Leading through uncertainty (with Coinbase CEO)

Transcript

[Music] welcome to web 3 with a16z a show about building the next generation of the internet from the team at a16z crypto this episode features Brian Armstrong CEO and co-founder of coinbase in conversation with a16z crypto founder and managing partner Chris Dixon the conversation was originally recorded at our founder Summit in November it covers the aftermath of FTX and the rise of crypto in politics but it also goes into company building at scale lessons for directing product development how to balance core business with disruptive innovation and more as a reminder none of the following should be taken as

business legal tax or investment advice please see az.com disclosures for more important information including a link to a list of our investments [Music] so I don't think Brian needs an introduction but I'll very briefly the the co-founder of coinbase um we've worked together for now it's actually 10 years uh this month we invested in coinbase um which was a um thank you that was was very very good very good uh investment for us and thank you honestly um and we have some I was just we were just reminiscing backstage um it was a exciting um so I think we'd first met in I think it was

like February of 2013 um when you were doing your series a and then I remember coming by a few times um to visit you guys you had like eight people in that apartment um and uh and then um and then I kind of messed it up and I think I gave you to L of a valuation offer and that well you guys passed on the series a I think but series B we came back to talk okay you gave us an initial offer yeah and it was like kind of low you guys were kind of annoyed I um I wasn't upset I mean in any negotiation you got to make a first offer and then um Frank I mean as an entrepreneur at our we were just like ah we got to get somebody else to bid

so we can try to have a bit of a process but and then uh and then I remember I was in New York and I was like oh i' realized I'd messed it up and then I like you had other offers and I was like okay I'm going to lose this and screw it up and I remember flying back you remember that time it was like midnight at your office do you remember that with bology came yeah is this when you um it was like midnight I flew in and I was like I I like ruined this like I messed up and then I and I was and then you were like well I want to make sure you're serious about crypto and I was like the way to prove that I'm serious is I'm going to bring bology who had just written a $25

million check to build semiconductors dipped in mineral oil to M Bitcoin and like how much more serious can you be than to write that guy a $25 million check to to do that um and so he showed up um like in his biology style like in his sweatpants at like midnight you and Fred remember this oh yeah yeah okay it was great and then we had like this four hour Deep dive of like the future and everything else and I felt like that was like the moment in which we maybe saved it I appreciated that you flew in it definitely showed a lot of commitment so anyways it was a fun time I think we left and we're like that guy biolog is crazy but you know but awesome and Chris Chris seems cool so you know why not yeah and we love B biologies you know

for those probably all know apology but um because he was like at the time like I mean he was I remember he he had like the whole like Stanford Bitcoin group and doing all this stuff and of course he later joined qu base we acquired his startup and yeah lots of good stories anyways that was so it's been an amazing ride 10 years um and uh it's amazing what you did like to build it up into such a you know big and important company and all the work you've done so um with that maybe we'll jump into some some some of the stuff going on now um the uh last year we were here I think you spoke to Ben and FTX had just blown up um and now um obviously spf's been convicted um I I guess like what do you

think I guess you know how do you feel about the sort of state of the industry what that means um and you know I guess hopefully we're moving beyond that now what are your thoughts on that yeah so I think the the conviction for SPF was hopefully a turning point psych psychologically I think I think we can all kind of move on justice has been served I mean we'll get the sentencing there'll be other cases there'll probably be movies that come out so you know it's not like um it'll be completely gone from the consciousness of of the community but psychologically I think it now we're allowed to turn the page and this kind of reminds me actually I think it was back in 2014 when FTX or sorry um Mount gaau blew up yeah so that that was the thing that it makes reminds me of the most and I

remember at that time it was very similar and there was all these articles being written about oh bitcoin's over and you know um Everybody couldn't stop talking about it it was just like a scar on people's mind that was Mount gox was like the main wasn't that the biggest exchange at the time or yeah yeah and you know something I remember it took about one year and some it somehow like a year passed and then people just stopped talking about it and they were ready to move on to new things and I remember when FTX blew up I was like well this is going to suck but it'll probably be in a year people will just mentally move on um and that's roughly what's been happening so I think Society needs um you know sacrificial scapegoat something someone to point to and say this was the root of it even if it's you

