Brian Armstrong: Coinbase, Cryptocurrency, and Government Regulation

00:00:00.000 | The following is a conversation with Brian Armstrong,

00:00:02.600 | co-founder and CEO of Coinbase,

00:00:05.280 | the largest cryptocurrency exchange platform

00:00:07.840 | with 98 million users in 100 countries,

00:00:11.400 | listing Bitcoin, Ethereum, Cardano,

00:00:13.920 | and over 100 popular cryptocurrencies.

00:00:17.360 | I recorded this conversation with Brian

00:00:19.320 | before this week's SEC probe

00:00:21.920 | into whether some of the crypto listings are securities

00:00:25.480 | and thus need to be regulated as such.

00:00:27.920 | As always with conversations that involve cryptocurrency,

00:00:31.280 | I try to make it timeless

00:00:33.040 | so that the price soaring high or crashing down low

00:00:37.220 | doesn't distract from the fundamental technological,

00:00:40.520 | economic, social, and philosophical ideas

00:00:42.760 | underlying this new form of money, energy, and information.

00:00:47.760 | Our world runs on money, the exchange and store of value,

00:00:52.440 | and cryptocurrency seeks to build the next chapter

00:00:55.400 | of how money works and what it can do.

00:00:58.720 | Coinbase and Brian are trying to do this

00:01:01.280 | by working together with regulators and governments,

00:01:04.280 | which is a long and difficult road.

00:01:06.760 | Bureaucracies resist change, for better and for worse.

00:01:11.260 | The latest SEC probe is a good representation of this.

00:01:14.720 | It is a serious attempt to limit fraud,

00:01:17.520 | but one that also runs the risk of limiting innovation

00:01:21.000 | and limiting financial freedom of individuals.

00:01:24.460 | This is a complicated mess,

00:01:26.040 | and I applaud everyone involved

00:01:27.480 | for trying to work through it.

00:01:29.400 | I hope in the end, the interest of the individual wins.

00:01:33.120 | Decentralization, after all,

00:01:35.080 | is a hedge against the corrupting nature

00:01:37.280 | of centralized power.

00:01:39.340 | This is the Lex Friedman Podcast.

00:01:41.360 | To support it, please check out our sponsors

00:01:43.520 | in the description.

00:01:44.760 | And now, dear friends, here's Brian Armstrong.

00:01:48.280 | Let's start with the fact that you're a programmer.

00:01:51.680 | What was the first program you've ever written,

00:01:54.000 | or the first one that you remember?

00:01:55.960 | - The first memory I have of programming

00:01:57.740 | was probably in middle school.

00:01:59.340 | And I remember it was recess,

00:02:01.800 | and they had this time period where you could read books,

00:02:04.820 | and the other kids were reading comic books and stuff.

00:02:07.240 | And for some reason, I had gotten into this idea

00:02:10.240 | that I wanted to get into computers,

00:02:11.580 | and I was playing with computers at home.

00:02:13.920 | And so I got this book, I think from the library,

00:02:15.920 | and it was called "How to Learn Java in 30 Days."

00:02:19.540 | So I was reading this book at the recess,

00:02:24.020 | and I didn't understand anything.

00:02:25.700 | And I remember I went home,

00:02:26.980 | and I tried to get this thing working.

00:02:29.620 | And if you've ever written a Java program,

00:02:31.860 | the first lines are like,

00:02:33.260 | "Public static void main string args," or whatever.

00:02:35.900 | And it's just so foreign,

00:02:38.020 | and it's so difficult to get started.

00:02:39.420 | And so I was kind of frustrated.

00:02:40.540 | I was like, "I don't understand anything

00:02:41.780 | "that's happening in this book."

00:02:43.300 | So the first thing I wrote was probably

00:02:45.640 | just a Hello World app in Java.

00:02:48.260 | But I felt like I was so confused

00:02:51.660 | about what was actually happening

00:02:52.860 | that I later learned a bit of PHP.

00:02:55.820 | And PHP was more fun for me,

00:02:57.700 | 'cause it was like, "Oh, just print out what you want."

00:03:00.420 | It didn't have all this complexity around it.

00:03:02.100 | So then I got more into PHP,

00:03:04.340 | started building some simple websites,

00:03:06.900 | I think learned some HTML.

00:03:09.260 | So I think that was my introduction to programming,

00:03:12.180 | at least the very beginning part.

00:03:13.380 | - Yeah, Java has a lot of...

00:03:17.420 | Out of all the Hello Worlds you can possibly write,

00:03:20.700 | Java is the one where I think it's the longest.

00:03:23.220 | - Yeah.

00:03:24.260 | - Which is quite interesting,

00:03:25.140 | 'cause Java is often, at least for a long time,

00:03:27.100 | was used as the primary programming language

00:03:29.220 | to teach people how to program,

00:03:30.860 | or at least about object-oriented programming.

00:03:32.740 | I think most universities have now switched,

00:03:35.340 | in high school switched to Python.

00:03:37.420 | I'm not sure if that's the case.

00:03:38.860 | - Probably better.

00:03:39.700 | It's easier to learn.

00:03:40.540 | It lowers the, it makes it less scary.

00:03:42.260 | It was like less of a hurdle.

00:03:43.560 | - And certainly none of them use PHP.

00:03:45.340 | I love PHP, and I feel like it's a dirty secret

00:03:48.420 | I have to keep private to myself,

00:03:51.020 | like it's somebody I'm seeing on the side

00:03:52.620 | or something like that,

00:03:53.460 | because it's just not a respected programming language,

00:03:56.340 | because I think there's so many ways

00:03:57.900 | you can write poor code with PHP,

00:04:00.740 | which is why it's not respected.

00:04:02.100 | - Yeah, it's a scripting language more so,

00:04:03.980 | although of course Facebook built a huge stack

00:04:06.300 | on top of it and valuable company,

00:04:07.660 | but I still love Ruby to this day.

00:04:10.220 | Ruby is probably my favorite language.

00:04:12.320 | Python's great too,

00:04:13.160 | but I just love the idea behind Ruby

00:04:15.540 | that it's like, let's make it easier for the human,

00:04:18.220 | harder for the computer,

00:04:19.540 | and make it a joy to be expressive and all these things.

00:04:22.620 | So I was never the best computer scientist,

00:04:24.940 | but I was a good hacker.

00:04:26.260 | I could rapidly prototype products

00:04:28.260 | and using languages like Ruby.

00:04:30.500 | Do a lot of computer science programs

00:04:32.420 | still use like Lisp and Scheme and things like that?

00:04:35.260 | - No, no.

00:04:36.220 | They do for, that's like, that's if you're hardcore.

00:04:39.100 | If you're legit, you're gonna do

00:04:40.540 | some of the functional languages.

00:04:42.300 | I think there's a few others that popped up,

00:04:44.920 | but Lisp is a distant memory for a lot of people.

00:04:48.580 | That's like somebody that's like,

00:04:49.980 | you go to library, you dust off the book.

