or some, that was very important.
2
SPEAKER_01
There was definitely moments where, you know, I was like, kind of, you know, at the width end or whatever.
2
SPEAKER_01
And he was like,
2
SPEAKER_01
He s like, dude, let s rally.
2
SPEAKER_01
And he basically carried the team a couple times in really key moments.
2
SPEAKER_00
What advice would you give to startup founders about this particular stage, about surviving it?
2
SPEAKER_00
to the five and through the five employee stage where you... Yeah.
2
SPEAKER_01
Well, if you re pre-product market fit, the best advice that I have from that period is action produces information.
2
SPEAKER_01
So just like keep doing stuff.
2
SPEAKER_01
I remember like Paul Graham... Good line.
2
SPEAKER_00
It s a good line.
2
SPEAKER_01
Yeah.
2
SPEAKER_01
Paul Graham had this great line like that.
2
SPEAKER_01
I think that s his line.
2
SPEAKER_01
And he was like, startups are like sharks, if they stop swimming, they die.
2
SPEAKER_01
You know, so even if you re like, not sure what to do, like, just do anything, because when you do it, it ll like, it ll produce some information, like people liked it, they didn t.
2
SPEAKER_01
This was very true.
2
SPEAKER_01
For me, there was times where
2
SPEAKER_01
I just did something, instead of debating it endlessly and like, just try it, you know, like, alright, so we shipped it.
2
SPEAKER_01
And like, there was a couple times where like, the minute I shipped it, I was like, I knew, I know, we built this wrong.
2
SPEAKER_01
But now I have an idea of what to do next.
2
SPEAKER_01
And it wasn t, I only would have had the idea if we d actually gone through the exercise of going to build it.
2
SPEAKER_01
It s like, my other favorite analogy for this is that
2
SPEAKER_01
You re like at the base of a mountain that s shrouded in fog.
2
SPEAKER_01
And you re looking up at the mountain and you re trying to think like, okay, how do I get up there?
2
SPEAKER_01
But you can only see like three or four steps ahead because the fog is so thick.
2
SPEAKER_01
So you have to just take steps into the unknown.
2
SPEAKER_01
And when you take three steps, another three steps will be revealed ahead of you.
2
SPEAKER_01
And sometimes you ll end up on some local maximum.
2
SPEAKER_01
You ll have to retrace your steps or whatever, but, or come up to a cliff, you know, but, um,
2
SPEAKER_01
most people in life don t take the steps into the fog, into the unknown, because it s scary.
2
SPEAKER_01
Or they re like, I don t know, what if I fail?
2
SPEAKER_01
Or like, I don t know how that s going to work.
2
SPEAKER_01
Or I might run out of money, or I won t be able to get a job after or I don t know, whatever reason.
2
SPEAKER_01
But that that is like one of the things that separates, I think, entrepreneurial people with that kind of inclination is that they have sort of a comfort with this risk tolerance.
2
SPEAKER_01
But it s actually not really risky.
2
SPEAKER_01
If you think about it, it s not like
2
SPEAKER_01
At least in most places, if you go to a startup and it fails, you re even more valuable to your next employer.
2
SPEAKER_01
Or you can go raise a seed round, pay yourself a salary, try it for two years or three years.
2
SPEAKER_01
If it doesn t work, go get another job.
2
SPEAKER_01
It s not like you weren t paying yourself a salary during that time.
2
SPEAKER_01
I think people overestimate the risk of doing a startup and they just never start because
2
SPEAKER_01
It seems crazy, and all your friends think it s silly.
2
SPEAKER_01
That s sort of the default nature of every big startup idea.
2
SPEAKER_00
It s just basic fear.
2
SPEAKER_00
It s the same kind of fear that if you see a guy, see a cute girl at a bar, it s the fear associated with coming up to her, be like her, asking her.
2
SPEAKER_00
It s like, what s the actual risk exactly?
2
SPEAKER_01
Right.
2
SPEAKER_01
She ll say, no thanks, I m not interested.
2
SPEAKER_00
No thanks.
2
SPEAKER_00
I guess the risk is like,
2
SPEAKER_00
that s going to be mentally difficult to deal with rejection.
2
SPEAKER_00
So just like it s mentally difficult to deal with failure.
2
SPEAKER_00
If you had a bunch of ideas and you were excited about them and you implement them and you realize they re not good, that could be difficult to keep pushing through that.
2
SPEAKER_00
But I suppose that s life.
2
SPEAKER_00
You re supposed to, you know, perseverance through the failures.
2
SPEAKER_00
And then the risk is low.
2
SPEAKER_00
So that s, and then the whole time through the fog up the mountain, you re looking for product market fit.
2
SPEAKER_01
Yeah, that s right.
2
SPEAKER_01
So you know, you have it when the usage of your product keeps growing without any marketing dollars or anything like that.
2
SPEAKER_01
It s just like more people keep coming back every week or month.
2
SPEAKER_01
So you re kind of keep you re basically watching your stats.
2
SPEAKER_01
Nothing is working.
2
SPEAKER_01
You see these little wiggles of false hope in your metrics.
2
SPEAKER_01
And you basically just keep talking to customers, fixing the improving the product, talk to customers, improve the product, talk to customers for product, you know, and try not to run out of money.
2
SPEAKER_01
So be really scrappy.
2
SPEAKER_01
And then if you re lucky, you hit some kind of threshold where like, okay, the thing is good enough now, or we hit on some use case and then it ll organically start to grow a bit.
2
SPEAKER_01
And then, then you have a whole different set of problems once you hit product market fit, which is.
2
SPEAKER_01
How do we scale this thing?
2
SPEAKER_01
How do we hire people?
2
SPEAKER_01
How do we, you know, hire an executive team or raise more money?
2
SPEAKER_01
And like, so the problems totally change, but yeah.
2
SPEAKER_00
Well, you were there through the whole thing.
2
SPEAKER_00
So that s the other question that s fascinating.
2
SPEAKER_00
Again, back to the girl at the bar, how do you hire people?
2
SPEAKER_00
It s like, how do you find good friends?
2
SPEAKER_00
How do you find good relationships?
2
SPEAKER_00
And in this specific case, how do you hire good people?
2
SPEAKER_00
engineers, executive, all of it.
2
SPEAKER_01
One thing is I ve done a lot of reps on hiring at this point.
2
SPEAKER_01
So Coinbase has about 5,000 people, probably the first 500 people or something, maybe in that range.
2
SPEAKER_01
You know, I interviewed every single one of those.
2
SPEAKER_01
But you have to remember, there s probably like, I don t know, on average, maybe 10 people that we went went in the process for every one we hired or something.
2
SPEAKER_01
So it was like,
2
SPEAKER_01
By the time that we had 500 employees, I had done like 5,000 interviews or something.
2
SPEAKER_01
I was like very burned out on interviews.
2
SPEAKER_01
I had been doing, some days I did like seven interviews in a day or maybe, you know, you would do lots of interviews, maybe you wouldn t get burned out, but different kind of interviews.
2
SPEAKER_00
Very different, very different.
2
SPEAKER_00
Yeah.
2
SPEAKER_00
Very different because you re, so first of all, most of your interviews lead to rejection.
2
SPEAKER_00
Yeah.
2
SPEAKER_00
Which is also exhausting.
2
SPEAKER_01
Yeah, and there s a whole part of the interview which is about candidate experience, right?
2
SPEAKER_01
Sometimes you know it s not the right person, but you want to make sure they have a good experience.
2
SPEAKER_01
If you re just exhausted and you re on your sixth interview and you re like, well, thanks for coming in and you wrap and you just, and then like, you re going to create a detractor, someone who s out there like, fuck that company or Brian was rude to me or whatever.
2
SPEAKER_01
So I had to, honestly, I had to work on that a little bit in the early days because I was doing so many interviews, like I needed to make sure that
2
SPEAKER_01
Um, when people came in, I was like, you know, made them feel comfortable.
2
SPEAKER_01
Um, ask them a couple of like warmup questions.
2
SPEAKER_01
It s like, Oh, how, how was it getting in the office?
2
SPEAKER_01
Like, did you find it?
2
SPEAKER_01
Okay.
2
SPEAKER_01
And like, what do you been up to this week?
2
SPEAKER_01
And not just like, you know, like a factory assembly line, like boom, boom, boom, like run.
2
SPEAKER_01
So I, yeah.
2
SPEAKER_00
But also there s a moment, because I ve interviewed a bunch of people for like teams and stuff.
2
SPEAKER_00
There s also a moment when you early on know it s not gonna be a good fit and you still have to land that plane and all that kind of stuff.
2
SPEAKER_00
And that could get really, really, really exhausting.
2
SPEAKER_00
So yeah, anyway, sorry.
2
SPEAKER_01
Yeah, so basically, we ve tried so many things over the years to make interviews more efficient, because it s a huge time sink for the team.
2
SPEAKER_01
So, you know, we basically will usually get them down to like 25 minutes.
2
SPEAKER_01
I ve seen if you re trying to hire like a big team, let s say, you know, of people who are like contractors or something, not necessarily full time employees, I ve seen people actually do 10 minute interviews.
2
SPEAKER_01
You can even interview like a thousand people almost like in a week or something.
2
SPEAKER_01
I m not sure if that quite works out, but let me listen to that.
2
SPEAKER_01
But you can basically get six and six done in an hour if you re just I need to get a team of 30 contractors for whatever purpose.
2
SPEAKER_01
But if you re talking about full time employees, I usually do like 25 minute.
2
SPEAKER_01
You know, you re oftentimes like one.
2
SPEAKER_01
One thing we ve done is we ll put like a
3
SPEAKER_01
like a Google form online.
3
SPEAKER_01
And it s like, put some basic hurdles in there, like, you know, ask them.
3
SPEAKER_01
to put in an answer of which you can check in a spreadsheet if it was correct or not.
3
SPEAKER_01
And like, there were some funny examples in the early days of Coinbase where we put in like brain teasers and stuff, but we don t do that anymore.
3
SPEAKER_01
We do like normal interviews, we do references.
3
SPEAKER_01
The kinds of things I ask in interviews, you know, it s usually like, I like to think about what do we need this person to accomplish in this role, right?
3
SPEAKER_01
And get really specific about that.
3
SPEAKER_01
It s like usually something pretty hard.
3
SPEAKER_01
And then I ll ask them a question.
3
SPEAKER_01
It s like, tell me about a time you did X.
3
SPEAKER_01
And, or tell me about the hardest, the hardest kind of problem you ve had to solve in why?
3
SPEAKER_01
And what did you do specifically to overcome it?
3
SPEAKER_01
Right?
3
SPEAKER_01
So I m asking to see if they can actually do the stuff we need to get done.
3
SPEAKER_01
But then I m also kind of asking like culture questions if I m interviewing for that.
3
SPEAKER_01
And so I m trying to see like, are they concise communicators?
3
SPEAKER_01
Can they just give me a clear answer?
3
SPEAKER_01
and stop talking.
3
SPEAKER_01
Some people like ramble on for like 5-10 minutes if you ask the first question.
3
SPEAKER_01
Some people are, you know, they re interrupters, like Church of Interruption, so like they won t stop talking until you interrupt them, which for me, I m always patient and I wait, so that s weird.
3
SPEAKER_01
I m looking to see for humility too.
3
SPEAKER_01
I ll ask people, tell me about a time something went really wrong, like you had conflict with someone on a team.
3
SPEAKER_01
And what I m kind of looking for is, were they part of the solution or are they still holding on to blame and criticism about that?
3
SPEAKER_01
And be like, well, I told them it shouldn t do that way, but they didn t listen to me.
3
SPEAKER_01
These are all bad signs.
3
SPEAKER_01
So I m looking for, yeah, can they get the job done?
3
SPEAKER_01
Will they work together on a team?
3
SPEAKER_01
Can they communicate effectively?
3
SPEAKER_01
Do they fit into our cultural values?
3
SPEAKER_01
And you know, those kind of things.
3
SPEAKER_00
Yeah, I mean, there s, because I ve, even for help with this podcast here, but also at MIT and so on, I ve done a bunch of hiring.
3
SPEAKER_00
And I was always looking for, you said brain teasers, all kinds of simple questions that can reveal a lot of information.
3
SPEAKER_00
And it s always been challenging.
3
SPEAKER_00
I used to, I still ask this question, but do you think it s better to work hard or work smart?
3
SPEAKER_00
And I had this idea that I think I ve matured about, which is I kind of believe that people who say, work smart on that question,
3
SPEAKER_00
don t actually work smart.
3
SPEAKER_00
So the right textbook answer is it s better to work smart.
3
SPEAKER_00
But the reality is it s people that haven t actually ever done anything that say work smart.
3
SPEAKER_00
They re like, they haven t really struggled.
3
SPEAKER_00
Because my general belief at the time was in order to discover what it means to work smart, to be efficient, you have to work your ass off.
3
SPEAKER_00
So you have to really fail a lot, and failure feels like hard work.
3
SPEAKER_00
And so I was always suspicious of people that would say work smart.
3
SPEAKER_00
I would want to interrogate that question.
3
SPEAKER_00
But then I also have learned that there is people that are just exceptionally smart.
3
SPEAKER_00
exceptionally efficient.
3
SPEAKER_00
They really do know what it means to work smart, even at a young age.
3
SPEAKER_00
And so you can t just disqualify based on that.
3
SPEAKER_00
You have to dig in deeper.
3
SPEAKER_00
But some of the most interesting people I ve ever worked with would say work hard, unapologetically.
3
SPEAKER_00
And they re usually the ones that know how to be efficient.
3
SPEAKER_00
It s just an interesting thing like that.
3
SPEAKER_00
And I ve always searched for questions of that nature to see, can I get,
3
SPEAKER_00
Can I get a person to reveal something profound about them in as brief of a question as possible?
3
SPEAKER_00
And then, of course, there s basic attention to detail and brain teasers and stuff like that, depending on the role, programming and so on, to see can they solve a tricky puzzle and do so, like one that doesn t require a lot of effort but requires a certain nonlinear way of thinking.
3
SPEAKER_00
Is there some,
3
SPEAKER_00
I mean, maybe you don t want to reveal, but is there some questions that you sometimes find yourself leaning on?
3
SPEAKER_00
You said, like, how did you solve a hard problem in your past and have them talk through it?
3
SPEAKER_00
That s one.
3
SPEAKER_01
You know, we started with brain teasers periodically at Coinbase, and we got away from that relatively quickly.
3
SPEAKER_01
And I think one, it s a tough one, because I actually think
3
SPEAKER_01
It does show how somebody performs under pressure, but I don t think it s a super reliable indicator because there s some people who are really good in the typical work situation, but that s not a typical work situation where somebody puts you on the spot, like in a live interview.
3
SPEAKER_01
Sometimes people get nervous and they can t think clearly and they don t have their computer in front of them or whatever they normally use.
3
SPEAKER_01
So yeah, I m a little skeptical now of the of the brain teaser thing.
3
SPEAKER_01
There is a whole, yeah, there is a whole question about like, a lot of universities are getting rid of, you know, entrance exams.
3
SPEAKER_01
So if you re hiring right out of universities,
3
SPEAKER_01
sometimes it s becoming a less reliable indicator of like, are they in that university?