know more nuanced than that um and of course what he did was terrible and it was fraud so um yeah I think we can all move on do you feel like you knew did you suspect that that that something was up I did not I wish I wish I could tell you I did I I'd met with him a number of times and I he always struck me as somebody who was very intelligent um perhaps a bit Young and Reckless but I definitely did not think he was fraudulent um so I I kind of got duped along with everybody else um and yeah it made me a little more skeptical if I if I ever see somebody sort of on like a meteoric rise like with their face on the front of magazines um I'm going to be more skeptical I think at this point

but yeah that was that was a wild one yeah and then and then that sort of the FTX stuff kind of catalyzed the uh a lot of the SEC stuff and just sort of the policy reaction I think partly I don't know it just uh I think one was some of the politicians were taking money from SP SPF and then felt like they needed to make up for it maybe and it also emboldened the critics MH um yeah so what's your take on sort of what happened this last year on the policy side and and you know and how have you been addressing it yeah well I definitely another thing that's helped us move on is I think some people were wondering is he going to get away with it because of all the donations that he made and so it did kind of feel

reassuring that okay there is some sense of justice yeah that's beyond uh you know people bribing and like you know this kind of stuff so that that helped a lot too but I think yeah certainly the FTX blowup did kind of give a gift to some enemies of crypto and they each kind of have their own motive for why they don't like crypto you know they want the big Banks to have power um they're just afraid of change and there's moral panics um you know maybe they just are anti- Freedom or whatever like and they want to control Society instead of allowing people to have freedom um but for whatever reason you know they took it as a gift never never let a good crisis go to waste and so we did see um you know Gary gendel or Elizabeth Warren especially really make a concerted effort to kill crypto and

kill the industry uh they did it you know through operation chokepoint 2.0 they did it with um that's the bank the banks uh so for those who don't know that's uh many of you have not been able to get bank accounts and that's that's sort of back Channel thing that we think y um exactly and you know through the media uh through just indiscriminate kind of lawsuits being sent out to everybody and so look the the bad news is that um they were able to harm the industry over a short you know a relatively short period of time I would say a couple of years the good news is that they failed to kill crypto um we're still here we're all going to keep building um the justice system in the US there are you know luckily in the US we have these different branches of

government the courts have been really good at upholding rule of law even when the SEC is kind of painting outside the bounds of the law and sending off these court cases which by the way you know gend is a smart guy I think int actually he knows that these some of these are pretty weak cases he's and he's unlikely to win them he doesn't care he's just trying to cast a shadow over the industry show that he was tough on the on crypto and then you know try to go on to his next thing I think look the courts are upholding rule of law that's great and we have to remember that in the US we get the the winds blow one way and they blow the other way every four to eight years and that's a really great thing because you know we as an industry

and we all the companies in this room we can Outlast any any regulator any appointed official any bureaucrat any Administration and in if we were building our companies in China or something like that we wouldn't have that you might have the same person in power for 30 years here we have I think by the way this is where we all have to kind of show up as an industry in 2024 and send a very clear message uh during the election period that if there are anti-crypto candidates out there they've got to go we we can talk about that too yeah I mean what should people be doing on the policy side in this room for example well the biggest thing you know I could use everyone's help with um so you know both a6z and coinbase um by the way A6 a6z has been incredible on the

policy front I mean you guys are all over DC um there's a lot of Education advocacy money being moved like whole kind all kinds of good things so coinbase is trying to do our part as well and um you know every time we see you guys step up like all right we got to do more too so I love I love what a16z has been doing but one thing I think we can ask from everybody in the room here is um you know there's an industry group uh stand withth share that message out there on social maybe in your products with your employees um you know the idea behind it is to try to there's 52 million people in the US who have used crypto may can we just get one million of them to raise their hand and say hey I really care about this as an issue as a voter and um

that would be enough people to really move the needle in a lot of these um districts Congressional races local politics even in presidential races potentially and so we're asking those people who are raising their hands to sort of say okay can you you know can you donate can you vote can you call your Congress person can you um share this on social can you show up at this town hall and really there's a number of candidates um if you look at different districts there's like typically there'll be like a pro crypto candidate an anti- crypto candidate oftentimes they'll go in there and try to educate the anti- crypto candidate because half the time they're just sort of ignorant of the of the facts they're just getting disinformation from somewhere but you know if there's an educational effort and they're not willing to kind of be