00:04:53.620 | But Scheme a little bit.

00:04:55.760 | I think if you're starting,

00:04:57.260 | I mean, there's courses about languages themselves,

00:04:59.440 | like programming languages.

00:05:01.580 | Lisp might be one of those,

00:05:03.180 | you know how there's languages that nobody uses anymore?

00:05:05.460 | Like ancient languages?

00:05:07.740 | You might have to go to school in that same way

00:05:09.180 | for programming languages.

00:05:10.660 | Back in the day, we used to use parentheses.

00:05:12.860 | I, of course, still use Emacs as the editor

00:05:15.860 | for most things that I do.

00:05:17.500 | And Emacs is, you know, a lot of the customization

00:05:21.700 | you could do is in Lisp.

00:05:23.360 | - Yeah. - And that's the language

00:05:24.340 | probably when I first really fell in love

00:05:28.300 | with programming is Lisp.

00:05:30.060 | Because for a long time throughout the earlier history

00:05:34.480 | of artificial intelligence, Lisp was the primary language.

00:05:36.860 | But it still had a life in the '90s in the arts

00:05:41.540 | where some people would use it.

00:05:43.220 | - Yeah. - It's such a beautiful,

00:05:44.660 | functional language, but it just somehow didn't pick up.

00:05:48.160 | That said, I should say, sort of push back,

00:05:53.500 | PHP, I feel like it's still true

00:05:55.820 | that most of the web runs on PHP.

00:05:58.860 | Most of the back end is still PHP.

00:06:02.220 | So if you look at, you know,

00:06:03.740 | it's like the stuff that people don't talk about.

00:06:05.700 | It's like what runs most systems in the world,

00:06:08.540 | what runs most back end, what runs most front end?

00:06:12.780 | - Yeah. - JavaScript, you know, HTML.

00:06:15.620 | - JavaScript, I think, the Stack Exchange surveys

00:06:17.780 | showed JavaScript's the most popular language

00:06:19.500 | in the world, I think, right?

00:06:20.420 | - Oh yeah?

00:06:21.260 | In terms of programmers and numbers of, I wonder.

00:06:23.660 | - By survey of number of programmers on Stack,

00:06:28.500 | Stack Overflow. - Oh yeah.

00:06:29.500 | But that's also the cutting edge, right?

00:06:31.440 | Those are the people that are just like

00:06:33.220 | excitedly writing code. - That's true.

00:06:34.860 | - I wonder if there's people that are just like

00:06:37.500 | maintaining gigantic code bases.

00:06:40.300 | - Yeah.

00:06:41.140 | I feel like the amount of Java out there

00:06:43.540 | just running industrial systems has gotta be enormous.

00:06:46.700 | And then of course in the banking industry,

00:06:48.780 | finance, it's like even older stuff, Cobalt and whatnot.

00:06:52.780 | - I've been actually looking for somebody

00:06:54.820 | to interview who represents Cobalt and Fortran,

00:07:00.780 | like who's the figure still,

00:07:03.460 | still there that holds the flag.

00:07:05.300 | I did, you know, with Java, founder of Java,

00:07:07.580 | creator of Java, creator of Python, creator of C++,

00:07:11.340 | but nobody wants to hold the flag for Cobalt and Fortran,

00:07:14.340 | even though some of the most important systems in the world

00:07:17.900 | still run on those. - Yeah.

00:07:20.060 | - Like power systems and infrastructure systems,

00:07:23.460 | which is fascinating.

00:07:24.700 | Which, and ATMs and stuff like that.

00:07:27.060 | Like a lot of stuff that we rely on that just works,

00:07:31.340 | and the reason we don't change it, 'cause it works well,

00:07:33.940 | is written in languages that people don't use anymore.

00:07:36.900 | - Yeah.

00:07:38.140 | That'd be a cool series of interviews.

00:07:39.580 | Get the stuff that's like tech that was invented

00:07:42.420 | 40, 50 years ago, but still is being used widely.

00:07:45.300 | I mean, Emacs is an example of that.

00:07:47.100 | - Let me ask the big question of

00:07:49.100 | what are cryptocurrency exchanges and what's Coinbase?

00:07:53.980 | How does it work?

00:07:55.020 | Before, I'll ask even bigger questions,

00:07:57.420 | but it's just a nice kind of palate cleansing question

00:08:00.780 | of what is Coinbase?

00:08:02.060 | - Coinbase is a cryptocurrency exchange,

00:08:06.260 | brokerage, custodian.

00:08:07.620 | Basically, we're the primary financial account

00:08:10.180 | for people in the crypto economy,

00:08:12.460 | how they buy crypto, how they store it,

00:08:14.300 | how they use it increasingly in different ways.

00:08:16.180 | We can talk about that.

00:08:17.340 | So yeah, we wanna be the way that a billion people

00:08:20.860 | hopefully access the open financial system globally.

00:08:23.860 | - How does it work?

00:08:25.060 | What's cryptocurrency?

00:08:29.700 | There's Bitcoin, there's Ethereum.

00:08:33.460 | What does it mean to be an exchange?

00:08:37.380 | What does it mean to store?

00:08:39.020 | What does it mean to transact?

00:08:41.260 | What does Coinbase actually do?

00:08:43.660 | - Okay, so basically in any given market,

00:08:46.700 | there's some people who wanna buy,

00:08:47.860 | some people who wanna sell,

00:08:49.380 | and you keep an order book of all those prices.

00:08:53.300 | And then if someone's willing to buy

00:08:56.940 | for more than the lowest price someone is willing to sell,

00:08:59.820 | then you get a trade to execute.

00:09:02.140 | That's kind of how an exchange works underneath.

00:09:04.460 | And a brokerage is kind of simpler than that even.

00:09:06.780 | You don't have to look at the whole order book

00:09:08.980 | and everything, but you just go in there and you say,

00:09:10.580 | "I wanna buy $100 of Bitcoin or whatever cryptocurrency."

00:09:14.020 | You get a quote, and if you like it, you can hit accept.

00:09:16.220 | And the core things that we do to make all that

00:09:19.460 | kind of just work, make it seamless,

00:09:21.460 | it sounds simple on the surface,

00:09:23.060 | is we have to do payment integrations

00:09:26.140 | in a variety of places around the world

00:09:27.540 | to make it easy for people to get fiat currency

00:09:29.580 | into this ecosystem.

00:09:31.740 | We have to work on cybersecurity a lot.

00:09:33.740 | There's lots of hackers out there

00:09:35.180 | trying to break into our systems and steal crypto,

00:09:37.100 | or to put stolen credit cards and bank accounts

00:09:39.860 | and things like that into these systems.

00:09:41.860 | We have to integrate with the blockchains themselves,

00:09:45.500 | which are periodically getting updated

00:09:48.380 | and having various airdrops and all kinds of things.

00:09:51.300 | So we're integrated with lots of different blockchains.

00:09:53.500 | And then we have to store the crypto

00:09:54.540 | that people buy securely as well.