3
SPEAKER_01
And I ve heard some companies, we haven t done this yet, but I ve heard some companies are actually creating their own, like for college grads, like their own basically exams, like standardized testing almost to get people in the door because the degree almost like doesn t mean what it used to, which is the whole topic, but.
3
SPEAKER_00
Yeah, that s fascinating.
3
SPEAKER_00
It s fascinating both for that, because it s not just about you trying to hire a great team, it s also to help them find the right place to work at.
3
SPEAKER_00
It s like a two-way street.
3
SPEAKER_00
All right, so once you found the product market fit, how did Coinbase become what it is today?
3
SPEAKER_00
Let me ask an engineering question, actually.
3
SPEAKER_00
From the Ruby wallet days, what are some of the interesting challenges there?
3
SPEAKER_00
Or are they not engineering?
3
SPEAKER_00
Just the things that had to be solved, what were they?
3
SPEAKER_00
Engineering, regulation, what was it?
3
SPEAKER_00
financial, hiring, lawyers, what was it?
3
SPEAKER_01
So post-private market fit, yeah, a lot of it s scaling and you got to build out an actual company.
3
SPEAKER_01
So I remember I was still writing a lot of code there for a while and we were hiring in, we had like maybe 25 people or something.
3
SPEAKER_01
I remember one of our investors came by one day and he was like, Brian, how much of your time are you spending writing code?
3
SPEAKER_01
I was like, maybe 50% or something.
3
SPEAKER_01
He was like, how much time are you spending hiring people?
3
SPEAKER_01
I was like, probably 20%.
3
SPEAKER_01
He was like, I think you need to flip those numbers.
3
SPEAKER_01
This company is not going to scale.
3
SPEAKER_01
You re the CEO.
3
SPEAKER_01
You don t need to be writing code every day.
3
SPEAKER_01
going to have to transition that stuff.
3
SPEAKER_01
Even if people can t, all that stuff s locked in your head.
3
SPEAKER_01
So maybe they re not going to do it as well as you for the first six months or something.
3
SPEAKER_01
But if you don t start to transition it, you re never going to build a real company.
3
SPEAKER_01
It s just going to be... You re going to be the bottleneck.
3
SPEAKER_01
So like a lot of founders, that took me a while to really internalize that lesson.
3
SPEAKER_01
I d always heard people say that.
3
SPEAKER_01
But I still was holding on too much to decision making.
3
SPEAKER_01
And I probably still am, by the way.
3
SPEAKER_01
Even to this day at Coinbase, we re
3
SPEAKER_01
We continually have to push down decision making in the org, like even with 5000 people, like who are the owners of each of these things?
3
SPEAKER_01
And so the temptation is people to push it up and you become a bottleneck and anyway.
3
SPEAKER_01
So yeah, you want you basically need to make sure you have enough money where you don t die.
3
SPEAKER_01
If there s in some some kind of a downturn, or hit break even profitability, we were in a position where we were periodically profitable during up periods, but then crypto would go down and we were unprofitable.
3
SPEAKER_01
And so we had to kind of manage our own psychology and the balance sheet to make sure we didn t like die in the downturn, which a lot of crypto companies did.
3
SPEAKER_01
We had to basically professionalize a whole bunch of services that had been just very quickly thrown together by like 20 year olds, right?
3
SPEAKER_01
Whether that was cybersecurity, it s like, okay, how do you get like a really senior experienced cybersecurity person, but not someone who s so senior that they can t get their hands dirty, and they can come into a company with 25, 50 people.
3
SPEAKER_01
How do you get a finance person to come and do that?
3
SPEAKER_01
Our finances were a mess.
3
SPEAKER_01
Like we didn t even really know how much money we had at certain times and stuff.
3
SPEAKER_01
I mean, this was, it s embarrassing to say, but it was true.
3
SPEAKER_01
Like I remember there was a point where, um, we, we had raised, I think like our series C or something like that.
3
SPEAKER_01
And I think we had our bank accounts and I just put like $25 million, like in a different bank account that none of this stuff was touched the actual operation of the business.
3
SPEAKER_01
Cause I was like,
3
SPEAKER_01
You know, our operations were so messy and we needed to hire a new finance person.
3
SPEAKER_01
And I was like this.
3
SPEAKER_01
I d heard horror stories of actually startups where they thought they had X amount of money and then it turned out they had way less.
3
SPEAKER_01
And then the whole thing was insolvent in like three weeks.
3
SPEAKER_00
So you wanted to have some padding to like, all right, I can at least count on this to save us if we go to like super negative.
3
SPEAKER_01
Right.
3
SPEAKER_01
I mean, it was like a cheap hack, but that was like the only thing I could come up with.
3
SPEAKER_01
And, you know, until we could hire like a real CFO and finance team who like, okay, now we got our arms around how much cash we have.
3
SPEAKER_01
It sounds silly, but we had such high volume of money coming in and out anyway.
3
SPEAKER_00
What was the ordering of hiring, by the way?
3
SPEAKER_00
How many engineers was it early on?
3
SPEAKER_00
You said CFO was not, did you even have a CFO for a bit?
3
SPEAKER_00
What was the landscape of hiring as you re building up this company?
3
SPEAKER_00
Was it engineering focused?
3
SPEAKER_01
Well, let s see.
3
SPEAKER_01
I mean, so the first person we hired was just like, we need to solve customer support.
3
SPEAKER_01
So we brought someone to do that, because we were all staying up till midnight every night trying to do customer support.
3
SPEAKER_01
And then we got more engineers.
3
SPEAKER_01
And then I think maybe the sixth hire or something like that was a recruiter, because that turned out to be, you need to build, hire the person who can hire more people.
3
SPEAKER_01
Yeah, that turned out to be a great
3
SPEAKER_01
force multiplier, and then, man, you re going down the list.
3
SPEAKER_01
Eventually, you wanna hire some more senior people.
3
SPEAKER_01
We needed legal and compliance.
3
SPEAKER_01
We needed that really badly, because there was all kinds of questions about what the legality of it was.
3
SPEAKER_00
Was it hard to find legal people that work with crypto, like serious adults?
3
SPEAKER_00
Because it s such a cutting-edge, new world.
3
SPEAKER_01
Yeah.
3
SPEAKER_01
I mean, there was nobody who had like more than nobody had three years of experience with it because it had only been around a few years.
3
SPEAKER_01
So yeah, we were finding people from adjacent fields.
3
SPEAKER_01
There s a certain personality type of people who are willing to join early companies because they have no structure.
3
SPEAKER_01
You can t really commit to them about you re going to have this team or this boss or whatever, like everything s in chaos and flux.
3
SPEAKER_01
So it takes.
3
SPEAKER_01
Yeah.
3
SPEAKER_01
Hiring is one of the hardest things in the early stage, for sure.
3
SPEAKER_01
You ve got to find people crazy enough to join you on this journey.
3
SPEAKER_00
So one of the interesting things about Coinbase, and you ve written, we ll talk about it a bit, you re very focused on the mission.
3
SPEAKER_00
You re very kind of, I think that simplifies things, that makes hiring easier, that makes working at Coinbase easier, that makes, I mean it s similar, sort of Elon has the same thing, it s pretty clear, it s pretty clear what we re here to do.
3
SPEAKER_00
So I suppose what s the mission of Coinbase?
3
SPEAKER_01
was to increase economic freedom in the world.
3
SPEAKER_00
And what is economic freedom?
3
SPEAKER_01
Yeah.
3
SPEAKER_01
So economic freedom is this term kind of like GDP that economists use.
3
SPEAKER_01
And it s basically a measure of different countries around the world.
3
SPEAKER_01
It looks at things like, are there property rights enforced?
3
SPEAKER_01
Is there free trade?
3
SPEAKER_01
Is the currency stable?
3
SPEAKER_01
Can you start companies that you want to start and can you join the ones you want to join?
3
SPEAKER_01
And, you know, is there corruption and bribery prevalent, or is it relatively free of that?
3
SPEAKER_01
And so this, there s several different organizations that basically score countries by economic freedom.
3
SPEAKER_01
And the really cool thing about economic freedom is that
3
SPEAKER_01
Basically, it positively correlates with things that we all want in society, like not only higher growth of the economy, but also things like higher self-reported happiness of citizens, better treatment of the environment, better income for the poorest 10% of people.
3
SPEAKER_01
It negatively correlates with things we don t want in society like corruption and bribery and war even and things like that.
3
SPEAKER_01
It s this pretty crazy provocative idea, which is that
3
SPEAKER_01
If you give people good property rights and rule of law and allow them to trade, it basically encourages them to do more good stuff and the whole society benefits.
3
SPEAKER_01
Like one of the things, you know, you may have noticed this growing up in various places you did or, you know, I spent a year living in Buenos Aires, Argentina that went through hyperinflation and there s a certain like pessimism that can creep into countries when they don t have
3
SPEAKER_01
economic freedom, which it s basically like everyone has this bit of this vibe, which is like, don t stick your head up, you know, don t try too hard, because it could all be gone tomorrow.
3
SPEAKER_01
Like the things that really are valuable in life are just family and friends, and the past was better than the future will be.
3
SPEAKER_01
And, and so you don t really people don t try as many, they don t try hard, because you re not really sure you can actually keep the upside of your labor if you if you try hard, so you just don t try as hard.
3
SPEAKER_01
Whereas in America, historically, you know, or high economic freedom countries,
3
SPEAKER_01
you know, people, basically, like they just try more stuff, because they re like, if I do good for other people, I ll get to keep part of it for myself.
3
SPEAKER_01
And I can improve my lot in life and for my children, my community, whatever.
3
SPEAKER_01
So I realized when I read the Bitcoin white paper a long time ago, that at least I had a hunch at the time I was like, this might be a really powerful piece of technology that can inject
3
SPEAKER_01
good financial infrastructure into all these countries around the world that don t have it, basically good economic freedom principles in like, you know, property rights and things like that, into these countries all over the world with just as long as you had a smartphone, and now crypto got invented, we could everybody could have economic freedom.
3
SPEAKER_01
And it s crypto is kind of really well suited for economic freedom, because
3
SPEAKER_01
If you want property rights, it s basically crypto is if you can remember a 12 word phrase, or, you know, have an app on your phone, you can store as much wealth as you want.
3
SPEAKER_01
And it can t be taken away from you, you can even, you know, there s like refugees who need to flee and they want to take their wealth with them.
3
SPEAKER_01
And they can t do it often in the traditional financial system.
3
SPEAKER_01
And so crypto lets them do that, right?
3
SPEAKER_01
Crypto is inherently global.
3
SPEAKER_01
So it allows free trade and cross border payments.
3
SPEAKER_01
It makes it easy to accept payments from people globally.
3
SPEAKER_01
You know, it s it provides a stable currency to everyone, not only with Bitcoin, which is kind of like this new reserve currency, but also with stable coins, right, which are, you know, new, new inventions there.
3
SPEAKER_01
So yeah, I basically feel like crypto is, is this secret hiding in plain sight that can create economic freedom for people all over the world and a more fair and free and global economy.
3
SPEAKER_00
Well, so the limit, and by the way, I didn t know about Argentina.
3
SPEAKER_00
Why d you end up in Argentina?
3
SPEAKER_01
Okay, so I was basically, you know, I was living in Houston, Texas after college, where I went to school, and I had never studied abroad.
3
SPEAKER_01
I kind of like, I don t know, I felt like I needed some adventure or something in my life.
3
SPEAKER_01
And I was like, I was running this other startup that I was trying at the time, a tutoring company, and I could work from anywhere.
3
SPEAKER_01
So my plan was, you know what, I m just gonna go do like a month in every city around South America, just be like, almost like to force myself out of my comfort zone, because I,
3
SPEAKER_01
I had never traveled by myself to a foreign country or whatever and where I didn t really speak the language.
3
SPEAKER_01
And anyway, I landed in Buenos Aires thinking I d go all around South America where I had never been there.
3
SPEAKER_01
But I basically once I was set up in Buenos Aires with an apartment and a cell phone and stuff, then I was like, I don t want to do that all again next month.
3
SPEAKER_01
So I just stayed there for most of the time and took some day trips.
3
SPEAKER_01
But yeah, it was kind of a formative experience in that regard.
3
SPEAKER_00
you got a chance sort of unexpectedly to experience the social effects of hyperinflation, which is interesting.
3
SPEAKER_00
But I also, I ve never been, but I really, really wanna go as a person who likes tango, as a person who likes the Argentinian national team and soccer and steak.
3
SPEAKER_00
All right, and all the other things that Argentina is known for.
3
SPEAKER_00
Okay, so economic freedom.
3
SPEAKER_00
One of the limits on economic freedom comes from government and government regulations and all those kinds of things throughout the world.
3
SPEAKER_00
So how does cryptocurrency help resist that?
3
SPEAKER_00
Can you sort of elaborate a little bit further?
3
SPEAKER_00
What are the things that limit economic freedom and how does crypto help ease that?
3
SPEAKER_01
You know, today the world like traditional financial system is basically every country of the world for the most part has their own currency.
3
SPEAKER_01
And so there s a group of people or institutions in each of those countries that s controlling that economic policy or that money supply.
3
SPEAKER_01
And, you know, it can be, it can be manipulated, right?
3
SPEAKER_01
So it s not like many of these currencies are not linked to gold standard, you know, the US kind of famously came off that in the 1970s, for instance, but if you read Ray Dalio, and all this stuff, like he talks about, there s thousands of fiat currencies that have been in existence over time.
3
SPEAKER_01
And basically, all of them eventually get disconnected from backing of like hard commodities, and then they get over inflated and printed.
3
SPEAKER_01
And so, in times of stress, you know, with Nixon, I guess it was like in the US, it was the Vietnam War or something like that.
3
SPEAKER_01
It kind of drove government spending.
3
SPEAKER_01
And so, under times of stress, they say, hey,
4
SPEAKER_00
it s a temporary measure, we need to break the peg.
4
SPEAKER_00
Temporary was like, you know, famous words that he used.
4
SPEAKER_00
And, and they go, they go, like, they go print.
4
SPEAKER_00
And so the bad thing about that, of course, is that it sort of erodes people s, like wealth, if they can only hold their assets in cash, which basically, like, poor people tend to do that.
4
SPEAKER_00
You know, if you re wealthy, you can hold stocks or like real estate and things like that.
4
SPEAKER_00
But it s really a tax on the poorest people in society, inflation.
4
SPEAKER_00
So anyway, crypto, in a way,
4
SPEAKER_00
is a little bit of like a return to the gold standard in this digital era, right?
4
SPEAKER_00
Bitcoin, there s guaranteed scarcity of it.
4
SPEAKER_00
It s deflationary.
4
SPEAKER_00
There s never going to be more than 21 million Bitcoin.
4
SPEAKER_00
And so that s a really important principle.
4
SPEAKER_00
I also think, you know, not just Bitcoin, but like cryptocurrency generally, it s really important in terms of this.
4
SPEAKER_00
You asked about regulation, right?
4
SPEAKER_00
So think about like, if you wanted to make a global borrowing and lending marketplace or a global
4
SPEAKER_00
exchange, you would have to go to all 200 countries in the world, sometimes like maybe 50 states in the US and get lending licenses or an operating exchange or whatever.
4
SPEAKER_00
And, you know, they re not going to, that s just an incredible amount of work.