constructive in around crypto policy and and ensuring people have the freedom to use this technology then you know they got to go and this is where we can act like in an example I think coinbase has roughly a million users in Ohio um that's a key state right now with shared Brown um and he's he's vulnerable I mean he's um he's behind in the polls he's anti- crypto um these are the kinds of things where we could move the needle on I don't know 10 20 different congressional seats in 2024 so yeah please sign up on standwood let's get to a million citizens in the US who who will raise their hand and say we care about this issue yeah I would just add to that like so like you I've been going to DC a lot um and meeting

with elected officials um I would say it makes me kind of more optimistic in some ways like one a lot of them I meet with I think they're actually trying you know they want to understand and they actually want to they want to do the right thing like contrary to the kind of cynical view of politics I mean there's a lot of things to be cynical about and the money and everything else but like one is and they say to me repeatedly like you're one of the the first people that's sort of shown up that's like explained this in a in a coherent way I think a lot of the industry representation has been either kind of extreme sort of Bitcoin libertarianism or just not very well done or like SPF obviously you know just sort of negative so like the bar is kind of low which is

kind of a good thing like if you show up and you're reasonable and you're trying to build something that's like societally productive people seem impressed and they seem to listen and there aren't that many people showing up like like actually going to DC actually go into these meetings also on the money side like it doesn't take that much money to you know if if you're able to donate personally to candidates you'd like it doesn't take that much to have an impact there um um so anyway so it makes me kind of more I think in some ways the industry has done such a bad job I'm not you know like this is like years ago I'm just sort of ignoring this or taking an extremist view that that that if we just do some stuff like this really matters what people do we had one

day we went to DC and we brought a few on R preneurs some in the room and it made a huge difference like the the elected officials saw them and said these are like reasonable people building productive things is very different than what I've been told of like people trying to take down the government or something right right um and they're like why are we Banning this like essentially like you know um so I and we've got by the way in the in the bill that um got through committee the fit 21 Market structure bill which would basically solve these issues the to the security issues um it was a unanimous on Republican side and in the you know six Democrats which is a big deal and including important ones who all had switched sides by the way like they were not for this a year ago um and so I

think there's a lot of reasons to be optimistic long term I I am yeah I I feel very optimistic the us is going to get this right eventually so um there's a good Winston TR quote on that but yeah yeah um so maybe they'll switch gears a little bit to Tech um so you've done a bunch of interesting stuff um just looking at your last earnings uh reading the public stuff it seems like you have this pretty interesting growing stable coin business and then I think what I find really exciting is the stuff you're doing with bass um you know which is really Innovative and I think really pushing kind of the Utility side so you're not just sort of a trading platform but like a you know real application platform we can tell us a little bit about how

you're thinking about that yeah well so of course coinbase started off as an exchange and we're now doing many different things and I've always been really P I'm not really a Trader at heart actually um I'm really got excited about crypto in terms of creating more economic freedom globally and like a more efficient Financial system and payments and uh if we can just make payments like Fast cheap Global kind of like a WhatsApp message that alone would just unlock an incredible amount of potential in the world um and so anyway we've been very excited about kind of self custodia wallets like Commerce applications payments stable coins for a long time we have product efforts in each of those areas uh one of the biggest areas I mean I don't have to tell this crowd this but layer 2 is a huge deal I think it is one of the best

opportunities we have to kind of kick off the next wave of adoption and innovation in crypto how do we get it to the next 100 million people how do we get it to a billion people using this technology globally I think layer 2 is going to play a huge role in that it's kind of like the internet moving from dialup to broadband right and so it'll you know when you when you bring down cost you bring down uh the time to confirm these transactions like a whole new wave of applications kind of get opened up so we're trying to do our part in that in with coinbase and we've launched base this layer 2 solution built on the optimism stack so it's we're trying to work with the community it's not it's not just one more Layer Two it's it's using the the optimism stack and there's there's lots of good