00:09:57.060 | So crypto is kind of like storing,

00:09:59.380 | you store the private keys, essentially.

00:10:00.940 | And we've invented a lot of cool technology

00:10:03.020 | about how to do that securely that helps me sleep at night

00:10:06.980 | as one of the largest crypto custodians out there.

00:10:09.500 | So those are some of the pieces that had to come together

00:10:12.420 | to get that early, simple buy-sell experience to work.

00:10:16.340 | And yeah, I mean, Coinbase actually has

00:10:18.660 | a lot of different products now.

00:10:20.020 | So we have like an institutional product.

00:10:21.900 | We have Coinbase Commerce, which is like merchant payments,

00:10:24.660 | like Stripe for crypto.

00:10:26.140 | We've got a self-custodial wallet, which we can talk about.

00:10:28.740 | There's all kinds of cool applications

00:10:30.300 | people are building with Web3

00:10:31.540 | and they can access it through that.

00:10:32.700 | We just launched an NFT product.

00:10:35.000 | I can go on down the list.

00:10:37.620 | So we're sort of like a portfolio of crypto products now.

00:10:39.660 | We're big enough where we can do multiple things.

00:10:42.020 | But yeah, the core thing we got started with,

00:10:43.900 | and still the majority of our revenue today,

00:10:45.500 | is people just want to come in and buy and sell some crypto.

00:10:48.660 | And we help them do that and make it simple and easy to use.

00:10:51.500 | - I'll ask you about wallet, NFTs, about,

00:10:53.860 | what is it called, the Stripe type?

00:10:55.380 | - Oh yeah, Coinbase Commerce.

00:10:56.660 | - Coinbase Commerce.

00:10:58.020 | I'll ask you about all that.

00:10:59.100 | But order books and exchange,

00:11:01.260 | what's the difference between that and stocks, for example,

00:11:04.820 | which there's also order books?

00:11:06.460 | - Yeah, so I mean, stocks trade through order books too.

00:11:08.540 | So do commodities.

00:11:09.540 | - There's all similar type of situation.

00:11:11.940 | So when I want to buy one Bitcoin

00:11:14.100 | and I see Coinbase say the price of that Bitcoin

00:11:17.660 | is say $40,000,

00:11:20.500 | and I press buy, what happens?

00:11:23.540 | - Yeah, okay, so you've gotten a lot,

00:11:27.620 | like, you know, when you press the button on your keyboard,

00:11:30.940 | like an electrical signal goes up the wire on your keyboard.

00:11:33.340 | No, we won't get on the level.

00:11:34.980 | - Well, that's also important, the timing, right?

00:11:36.700 | 'Cause isn't that price fixed?

00:11:38.780 | - Yeah, that's true.

00:11:39.620 | It's giving you a quote, right?

00:11:40.740 | That's, you know, there's a whole concept of like slippage.

00:11:44.500 | And like, by the time the quote is executed,

00:11:47.340 | if the price has moved too much,

00:11:49.620 | like we may reject it.

00:11:50.700 | And you know, there's various things like that.

00:11:52.900 | But how do, I mean,

00:11:53.740 | what's the simple version I can give you?

00:11:54.980 | So we, you know, we'll basically check the order book,

00:11:57.500 | give you a quote.

00:11:58.860 | It's good for some period of time

00:12:00.500 | or for some amount of slippage.

00:12:02.420 | And then what's happening is we're initiating a debit

00:12:06.180 | to your payment method,

00:12:07.020 | whether that's a credit card or a bank account,

00:12:08.980 | or, you know, you're storing dollars or euros

00:12:11.220 | or something on our platform.

00:12:12.380 | There's various payment methods.

00:12:13.780 | So we're basically debiting that.

00:12:15.580 | And then we're crediting you the crypto

00:12:17.500 | and we're taking a fee for it too.

00:12:19.620 | So that's fundamentally what's happening underneath.

00:12:24.140 | - And then there's some interesting slippage.

00:12:26.140 | How do you calculate the, how much slippage is allowed?

00:12:30.660 | Like, how do you know these things?

00:12:32.780 | That, you know, 'cause order books are fascinating.

00:12:35.340 | The dynamics of that is pretty interesting.

00:12:39.020 | - Yeah. - From the little

00:12:39.860 | I know about it.

00:12:40.700 | - Yeah, so there's a lot of people like traders

00:12:43.700 | who get super into this and like high frequency traders

00:12:46.100 | and arbitrage and all kinds of interesting topics.

00:12:48.340 | Flash Boys was like an interesting book on this whole thing.

00:12:50.900 | You want like access to information to the fastest,

00:12:53.860 | sometimes even putting your, you know,

00:12:55.900 | your thing in the data center right next to the thing.

00:12:57.980 | We don't allow that colo stuff

00:12:59.460 | 'cause we want it to be more democratized.

00:13:01.500 | But, you know, basically you give a,

00:13:05.260 | let's say we wanted to just keep it math simple.

00:13:07.100 | We want to charge a 1% fee.

00:13:08.660 | So if you're buying $100 of Bitcoin

00:13:11.140 | and we'll charge you $101, you know,

00:13:13.420 | we've presented you the amount of Bitcoin

00:13:14.820 | you're gonna get for the $100.

00:13:16.300 | Now let's say 10 seconds later, you hit accept.

00:13:18.740 | We go to fill the order.

00:13:20.980 | So it's gonna be some error bound around that 1% fee, right?

00:13:25.380 | And if we think we're actually losing money on the trade,

00:13:27.500 | I think we'll often reject it.

00:13:29.540 | - So some part of the fee,

00:13:31.940 | the slippage is incorporated into that,

00:13:34.980 | averaged over a large number of people.

00:13:37.980 | I mean, just, it's fascinating.

00:13:39.660 | 'Cause like even just like that little detail

00:13:41.540 | probably requires a lot of experimentation.

00:13:44.260 | - Yeah, and it's kind of like a giant bug bounty out there

00:13:46.940 | because if you get it wrong,

00:13:48.460 | there's people who are gonna arbitrage that.

00:13:49.980 | And we've had people sort of pen test our systems

00:13:53.580 | in really creative ways where like,

00:13:55.820 | they'll just fire, like programmatically with APIs,

00:14:01.260 | they'll fire off like a million different quotes

00:14:03.620 | and look for one of them that's out of bounds

00:14:05.260 | and then actually take that money right there.

00:14:07.140 | And you know, we get people doing all kinds of crazy stuff.

00:14:10.300 | - So how do you protect against that?

00:14:12.260 | How do you protect?

00:14:13.340 | So we'll talk about cybersecurity in interesting ways,

00:14:15.820 | but there's a lot of clever people

00:14:18.180 | trying to do clever things to earn,

00:14:20.900 | not even just to break into the system,

00:14:22.580 | but to earn an edge of some kind in the system.

00:14:26.260 | How do you stay one step ahead?

00:14:28.780 | - There's no silver bullet,

00:14:29.620 | it's a bunch of lead bullets, right?