4
SPEAKER_00
And you can t even do business in many of these countries because like, you know, you have to bribe somebody or it s corrupt or whatever.
4
SPEAKER_00
And so, but with DeFi, with decentralized finance, people have published, you know, like Uniswap is a decentralized exchange.
4
SPEAKER_00
Everybody in the world, no matter what country you re in, what jurisdiction can interface with that decentralized exchange because it, and there s no central,
4
SPEAKER_00
company operating it.
4
SPEAKER_00
It s a smart contract on the Ethereum blockchain, which is globally decentralized.
4
SPEAKER_00
So there s no throat to choke.
4
SPEAKER_00
There s no one person or company you can go to like, hey, shut this thing down.
4
SPEAKER_00
Even if everybody who s working on Uniswap today stopped, the Uniswap smart contract would continue to operate on the Ethereum blockchain.
4
SPEAKER_00
Similarly, for like a borrowing and lending marketplace, you know, like,
4
SPEAKER_00
it s, you know, if you want somebody in India wants to borrow from somebody in the US or whatever, like, there s very difficult to do that in the traditional financial world.
4
SPEAKER_00
But in a smart contract is decentralized, you can enable anybody to access it.
4
SPEAKER_00
So it s, it s really kind of this great democratizing force that is creating a new financial system that is more fair and more free.
4
SPEAKER_00
Yeah, in some ways, it is.
4
SPEAKER_00
It s a clever way that s not, it s enabling people to do that in a novel way.
4
SPEAKER_01
So is Uniswap in some sense a competitor to Coinbase?
4
SPEAKER_01
In which way is it, in which way is it not?
4
SPEAKER_01
So because for people who don t know, Coinbase is centralized.
4
SPEAKER_01
So let me ask, doesn t that go against the spirit of crypto?
4
SPEAKER_01
Since crypto is decentralized, what are the pros and cons of being centralized?
4
SPEAKER_00
So I don t think Coinbase is fully centralized.
4
SPEAKER_00
We have many different products and the way that I think about it is that our exchange or our brokerage is a centralized regulated financial service business.
4
SPEAKER_00
And it s actually important for the crypto ecosystem to have that because you want to allow a lot of the fiat money in the world to flow into the crypto economy.
4
SPEAKER_00
you know, we re very proud of that.
4
SPEAKER_00
And I think we ve helped a lot of that money flow in.
4
SPEAKER_00
Now, once people have money in crypto, they can choose to hold it in a variety of ways.
4
SPEAKER_00
And they can choose to hold it in a self custodial wallet, which is more decentralized.
4
SPEAKER_00
They can choose to use decentralized exchanges, which we love and Uniswap is not really I don t think of them as like a direct competitor to us.
4
SPEAKER_00
We basically have integrated Uniswap into a number of our products.
4
SPEAKER_00
We love DeFi decentralized exchanges, the whole thing.
4
SPEAKER_00
So a Coinbase wallet, which is a self-custodial wallet, is more decentralized and it allows people to hold their own crypto.
4
SPEAKER_00
They don t have to trust us.
4
SPEAKER_01
Can you explain what a self-custodial wallet is?
4
SPEAKER_01
What is a wallet and what is a self-custodial wallet?
4
SPEAKER_00
Yeah, so it s confusing.
4
SPEAKER_00
So a custodial wallet means you re trusting Coinbase to store your crypto, the private keys themselves.
4
SPEAKER_00
And for some people in institutions and everything, just meeting them where they are today, that s nice because it s simpler.
4
SPEAKER_00
They re not afraid of losing their crypto if they make some accidental mistake.
4
SPEAKER_00
So custodial crypto products are important to help get a bunch of people into the ecosystem.
4
SPEAKER_00
I m very supportive of self-custodial wallets.
4
SPEAKER_00
And I think in some ways they are the future because more and more people are going to want to store their own crypto, not trust a third party institution to do it.
4
SPEAKER_00
And in some ways that is much more authentic to the ethos of crypto.
4
SPEAKER_00
So Coinbase will help you convert the fiat into crypto.
4
SPEAKER_00
And frankly, that s a more centralized thing.
4
SPEAKER_00
But once you have crypto, you can then go into the self-custodial world, store it yourself.
4
SPEAKER_00
To get into the technical details, just for a second.
4
SPEAKER_00
It s basically saying, you re going to store the keys on your own device.
4
SPEAKER_00
And so even if Coinbase, you know, get some court order to seize it, we actually can t, like from an architecture point of view, we can t do it.
4
SPEAKER_00
Or, you know, if Coinbase gets hacked or something, we can t lose your funds.
4
SPEAKER_00
Like, now you, the thing is, you have to take the responsibility because we re not taking it.
4
SPEAKER_00
So the individual person could get hacked, right?
4
SPEAKER_00
And there s a whole bunch of really cool research happening to make self custodial wallets.
4
SPEAKER_00
more resilient to accidental loss, hacks, and just user error.
4
SPEAKER_00
I don t know how much you ve looked at various cryptography things, but basically, you can have multiple signatures from different keys on different devices where you need two of the three or three of the five.
4
SPEAKER_00
There s a whole technology called multi-party computation or threshold signing signatures, which is really cool.
4
SPEAKER_01
But those are the things you would run locally?
4
SPEAKER_01
Like what, these are all security measures, like cryptography measures to protect you without a centralized component?
4
SPEAKER_00
Right.
4
SPEAKER_00
So like a simple example would be, let s say you had a two of three key signature and, you know, one key might be sort of Coinbase, but that s not a quorum.
4
SPEAKER_00
So we couldn t unilaterally move your funds, but then another key is on your device, on your phone, let s say.
4
SPEAKER_00
Oh, cool.
4
SPEAKER_00
So that, so in a normal situation, you have a key on your phone, we have one, but you, and so two out of three, now just, you know, it can all get signed very quickly for day-to-day use.
4
SPEAKER_00
But let s say you lose your phone or something.
4
SPEAKER_00
Now there has to be a third key, and that s where you could store it in a backup somewhere, like in Google Drive or iCloud.
4
SPEAKER_00
You could trust a third party that s not Coinbase to also have that one key, and they can t do anything unilaterally with that one key.
4
SPEAKER_00
So that s a simple example.
4
SPEAKER_00
You can get way more complicated.
4
SPEAKER_00
Yeah, that s an awesome idea.
4
SPEAKER_01
And so if your funds get seized, Coinbase can t
4
SPEAKER_01
can t do anything.
4
SPEAKER_01
Right.
4
SPEAKER_01
But you better not lose your phone.
4
SPEAKER_01
Maybe in that case.
4
SPEAKER_00
Yeah.
4
SPEAKER_00
Yeah.
4
SPEAKER_00
But it provides a there is.
4
SPEAKER_00
So even if you lose your phone, then there is a recovery mechanism because you can get the one key from Coinbase, the one from your backup provider and recover a new one back on your phone.
4
SPEAKER_01
I know, yeah, but what if Coinbase is no longer, because of government, say it s in North Korea, government says you re no longer, like Coinbase is shut down in that country or something like that, then you can get it even if you have access to those two.
4
SPEAKER_01
So again, perhaps a silly question, but isn t a self-custodial wallet a competitor as a notion to Coinbase?
4
SPEAKER_00
No, I mean, so we offer a self-consolidated wallet.
4
SPEAKER_01
We ve built one, and it s like- But doesn t it bleed the, like, I guess I m asking a sort of a financial question, is like, how does Coinbase make money on transactions?
4
SPEAKER_01
So does this not, it does not decrease the number, or does not significantly negatively affect transactions?
4
SPEAKER_01
Or are you more focused on growing the number of, the pie of the number of people that are using cryptocurrency?
4
SPEAKER_00
Yeah, like a traditional financial service firm would probably say, well, we should be storing, let s keep more of the custody with us because that s how we prove to the world that we re valuable or whatever.
4
SPEAKER_00
I don t really believe that.
4
SPEAKER_00
Like, I think that actually we kind of want to encourage our users to move to self custody over time for those who are ready and willing.
4
SPEAKER_00
And that technology needs to mature.
4
SPEAKER_00
I m not trying to like force anybody to do it who doesn t want to do it.
4
SPEAKER_00
But to me, that s like the future of how we get billions of people using crypto.
4
SPEAKER_01
But doesn t that mean they can go somewhere else?
4
SPEAKER_01
Easier?
4
SPEAKER_00
Yeah, that s sort of the point is like, we re all using the same protocol.
4
SPEAKER_00
So there s low switching costs, which keeps all the companies accountable, right?
4
SPEAKER_00
Like, if you, if you want to access the Visa network, there s only one company in the world, you can go through to do that, like Visa.
4
SPEAKER_00
But if you want to access the Bitcoin network, there s dozens or hundreds of companies out there who can do that.
4
SPEAKER_00
So it s, you know, it s arguably, you could argue it s worse for us as a company, but I think it s better for it s what makes Bitcoin interesting.
4
SPEAKER_00
And cryptocurrency interesting is that nobody controls it.
4
SPEAKER_00
there is low switching cost for customers.
4
SPEAKER_00
It s better for customers, and that means that all the companies in the space are gonna be held to a high standard, because the minute you lose someone s trust, they re just gonna move their Bitcoin to some other service, and that s good for the world.
4
SPEAKER_01
Do you think of Coinbase as, so there s these ideas of layer one, layer two, layer three technologies.
4
SPEAKER_00
Yeah.
4
SPEAKER_01
Do you think of Coinbase as layer one, layer two, layer three?
4
SPEAKER_01
Now that said, there s so many
4
SPEAKER_01
products that are under the Coinbase umbrella, that it s hard to answer that question, but what do you think?
4
SPEAKER_01
Do you acknowledge the existence of Layer 3?
4
SPEAKER_00
So, usually when people are using those terms, Layer 1, Layer 2, so they re referring to Layer 1 would be the blockchain, Layer 1 blockchain itself, like a Bitcoin or Ethereum or something, not like a centralized service like Coinbase or even our decentralized self-custodial wallet.
4
SPEAKER_00
So,
4
SPEAKER_00
Yeah, I wouldn t consider us to be like a layer one.
4
SPEAKER_00
These are the decentralized protocols that we re integrating, but Coinbase itself is not those.
4
SPEAKER_01
Yes, but layer two is the thing that was basically doing transactions without the settlement on the blockchain.
4
SPEAKER_01
And so you get to have some of the benefits of faster transactions without the security associated with the blockchain.
4
SPEAKER_01
Layer three is, I suppose, sort of apps built on top of that.
4
SPEAKER_01
So, you know, at least I think talking to Michael Saylor, he considers Coinbase a layer three technology.
4
SPEAKER_01
Interesting, okay.
4
SPEAKER_01
I m not really particularly familiar with this kind of distinctional layer three and two.
4
SPEAKER_01
I don t see them as fundamentally different.
4
SPEAKER_01
But some of the, okay, I mean, one way of asking that,
4
SPEAKER_01
Is there some layer two like of magic happening in order to make transactions associated with the blockchain happen instant, so that they re quick?
4
SPEAKER_01
So that- On Coinbase?
4
SPEAKER_01
On Coinbase, yeah.
4
SPEAKER_01
Is there some magic going on?
4
SPEAKER_01
Because you re, okay, we should say, how many cryptocurrencies are currently on Coinbase?
4
SPEAKER_01
So it s more than two.
4
SPEAKER_00
Yeah.
4
SPEAKER_01
It s a lot more than two.
4
SPEAKER_00
Yeah.
4
SPEAKER_01
So you have to understand, you have to incorporate all these technologies.
4
SPEAKER_00
Yeah.
4
SPEAKER_01
So how do you make that magic of sort of universal transactions happen across all of these different cryptocurrencies?
4
SPEAKER_00
there s our centralized products and decentralized products, right?
4
SPEAKER_00
The centralized products, we are storing that crypto for you.
4
SPEAKER_00
And so if you re moving from one of your accounts to another account, like an ETH1 account to ETH2 account, or from my ETH Coinbase centralized account to your ETH, so we can do that transaction off chain to make it faster.
4
SPEAKER_00
And it saves the customer fees and it just confirms instantly, but it s not truly using the decentralized blockchain, right?
4
SPEAKER_00
So you can also send any Bitcoin address or Ethereum address, for instance, and that is putting the transaction on-chain.
4
SPEAKER_00
Now, our decentralized products like Coinbase Wallet, the self-custodial wallet, every transaction is happening on-chain with that.
4
SPEAKER_00
And so basically, it just shows a little bit of the evolution of Coinbase and the blockchains themselves.
4
SPEAKER_00
In the early days, these networks were not scalable, and so there were no L2 solutions, for instance.
4
SPEAKER_00
And so we had to do sort of these hacks, like moving the crypto off chain, if you were moving between your own accounts and stuff like that.
4
SPEAKER_00
Otherwise, the minor fees would have just eaten us alive as a company, right?
4
SPEAKER_00
And yeah, but now that like, the blockchains are starting to scale, there s a whole bunch more work that needs to be done on that.
4
SPEAKER_00
And we re getting l2 solutions.
4
SPEAKER_00
So I think more and more of the transactions are going on chain, whether it s l2 l1.
4
SPEAKER_00
And, you know, we shouldn t be like,
4
SPEAKER_00
Ideally, we shouldn t be doing that many transactions, you know, off-chain, just internal Coinbase Ledger or something.
4
SPEAKER_00
That s not really in the spirit of crypto.
4
SPEAKER_01
So when you say on-chain, that includes like a lightning network, that includes layer two technology that the blockchain proposes.
4
SPEAKER_00
Yeah.
4
SPEAKER_01
So you re, when you, yeah, okay.
4
SPEAKER_01
So I guess I was asking how much fun magic is happening off-chain within Coinbase.
4
SPEAKER_01
And you re saying in the early days you had to, but you re trying to do less and less.
4
SPEAKER_00
So look, there s a bunch of like high frequency traders that use the centralized products and even just regular retail people like they don t want to pay the gas fees and stuff.
4
SPEAKER_00
And they re trying to it actually we back of the envelope, you know, calculated this out at one point.
4
SPEAKER_00
And just like, it would be completely infeasible for like high frequency traders to put everything on chain at this point.
4
SPEAKER_00
That s basically what DEXs are doing.
4
SPEAKER_00
And so
4
SPEAKER_00
Both are important.
4
SPEAKER_00
I think more and more is going to move decentralized over time, which is great.
4
SPEAKER_01
And we re, and we re basically... DEXs are decentralized exchanges, by the way.
4
SPEAKER_00
Yeah.
4
SPEAKER_00
So anyway, we want to, we want to encourage more and more of it to move decentralized over time.
4
SPEAKER_00
But I don t, the centralized things aren t going away for like a long time.
4
SPEAKER_00
It s a decade from now, there s going to be some big institution or pension fund or central bank that s like, all right, we got to hold crypto.
4
SPEAKER_00
Let s set up the account in a centralized way.
4
SPEAKER_00
So that s fine.
4
SPEAKER_00
Both are important.
4
SPEAKER_01
Do you know the number of cryptocurrencies currently on Coinbase?
4
SPEAKER_01
Do you know that number?
4
SPEAKER_00
It s over 100, but it depends what jurisdiction you re in and are you an institution versus retail.