layer twos out there by the way we're going to integrate a lot of them so I'm not trying to pick favorites here but um we happen to build based on top of that it's um I think it's number 3 L2 um Now by tvl and um transactions per second things like that we've we're trying to reach out to everybody in the community building these applications and just talk talk to them about how they can integrate it one of the things we're tracking internally at coinbase is what percentage of transactions happening on coinbase are happening on Layer Two today it's about 7% you know I think that's way too low I I think we're going to be in a world here in three or four years where the layer two is the default right and it's kind of like um I don't know what an example would be like this is a bad

example but if you go if you're on the internet um you know and you like could you manually you know use telnet to connect to some IP address or something like yes you could but nobody nobody does that right or um you know if you're on like a low bandwidth connection or something maybe it's better analogy but um long story short is we should be getting 99% of transactions happening on L2 it should be the default for everything if somebody really wants to do an L1 transaction of course it should be possible but L2 should be the default we're also tracking internally this metric of you know the average time confirmation and the average cost of a transaction and right now I think across all networks all all blockchains on coinbase it's roughly it's like maybe I think it's like about 20 minutes to get

final confirmation and something like $3 or something on average if you look at transaction fees we're trying to get that I I I gave the team this kind of crazy goal as like how do we get it under one second and one cent you know as an average across all transactions happening in crypto and of course a big piece of that's got to be layered too it's got to Layer Two has got to be the default for that to happen lightning network has got to happen um all these different pieces so you know we might even be able to do smart things around optimistic confirmation you know and you could imagine end to end if you instrument that where is the the time taking for a transaction to confirm so if we get it under one second one cent Global Payments you know you can imagine

anywhere in the world someone with a phone is just like scan that QR hit pay and like within one second it shows a green check somewhere on the other side or whatever it's like we're going to see an explosion I think of payments utility use cases um you know trading is something where even on a decentralized exchange or something you could do one trade and you could wait 20 minutes it's not a big deal but if we're going to be building all these applications decentralized social like you know identity login badging into buildings like um Dow you know we we need everything to be fast and cheap and so anyway if anybody is building out there and hasn't looked at Bas I'd love it if if they did so let's let's build it together that's great I think it's great you're pushing that forward and I also

like the um attestation thing you did recently it like so this is like you can I think use you have how many 100 million or something users or some number and so those 100 million can now um I I just you know go and ATT test on the on base that they live in a certain country and I I don't know if there you have kyc in there yet or I assume that you it's yeah onchain ass station so we're doing lots of stuff on chain now actually I think it's really incumbent on us as a company to do we're trying to shift more and more like the default is everything we're going to do in the future will be onchain there's a good reason not to we may we may not to but it's sort of like mobile first or you know these big pushes culturally you

have to make inside companies like onchain is is the new online so it's onchain first is kind of the mentality it's it's just that was a really nice feature because you're taking advant like people have already gone through all of the driver's license kyc stuff on coinbase so why make them do it again and it's nice I like it because it's opt in so the user has power but they can opt into a really easy way to get kyc and then that will in turn you know if if required uh you know make it more frictionless to use other applications and yeah it's it's not just coinbase too any any company could provide this kind of um attestation on chain and you know I think that's an important piece of the ecosystem developing so um as I mentioned it's been 10 years since we invested you've

been doing this I guess 11 years now is that right or something like that um and you've seen multiple waves and you know sort of downturns in this last one you know tell like tell us sort of how is that like about your sort of founder journey and um H how has that been kind of going through those different waves and you know how do you keep yourself inspired yeah well I mean so everybody I don't know if how many people in the room maybe this is the first crypto winter but um yeah we've been through a few of them now and you kind of have to on the way up you know there's so much hype and great articles being written about it and you're getting invited to cool parties and journalists want to talk to you and you know when things are down you stop getting invited to cool

things journalists ask you questions like you know what are you going to do now that crypto's over or whatever they have they haven't really asked asked me that in this in this downturn which is a shift I was it was a clean TCH for me like you're the VC who did clean T you know I was like this bad nck yeah yeah so there's definitely um there's definitely an art to cultivating this mindset of just like tuning out all the noise like if if people are saying you're great you got to ignore that and if they say you're suck you got to ignore that and that's just a journey of Entrepreneurship is like you know when FTX blew up or the the macroeconomy came down I was kind of like I was like like all right next we've seen this before the next few years are going to kind of