00:14:30.740 | So it's like, you know, one thing we do is

00:14:34.620 | we just have good test suites, right?

00:14:36.140 | So you're testing every piece of code that goes out.

00:14:38.340 | That's like just common, good best practice,

00:14:40.100 | but it's particularly important in financial services.

00:14:43.340 | Another thing we do is we hire third-party firms

00:14:45.900 | to try to audit this stuff and break in.

00:14:47.980 | Another one we do is we have a bug bounty program.

00:14:51.220 | So we basically pay white hat hackers

00:14:54.340 | to find this stuff before the black hats do.

00:14:56.740 | And we've paid out lots of good bug bounties.

00:14:59.740 | So, you know, try all the above.

00:15:02.700 | And occasionally you don't get it right

00:15:03.780 | and you lose some money and then you fix it

00:15:05.340 | and you keep going, so yeah.

00:15:07.300 | - Let's talk about cybersecurity a little bit more.

00:15:09.980 | - Yeah.

00:15:10.820 | - You mentioned using stolen bank accounts.

00:15:12.500 | - Yeah.

00:15:13.340 | - So that's another one.

00:15:14.180 | That's another interesting one.

00:15:15.180 | How do you protect against that?

00:15:17.460 | - Okay, so fraud prevention, yeah, is a big topic.

00:15:20.700 | So one of the, there's a lot of things people do,

00:15:23.100 | but one of the things they do is that

00:15:25.940 | use machine learning, right?

00:15:28.140 | So you look at hundreds--

00:15:29.660 | - Protect or to attack?

00:15:30.900 | - To protect against it.

00:15:32.380 | So what you wanna do is kind of build up a labeled data set

00:15:37.020 | of all the different people who have turned out

00:15:40.340 | to be fraudulent and good actors,

00:15:42.700 | and hopefully collect as much data as you can.

00:15:44.220 | And then you might feed hundreds or thousands

00:15:46.300 | of these factors into your machine learning model

00:15:49.420 | and it'll come back with a risk score.

00:15:51.540 | So, you know, an example of like the kinds of factors

00:15:54.660 | people create or put in there,

00:15:56.220 | you know, obviously I don't wanna disclose too many of them

00:15:57.820 | 'cause it's a cat and mouse game,

00:15:59.700 | but just kind of, I don't know,

00:16:01.340 | relatively well-known stuff might be,

00:16:03.260 | you know, you have device fingerprints, right?

00:16:06.860 | So like, what kind of device are you on

00:16:08.860 | and what fonts do you have installed?

00:16:10.380 | A lot of people who are farming lots of these accounts,

00:16:12.300 | they're using emulators and like virtual machines and stuff.

00:16:15.220 | They're not like, you know, an average person on that device.

00:16:18.220 | And then you'll see sometimes like,

00:16:21.140 | one of my favorite metrics we track for this was called

00:16:23.620 | like improbable travel velocity.

00:16:26.100 | So we were tracking people's IPs, right?

00:16:28.460 | And you might see someone who was one day in Austin, Texas,

00:16:33.340 | and then like an hour later,

00:16:34.940 | they were in London or something.

00:16:36.140 | And it's like, well, that's very improbable.

00:16:37.580 | I mean, sometimes people are using VPNs.

00:16:39.500 | So you gotta be careful with that

00:16:40.500 | 'cause like there's legitimate people who use VPNs too.

00:16:42.780 | But if it's not possible for them to have gotten on a plane

00:16:46.700 | and gotten there that quickly,

00:16:47.620 | then that's usually they're like spoofing a device or IP.

00:16:50.260 | Sometimes those are interesting factors.

00:16:52.540 | But yeah, if you feed enough of these in,

00:16:54.580 | you will, oh, another fun one is like,

00:16:57.860 | you know, real users will type their credit card

00:17:01.580 | like one number at a time.

00:17:03.700 | Scammers have a list of them

00:17:05.260 | and they'll just paste in a whole number.

00:17:08.260 | So you can look at like the number of milliseconds

00:17:10.740 | between keystrokes.

00:17:11.900 | Like there's all kinds of stuff people have come up with.

00:17:13.660 | - And even for travel velocity,

00:17:15.340 | you could probably incorporate VPNs too

00:17:17.740 | because there's probably a travel velocity

00:17:21.100 | for VPN switching too.

00:17:23.420 | That's human-like.

00:17:24.500 | Like if you're using legitimately VPN for something else,

00:17:27.340 | - Yep.

00:17:28.620 | - That might be, there's like legitimate uses too.

00:17:31.060 | Actually, you know, I feel embarrassed

00:17:32.660 | that I don't know this, probably should.

00:17:34.860 | But the, I'm not a robot.

00:17:37.660 | - Capture thing?

00:17:38.500 | - Capture thing.

00:17:39.340 | - Yeah.

00:17:40.180 | - So that probably works in the same way.

00:17:42.580 | Like how do you move your mouse maybe?

00:17:46.020 | Or how the dynamics of the clicking.

00:17:48.940 | - Totally.

00:17:49.780 | - But how does that even work that well then?

00:17:51.660 | And why can't it be faked?

00:17:52.980 | I need to look into this.

00:17:53.940 | 'Cause it's such a trivial capture.

00:17:56.860 | It feels like it should be very crackable.

00:17:58.740 | And yet a lot of high security places use that.

00:18:02.340 | - Yeah.

00:18:03.180 | - It's really interesting.

00:18:04.020 | - It's another cat and mouse game.

00:18:04.940 | So I think they've, yeah,

00:18:05.980 | but it's using a lot of similar signals

00:18:07.460 | like mouse movements, keystrokes.

00:18:10.260 | And then obviously all the stuff that comes

00:18:11.700 | over the wire with your browser.

00:18:14.180 | So like what operating system, what fonts, you know,

00:18:17.340 | what headers are being sent over.

00:18:18.980 | And there's actually, there's an old website.

00:18:21.940 | I can't remember what it's called.

00:18:22.780 | It was called like Panopticon or something.

00:18:25.500 | But it basically was like a proof of concept site

00:18:27.580 | that they would just show you all the data

00:18:30.180 | that was kind of getting sent over with your request.

00:18:33.100 | And like say that there's only one person

00:18:35.860 | in the world who has this exact set of data.

00:18:37.460 | It's you.

00:18:38.300 | And so it's almost like a workaround,

00:18:41.140 | a clever workaround to track somebody.

00:18:43.860 | Make, identify a unique person,

00:18:45.460 | even if like there wasn't a cookie involved or something.

00:18:48.380 | - Yeah, this is a fascinating world

00:18:50.180 | where you can't see anybody.

00:18:51.340 | You're in the dark and yet you have a lot of signal

00:18:54.060 | and you have to figure out who's a real person, who's not.

00:18:56.260 | Who's a robot, who's not.

00:18:57.700 | - Yeah.

00:18:58.540 | - Let me step back.

00:18:59.360 | We're gonna jump around all over the place.

00:19:00.460 | - Great.