4
SPEAKER_00
There s so many different categories now.
4
SPEAKER_00
Even like- But over 100.
4
SPEAKER_00
Yeah.
4
SPEAKER_01
So what does it take to become an asset, to become a cryptocurrency on Coinbase, to add your technology to Coinbase?
4
SPEAKER_00
Okay, well, so we re trying to get away from this idea of being listed on Coinbase as being seen as like an endorsement or something, because I actually think it s very important that we are not considered
4
SPEAKER_00
judge and jury about, you know, like imagine it was the early days of the internet and you were like, what s a good webpage and what s a bad webpage?
4
SPEAKER_00
Like you would have been totally wrong.
4
SPEAKER_00
Or anytime big tech companies try to make these review boards of like, you know, Apple famously gets in trouble for this a lot with their app store review process, right?
4
SPEAKER_00
And so something that you think like a committee of people somewhere thinks look silly may turn out to be the next big thing, right?
4
SPEAKER_00
And so it s very difficult.
4
SPEAKER_00
So what do we do?
4
SPEAKER_00
I mean,
4
SPEAKER_00
We basically have a test of legality, right?
4
SPEAKER_00
We check, you know, do we believe this is a security?
4
SPEAKER_00
If so, it can t be listed on Coinbase.
4
SPEAKER_00
And there s a very rigorous process we go through for that.
4
SPEAKER_00
Just currently the way the laws are in the US, you can t do that.
4
SPEAKER_00
And we ve been, we acquired a broker duo license from the SEC.
4
SPEAKER_00
We re trying to work with them to get that operational.
4
SPEAKER_00
And hopefully someday we can trade real crypto securities.
4
SPEAKER_00
But today, that s not possible in the US at least.
4
SPEAKER_00
Then we look at sort of the cybersecurity of the crypto asset.
4
SPEAKER_00
Do we think there s some flaw in the smart contract or?
4
SPEAKER_00
you know, a way that somebody could manipulate it without the customer s permission.
4
SPEAKER_00
We look at some compliance pieces to it as well, like the actors behind it and like, you know, their any kind of criminal history, anything like that.
4
SPEAKER_00
But if we believe it meets our listing standards, basically this test of legality and everything for customer protection.
4
SPEAKER_00
then we want to list it because we want the market to at that point decide.
4
SPEAKER_00
And it s kind of like Amazon or something like that, where a product might have three stars or it might have five stars.
4
SPEAKER_00
But if it starts to get one star consistently, it s probably a fraudulent or it s defective or something like maybe Amazon will remove it.
4
SPEAKER_00
But otherwise, you want to let the market decide what these things are.
4
SPEAKER_00
So that s generally how we do it.
4
SPEAKER_00
And by the way, more and more of these assets, I think, especially like low market cap assets are going to be traded on DEXs through Coinbase.
4
SPEAKER_00
It s not that we
4
SPEAKER_00
We don t need to list every asset on a centralized exchange.
4
SPEAKER_00
I think DEXs are really good for the long tail.
4
SPEAKER_00
And then it becomes an even, it s even more clear to people, like, this is not some endorsement by Coinbase of like, this asset s good and this one s bad.
4
SPEAKER_00
Like, you know, my belief is there s gonna be millions of these assets over time.
4
SPEAKER_00
And so I hope it doesn t like make news every time we add one in the future, basically.
4
SPEAKER_01
Yeah, I wonder how you get there.
4
SPEAKER_01
Because I, even I look to Coinbase for, for example, you know, people, as you can imagine,
4
SPEAKER_01
Sort of tag me on Twitter or something like that and all that like you should interview our sort of
5
SPEAKER_00
the founder of this particular coin, right?
5
SPEAKER_00
And it s so hard for me to know what s, first of all, what s the interesting technology.
5
SPEAKER_00
who s a scammer or not, who s actually legitimately representing an ambitious new thing versus a scam.
5
SPEAKER_00
And there s very few sources of verification signal.
5
SPEAKER_00
And unfortunately, Coinbase in part has become
5
SPEAKER_00
a little bit of that too, and you re trying to get away from that, because you re trying to get as many, sort of, let the people decide.
5
SPEAKER_00
So you re thinking of like Amazon Star type system, where the people could rate
5
SPEAKER_01
Yeah, so I think we ll actually probably add like user ratings and reviews.
5
SPEAKER_01
And we ll be very cautious about like, you know, these are real people.
5
SPEAKER_01
There s a bunch of stuff we have to do for that already.
5
SPEAKER_01
So I think wisdom of the crowds is good in terms of getting feedback on items.
5
SPEAKER_01
But we also, we re gonna do our own review, which I mentioned earlier, right?
5
SPEAKER_01
Which is like, okay, it meets this minimum bar to be listed on our site.
5
SPEAKER_01
So I think, yeah, both are important.
5
SPEAKER_00
How do you know if a coin is a scam or not?
5
SPEAKER_01
Well, you can see a few things.
5
SPEAKER_01
I hate to use the word scam because a lot of these are judgment calls.
5
SPEAKER_01
A court may or a jury may land either way.
5
SPEAKER_01
But things that would be red flags to look at is a bunch of the asset owned by an insider or insiders with short vesting periods.
5
SPEAKER_01
you know, are just the background of the founders, like they may have criminal records, or they ve perpetrated other frauds in the past, right?
5
SPEAKER_01
There s a difference between something which is
5
SPEAKER_01
just a me too product that s like, doesn t have anything interesting about it and something that s an actual fraud or outright scam.
5
SPEAKER_01
And, um, you have to, a lot of this data, what s cool about it is that it s now available on chain.
5
SPEAKER_01
You can look at like the tokenomics behind it and see who owns it.
5
SPEAKER_01
And are they selling it, you know, in like inappropriately, or are they
5
SPEAKER_01
pumping it on like YouTube and Twitter and making promises about, hey, the value of this thing may be a higher in the future.
5
SPEAKER_01
And like, all those are just big, big no-nos that we would, you know, we just don t want to go there.
5
SPEAKER_01
So our whole thing is like, we want to enable innovation in this space, but not allow anybody to
5
SPEAKER_01
curtail the advancement of this industry by doing some kind of fraudulent thing or get rich quick thing, so.
5
SPEAKER_00
It s a tricky industry, because I m trying to figure out what s interesting to understand, to research, and it s hard to know.
5
SPEAKER_00
Let me ask you about a tricky one to add to a centralized exchange, which is privacy-preserving cryptocurrency, so like Monero.
5
SPEAKER_01
Yeah.
5
SPEAKER_00
Is that technically difficult or is that why, why is like Monero for example, forget that specific one, but like privacy preserving cryptocurrency blockchains, why is that, is that ever possible to add?
5
SPEAKER_01
So that s a great question.
5
SPEAKER_01
So the answer is maybe.
5
SPEAKER_01
So here s the reason why.
5
SPEAKER_01
So because we re a regulated financial service business, we have various licenses to do that.
5
SPEAKER_01
We are regulated by various regulators.
5
SPEAKER_01
Part of those licenses requires us to have a quote, reasonable program to monitor for suspicious activity.
5
SPEAKER_01
you know, an AML program, anti-money laundering, right?
5
SPEAKER_01
And so if a coin is 100% anonymous, and we can t really do blockchain analytics to track source of funds and where these things might be going, it makes it harder to have a reasonable program around that.
5
SPEAKER_01
that s defensible.
5
SPEAKER_01
Now, there are privacy preserving coins like Zcash, which have something called a view key.
5
SPEAKER_01
And a view key is basically another key which allows you to de-anonymize the transactions in specific situations where you want that.
5
SPEAKER_01
So for instance, you know, we do support Zcash.
5
SPEAKER_01
And one of the ways we got comfortable with that is that
5
SPEAKER_01
When you re buying it on Coinbase, you can basically have a view key, the transactions are not anonymous while you re buying it, and we can see where it goes afterwards and do our whole standard program.
5
SPEAKER_01
Now, if it gets a few hops away down the road, I mean, people could eventually turn on privacy preserving aspects.
5
SPEAKER_01
So, these are tough judgment calls, but at least in terms of our interaction with the customer and everything, we feel comfortable at that.
5
SPEAKER_01
I think there s a broader point here, which is that I actually think privacy coins are a good thing for the world and they should be allowed.
5
SPEAKER_01
We ve made this judgment call to operate in a regulated and safe and compliant way.
5
SPEAKER_01
Just taking my Coinbase hat off for a minute, I think the world would be a better place if there were more privacy coins, because it s kind of like the internet when it first came online, like there was no HTTPS.
5
SPEAKER_01
Everything was HTTP and there was, you know, so people were afraid to put their credit cards on the internet and your messages could be intercepted and all this stuff.
5
SPEAKER_01
And now the whole internet has basically moved to HTTPS with a little lock icon in your browser, which is better.
5
SPEAKER_01
Like, and financial information is like the most important information to keep private, right?
5
SPEAKER_01
So there s times where, like, let s say you re running a charity or something, and you want to have total auditability, transparency for the whole world, who donated and where did the money go?
5
SPEAKER_01
That s great.
5
SPEAKER_01
You want it to be public.
5
SPEAKER_01
But if it s like your personal money or something like that, you don t want to be broadcasting that to the whole world.
5
SPEAKER_01
And in some ways, that s what blockchains are doing.
5
SPEAKER_01
you know, pseudonymously, because like, but it is a public ledger.
5
SPEAKER_01
And so if you can know who owns each address, you can basically de anonymize it.
5
SPEAKER_01
I, you know, I think, basically, the people should fight for privacy and freedoms of all kinds, but privacy of money is a good thing.
5
SPEAKER_01
So I would like to see more of that in
5
SPEAKER_00
You ve chosen with Coinbase to have a seat at the table with the regulators.
5
SPEAKER_00
So what kind of conversations are there at that table?
5
SPEAKER_00
What are the regulations like?
5
SPEAKER_00
What is the level of understanding with regulators?
5
SPEAKER_00
What are they worried about?
5
SPEAKER_00
What are they thinking about?
5
SPEAKER_00
What are the positive and what are the negative regulations that you re facing?
5
SPEAKER_00
that you re educating, struggling with, pushing back on, supporting, all that kind of stuff.
5
SPEAKER_01
Yeah.
5
SPEAKER_01
Oh, man, there s so many because we re I mean, we re live in like, you know, maybe 100 countries or more at this point.
5
SPEAKER_01
So the conversations are all over the map.
5
SPEAKER_01
I m trying to think what broad strokes I could paint for you.
5
SPEAKER_01
So I d say one trend that s that s positive is that basically regulators around the world are more and more over the last five years, I would say,
5
SPEAKER_01
it s more and more common to find a regulator today asking, how can we preserve the innovation potential of this technology while keeping the bad actors out than it was five years ago where they were saying, this is all bad activity, how do we prevent it?
5
SPEAKER_01
And so maybe this is- When you say more and more.
5
SPEAKER_00
What fraction?
5
SPEAKER_01
I ll give you like a U.S.
5
SPEAKER_01
specific example, although we operate in many countries.
5
SPEAKER_01
So when I go to D.C.
5
SPEAKER_01
now, I would say, you know, 50, 60 percent of the people who I meet with are basically, you know, they re in the camp of crypto has a lot of potential.
5
SPEAKER_01
We should regulate it to make sure the bad people don t do something bad with it.
5
SPEAKER_01
But this is here to stay and it has a lot of upside.
5
SPEAKER_01
We should basically
5
SPEAKER_01
create thoughtful regulation and celebrate it and actually encourage this innovation to happen in the US.
5
SPEAKER_01
That s a huge change from just three years ago, where it was probably 30% of people saying that now it s like 60.
5
SPEAKER_01
It s like almost double.
5
SPEAKER_01
It s getting harder to find like true crypto skeptics in DC.
5
SPEAKER_01
I d say that, you know,
5
SPEAKER_01
Maybe maybe only like 20 or 30% of people are like willing to say something negative, like they actually think it s net negative.
5
SPEAKER_01
It s like it s really hard to defend that position at this point, because almost like one in five Americans have used or tried crypto at this point.
5
SPEAKER_01
So you re kind of condemning 20% of your fellow citizens if you say that at this point.
5
SPEAKER_01
You know, especially with NFTs and all these things like a huge segment of people who don t even care about investing or whatever came into the space.
5
SPEAKER_01
So.
5
SPEAKER_01
And then basically that s that same conversation is happening.
5
SPEAKER_01
But, you know, delayed by a few years in in like India and Europe and in some Asian countries, and some countries have really embraced crypto and they re like trying to really
5
SPEAKER_01
they re ahead of where the US is because they re trying to actually attract the best startups and entrepreneurs like, you know, like Dubai and UK and Australia and all are kind of pushing good regulation.
5
SPEAKER_01
El Salvador actually, I guess, adopted it as like Bitcoin as a legal tender.
5
SPEAKER_01
There was another country, Central African Republic, I think that is supposedly did that as well.
5
SPEAKER_01
But, you know, there s countries like China that are more autocratic that are saying, hey, this is a threat to our power.
5
SPEAKER_01
And like, we re going to try to really curtail it.
5
SPEAKER_00
So what kind of regulations are there that you feel the most that are limiting or that are empowering?
5
SPEAKER_00
Like is there specific examples?
5
SPEAKER_01
Yeah.
5
SPEAKER_01
Okay.
5
SPEAKER_01
So, um, I mean, basically I think the securities laws in the U S need to be clarified about, um, what there s crypto is many different things.
5
SPEAKER_01
That s what people don t realize.
5
SPEAKER_01
So like some crypto, like Bitcoin, Ethereum, and many others are probably more like commodities.
5
SPEAKER_01
Um, they re not controlled by any one person, you know, like anyway, there s people who want to raise money for a company.
5
SPEAKER_01
That s sounds more like a security that should be regulated by the sec commodities regulated by the CFTC.
5
SPEAKER_01
Then there s some cryptocurrencies which are more like currencies, like stablecoins and central bank digital currencies.
5
SPEAKER_01
And those are probably, you know, should be regulated by the treasury or someone like that.
5
SPEAKER_01
And then there s a whole another category of cryptocurrencies, which are none of those things.
5
SPEAKER_01
They re NFTs like artwork or they re metaverse items or decentralized identity and voting.
5
SPEAKER_01
And so I think that there s a very unhelpful point of view out there by some folks, which is
5
SPEAKER_01
Hey, this is all, most of this is like bad activity.
5
SPEAKER_01
We need to shut it down.
5
SPEAKER_01
So we re just going to pursue enforcement actions or something like that.
5
SPEAKER_01
Most people in DC don t feel that way anymore.
5
SPEAKER_01
And I think the people of the U S don t feel that way anymore because a lot of them are using this stuff.
5
SPEAKER_01
And their, their general view is there s a lot of upside potential here.
5
SPEAKER_01
We can all agree.
5
SPEAKER_01
Let s get rid of the fraud and the scams.
5
SPEAKER_01
We all want to get rid of that.
5
SPEAKER_01
So let s create a relatively simple test, which says, you know, if it s like,
5
SPEAKER_01
Nobody controls more than 20% of it or some threshold.
5
SPEAKER_01
It probably is more like a commodity.
5
SPEAKER_01
If someone s raising money for they re selling this thing for a business, then it s probably a security.