suck uh but let's just wake up every day put one foot in front of the other um try to build some good stuff like this to will pass um and so there's definitely an art to kind of getting in front of the company you know any of you may have as Founders may have felt this where sometimes you feel like ah I got to get in front of the company and like put on a good face and like tell them how excited I am um and carry the carry the team and there's certainly an element of Truth to that like you know entrepreneurship is not fun it's it's supposed to be hard that's what makes it fulfilling and like building something good in the world over many many decades so there's some there's some mornings where I wake up and I'm just like oh man

like I don't my my mind's not in the right place or like I'm tired or whatever I've been grinding the last like whatever three weeks and you know I try to just like have this morning routine where I get myself psyched up and you know I saw a bunch of you at the gym this morning and like you know put on a little David goggin or um you know listen I like I like listening to bio like biographies of people who have tried crazy stuff and it makes all your problems look small by comparison or I remember there there was a couple times in the last um crypto winter where I was just like oh man this sucks like these people on my team are fighting this person's like suing us you know this whatever like we lost this much money in some bug and everything sucks and then

you know I'd go watch some documentary about like the Space Program um and like you know these astronauts got like blew up on the Launchpad or like you know watch something about um World War II or like banded brothers or what whatever and I'm like oh my God like all the problems we have are tiny like somebody sent me a mean piece of paper in the by email okay whatever like nobody died nobody died today right um there's actually a great line in that that show succession where um Kendall's like on the plane and he's like we're GNA we're going to fight for our lives and um his sister's like no you're not you're just sending documents back and forth over email um and um there's so there's some days you kind of have to laugh about it and you're just like I mean this is

nobody died like let's just get back on the horse keep building some stuff um you know who cares like if some angry person's like writing dumb articles are suing you or whatever like you know you can't let that stop you keep keep building good stuff yeah um awesome so maybe um with that we'll we'll go to some uh questions from the audience what are your uh current views on remote vers hybrid vers and office work yeah I think every CEO is kind of trying to figure out this right now so there's no one right answer but for us what we're doing is so we we went remote first we call it during the pandemic which is not saying you have to be remote it's saying um if you want to go in the office you can no one's required to and we're sticking with that I I like

it for now one thing we are shifting though on that is that uh we want to make the in office experience great there was a weird thing that happened where um you know some of our offices they just became they weren't really fun to go in because there was kind of initially they had this much capacity and then only 20% of people going in so it felt like a ghost town um you know there wasn't like good food service or games so we're now in the process of kind of revamping our in-office experience to make it great we have we're put making kind of a hub in New York and Bay Area um and especially for earlier in career talent I think it's really more to them it's like a perk or really almost a necessity I think sometimes to be around other people there's social aspects of that you know

they don't have maybe as great of a setup at home um and so I think for early in career Talent they're going to want it and for later in career Talent they're not going to want it and so we are currently kind of trying to get the best of both worlds and make the in office experience great have more and more offsites coming through there so they get access and exposure to more senior talent but not require people to come in if they don't want to I so far we're we're keeping with that and um you know we were already kind of if I was like 15 people all in one city okay maybe let's all get together the coinbase has offices in a bunch of cities already and any meeting I was in already had people dialed in remotely whether they were in an office in London

or New York or whatever so um yeah we stick with remote first thanks again for coming and speak to us um you talked a little bit about your own personal uh way of kind of psyching yourself up during this fair market can you share a little bit about what's worked for your team in terms of motivating them through tough times well I mean my first thought as you said that was so I think we we really over hired in 2021 we were probably a little irrationally exuberant along with other people and so over the last year or so we cut like 50% of the cost out of the business cultivating this mindset when you speak with a company whether that's in you know town halls or all hands or blog posts or emails that go out or whatever and