00:19:01.300 | - Let me step back.

00:19:02.140 | - That's why I like your interviews.

00:19:02.960 | - I like technical topics.

00:19:04.140 | - So just let's use Bitcoin as a measure of time.

00:19:09.260 | You started Coinbase when Bitcoin was $10.

00:19:11.980 | - Yeah.

00:19:14.460 | - And you just mentioned an incredible system

00:19:17.020 | with security, with transactions.

00:19:19.800 | Everything is thought through.

00:19:20.940 | There's a lot going on.

00:19:21.980 | But what was version one back in those early days,

00:19:25.060 | the first prototype of Coinbase?

00:19:26.740 | What did that look like?

00:19:28.020 | - Yeah.

00:19:28.860 | - Like what did it take to write it,

00:19:31.060 | to think through it and make it work enough

00:19:35.420 | to at least make you believe that it's gonna work?

00:19:38.600 | - Well, I definitely didn't know if it was gonna work.

00:19:40.080 | I mean, it was kind of,

00:19:41.400 | I felt like I was just following my gut.

00:19:44.120 | So, I mean, I was working at Airbnb.

00:19:47.000 | I was a software engineer there, project manager.

00:19:50.080 | I was working on some fraud prevention stuff, for instance.

00:19:52.680 | And I read the Bitcoin white paper

00:19:55.280 | in kind of December of 2010.

00:19:57.020 | I started going to some Bitcoin meetups in the Bay Area.

00:20:01.020 | Met lots of interesting people there,

00:20:02.300 | like crazy people, anarchists,

00:20:04.760 | really brilliant people, all the above.

00:20:06.860 | And so I started nights and weekends

00:20:09.220 | trying to put together a prototype.

00:20:11.220 | And my initial thought was,

00:20:12.660 | well, SMTP is a protocol that runs email.

00:20:16.700 | And Git is a protocol for version control

00:20:21.020 | that people made like Gmail and GitHub.

00:20:23.380 | Most people don't wanna run their own email server

00:20:25.500 | or even their own Git server.

00:20:26.860 | They just wanna use a hosted thing

00:20:28.920 | that will do all the security and backups for them.

00:20:31.700 | So the thought in my head at that time was,

00:20:33.260 | Bitcoin's this new protocol.

00:20:34.620 | There's probably gonna be somebody

00:20:35.620 | who makes a hosted service

00:20:37.460 | that does all the security and backups for you,

00:20:39.300 | makes Bitcoin as a protocol easy to use.

00:20:42.100 | So maybe I should make like a hosted Bitcoin wallet

00:20:45.860 | or something.

00:20:46.700 | That was my, it was gonna make Gmail

00:20:48.060 | for Bitcoin or something.

00:20:50.020 | And a bunch of people told me that was a bad idea.

00:20:52.860 | Like most of my smart friends who I told about it,

00:20:55.060 | they were like,

00:20:56.940 | well, first of all, I don't really get

00:20:58.680 | what you're doing at all.

00:20:59.520 | Like Bitcoin sounds like a scam

00:21:01.120 | or something you've gotten involved in.

00:21:03.080 | But then other people who understood what Bitcoin was

00:21:06.040 | told me they thought it was a dumb idea.

00:21:07.120 | 'Cause they're like, dude, if you store all this Bitcoin,

00:21:09.960 | you're just gonna get hacked.

00:21:10.840 | Like nobody, why would you do that?

00:21:14.800 | And so I kinda had this thought like, you know what?

00:21:18.160 | I'm not gonna go all in

00:21:19.760 | and like make a store everyone's Bitcoin.

00:21:21.760 | That would be too much right now.

00:21:22.680 | I have a job, I have a day job.

00:21:25.040 | But let me just make a prototype

00:21:26.560 | and I'll tell people this is like a beta thing.

00:21:28.300 | Like don't put any real money in it

00:21:29.580 | and just see if there's interest.

00:21:31.100 | And if I feel like I'm onto something,

00:21:32.300 | maybe I'll go do this as a company.

00:21:33.860 | 'Cause I really wanted to be an entrepreneur at that time.

00:21:36.000 | I was like, I was 29, I was almost turning 30.

00:21:38.700 | And I always wanted to like start a company,

00:21:40.500 | but I wasn't yet.

00:21:43.580 | I was an employee at a company that was great.

00:21:45.020 | But so anyway, I had this prototype.

00:21:47.740 | I was hacking together nights and weekends.

00:21:50.300 | I actually wrote a whole Bitcoin node in Ruby,

00:21:53.900 | which turned out to be maybe a weird decision in hindsight.

00:21:56.260 | 'Cause Ruby wasn't the most performant language.

00:21:57.940 | We've subsequently had to rebuild that many times.

00:21:59.660 | But yeah, I had this hosted Bitcoin wallet.

00:22:03.100 | And the thing that I didn't have any users for it,

00:22:05.980 | by the way, I applied to Y Combinator.

00:22:08.020 | 'Cause I was like, maybe if somebody there writes me a check

00:22:10.700 | this will like make it feel like a real company.

00:22:12.340 | And I was trying to find a co-founder

00:22:14.100 | at that time unsuccessfully.

00:22:16.100 | So I was basically just wandering in the desert.

00:22:18.220 | I had a lot of self doubt about this.

00:22:20.460 | 'Cause I was like, I don't know,

00:22:21.860 | all my friends don't think this is kind of dumb.

00:22:24.220 | And maybe Bitcoin is just gonna get shut down

00:22:27.380 | and like this will all be some stupid thing.

00:22:29.020 | So there was definitely a feeling of just wandering,

00:22:31.820 | lost in the desert, lots of self doubt.

00:22:33.820 | Paul Graham and the Y Combinator group

00:22:37.200 | kind of wrote me the first check

00:22:38.580 | after I went and interviewed and stuff.

00:22:39.860 | And they wrote me a check for like 150K.

00:22:42.380 | And that was the first time somebody

00:22:44.020 | who I really looked up to kind of said,

00:22:46.020 | this is worth pursuing.

00:22:47.540 | Like maybe you're onto something, maybe you're not,

00:22:49.260 | but like, let's at least try it.

00:22:50.940 | And so that was kind of what gave me the confidence

00:22:53.740 | to quit my job and try it.

00:22:55.420 | And I'll wrap the story here by saying that,

00:22:58.740 | like I found the right co-founder after Y Combinator.

00:23:02.860 | We still didn't have any customers.

00:23:03.980 | The thing that, I basically launched

00:23:05.940 | the hosted Bitcoin wallet.

00:23:07.620 | There were people signing up.

00:23:09.100 | I just posted on Reddit and places like that.

00:23:11.300 | And maybe like a hundred people would sign up

00:23:13.300 | and then nobody would come back.

00:23:14.980 | And so I was like, I just, in Y Combinator,

00:23:18.300 | they often tell you like,

00:23:20.300 | talk to your customers and improve your product.

00:23:21.860 | Talk to your customers, improve your product.