5
SPEAKER_01
And then, you know, if it s more like a medium of exchange, it s a currency.
5
SPEAKER_01
And if it s none of those things, maybe it s artwork or whatever.
5
SPEAKER_01
A legal test like that would help clarify who, which regulator is regulating what.
5
SPEAKER_01
And then, you know, we also want to have probably like a sandbox for innovation where if you re a startup and you re doing less than, I don t know, some number, less than some amount of payment volume or customer funds you re storing, it s like, just let those things get off the ground without a soul-crushing amount of legal bills, you know, and uncertainty.
5
SPEAKER_01
If the US can get there, that would be great.
5
SPEAKER_01
I think a bunch of other countries now are rushing around the world to sort of create that regulation that does attract innovation.
5
SPEAKER_01
And so in the international bodies like IMF and G20 and stuff, they re starting to look at proposed regulation.
5
SPEAKER_01
I hope that Coinbase and a bunch of other crypto companies can help in that conversation too.
5
SPEAKER_01
We have a whole policy effort.
5
SPEAKER_01
I think actually crypto policy efforts are like probably one of the biggest things in DC right now.
5
SPEAKER_01
It moves it moves slow at the speed of government.
5
SPEAKER_01
But yeah, and in the meantime, we re just trying to help more and more people use crypto because ultimately, that s what in the democracies, that s what they care about.
5
SPEAKER_01
Like, they ll do what the people of the country want.
5
SPEAKER_00
Do you want governments to start understanding differences between, in the crypto space, commodities, securities, currencies, NFTs?
5
SPEAKER_00
I still don t understand.
5
SPEAKER_00
What are they supposed to make sense of NFTs?
5
SPEAKER_00
What is NFTs exactly from a perspective of a regulator?
5
SPEAKER_00
Is it the other categories?
5
SPEAKER_00
Is that how you-?
5
SPEAKER_01
Yeah, you know, most NFTs you could think of as like artwork, although it s, who knows where it s gonna go?
5
SPEAKER_00
It could be- Well, you mentioned metaverse, right?
5
SPEAKER_00
You mentioned some kind of unique identity of a thing.
5
SPEAKER_01
Yeah, like, I mean, there s people selling virtual land in NFTs.
5
SPEAKER_01
I actually, I bought this NFT that s like, it s like citizenship in this like city, Dow in Wyoming.
5
SPEAKER_01
Like I ve never been there, but it s almost like a, like a, like a badge or attestation, like to get access to this location.
5
SPEAKER_01
There s like people doing like tickets to events.
5
SPEAKER_01
Like, you know, they re called a POAPs, like proof of attendance and things like that.
5
SPEAKER_01
So it ll be very interesting to see where NFTs go over time.
5
SPEAKER_01
And that s the danger.
5
SPEAKER_01
You don t want to try to define the regulation if you don t even know where this thing s going to go.
5
SPEAKER_00
And so your efforts on the policy arm is education?
5
SPEAKER_01
Yeah, education, advocacy.
5
SPEAKER_01
We re just trying to be like a helpful educational resource, essentially.
5
SPEAKER_01
And then if they give us feedback and like, hey, don t do this or don t or do this, like we re more than happy to do anything that s requested.
5
SPEAKER_01
We generally go get licenses and we ve just tried to do the right thing in the absence of clarity because
5
SPEAKER_01
If it s not clear what the law says, then you should just basically do good things that you think may be required in the future to show good faith effort towards the right thing.
5
SPEAKER_01
And that s part of innovating in a regulated field, which is a whole topic in itself.
5
SPEAKER_00
So if you are at the table, this is less the case in the United States, but can government agencies seize a person s cryptocurrency by forcing Coinbase to hand it over?
5
SPEAKER_00
So when you re centralized, they have a phone number to call.
5
SPEAKER_01
Okay, so this is a complicated topic.
5
SPEAKER_01
Like, if you really want to be sure that, this is why people want to store their own crypto, right?
5
SPEAKER_01
Like with self-custodial wallets, like with Coinbase Wallet and bracing decentralization, they want to avoid that.
5
SPEAKER_01
Now, in the US, there is rule of law, right?
5
SPEAKER_01
So we have reasonable protections in place around like search and seizure and things like that.
5
SPEAKER_01
You know, Coinbase does, we publish transparency reports on this.
5
SPEAKER_01
We get subpoenas, court orders, things like that from various countries around the world.
5
SPEAKER_01
And there are situations where we have been ordered to freeze accounts, things like that.
5
SPEAKER_01
We have to follow the law, is another way to put it.
5
SPEAKER_00
We re a regulated financial service business, and so... If the money is used as part of breaking the law, that s what that, in a particular jurisdiction, in a particular... Right, and then the other thing, sometimes we will actually get court orders or subpoenas that are overly broad.
5
SPEAKER_01
We ve seen, so they need to follow
5
SPEAKER_01
due process, right?
5
SPEAKER_01
And so we ve seen some in the past that were like, well, we need you to freeze this huge number of accounts.
5
SPEAKER_01
And it s like, well, we ll actually gone to court and like push back on some of these and said, like, what is your probable cause?
5
SPEAKER_01
And is that has the threshold been met?
5
SPEAKER_01
And like, we ve won some of those cases on behalf of our customers.
5
SPEAKER_01
So yeah, it s actually really
5
SPEAKER_01
It s kind of unfortunate and frustrating.
5
SPEAKER_01
As a large business, you spend a lot of resources basically interacting with inbound requests by all kinds of lawyers and people and requesting things.
5
SPEAKER_01
And some of them are silly and ridiculous, and you have to push back and say no.
5
SPEAKER_01
And so it s kind of a tax on every company at a certain size, which ultimately gets passed on to the customer in higher fees.
5
SPEAKER_01
So you have to employ armies of lawyers to deal with this stuff.
5
SPEAKER_00
Can you educate me on something?
5
SPEAKER_00
How much innovation is there in the legal space?
5
SPEAKER_00
So for lawyers working with Coinbase, because it s such a new, cutting edge thing.
5
SPEAKER_00
So you re, there s a lot of gray area you re supposed to be operating under.
5
SPEAKER_00
Like how hard is it being a lawyer at Coinbase?
5
SPEAKER_00
Like how much precedence is there, I guess is what I m asking.
5
SPEAKER_00
I mean, just like you said, three years.
5
SPEAKER_00
It s kind of a new space.
5
SPEAKER_01
Yeah.
5
SPEAKER_01
Well, it s probably very hard to be a lawyer at Coinbase and very fun because, you know, whenever you re in a new field that s growing fast, there isn t a lot of case law and just precedent set.
5
SPEAKER_01
So that s also an opportunity for you to go create that stuff.
5
SPEAKER_01
And that s what a lot of legal careers are made out of is like, take a complex situation where you have to balance difficult things like, how do we prevent bad activity, but still enable an innovation?
5
SPEAKER_01
That s a hard question.
5
SPEAKER_01
And there s, you can go draft legislation and circulate it to policymakers or come up with these policies and, you know, how do you operate a business in an environment where the law is just unclear, right?
5
SPEAKER_01
It s like, try to do the right thing, but like, you know, strike the right balance.
5
SPEAKER_01
So yeah, a lot of our lawyers have to come up with that, very creative stuff.
5
SPEAKER_00
You mentioned one of the things you re focused on is expanding the number of people, maybe a billion people.
6
SPEAKER_00
people on Coinbase are using cryptocurrency.
6
SPEAKER_00
Where are we at now?
6
SPEAKER_00
How do we get to a billion?
6
SPEAKER_01
As of Q4 last year, we had 89 million verified accounts on Coinbase.
6
SPEAKER_01
But in any given quarter, only, you know, maybe
6
SPEAKER_01
10 or a little more million of those are like really active.
6
SPEAKER_01
And then if you look at globally, I think some of the estimates I ve seen is maybe there s like 200 million people or something like that who have ever used or tried crypto.
6
SPEAKER_01
So we re a long, you know, we re a ways from a billion, but it s not like that far off.
6
SPEAKER_01
How do you get there?
6
SPEAKER_01
How do you get to a billion?
6
SPEAKER_01
So a few things.
6
SPEAKER_01
One is the blockchains have got to become way more scalable.
6
SPEAKER_01
It s kind of like we re all running dial-up modems, and we need broadband.
6
SPEAKER_01
And so it s just like, too expensive, too slow to do all these transactions.
6
SPEAKER_01
And I think if we just get L2s working and scalability, you know, we ll see another order of magnitude kind of come out just from that.
6
SPEAKER_01
I think the second one would be more clear regulation.
6
SPEAKER_01
That would help a lot.
6
SPEAKER_01
I do talk to pension funds and various asset managers, sovereign wealth funds and stuff.
6
SPEAKER_01
And a lot of them tell me, we ve got 1% of our portfolio in crypto today.
6
SPEAKER_01
But we really would rather have like 20% in there.
6
SPEAKER_01
But what we re waiting for is more clear regulation coming out and saying that clear test that I was saying.
6
SPEAKER_01
These assets are commodities regulated by SEC.
6
SPEAKER_01
These are by SEC.
6
SPEAKER_01
These are by Treasury, whatever.
6
SPEAKER_01
So that would be a big unlock.
6
SPEAKER_00
Do transactions.
6
SPEAKER_00
So one of the things that you mentioned payments.
6
SPEAKER_00
Sorry.
6
SPEAKER_00
Yeah.
6
SPEAKER_00
Well, does that unlock a lot of users?
6
SPEAKER_01
Yeah, it does.
6
SPEAKER_01
I mean, remittance is like a huge thing, people sending money home to their families in other countries, where the fees are super high.
6
SPEAKER_01
So yeah, if we get blockchains to be more scalable, and there s more global adoption, like I think we ll see remittance quarters move over to crypto a lot.
6
SPEAKER_01
There s also just the other thing that s driving a lot of crypto adoption is basically the creation of more and more third party apps.
6
SPEAKER_01
So or dapps, they re sometimes called decentralized apps.
6
SPEAKER_01
So a lot of startups now, you know how like used to use in the early 2000s, they called them.com startups, but now you don t need to say.com because everybody s using the internet.
6
SPEAKER_01
And so now there s like, hundreds or 1000s of these crypto startups.
6
SPEAKER_01
But I think in the future, you won t need to call them crypto startups because they ll just be called startups because everyone s using the Internet and crypto and whatever.
6
SPEAKER_01
So anyway, the use cases, the utility of crypto is getting better and better with like all these third party apps getting funded and created.
6
SPEAKER_00
And do you think there s going to be a killer or a set of killer dApps, like a thing where nobody can live without?
6
SPEAKER_00
Are we still waiting for that?
6
SPEAKER_01
There s going to be a bunch of them.
6
SPEAKER_01
It s just like, it s like the internet, like what were the killer web companies, you know, like Uber and Wikipedia and Airbnb and Google.
6
SPEAKER_01
And like, so there s going to be some big winners, but there ll be thousands of, this is basically the new, it s like what happened with the.com startups in the early 2000s.
6
SPEAKER_01
It s like a lot of the best entrepreneurs are building crypto startups now.
6
SPEAKER_01
So tons of venture money flowing into the space, a lot of smart young people.
6
SPEAKER_01
So.
6
SPEAKER_00
Do you think Bitcoin or some other cryptocurrency will become the reserve currency of the world at some point?
6
SPEAKER_01
So this is kind of a controversial idea, but I actually think, yes, I do think Bitcoin could end up becoming a reserve currency of the world.
6
SPEAKER_01
So I ve been reading Ray Dalio recently with his new book, The Changing World Order, and I thought it was a really well-researched book.
6
SPEAKER_01
He talks in there, he looks back at history, right?
6
SPEAKER_01
He looks at empires and going back to various Chinese empires, the Dutch and Ottomans and everybody.
6
SPEAKER_01
how did they rise and they were able to have the reserve currency as they rose and what produced that?
6
SPEAKER_01
It came from good education and innovation and better trade.
6
SPEAKER_01
Anyway, so the US by some measures looks like it s maybe had a really good run and it s coming down a little bit and China is coming up.
6
SPEAKER_01
Who knows how that ll play out, by the way?
6
SPEAKER_01
The world is very complicated.
6
SPEAKER_01
That could switch.
6
SPEAKER_01
But I guess
6
SPEAKER_01
If the U.S.
6
SPEAKER_01
dollar is going to be seeing more inflation in the future, the Chinese yuan is not like necessarily better, right?
6
SPEAKER_01
I mean, they have a ton of debt as well.
6
SPEAKER_01
And, you know, it s not like you could really... the yuan could be inflated as well, right?
6
SPEAKER_01
It probably will be.
6
SPEAKER_01
And so I do think that there s this group of people today, which probably most traditional
6
SPEAKER_01
I don t know, like the people who run big banks and like governments and stuff that they re not, this is not really on their radar today.
6
SPEAKER_01
But I think there s, there s a basically a group of younger people in that kind of, you know, 2535 year old range who are tech savvy, they re starting to think of crypto as like the primary thing in their financial life.
6
SPEAKER_01
It s like, I basically hold my wealth in crypto.
6
SPEAKER_01
And I use
6
SPEAKER_01
dollars or euros or whatever, if I happen to need something, I convert it to that last minute.
6
SPEAKER_01
If I m traveling, I might convert some local currency in the moment, but that s not where I hold most of my wealth.
6
SPEAKER_01
This segment of the population is not massive yet from a GDP point of view, but I think it s a leading indicator of where things could be going.
6
SPEAKER_01
This is actually good for the world.
6
SPEAKER_01
It s kind of like
6
SPEAKER_01
especially if China does continue to rise and it has a more authoritarian view, it ll be kind of this very centralized East versus a decentralized West, where people are in the West, in the free world, really kind of embracing crypto and a more open, fair, free, global financial system, which I think will be enormously beneficial for humanity.
6
SPEAKER_01
And I do think basically Bitcoin is the reserve currency, the gold standard of the crypto economy.
6
SPEAKER_01
So that s pretty crazy.
6
SPEAKER_00
Yeah, the gold standard.
6
SPEAKER_00
I mean, it s also like with Ray Dalio.
6
SPEAKER_00
I feel like China will drive a lot of this, either in response or directly.
6
SPEAKER_00
I think the ruble, I m not paying as close attention to the financial systems, but I think they re trying to tie it to gold once again.
6
SPEAKER_00
So that s an interesting, maybe it ll be one of the more authoritarian regime that will switch to a Bitcoin standard first.
6
SPEAKER_00
And then it s the West that will,
6
SPEAKER_00
out of that pressure will catch up versus the other way around.
6
SPEAKER_00
It s fascinating to think of what is the forcing function, what kind of perturbation is required to switch, to change anything, honestly, about the financial system.
6
SPEAKER_00
It could be, as you re saying, just waiting for the people that are young now that are embracing crypto to enter the positions of power, essentially.
6
SPEAKER_00
But I hope that s not the case, because that s, if for any innovation we have to wait, sorry to say, for the older folk to pass away, that s not an efficient way to make change.
6
SPEAKER_01
Yeah, that s a super interesting topic of how people s minds become less plastic as they age.
6
SPEAKER_00
I guess it s a feature.
6
SPEAKER_00
It s called wisdom, but then we also need the wild ones to explore.
6
SPEAKER_00
Exploration versus exploitation.