you're kind of cultivating this mindset of um agency it's like the world is not happening to us we are leaving our mark on the world right and so what is in our control there's there's some stuff that's not in our control like drone pow might change the interest rates and the stock market will go down along with crypto okay that's not really in our control but what is control can we build something that's more Innovative can we go fix those bugs can we like fix this security issue can we go get legislation passed like these are definitely things that are in our control and I also like to think of it don't be constrained by what's happening in one in one country right um we're this is a global industry it's a global movement and so if in if

in one part of the world like let's say you know right now we had uh you know Gary gendler and Elizabeth Warren on the war path in the US but Rishi sunk in the UK is like super pro crypto so okay great let's go invest in countries that have the door open and maybe in four years it'll flip and somebody anti- crypto will be in the UK and pro crypto will be in the US and we'll build in the US then so um there's always something you can do right when you're faced with these obstacles you know you find like you run into a wall okay well we can dig a tunnel under it we can climb over the wall we can just get some sledgehammers and break through the wall we can like get a helicopter whatever like so it's cultivating that mindset with the team

and I kind of try to be a little bit of that mentality and energy I do it in all hands and I talk about okay we tried um here's something that we tried we tried 10 different things and none of them worked so what did in what did this person do and I try to like look for examples of this in the company and bring them like okay I want you to go tell this story in in front of the whole company at the town hall because this is a good example I want others to emulate right it's like 10 of the things we tried didn't work we we just went and tried 10 more you know like there's not really an option here where we just like give up and feel sorry for ourselves like we we're never going to do that we never give up so I try to um find

examples of that elevate those people in the company speak about it authentic as authentically as I can and everybody should kind of find their own version of that like you know my my version of it might not be authentic for you but um speak whatever feels right to you and talk more about you know why are you're still going and what what you do believe in what you're skeptical of if you're scared if you're upset like just talk about that too being vulnerable is a great is great leadership as well uh Hey Baran happy happy base partner here thank you for that um I was wondering uh what your sort of expectations are for the pace of progress over the next couple years obviously we have need some regulatory Clarity we need some killer apps on the consumer side we need to the

infrastructure you know to improve in a in a major way again um you know what are you all thinking about just in terms terms of timing and Pace over the next several years well I'm always kind of impatient um I always wish things were moving faster and you know Frank slutman has this great book amp it up um there's a couple books like that where the pace is kind of whatever we set it to be right so that that's like a leadership question I think you know I try to do this within the company right especially as as coinbase has gotten bigger we have to fight against you know natural tendencies towards bureaucracy and things like that in startups this is less of an issue where you are probably most of you are but an example is just little things right like if somebody if

somebody's like oh okay great I'll come back to you um next week with the next version of that I'm like how about we meet in 24 hours like right um and you don't want to be a jerk about it but like I sometimes I'll just ask people in front of the in front of the team in live in front of the meeting like so great when do you think you can have the next version of that and it's a little bit of a management technique because you know they don't want to stay like a really long time in front of all their peers and like you know get challenged or whatever so they set their own ambitious Target I'm like great I'm going to hold you to that right yeah I I don't know I mean I think if you had asked me 10 years ago um when crus was

first starting like how long would it take to get um I don't know like 20% of all e-commerce running on crypto I would I was like way optimistic I I was like well it's clearly a better system it's sort of native to the internet and it no chargebacks and it works globally and every I was like I don't know probably like three to five years we'll have like 20% of all e-commerce running in crypto I was way off right so I I don't really trust my judgments on how these things are going to happen it's usually surprising if something takes off that you didn't expect and this thing takes longer but that's fine the goal is just to be trying a lot of things have a portfolio you know I would not have guessed that one thing would take off versus another but just try to be

relentless Drive the drive set the pace be the pace car um in your organizations and you know amp it up I I think we can we can create whatever outcome we want there thanks um I really like coinbase's Focus as kind of a mission focused company and being Ally neutral to an extent did that have any unexpected negatives though after you made the announcement so the I mean the negatives of it were that and we knew this would happen is that we we would get attacked right so um immediately after we did that like the New York Times kind of started a special team internally to like go dig up dirt on us and they just they wrote some like fake articles about us calling us essentially racist or whatever it didn't even make sense but we we knew that would happen um that it