00:23:23.140 | That's all you're supposed to be doing.

00:23:24.220 | Try to find product market fit.

00:23:25.740 | So I emailed like five of the users that had signed up

00:23:28.820 | and I was like, hey, I worked on this app.

00:23:30.540 | I saw you signed up. Can I get on the phone with you?

00:23:32.100 | I get on the phone with like five of these folks.

00:23:34.420 | And I was like, you know, why didn't you come back?

00:23:36.820 | And the guy was like, well, the app was okay for a beta,

00:23:39.780 | but like, I don't have any Bitcoin.

00:23:41.580 | So I didn't really know what to do with it.

00:23:43.380 | And I remember this light bulb kind of went off my head.

00:23:44.980 | I was like, well, if I put a buy Bitcoin button in there,

00:23:48.020 | would you have used it?

00:23:49.740 | And he was like, yeah, maybe.

00:23:51.500 | So then I had this, we went about the process.

00:23:54.180 | My co-founder at that time, we like got,

00:23:56.340 | basically you had to get like a bank partnership,

00:23:57.940 | payment rails, you know, an exchange,

00:23:59.300 | basic exchange functionality,

00:24:00.420 | all that stuff I was mentioning earlier in place.

00:24:03.620 | And the minute we launched that feature

00:24:05.340 | where you could just click buy,

00:24:06.260 | put in your bank account or credit card,

00:24:07.620 | buy it, buy Bitcoin, it showed up in your account.

00:24:09.620 | From that day forward, like the number of users

00:24:11.500 | started to go up like this.

00:24:12.660 | And so we finally had found product market fit

00:24:15.020 | after two years of wandering in the desert.

00:24:17.180 | - So you weren't even thinking about the buy the on-ramps.

00:24:20.500 | You were thinking it would be just a wallet,

00:24:22.060 | a place to store Bitcoin that you've already gotten.

00:24:25.540 | - Yeah. - Okay.

00:24:27.500 | This is, I mean, 'cause that's such a pain to do,

00:24:31.140 | to have to work with others to convert dollars

00:24:34.380 | of any fiat currency into Bitcoin.

00:24:37.860 | - Yeah. - So did you,

00:24:39.460 | I mean, were you overwhelmed

00:24:42.700 | by the immensity of the task here,

00:24:45.420 | or were you just sort of like,

00:24:49.260 | sort of not allowing yourself to think too deeply

00:24:52.940 | through this whole thing

00:24:53.860 | and just letting the optimism take over here?

00:24:57.180 | - You know, I was really looking forward

00:25:00.540 | to like doing something crazy and like a big challenge.

00:25:03.300 | And I wanted to, I love kind of crisis moments like that

00:25:08.300 | where, you know, I'm very determined, right?

00:25:12.260 | And especially when I get like very set on something

00:25:14.780 | and I'm just like, you know what?

00:25:15.700 | I'm gonna figure out a way to make this fucking thing work.

00:25:18.380 | Like no matter what.

00:25:19.700 | And so I reveled in that.

00:25:23.140 | I was sort of, I had read all these books about startups

00:25:26.220 | and like every startup has these like, you know,

00:25:28.140 | major setbacks and just like nothing works.

00:25:30.340 | And so--

00:25:31.180 | - So that was a sign that you're doing something right.

00:25:33.460 | - I had no idea if I was doing anything right at all,

00:25:35.460 | but I was like, I was kind of loving the experience of it

00:25:38.220 | in a weird way.

00:25:39.060 | It felt stressful at the time, like, you know,

00:25:41.700 | nothing was working and, but I was just,

00:25:44.420 | I felt like I was on the right path somehow.

00:25:47.180 | And so I just kept going.

00:25:48.180 | I don't know.

00:25:49.020 | - What was the darkest moment that you've gone to

00:25:53.900 | in your mind during that time?

00:25:55.660 | What were some of the tougher moments?

00:25:58.660 | You said self-doubt.

00:26:00.460 | - Yeah.

00:26:01.860 | - Have you, yeah.

00:26:03.340 | Where'd you go?

00:26:04.700 | Where'd you go in your mind?

00:26:06.100 | (laughing)

00:26:07.900 | Is there a moment where you're just like laying there,

00:26:10.460 | this is hopeless?

00:26:12.220 | - Well, there's a couple moments I'm remembering.

00:26:15.500 | I mean, so for whatever reason,

00:26:18.260 | I had this like big chip on my shoulder at that time.

00:26:20.780 | And I was like, I really want to do something important

00:26:23.380 | in the world.

00:26:24.220 | Like, you know, I could have a good life

00:26:26.260 | and like work for some good companies

00:26:27.860 | and write some software.

00:26:29.100 | And I'm, for some reason, I never wanted that for myself.

00:26:31.940 | That probably would have been healthier, honestly,

00:26:33.340 | just to like, as an expected value outcome,

00:26:35.860 | that's probably a better thing in life.

00:26:38.020 | But I was like, I was like, man,

00:26:40.260 | I really want to do something important

00:26:41.940 | and have a bigger impact.

00:26:43.140 | And I was like, I was willing to sacrifice a lot for that.

00:26:46.220 | I was like sleep and not going out with friends and stuff.

00:26:49.620 | I remember one of the,

00:26:50.660 | just for like years working on this stuff.

00:26:52.740 | I remember one of the darker moments was,

00:26:55.940 | we probably had like maybe five employees at that time.

00:27:00.140 | And I remember like a bunch of bad things happened

00:27:03.580 | like all at once.

00:27:04.420 | And it was, so first of all,

00:27:06.660 | you have to remember at this time,

00:27:08.860 | we were all very sleep deprived,

00:27:10.420 | which kind of exacerbates everything.

00:27:11.900 | If you look at like the Exxon Valdez spill

00:27:14.460 | and all these like natural disasters,

00:27:16.300 | like sleep deprivation is often involved.

00:27:18.500 | So, 'cause the reason why we were so sleep deprived

00:27:20.940 | is not just 'cause we were working so much,

00:27:22.100 | but like the site would go offline

00:27:24.580 | in the middle of the night and we'd get,

00:27:25.700 | I'd get paged, I was like on pager duty.

00:27:27.180 | So I'd get woken up sometimes like two or three times

00:27:28.980 | a night, like have to try to fix something,

00:27:30.580 | go back to sleep.

00:27:31.940 | So in that environment, you can kind of get,

00:27:34.980 | you can get discouraged.

00:27:37.020 | So one bad thing that happened was,

00:27:39.380 | we had a bug on the website

00:27:40.660 | and there was thousands of people on Reddit and Twitter

00:27:43.740 | who were all like pissed at Coinbase

00:27:46.660 | 'cause like the balances were showing wrong.

00:27:48.340 | And they were just like, fuck this company, it's over.

00:27:51.580 | Like, I hate these guys.

00:27:52.540 | And so that was, I'd never had this feeling

00:27:55.300 | of a thousand people mad at me at the same time.

00:27:57.260 | You know, I feel like I'm a pretty chill guy.