6
SPEAKER_00
You wrote a blog post that s really interesting in September 2020 titled, Coinbase is a mission-focused company, like what we re talking about.
6
SPEAKER_00
So one interesting thing you said in that blog post is that we re not going to be distracted by sort of activism within the company that s not related to the mission of the company.
6
SPEAKER_00
Now that s a rare thing for a company to state, for a company CEO to state, especially in this climate.
6
SPEAKER_00
Can you, first of all, describe in a little more detail what you meant?
6
SPEAKER_00
Did you receive blowback for this?
6
SPEAKER_01
I definitely received some blowback, but yeah, I ll describe what I meant, and if you want to talk about how it came to that too, we can talk about that.
6
SPEAKER_01
But what I meant is that
6
SPEAKER_01
There s a lot of companies right now, including tech companies, but not exclusively, where... I think great companies, they have an important mission.
6
SPEAKER_01
They re trying to do something really good for the world.
6
SPEAKER_01
And unfortunately, they re getting a little distracted from that at times because of employee activism that is causing the...
6
SPEAKER_01
company to basically jump into whatever the current thing is and try to help is like the positive interpretation, you know, the negative interpretation would be to virtue signal.
6
SPEAKER_01
And my view is that this is actually kind of destructive to this is largely an American company phenomenon, by the way, I do worry that this is making America less competitive.
6
SPEAKER_01
Even though I think of myself as kind of internationally minded, but I you know, I am a US citizen have a lot of my whole life here.
6
SPEAKER_01
So
6
SPEAKER_01
When we put out this statement, we had employees that were not in the U.S.
6
SPEAKER_01
who were confused by it.
6
SPEAKER_01
They were like, why did Brian need to say that?
6
SPEAKER_01
He was just saying you re gonna focus on work at work.
6
SPEAKER_01
That s what we were doing already.
6
SPEAKER_01
And there was certain pockets of the U.S., certain cities in particular, where we had employees that a very peculiar cultural phenomenon had evolved where I think people really wanted the company they worked at to be
6
SPEAKER_01
you know, almost acting like the government or something and like trying to solve the hardest societal issues and at least have an opinion on it, if not contribute to the solution on almost everything.
6
SPEAKER_01
And for me, I kind of, you know, it was a very uncomfortable situation for me as a CEO.
6
SPEAKER_01
I d never quite been in this situation where
6
SPEAKER_01
Most of the time when employees in the past were asking me questions, they would be asking about like, how do we make this product better?
6
SPEAKER_01
What do we do with this competitor?
6
SPEAKER_01
What about this regulator?
6
SPEAKER_01
And it got to a place around that time where most of the questions we were receiving were, I think, even about things not related to the company.
6
SPEAKER_01
They were about broader societal issues, like, Brian, what s your stance on XYZ controversial thing?
6
SPEAKER_01
And, you know, it was... I often, like, didn t have an opinion on these really hard questions, right?
6
SPEAKER_01
And I didn t really... I felt like it was distracting the company.
6
SPEAKER_01
People internally were getting into fights a lot, too.
6
SPEAKER_01
disagreeing with each other.
6
SPEAKER_01
There was a thing where the Slack internally was turning into social media almost with people putting in flame wars.
6
SPEAKER_01
And this culminated, by the way, with a walkout that happened in the company.
6
SPEAKER_01
We had received some demands from employee groups about various things.
6
SPEAKER_01
And there was basically an antagonistic thing with management and employees.
6
SPEAKER_01
And I was like, we re all on the same team here.
6
SPEAKER_01
If you want to be antagonistic, let s do it with somebody else outside the company that we re trying to improve the world in that dimension.
6
SPEAKER_01
Eventually, I was like, okay, the company is not aligned on this.
6
SPEAKER_01
I don t like the job as CEO, frankly.
6
SPEAKER_01
If the job is to come in here every day and have to squirm in front of the most difficult societal questions, I don t think I want to do that job.
6
SPEAKER_01
Either they re going to have to go or I m going to have to go.
6
SPEAKER_01
I founded this company and I really believe in the mission, so they re going to have to go.
6
SPEAKER_01
What I realized was that I made an exit package available to anybody who wasn t on board with this direction.
6
SPEAKER_01
5% of employees took it.
6
SPEAKER_01
I got the company realigned towards this mission.
6
SPEAKER_01
We re all here to do work.
6
SPEAKER_01
By the way, people can, they can go do anything like political or social activism outside of work.
6
SPEAKER_01
It s totally fine.
6
SPEAKER_01
Like we all, everybody has stuff like that in their personal life.
6
SPEAKER_01
But while at work, we can also disagree at work, by the way, on the work.
6
SPEAKER_01
You know, this is not like a no disagreement culture.
6
SPEAKER_01
Like we should, let s try to get the truth.
6
SPEAKER_01
But don t bring stuff into work that s just going to create division.
6
SPEAKER_01
Make the workplace a refuge from division about all these crazy things.
6
SPEAKER_01
And like, we re all aligned here to work on the mission.
6
SPEAKER_01
Let s do that.
6
SPEAKER_00
Yeah, that was really, really, really refreshing to hear.
6
SPEAKER_00
So this is me speaking, but there s a sense when companies take on these issues publicly from a CEO position or anywhere else, that it does seem to optimize for virtue signaling versus solving a particular problem.
6
SPEAKER_00
Because to solve a particular problem, you really have to hire a huge number of people.
6
SPEAKER_00
You basically have to create a company within a company to take on a particular thing.
6
SPEAKER_00
But if you allow yourself to internally care,
6
SPEAKER_00
about a particular issue, you re basically pacifying some number of employee, like making sure Slack doesn t get out of hand, and then you re doing this kind of, from my perspective, especially on issues I care about, fake virtue signaling, basically trying to understand what will make me look the best, what will make the company look the best in this particular aspect.
6
SPEAKER_00
And it just seems very shallow.
6
SPEAKER_00
And it s optimizing for the wrong thing.
6
SPEAKER_00
Not for the solving of the problems, but for the making yourself look like the good guy.
6
SPEAKER_00
And trying to then leverage that to say I m the good guy in all situations.
6
SPEAKER_00
And it s the wrong thing.
6
SPEAKER_00
And perhaps from your perspective as a CEO, as a leader, it s also creating
6
SPEAKER_00
division, unnecessary division within people.
6
SPEAKER_00
Yeah, there s something about us that gets extremely argumentative about certain topics.
6
SPEAKER_00
They really bring out the emotion.
6
SPEAKER_00
And I think that probably, as you were saying, that emotion is even probably okay, maybe productive, when that emotion has to do with the mission of the company.
6
SPEAKER_00
Like you really care about those disagreements versus something that has nothing to do with a particular
6
SPEAKER_00
with increasing economic freedom using crypto.
6
SPEAKER_00
Yeah, it s fascinating, but it was so refreshing because it s rare.
6
SPEAKER_00
Why do you think that s rare?
6
SPEAKER_00
The city you re mentioning, I mean, there s a bunch of cities, but San Francisco is one such city when that culture, and it s sad because San Francisco is also, the Bay Area is also the hub
6
SPEAKER_00
historically of some of the greatest innovation in human history.
6
SPEAKER_00
So there s that tension.
6
SPEAKER_00
How did that culture emerge there where the innovation was done by people that are very mission-driven.
6
SPEAKER_00
You get a bunch of smart people together to solve a difficult problem.
6
SPEAKER_00
They get maybe sometimes too much blinders on, but they try to balance that, because it requires that focus to solve an actual problem, and yet that s also the place where this culture emerged.
6
SPEAKER_00
It s a fascinating human dynamic.
6
SPEAKER_00
I don t know.
6
SPEAKER_00
Somebody will one day tell the history of Silicon Valley, not just the innovation, but the social dynamics that occurred there.
6
SPEAKER_00
Anyway, why do you think that s so rare?
6
SPEAKER_01
Well, because people don t wanna get attacked.
6
SPEAKER_01
It s like super, you don t wanna get canceled, right?
6
SPEAKER_01
It s super uncomfortable.
6
SPEAKER_01
Nobody wants to be called a racist or whatever people wanna say on Twitter.
6
SPEAKER_01
So- Did you get attacked?
6
SPEAKER_01
Yeah, yeah, I definitely got attacked.
6
SPEAKER_01
I mean, and I knew it would be controversial.
6
SPEAKER_01
The only reason I did it, frankly, was that I was kind of at my wit s end.
6
SPEAKER_01
I was like,
6
SPEAKER_01
Well, like I said earlier, the CEO job sucks.
6
SPEAKER_01
Either I don t want to do it, or they have to go, and I m going to make the company into something that I want.
6
SPEAKER_01
I d spent eight or nine years of my life at that point building this thing.
6
SPEAKER_01
I was like, well, I could go start another company, but it takes a long time to get momentum with these things.
6
SPEAKER_01
Coinbase is a very rare thing that happened in the world.
6
SPEAKER_01
I feel very passionate about it.
6
SPEAKER_01
So yeah, I m not going to go.
6
SPEAKER_01
I need to make this the company that I want to work at.
6
SPEAKER_01
And what was really interesting was that there was such a huge outpouring of support.
6
SPEAKER_01
So I knew that it would be controversial and I would get attacked.
6
SPEAKER_01
And predictably, there was some
6
SPEAKER_01
some journalists and, you know, New York Times and all these people who kind of like went and started writing hit pieces on the company shortly thereafter.
6
SPEAKER_01
And they basically just call people who ve left the company and like, you know, can get quotes on whatever they want and then they ll write a story.
6
SPEAKER_01
So mainstream media, I lost a lot of trust in mainstream media, frankly, after that.
6
SPEAKER_01
And of course, it s kind of become obvious since then that most mainstream media is like hyper politicized at this point.
6
SPEAKER_01
It s basically either super left or super right.
6
SPEAKER_01
And it s not really that focused on
6
SPEAKER_01
Um, truth.
6
SPEAKER_01
So that s, that s kind of unfortunate.
6
SPEAKER_01
Um, cause I think journalism is actually like really important in society.
6
SPEAKER_01
So that, that whole thing got eroded in the U.S.
6
SPEAKER_01
Luckily there s sort of new media, people like you, um, and a whole bunch of people.
6
SPEAKER_00
Did that blog post help that statement, the, the 95 people that remained, is this still something you struggle with?
6
SPEAKER_00
Because there, it s also a culture of the broader tech space.
6
SPEAKER_01
Okay, so that was an interesting thing, which was that so the 95% of people stayed, I got a huge outpouring of support from people who
7
SPEAKER_00
said, thank God you finally spoke up and said something because, frankly, it was making it not a very fun place to work either.
7
SPEAKER_00
And I realized that there is, I think there was a, I think Nassim Taleb has this blog post about the tyranny of the 1% or something like that.
7
SPEAKER_00
But there s basically a relatively small group, 1-5% or something like that, that is
7
SPEAKER_00
really upset about something.
7
SPEAKER_00
It s not the majority of the company, it s like 5%.
7
SPEAKER_00
There s another 15% or something that are sympathetic to the cause, they re actually somewhat suggestible, they will move go along with whatever, because it sounds reasonable, you know, these are like real issues they re talking about.
7
SPEAKER_00
It s not not to say that it s not real.
7
SPEAKER_00
And they ll kind of get swept up in it.
7
SPEAKER_00
But there s an 80% of the company that basically
7
SPEAKER_00
doesn t agree or just wants to get their work done without all this drama and or distraction.
7
SPEAKER_00
And they re afraid to speak up because if they speak up, they re afraid of being again called a racist, like fired, you know, ostracized amongst their peers.
7
SPEAKER_00
And so it did require
7
SPEAKER_00
it to get to a bad enough place for me to finally say, you know what, I just I feel like I have to do this, live through the short term attacks of the press, which ultimately was very freeing for me, because now I don t really care.
7
SPEAKER_00
And now I can actually just build the company that I want to build without like caring about that.
7
SPEAKER_00
So and then what was cool was a lot of really great people reached out to the Coinbase to after that, and we re like,
7
SPEAKER_00
I m an early engineer at Google or wherever, and this culture has gotten messed up.
7
SPEAKER_00
And I want to work at a company that s willing to stand for that.
7
SPEAKER_00
And so we ve gotten a lot of good people come over.
7
SPEAKER_00
Basically, what I realized... And by the way, our diversity numbers and all that stuff... People told me when I was drafting this post, they re like, don t post this.
7
SPEAKER_00
People, underrepresented groups will never want to work at this company again.
7
SPEAKER_00
I don t think that s true.
7
SPEAKER_00
Like I talked to like our ERG groups, and they re not telling me they care about this stuff that much.
7
SPEAKER_00
They re telling me they just want to like be respected at work and do good work and contribute.
7
SPEAKER_00
So my gut was telling me that that advice was wrong.
7
SPEAKER_00
And like, I can tell you a year, a year after doing it, like our diversity numbers are basically either the same or better in every category.
7
SPEAKER_00
So that turned out to be false.
7
SPEAKER_00
Look, I hate to be polarizing on either dimension here.
7
SPEAKER_00
I just want to get good work done and build good stuff with technology.
7
SPEAKER_00
So I think companies should just have reasonable policies.
7
SPEAKER_00
You want to get rid of bias in hiring.
7
SPEAKER_00
You want to attract great people from all different backgrounds.
7
SPEAKER_00
We have Pledge 1%.
7
SPEAKER_00
We put 1% of the company equity into a foundation.
7
SPEAKER_00
I hope we re able to do good stuff with that.
7
SPEAKER_00
Let s give back in some way.
7
SPEAKER_00
But
7
SPEAKER_00
The main message, I guess, for me is the core mission, the core work that we re doing on economic freedom and just all of our products, that is the main value that we re contributing in the world.
7
SPEAKER_00
Let s just do that more and hopefully we can get from 89 million verified users to a billion or whatever.
7
SPEAKER_00
I just think that s how we ll have the biggest impact.
7
SPEAKER_01
It s tempting, though.
7
SPEAKER_01
It s so interesting how companies get tempted to help.
7
SPEAKER_00
Yeah.
7
SPEAKER_01
It s like, and you step in, and it s almost like a drug, and then you can t, you forget, I mean, like all of us in life, it doesn t have to be companies, you get distracted.
7
SPEAKER_01
and maintaining focus.
7
SPEAKER_01
You re absolutely right.
7
SPEAKER_01
The way for Coinbase to add value to the world is to maximize the mission that it s on, not other stuff.
7
SPEAKER_01
And when you get wealthier and more successful, it becomes more and more tempting to just help out in some other shallow ways.
7
SPEAKER_01
It s fascinating, and you just kind of brought that to light, so it was very refreshing, and it shouldn t be controversial to sort of focus on just getting stuff done.
7
SPEAKER_00
Well, let me ask you, I mean, do you think that this, it s, all these things tie together.
7
SPEAKER_00
There s like a general trend of like more censorship, you know, there s like more cancel culture.
7
SPEAKER_00
There s some of these like freedom values are kind of, you know, even like freezing people s accounts, like the trucker thing that happened.
7
SPEAKER_00
And it seems like there s a general trend of more authoritarian, you know, policies there.
7
SPEAKER_00
But do you think that do you feel like the tide is turning on that?
7
SPEAKER_00
Like there s counter examples to it we ve seen recently.