would be kind of unpopular but I do I do think that you know it's actually it was only unpopular with like a fringe minority I would say um most of the people most of the reactions I got from it including from employees um of all different backgrounds and everything was overwhelming positive and they were and they basically said thank you for finally speaking up like it was getting crazy um you know we couldn't just come in and do good work because there was this really small group of people that were trying to hijack the company for their own political outcomes or whatever so um we did have 5% of the company leave we got some negative articles but we looked at the numbers a year later and um you know our most of our diversity metrics were the same or better it didn't really several people

had told me when we were thinking about putting that out they said you know no underrepresented person will ever work at this company again I was like is that true I went and talked to our ergs um our employee resource groups and they they were telling me something very different they said you know we don't really care about that stuff we just want to come to work and be respected and like do good work and learn learn on the job they just wanted the same thing everybody else did so my instinct was that the fears were overblown um I would say it was a very positive thing and it's allowed us to not have these unforced errors internally of like employees getting in unnecessary fights and you know um protesting and like these flame Wars happening in slack channels and internal social media and stuff like that so it's

actually been much better I would say my job as a CEO is is I is a lot better because I'm not sort of being you know these Open Mic q&as I think are like an unforced error that a lot of companies do once they get to a certain size and it only takes one person to sort of um you know grand stand hold the mic kind of distract everyone in the whole company by trying to get you you know on stage like how are you going to solve the world's biggest problem of X and I'm like I don't know we're focused on crypto um so we don't we don't do like Open Mic Q&A anymore like people can submit questions in advance um but you can't like vote Brigade you know this one kind of current thing issue um anyway I I would recommend it I think it

was incredibly net positive and if the worst thing that happens is you get a negative article written about the company um you know welcome to the club it's you're you're in good company hey Brian um how do you think about like your proportion of investing in core to new innovation like what kind of process do you have for kind of running this you know your M your team and yourself through what bets to pick and what not do and how to divide the core versus New Growth next billion areas yeah this is a great question because I I always this would always kind of make me laugh when coinbase was growing and we were like you know 500 people or whatever um some days I'd literally I'd go into one meeting and um some

employees would ask me like how can we not be investing in this one thing which is making all the revenue there's so many side projects distracting us right and I'd be like okay that's a good point and we go to the next meeting and somebody would say how can we not be investing in this new thing that is going to be disrupting our business and it's the clearly the future of the whole industry and we're just caught in the sidelines stuck in this old mentality right and I was like that's kind of true too so I was like how do we reconcile this and um the best idea I came up with for this uh was or framework you know which we basically borrowed from others is we call it 70 201010 resource allocation and it's this by the way the the beauty of this is not that it's some

magical formula the beauty of it is that you have to have some formula to get everybody to sort calm down and not freak out about this all the time um and so what simplified the the framework is 70% of resources goes toward the core the core is the thing that's making most the revenue today so you make sure keep the main thing the main thing don't lose on the main thing um 20% of resources go to these adjacent bets which are things that are kind of natural extensions of your core so you know if spot trading is going well let's try derivatives trading that's like an adjacent bet and then 10% can be vent these Venture bets which are high risk but higher reward if they work you can have a higher tolerance for failure but they're small you're capping the total amount of resources at 10% so

this is what we do inside coinbase every we we measure the 70 201010 um we have definitions of them actually and say hey I we have two or three people we want to go do this thing and if any of the product groups kind of leaders decide to fund it um it's almost like pitching internal Venture Capital you know if you get any one of the the product leaders to to fund it out of their budget then they're like go okay go try this experiment but it's all it's within the bounds of that 10% of resources so you know some some CEOs have they're very much more like um like I have a very clear Vision I have high conviction we're only doing these three or four things like imagine apple or something like they they have a very narrow set of products and it's much they only very

very rarely will do like a new thing and then companies like Google historically they were much more like free-for-all they were just like good ideas can come from anywhere and like they'd have like four different teams working on chat or whatever and so we've tried to make sort of the reasonable Middle Ground of that and 7020 is is what we ended up doing and yeah so I know enough to know that I don't know exactly what the next big thing is going to be so I'm glad we have at least some kind of a portfolio all right I think we're out of time but Brian thank you for all you do for the industry and being here today thanks [Music]