00:27:58.820 | Like most of the time people don't get mad at me.

00:28:00.420 | So that was one.

00:28:02.100 | Another one was that-

00:28:03.420 | - Can we pause on that?

00:28:04.260 | That's so interesting.

00:28:05.220 | So you were saying like, here's a dream,

00:28:07.100 | I'm trying to create something

00:28:08.660 | and now forever the reputation of this dream is ruined.

00:28:13.180 | It will never, it's irrecoverable, it's over.

00:28:15.860 | That kind of feeling.

00:28:17.220 | - Yeah, well, I didn't, you're right.

00:28:18.620 | I didn't know at that time.

00:28:19.580 | I was like, is this the end?

00:28:21.660 | Like everybody, we're so tiny now everybody hates us.

00:28:25.100 | So is it over?

00:28:26.340 | - Yeah.

00:28:27.180 | - Nobody told me this before starting a company

00:28:30.780 | that like, a bunch of people will hate you for this,

00:28:33.580 | which is like a very counterintuitive thing.

00:28:35.220 | 'Cause you know, most companies I think

00:28:37.900 | are doing good things in the world,

00:28:38.940 | at least you're trying, right?

00:28:39.780 | And so even if someone's like trying,

00:28:41.980 | but they're not, they're failing,

00:28:42.860 | I'm generally rooting for them,

00:28:43.940 | at least you're trying, right?

00:28:45.380 | But that's not the case at all.

00:28:47.100 | And most founders I've known have gone through this too,

00:28:50.180 | where they're very surprised

00:28:52.660 | at the amount of hate that they get.

00:28:54.180 | And if it's, I think it's actually like a muscle

00:28:55.980 | you can build your tolerance to it.

00:28:57.740 | Like, because you go talk to somebody who's like,

00:29:01.500 | for you it feels terrible

00:29:02.420 | 'cause you're at the center of this storm.

00:29:03.660 | And like, but if you go, then you go talk to like,

00:29:05.900 | you know, your family or some other person,

00:29:07.620 | like, dude, I didn't even hear about that.

00:29:09.580 | They're just busy in their own life.

00:29:11.300 | And so they have no idea that you had all this negative

00:29:14.420 | press or like whatever it was.

00:29:16.500 | - Can I once again linger on that?

00:29:19.020 | - Yeah.

00:29:20.380 | - There's an interesting person I'd like to bring up,

00:29:23.500 | just as an example, Bill Gates.

00:29:26.460 | - Yeah.

00:29:27.600 | - So he gets a very large amount of hate on the internet.

00:29:31.540 | - Yeah.

00:29:32.380 | - And there's something about him,

00:29:34.220 | this is me talking, not you,

00:29:35.740 | that he seems out of touch about that hate.

00:29:38.960 | I believe, at least in my understanding,

00:29:44.300 | with the resources he has,

00:29:46.380 | he's trying and is actually doing a lot of good.

00:29:49.520 | And yet there's a gigantic amount of hate,

00:29:52.660 | conspiracy theories and stuff like that.

00:29:54.660 | - Right.

00:29:55.500 | - And it feels like that's the case

00:29:57.980 | because he's somehow out of touch with people.

00:30:02.100 | So I wonder how you stay in touch

00:30:04.340 | with the voice of the people

00:30:05.540 | without being destroyed by the outrage.

00:30:08.820 | Is there any wisdom you have to that?

00:30:10.900 | (laughing)

00:30:12.140 | - I don't know about wisdom,

00:30:12.980 | but I've thought about this too,

00:30:14.460 | because yeah, you want to always be open to feedback,

00:30:19.100 | especially from people who have

00:30:20.340 | your best interests at heart, right?

00:30:22.380 | And you can become isolated from it

00:30:25.440 | and just surrounded by yes people.

00:30:28.340 | And I mean, who knows, maybe like she and Putin

00:30:32.500 | and people like that are in situations I have no idea.

00:30:35.200 | But if you listen to too much of it

00:30:39.140 | and you just try to please everyone,

00:30:40.300 | you'll never get anything done.

00:30:41.500 | And I mean, most of the best leaders are people

00:30:44.920 | who they can act when they believe

00:30:47.940 | that they're doing something net positive

00:30:49.780 | for the world and humanity.

00:30:51.560 | And they actually don't really care

00:30:52.780 | if they piss off some portion of the people.

00:30:55.640 | Almost anything you're gonna do of significance

00:30:58.180 | in the world today is gonna piss off 5% of people,

00:31:01.120 | maybe 49% of people or whatever, maybe 60%, I don't know.

00:31:04.860 | So you never want to become so surrounded

00:31:07.740 | by people who just work for you and will say yes.

00:31:09.740 | And then you think like, well, I'm a genius

00:31:11.500 | and I'm like, that's how you become a dictator or whatever.

00:31:15.260 | But you also can't care so much about what people think

00:31:18.060 | because then you'll never do anything

00:31:19.300 | that's truly authentic to yourself.

00:31:21.580 | One other thought on that, by the way,

00:31:22.780 | I think it's a really good question.

00:31:25.120 | So I've thought about this a lot,

00:31:26.500 | like why, you know, people generally kind of hate on Zuck

00:31:29.580 | and they hate on Bill Gates and they hate on,

00:31:32.340 | they don't really hate on Elon.

00:31:34.820 | Well, actually, Elon has a lot of haters too,

00:31:36.020 | but it's a different thing.

00:31:37.380 | - This is measured, this is measured.

00:31:39.260 | I was looking at some surveys.

00:31:41.220 | So I think Zuck is the most, so loved and hated, right?

00:31:45.540 | - Yeah.

00:31:46.540 | - Zuckerberg is the most both loved and hated.

00:31:50.780 | He's the most hated.

00:31:52.380 | And then I think it's Bill Gates and Elon is down there.

00:31:55.300 | I think it's like 40% hate Zuck.

00:31:58.660 | People asked, and then Elon is in the double digits,

00:32:02.620 | but low double digits.

00:32:04.220 | And so it's interesting.

00:32:05.060 | You just look at this data, ask yourself why.

00:32:08.100 | - Right.

00:32:08.940 | So I ask myself this sometimes too,

00:32:10.420 | because I don't claim to know any of these people well,

00:32:13.100 | but like I've met them briefly.

00:32:15.100 | And my impression is that they're actually all smart people

00:32:17.780 | trying to do good things in the world.

00:32:18.800 | So there's not too much difference there

00:32:21.180 | despite public perception.

00:32:23.300 | So why is it that some are really hated and some aren't?

00:32:25.460 | I mean, it's a complicated question.

00:32:28.100 | Obviously, Zuck and his Facebook got blamed

00:32:31.260 | for the whole election thing and all that didn't help.

00:32:34.260 | Social media has gotten a lot of pressure just from like,

00:32:38.140 | hey, why aren't you solving all of society's tough problems?

00:32:40.780 | It's like, well, they're just one company.