7
SPEAKER_00
Yeah.
7
SPEAKER_01
I think it s the last gasp of old way of doing things.
7
SPEAKER_01
And so there s desperation and so on.
7
SPEAKER_01
Because to be fair, it s kind of the internet, which is where s the source of a lot of this, where people have a voice, is making the power centers of the world really nervous.
7
SPEAKER_01
And so that s where that s coming from, I think.
7
SPEAKER_01
And the internet is tricky.
7
SPEAKER_01
It s weird.
7
SPEAKER_01
It s full of bots.
7
SPEAKER_01
It s full of misinformation of all kinds.
7
SPEAKER_01
Full of large groups with conspiracy theories and so on.
7
SPEAKER_01
And I mean misinformation broadly.
7
SPEAKER_01
People are misusing the word misinformation.
7
SPEAKER_01
Governments are just labeling random things with misinformation just to censor them.
7
SPEAKER_01
But I just think it s just like a new world where the internet is really finally taking hold, where there s billions of devices and everybody has a voice.
7
SPEAKER_01
It s almost, basically governments and powerful people are slightly losing hold of power and they re starting to freak out a little bit.
7
SPEAKER_01
That s it.
7
SPEAKER_01
And once you have young people that are coming up now,
7
SPEAKER_01
gain power, I think will rebalance everything.
7
SPEAKER_01
And then there s, yeah, like you said, promising signs that it s obvious that the majority of people want freedom.
7
SPEAKER_01
And that means a lot of things.
7
SPEAKER_01
That means economic freedom, that means freedom to have a voice, freedom to move around, freedom to act in the way they, you know, without reasonable sort of
7
SPEAKER_01
limitations by people that don t have their best interests.
7
SPEAKER_01
And I gain more hope from just regular people that are fighting and like demanding the being able to have freedom of speech, or more specifically sort of resisting crude overreach of government in the acts of censorship, at least in the United States.
7
SPEAKER_01
And hopefully that percolates out to the rest of the world that s struggling on a much more basic level where people are being put in prison for the words they say, not just banned from Twitter.
7
SPEAKER_01
What are some lessons from your failures and your successes about what it takes to run a company?
7
SPEAKER_00
I think one of the things that I ve learned about leadership is that
7
SPEAKER_00
know, I never really thought of myself as a very natural leader, to be honest.
7
SPEAKER_00
I don t think I was a natural leader.
7
SPEAKER_00
But so I always envisioned, you know, good leaders as like these military generals, like they seem so like confident, and they re just like bark orders, you know, like charge that hill and do this.
7
SPEAKER_00
And I was, I was actually like more introverted and kind of, you
7
SPEAKER_00
I wasn t really confident in the way I communicated.
7
SPEAKER_00
And so what I realized is that there s lots of different kinds of leaders.
7
SPEAKER_00
You can be any kind of CEO you want, right?
7
SPEAKER_00
I was kind of more of like a product technical focus CEO.
7
SPEAKER_00
And I preferred to sort of hear everyone s opinion.
7
SPEAKER_00
And it wasn t just gonna like render a decision in the room in some like kind of heated moment and like piss off half the people.
7
SPEAKER_00
I would be like, all right, I m gonna go think about it.
7
SPEAKER_00
And I ll send you my decision later today or tomorrow, whatever.
7
SPEAKER_00
And so I found ways to kind of make it work for me where I could basically, I always tried to avoid like,
7
SPEAKER_00
you know, when people getting like super emotional about something and like, I think their, their thinking, their judgment goes down.
7
SPEAKER_00
Right.
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SPEAKER_00
And it s like, never make a decision when you re angry.
7
SPEAKER_00
Right.
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SPEAKER_00
And so if I would always sort of try to get a sense of, are these people like trying to be right?
7
SPEAKER_00
Or are they trying to seek the truth?
7
SPEAKER_00
You know, and you can do these little tricks like, you know, okay, you argue that person s position and you argue the other one and like, see if you can genuinely represent it.
7
SPEAKER_00
Now I know you re listening and you know, these kinds of things.
7
SPEAKER_00
But I guess, sorry, getting back to your question about leadership, I think
7
SPEAKER_00
I basically just kept doing things that were a little outside my comfort zone, and then my comfort zone kept getting bigger and bigger.
7
SPEAKER_00
And so I think that s how you build confidence, is you do the thing that s scary and it s a little outside.
7
SPEAKER_00
When I first started Coinbase, I had never managed anybody.
7
SPEAKER_00
I would have been scared to death to have put out a very controversial opinion like that and sort of
7
SPEAKER_00
All right, 5% of people go, you know, we didn t know what percent it was going to be, by the way, it could have been 1%, it could have been 50%.
7
SPEAKER_00
But we went into it scary because it was a scary thing.
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SPEAKER_00
I was like, I don t know, I think this is right.
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SPEAKER_00
I m just going to do it.
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SPEAKER_00
So if you do enough scary things, you ll build the confidence.
7
SPEAKER_00
And I feel like I m still on that journey.
7
SPEAKER_00
Every year or two at Coinbase, there s some big thing that comes out that s like, oh my God, I didn t sleep well for a week, and this is the next level, right?
7
SPEAKER_00
But that s how you learn and grow.
7
SPEAKER_01
So you re still going up that mountain through the fog one step at a time.
7
SPEAKER_00
Yeah.
7
SPEAKER_01
Can I just quickly ask you about a couple other efforts that are super interesting that you re involved with?
7
SPEAKER_01
So first of all, a little bit more old school, fascinating effort of Research Hub.
7
SPEAKER_01
So what s that about?
7
SPEAKER_01
The GitHub for open science.
7
SPEAKER_00
Yeah, okay, so basically I ve had a chance to try to help a couple other companies get off the ground too, because I want to see various efforts out there succeed.
7
SPEAKER_00
And one of them, I ve always thought about like, why is scientific research
7
SPEAKER_00
not more like open source software?
7
SPEAKER_00
Or why couldn t it be much faster, right?
7
SPEAKER_00
And there s, you ve probably have seen this like in an academic setting, right?
7
SPEAKER_00
But there s all kinds of things that feel very antiquated to me about scientific research.
7
SPEAKER_00
Everything from the funding process and grants to how peer review works, to how you submit to journals, all the costs associated with journals.
7
SPEAKER_00
You know, the people, you d think like you d get paid for this or something, and it would then be available to all the taxpayers for free.
7
SPEAKER_00
But no, they re like, they re all paywalled.
7
SPEAKER_00
And there s like these big companies that have sort of
7
SPEAKER_00
in my view, kind of held back innovation here.
7
SPEAKER_00
So, and the preprint servers like bioRxiv and archive.org have really helped this, but those websites are, they look like they re kind of from like 15 years ago or something.
7
SPEAKER_01
It s a Craigslist or something.
7
SPEAKER_00
Yeah.
7
SPEAKER_00
So anyway, I, one of the things I, once Coinbase went public last year, I had a little bit of liquidity and I was like, all right, let me find a small team and let s see if we can
7
SPEAKER_00
if they can like go off and make something better here.
7
SPEAKER_00
So we have a prototype out there.
7
SPEAKER_00
It s at researchhub.com.
7
SPEAKER_00
People can check it out.
7
SPEAKER_00
And it s basically, you know, the first version is kind of like Reddit for science.
7
SPEAKER_00
There s like various hubs, which are like journals.
7
SPEAKER_00
But, you know, you can publish papers there.
7
SPEAKER_00
You can use an electronic lab notebook to sort of have a modern day paper, which is not just a PDF that s static, but it s a living document.
7
SPEAKER_00
Ideally, in the future, you can get comments and feedback from people in there.
7
SPEAKER_00
You can update it over time.
7
SPEAKER_00
We want people to be able to share the code and the datasets associated with their research papers, not just a PDF.
7
SPEAKER_00
In the future, we want to make it even where people can get funding for science through that site and even license out
7
SPEAKER_00
innovations that they ve made.
7
SPEAKER_00
Because the other thing I ve noticed in life is that there s kind of like, there s a bunch of people working on science, and there s a bunch of people building companies, and they very rarely intersect.
7
SPEAKER_00
But when they do, you get the best things like, like SpaceX, and Genentech, and even Google, and like, even Coinbase was based on a research paper, the Bitcoin white paper.
7
SPEAKER_00
And so most business people are like creating companies that don t have any scientific innovation.
7
SPEAKER_00
They re just like marketing based on, you know, whatever.
7
SPEAKER_00
And then a lot of scientists are making things which never actually benefit humanity because they re not commercialized and turned into products.
7
SPEAKER_00
And so if we can somehow create a translation layer between those two groups and help them
7
SPEAKER_00
you know, helps align the market forces, align scientific research to market forces so that they re more incentivized.
7
SPEAKER_00
Like if you if you discover CRISPR or something like that, like you should be a billionaire, you know, and like all the downstream implications of that, not going through some antiquated tech transfer office or whatever.
7
SPEAKER_00
And if you
7
SPEAKER_00
And if you re an entrepreneur, you should be looking to commercialize the latest scientific innovations.
7
SPEAKER_00
And so that s kind of like the long-term vision for that site.
7
SPEAKER_00
I think it s just an early step today, but we ve got like a really passionate community on there that are jumping into like, you know, computer science or longevity or various bio hubs or whatever, and like beginning to source the best innovations, but also discuss them, improve them and publish through the site.
7
SPEAKER_01
So I have a question about incentives, but first let me say, for people listening who are outside of academia might not be familiar with an absurd situation.
7
SPEAKER_01
So there s journals, like you mentioned, and scientists publishing those journals, and the journals provide very little value except matching you with reviewers that are unpaid.
7
SPEAKER_01
And so in the digital world, they re providing basically almost no value except hosting your paper.
7
SPEAKER_01
And they put up a paywall and charge people to access that.
7
SPEAKER_01
And that charge is not like even Netflix fees.
7
SPEAKER_01
You re talking about a lot of money.
7
SPEAKER_01
So they re basically blocking your research that should be wide open.
7
SPEAKER_01
out from the world and creating a paywall.
7
SPEAKER_01
It s a fascinating scam that s actually holding back, it s a shitty scam because you re not making that much money.
7
SPEAKER_01
I feel like a definition of a scam, you should at least be making money, a significant amount of money.
7
SPEAKER_01
You re basically making shady money and holding back all of human knowledge, okay.
7
SPEAKER_01
So that put aside, and people get a little confused because the journals aren t the ones paying the scientists.
7
SPEAKER_01
People think like the journals are somehow funding the scientists, therefore they have the right to put up a paywall.
7
SPEAKER_01
No, no, no, the funding is coming from elsewhere.
7
SPEAKER_01
Journals are the middle man that nobody asks for, especially in the digital world, anyway.
7
SPEAKER_01
That said, there is interesting kind of incentives for scientists, which is prestige and so on.
7
SPEAKER_01
So there s a thing with journals, if there s a prestigious journal and you pass the review process, you get into that journal, or a prestigious conference in computer science, then that s seen as a good thing in your resume.
7
SPEAKER_01
Oh, not just your resume, within your community, that s a respected thing.
7
SPEAKER_01
is there some way to achieve that same kind of incentive in the open setting of Research Hub?
7
SPEAKER_01
So like where I could say, I got X, Y, and Z, like look, I m impressive because this happened on Research Hub.
7
SPEAKER_00
I think you re right.
7
SPEAKER_00
The whole academia progress track is about where you got published and how many citations.
7
SPEAKER_00
It s kind of like a false economy of reputation because there s not real money backing it.
7
SPEAKER_00
I think we ve thought about this a little bit.
7
SPEAKER_00
And I think the Research Hub team has an opportunity to do something here that basically says, like, OK, I had the top paper for 2022 in, you know, biology on in here.
7
SPEAKER_00
And you basically publish a list, a leaderboards of these like the top.
7
SPEAKER_00
you know, for the month, the year, in all these different categories, then actually, you know, we should probably give out grants and awards.
7
SPEAKER_00
In addition to that, fund those people almost like fellows or even give out like, you know, like the Nobel Prize, there should be like a research hub prize or something and like ship people, maybe even ship like a print version of a journal that is the top papers in each category in each month or whatever.
7
SPEAKER_00
And like, people want to put that in their wall in the lab and like,
7
SPEAKER_00
So I do think we need to sort of change, I don t know, like the traditional folks in academia or science would probably think this is like crazy, a crazy idea, but I think we need to change the culture to not celebrate getting published in paywall journals, almost like friends don t let friends publish in like paywall journals, like, cause that s, it s just not helping humanity.
7
SPEAKER_00
So like, you know, it should be more prestigious to publish in an open science way.
7
SPEAKER_00
and get the top spot.
7
SPEAKER_00
That should be celebrated above being published in whatever, I don t even want to name one of them, you know?
7
SPEAKER_01
Well, there s currently, the culture has already shifted to where almost everybody publishes on archive and by archive and so on.
7
SPEAKER_00
Yeah.
7
SPEAKER_01
But, so the culture s there on that, that scene, friends don t let friends not publish open.
7
SPEAKER_01
But then the prestige thing is missing, which is like, anyone can publish an archive.
7
SPEAKER_01
So how do you know it s actually a strong paper?
7
SPEAKER_01
Now, funny enough, even with the crappy systems we have now,
7
SPEAKER_01
word of mouth is powerful, like you have a, like citation system is pretty powerful.
7
SPEAKER_01
So like you say, okay, this is a strong paper, we don t need reviewers, our human eyes are the reviewers, like the community is the reviewers.
7
SPEAKER_01
So it s already, like that part is there, but it would be nice to have like,
7
SPEAKER_01
you know, nature level, like this is a respectful accomplishment.
7
SPEAKER_01
And something like a leaderboard, but a stable kind of system.
7
SPEAKER_01
Yeah.
8
SPEAKER_00
And I should mention too, there s a crypto angle to this too, which is, so ResearchHub has a coin associated with ResearchCoin.
8
SPEAKER_00
And it s basically if people, you know, upvote your paper or like support it, you ll accumulate more ResearchCoin, which is basically like REP or like a reward token.
8
SPEAKER_00
And so that is a way to, I guess, measure the community s collective view of that paper, a form of peer review.
8
SPEAKER_00
And it can even be weighted by like the reputation of the people voting on it and that sort of thing over time.
8
SPEAKER_00
Yeah, I think the last thing I ll just say is that, so I think from a prestige point of view, it won t start off that way.
8
SPEAKER_00
It ll probably start off being a little more quirky.
8
SPEAKER_00
Remember when YouTube first started, it was people posting weird cat videos and stuff.
8
SPEAKER_00
But now, if you have a million subscribers on YouTube, that s probably better than getting a TV show on NBC or whoever the traditional gatekeeper was.
8
SPEAKER_00
So my hope, it might take 10 years, 20 years, whatever, but I m hoping that
8
SPEAKER_00
this can sort of be the new prestigious way that young people publish in science, and it ll come to be viewed as more prestigious.
8
SPEAKER_00
The traditional journals will be viewed as old-fashioned.
8
SPEAKER_02
Well, it s definitely a system that could do a lot better, and there s a lot of incredible, brilliant people doing science.
8
SPEAKER_02
They deserve better, the better platforms.
8
SPEAKER_02
So another thing you re taking on and helping out with is this new limit, which is looking at longevity.
8
SPEAKER_02
What s the idea there?
8
SPEAKER_00
Yeah, okay.
8
SPEAKER_00
So, as you can see, I m excited about science.
8
SPEAKER_00
Like, I think, you know, science is sort of the, basically, if you get scientific innovation, then you get better products, and you get better economic growth, and then you get all kinds of, like, surplus in society that can go to arts and philosophy and, like, all kinds of stuff.
8
SPEAKER_00
But with New Limit, so, yeah, I kind of got excited.
8
SPEAKER_00
I started hosting some dinners with scientists.
8
SPEAKER_00
last year and I was learning about all kinds of the latest stuff happening in bio.
8
SPEAKER_00
And there s a lot of really cool stuff happening with like CAR T cells and CRISPR and all these things.
8
SPEAKER_00
And anyway, one of the topics I started to learn more about was something called cell reprogramming.
8
SPEAKER_00
And, you know, people maybe have heard of this induced pluripotent stem cells where you could take like a skin cell and turn it back into a stem cell.
8
SPEAKER_00
And Shinya Yamanaka won the Nobel Prize for this work that was done in 2006.
8
SPEAKER_00
And
8
SPEAKER_00
You know, it s kind of a crazy thing.
8
SPEAKER_00
You can turn one cell into another type of cell.
8
SPEAKER_00
Well, people recently have been
8
SPEAKER_00
experimenting with different types of transcription factors that would either not, you don t want a cell to go all the way back to being a stem cell.
8
SPEAKER_00
You can end up getting like cancerous cells and things like that, but you want it basically to the cell to revert a little bit earlier in its, you know, it would call it the Waddington landscape, but it s basically like, it ll go, become act, start to act like a bit of a younger cell, but not to, to de-differentiate and become more like a stem cell.
8
SPEAKER_00
And so I decided this might be an interesting area to go fund.
8
SPEAKER_00
I think that that team has come together.
8
SPEAKER_00
There s like some really talented people who ve come together to help get that off the ground.
8
SPEAKER_00
And they re basically building a platform that can test a lot of different transcription factors on different cell types and hopefully find ways to rejuvenate different types of cells and tissues to extend human health span.
8
SPEAKER_00
I mean, the moonshot goal here, you know, the get to Mars is that there could be some therapy here that in, I don t know, 10 or 20 years that you take and from a whole body point of view,
8
SPEAKER_00
is sort of rejuvenating tissue, not just one type of tissue like your immune system, but eventually your whole body, maybe even your brain, so that we don t have that issue where people who are older have trouble learning or they re more ossified in their thinking.
8
SPEAKER_00
To me, this is just, I always think about
8
SPEAKER_00
you know, it s actually a little inspired by Elon, right?
8
SPEAKER_00
It s like, what are some of the biggest things in the world, like that are probably high technology risk, but if they did work, maybe they re kind of low chance of working, but if they did work, would have enormous impact.
8
SPEAKER_00
I like the idea of trying hard tech problems, especially for people like founders like me, who ve made some money in software, which I think we re in kind of like a golden age of software.
8
SPEAKER_00
So there s like fortunes to be made.
8
SPEAKER_00
But if you do make some money in that, my hope is people will like,
8
SPEAKER_00
do atoms, not bits, and try some of the harder things, like in biotech, or I guess he s doing cars and rockets and stuff, but anyway, I think we should try hard tech, or physical science problems as well, and see if that can advance for Team Human.
8
SPEAKER_02
Yeah, so he s also doing bio with Neuralink, and I feel like bio is tough.
8
SPEAKER_02
Because it s messy.
8
SPEAKER_00
We don t understand it as well.
8
SPEAKER_02
We don t understand it.
8
SPEAKER_02
The risk is higher in terms of, not the risk is higher, but you have to deal with the actual sort of, to get to human, to get to stuff where it could be therapies for actual human bodies.
8
SPEAKER_02
is tricky, because you have to prove that it s safe, it s effective, all those kinds of things with FDA.
8
SPEAKER_02
I mean, it s just, it s tricky.
8
SPEAKER_02
It s very difficult.
8
SPEAKER_00
It s a long journey, I mean.
8
SPEAKER_00
If I can give a quick plug.
8
SPEAKER_00
So, yeah, I m on the board at New Limit.
8
SPEAKER_00
We re hiring talented scientists that are interested in the cell reprogramming space.
8
SPEAKER_00
They don t necessarily have to be coming from an aging background or anything like that.
8
SPEAKER_00
There s sort of a small group of people doing even something.
8
SPEAKER_01
So this is a new thing?
8
SPEAKER_01
Is New Limit relatively new?
8
SPEAKER_00
Yeah, it s very new.
8
SPEAKER_00
There s a small team today, just a handful of people.
8
SPEAKER_00
And so we re hiring more there.
8
SPEAKER_00
If people are excited about that space, reach out.
8
SPEAKER_00
And same thing for Research Hub.
8
SPEAKER_00
There s a small team there that s really awesome, that s doing more like software engineering, design, product, that kind of stuff.
8
SPEAKER_02
What advice would you give, if you put on your old wise sage hat, what advice would you give to young people today?
8
SPEAKER_02
High school, maybe undergrad and college, about life.
8
SPEAKER_02
So like career, having a career they can be proud of, or maybe a life they can be proud of.
8
SPEAKER_00
So people can do whatever they want to be happy, right?
8
SPEAKER_00
So there s not one way to do it.
8
SPEAKER_00
I do think that some people, a particular type of people out there, a lot of people actually, they want to have an impact on the world.
8
SPEAKER_00
That s how they get a sense of fulfillment, right?
8
SPEAKER_00
So, I mean, you need to have like health, physical health.
8
SPEAKER_00
You need to have good relationships.
8
SPEAKER_00
Like there s lots of things, but most people want to do something important.
8
SPEAKER_00
They want to have fulfilling work, a way that they can feel like they re contributing.
8
SPEAKER_00
I think a lot of people, young people today are thinking like, you know, I should be an activist or something like that.
8
SPEAKER_00
And there s people in the world who have power and I don t, a lot of people who don t, I don t have power.
8
SPEAKER_00
And so the way to change the world is to, you know, speak truth to power or like criticize power and try to pressure them to change.
8
SPEAKER_00
To me, I don t think that s the right way to actually have an impact on the world because, you know, everybody has probably, I think people have more power than they realize.
8
SPEAKER_00
And by the way, it s easy to be a critic.
8
SPEAKER_00
It s hard to actually change these things and fix it.
8
SPEAKER_00
And so you ll get a lot of accolades from friends and things like that.
8
SPEAKER_00
If you kind of go around criticizing, you know, it s easy to do.
8
SPEAKER_00
Like everything is broken and could be better, including, you know, stuff I m working on.
8
SPEAKER_00
I find it so frustrating.
8
SPEAKER_00
There s a million things I want to be better about, like what we re doing in Coinbase.
8
SPEAKER_00
So, be the person in the arena.
8
SPEAKER_00
You know, like that Theodore Roosevelt quote, I think he said it, right?
8
SPEAKER_00
Like, go chew glass and stare into the abyss.
8
SPEAKER_00
Like, if you really want to have an impact, either join a company that has a mission that is trying to fix the thing you re passionate about, or start that company if it doesn t exist, or start a charity if it s not suitable to be a company or whatever it is, but go try to be a part of the solution.
8
SPEAKER_00
Don t just, you know, criticize or be a part of the problem.
8
SPEAKER_00
My hope is that more people can, you know, realize that they actually can have a meaningful impact that way.
8
SPEAKER_00
And I think that, to me, technology is actually one of the most important ways to improve the world.
8
SPEAKER_00
Like if you look at
8
SPEAKER_00
climate change, like a lot of the best ideas like carbon sequestration, all these things, it s a technology thing, right?
8
SPEAKER_00
If you want to try to fix education, it s like look at like Khan Academy and all the stuff going online, right?
8
SPEAKER_00
If you want to fix, you know, whatever, transportation and like the financial system and global freedom and like equality of all these things, like there s typically the way to get
8
SPEAKER_00
something changed in the world today is with technology.
8
SPEAKER_00
And so I do think people, it s very bizarre to me that there s this kind of like anti-tech thing going on.
8
SPEAKER_00
Look, no, nothing is perfect.
8
SPEAKER_00
Like if you create something new and like tens of millions of people use it or billions of people use it, it s like, there s going to be some bad people who use it too.
8
SPEAKER_00
Okay.
8
SPEAKER_00
And there s, you know, society is complicated, but like, I think
8
SPEAKER_00
most of these things have been net positive because most people in the world are good is at least my view.
8
SPEAKER_00
So yes, we can mitigate like the 1% of bad people trying to, you know, abuse something.
8
SPEAKER_00
But 99% of people in the world are good.
8
SPEAKER_00
And the way you can improve the world is with technology, joining companies, starting companies that are working on the right stuff.
8
SPEAKER_00
So I hope I hope more young people do that.
8
SPEAKER_00
And just if you re not sure what to do, like just get started with anything.
8
SPEAKER_00
That s how you learn.
8
SPEAKER_02
and basically have the optimism that you have the power to do the change.
8
SPEAKER_02
So it s easy to distract yourself by being the critic.
8
SPEAKER_02
That s almost like acknowledging to yourself that that s all you can be.
8
SPEAKER_02
But basically everybody has the power to be the fixer.
8
SPEAKER_02
I like chew glass and look into the abyss.
8
SPEAKER_02
That s much more fun than it sounds.
8
SPEAKER_02
What do you think is the meaning of this whole thing?
8
SPEAKER_02
Why are we here?
8
SPEAKER_02
What s the meaning of life?
8
SPEAKER_02
What s this existence we got?
8
SPEAKER_02
You re trying to increase the amount of economic freedom on this planet Earth, trying to alleviate some of the suffering, but why?
8
SPEAKER_00
I don t really think there is any point to life.
8
SPEAKER_00
Somebody once told me, if you go into these really big existential questions, it can get a little scary, because you stare off the cliff and there s nothing there.
8
SPEAKER_00
This one person told me one time, they were like, Brian, you should probably snorkel, don t scuba.
8
SPEAKER_00
I guess, and I think they were trying to say like, some of my friends have done this, right?
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They ll go to like, you know, epic meditation retreats and like, they ll kind of come back with all this existential dread of like, what s the meaning of it all?
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And then like, as far as I can tell, we are just some organic molecules in the ocean started like dividing and replicating and the selfish gene and all this stuff like basically ended up here.
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And our only, it s some kind of like really naive algorithm that s just kind of trying to get us to survive and replicate.
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And we have DNA just like every other animal.
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And so we happen to develop these like really cool neocortexes.
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And so now we re sort of self-aware and we have all these big questions.
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And maybe, maybe we ll create another, you know, as computers get better, we ll create the simulation inside our thing.
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And I think it s cool.
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Like we should basically, I just want to keep watching the movie, you know, unfold.
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That s part of why I want to work on like New Limit is really cool because it s helped if people can live longer, whether that s
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uploading their brain to the cloud or, you know, basically through we get biology to work or the strong AI to work or whatever.
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One of those two hopefully works out.
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And then we get to we get to keep watching the movie and see how it all unfolds.
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I think that s fun.
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And so I don t know if that s like an answer, but I guess I don t think there s any real purpose.
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So just try to have fun.
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Well, the cool thing is that we get to write the movie as we watch it.
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Yeah, that s exactly right.
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I mean, that s like the Steve Jobs quote and all that, where he s like, everything around you was invented by somebody who just was like, this was a crazy idea they thought up.
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once you realize you can kind of do anything you want, then that s what you start to go, you start to go try crazier stuff.
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I mean, this is another one of those areas where not to get too out there, but like, you know, when you re, when I was, I think you can build your comfort zone around like people being upset with you.
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You can also build your,
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your range of what you think is possible, right?
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When I was in my 20s, I was reading all these books about self-improvement and how to write down your goals and stuff.
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And my goals were like, someday I want to make $100,000 a year or something like that.
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And it seemed like a little outlandish.
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I wrote down these goals like, I want to own rental property or something.
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Anyway,
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And then I slowly started to get some of these things done over a couple of years.
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And so I started to think a little bigger.
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I remember one time I wrote down this goal where I was like, what s the craziest thing I could think of?
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I was like, what if I want to write, I want to start a billion dollar tech company.
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That s crazy.
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And I had never started like a million dollar tech company or any tech company really.
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So what business did I have writing that goal down?
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I remember I wrote that on a piece of paper like, like probably every day for a year or something almost, right?
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I don t know if it was every day, but like I wrote it down a lot.
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And
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And so little things started to happen.
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I was like, all right, well, maybe I should move back to the Bay Area from Buenos Aires.
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Maybe I should try to apply to Y Combinator or whatever.
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And I started thinking about these ideas.
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And so whatever gets you fired up, it doesn t have to be some company goal or startup thing.
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It could be anything, right?
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Maybe you want to publish a book or do something creatively or whatever.
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Anyway, I think within
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seven years.
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No, it s probably more like 10 years of me writing that goal down.
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Coinbase had a valuation over a billion dollars.
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So it, it was out of my realm of what was even possible.
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And then within 10 years, you can you can accomplish more in 10 years than you think less than a year than you think.
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So now I start now I m like, okay, what s the next goal?
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What s the crazy?
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Okay, maybe
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I want to get a billion people accessing the open financial system through our products every day.
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You know, that would be cool for, for humanity.
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And that s a pretty crazy goal.
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Like it s only 8 billion people or something.
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Right.
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So the one out of eight, um, or maybe I can radically, like if I make some, like the right investments or whatever, I can like help radically extend human health, uh, human health span or whatever.
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Right.
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Um, so.
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Try crazier stuff.
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I don t know.
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Even if it doesn t work, like hopefully you ll advance the state of affairs, like something interesting will happen.
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And so most people today, they look at people trying this stuff and they re like, oh my God, they re so, they re a genius or whatever.
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And it s like, or they re an idiot.
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Like one of the two, neither one are true.
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It s just like anybody can start by thinking about what they want and then like go for it.
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And then once you get that, like go for something a little bigger and like, you just have fun with it.
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And the universe is a way of smiling and helping you out if you just write it down and you dream big.
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There s something about just karma, about the energy you put into this world.
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Other people will help you out, doors will open.
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You ll notice that the doors opened and you could actually have a shot at making it happen.
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It s a funny world.
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Yeah, I mean, I don t really subscribe to all the woo-woo interpretations of this, but my very rational brain interpretation of it is that if you just wake up every day and write down what you want to get done towards your larger goals, it s just on your mind that day, so you start to notice opportunities and you think about it more.
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So Brian, thank you for dreaming big.
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Thank you for doing what you re doing, doing incredible engineering at scale, trying to help out people from all over the world and actually helping me personally get more into crypto just because it s so easy.
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So thank you so much.
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And thank you so much for giving your extremely valuable time today to this awesome conversation.
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Thanks for your awesome podcast.
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I love it.
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I listen to it often.
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Thanks for listening to this conversation with Brian Armstrong.
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To support this podcast, please check out our sponsors in the description.
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And now, let me leave you with some words from Benjamin Franklin.
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An investment in knowledge pays the best interest.
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Thank you for listening, and hope to see you next time.