00:32:42.620 | But one thing I've noticed is that

00:32:44.380 | a lot of these people, they have like Asperger's, right?

00:32:49.300 | A little bit.

00:32:50.140 | And sometimes people with Asperger's

00:32:53.340 | don't really emote in the same way.

00:32:54.740 | And so I think it's almost a form of like,

00:32:58.100 | bias against their cognitive type or something,

00:33:03.100 | which is like, that person doesn't emote right.

00:33:07.940 | I don't trust their intentions.

00:33:11.280 | And the other thing I've thought about too,

00:33:14.380 | is that sometimes I think some leaders,

00:33:16.840 | like maybe Zuck or Bill Gates,

00:33:19.260 | they can come across as like a little bit PR rehearsed.

00:33:22.940 | Like they're basically,

00:33:24.860 | they're giving the PR approved answers

00:33:26.940 | where Elon just says whatever he thinks to a fault.

00:33:29.660 | So even if people hate what he says,

00:33:31.020 | they're like, at least I believe it's authentic.

00:33:33.220 | So I've always thought about that too for myself.

00:33:34.900 | I'm like, how do I,

00:33:36.460 | 'cause you can fuck it up on both sides, right?

00:33:38.420 | Like if you just come out and you're like saying

00:33:39.900 | whatever's stream of consciousness,

00:33:42.220 | you'll often end up like pissing off people on your team

00:33:44.640 | or like tripping over some regulation that you've,

00:33:47.980 | there's all kinds of things about running a public company.

00:33:51.420 | You can't say certain stuff.

00:33:53.080 | But if you're too PR approved in your answers,

00:33:56.300 | nobody trusts you, what you're saying.

00:33:58.220 | And so anyway, this is something I think about a lot.

00:34:00.420 | I don't think I have the right answer,

00:34:01.500 | but I'm trying to find that balance.

00:34:02.780 | - And more and more with the internet,

00:34:04.340 | there's a premium on authenticity, just like you're saying.

00:34:07.380 | - Yeah.

00:34:08.220 | - People really, really appreciate that.

00:34:09.040 | So for leaders, it's a challenge to be,

00:34:11.940 | how do I make sure I'm authentic,

00:34:15.600 | but also don't say stupid shit.

00:34:19.140 | - Yeah.

00:34:19.980 | - And so that's an interesting thing.

00:34:20.940 | I've noticed that just having interacted

00:34:23.700 | with a bunch of leaders that you have to be careful

00:34:28.700 | how much you surround yourself with PR folks.

00:34:31.940 | 'Cause the best, I would say,

00:34:33.380 | let me just say a nice thing about marketing and PR folks,

00:34:36.320 | the best marketing folks are extremely good.

00:34:40.020 | - Yeah.

00:34:40.860 | - So they understand exactly what great marketing is

00:34:43.660 | and great PR, it's authenticity.

00:34:46.040 | It's showing, revealing the beauty.

00:34:48.260 | As opposed to PR and marketing out of fear.

00:34:51.460 | Oh, don't say that, don't say this, don't that.

00:34:53.500 | Because then you start living in this kind of,

00:34:57.100 | that pushes you towards a bubble

00:34:58.460 | where you can't express your beautiful quirks

00:35:01.420 | and weirdness and all that kind of stuff.

00:35:03.260 | And also the cool, the beautiful things

00:35:06.060 | about what you're doing.

00:35:07.120 | I find like, especially with tech things,

00:35:10.340 | like even like Coinbase, the way to reveal the beauty of it

00:35:15.060 | is not only by showing all the things you could do with it,

00:35:18.460 | but showing that there's great engineering

00:35:20.660 | going on underneath.

00:35:22.180 | So letting the nerds shine too.

00:35:23.780 | It doesn't have to be like these kind of commercials

00:35:28.540 | where it's like a happy family using Coinbase

00:35:33.500 | to send a transaction about flowers for mom

00:35:36.660 | or something like that.

00:35:37.660 | Like it could be also like gritty stuff and real stuff.

00:35:41.580 | So that's a general just observation I made.

00:35:45.280 | But you said you were talking about dark moments

00:35:46.940 | and that there's people on the internet

00:35:49.060 | that were pissed off that the site was down.

00:35:51.180 | And you said there might be something else.

00:35:54.060 | - Yeah, so sleep deprived,

00:35:55.860 | like a bunch of people on the internet were pissed at me.

00:35:57.800 | The balances were fucked up.

00:35:59.440 | Like people were tweeting the company's over,

00:36:01.220 | just give the money back, whatever.

00:36:03.580 | And then, oh yeah, somebody posted.

00:36:07.800 | So we had all this, we didn't,

00:36:09.500 | we had started to get all these customer support inquiries

00:36:11.300 | and like we only had like a few people at the company.

00:36:14.220 | And so we were backed up maybe like 20,000 support requests.

00:36:17.980 | So people couldn't get ahold of us.

00:36:19.740 | So somebody posted my cell phone number on Reddit

00:36:22.820 | and they were like,

00:36:24.220 | if you need to get ahold of the CEO, whatever,

00:36:25.800 | 'cause everyone's upset about where their money is.

00:36:28.260 | So I remember we're in the office,

00:36:30.020 | it's like late at night, we've been working like 12 hours,

00:36:32.700 | we're all sleep deprived.

00:36:33.540 | I'm trying to hack and like get this bug fixed.

00:36:36.620 | And we all need like food at the office.

00:36:38.660 | And so my phone has been blowing up all day

00:36:41.020 | 'cause someone posted my phone number on the internet.

00:36:43.020 | And there's like a guy,

00:36:44.140 | there was a guy like trying to deliver food

00:36:46.960 | and I needed to answer my phone

00:36:48.500 | to like get the food from downstairs.

00:36:50.460 | So I was like, shit, I gotta just see if that's him.

00:36:53.020 | So I started answering the call and it's like,

00:36:55.980 | is this Brian?

00:36:56.820 | I'm like, nope, wrong number, click.

00:36:58.540 | And I pick up the next call.

00:37:00.940 | It's like every way when I finished the call,

00:37:02.700 | another call is like coming in.

00:37:03.700 | So I was like, I'm a reporter from Japan,

00:37:06.420 | like asking about a security.

00:37:08.060 | Nope, wrong number, click.

00:37:09.060 | And then I like, finally I get the delivery guy downstairs,

00:37:11.180 | bring the food up.

00:37:12.020 | We're all like surviving to like fix this bug.

00:37:17.100 | I remember there was just basically a point that night

00:37:19.020 | where I was like, fuck, I need to just,

00:37:20.700 | I basically just curled up on like a ball on the floor.

00:37:24.500 | And I just like cried for a little bit.

00:37:27.360 | I think I let myself just kind of wallow in self-pity,

00:37:31.060 | kind of took a nap for about five minutes.

00:37:32.780 | And I was like, let's fucking solve this.

00:37:35.180 | And I like, you know, stopped being like a little whatever

00:37:38.380 | and like got back up.

00:37:40.100 | - Sleep deprivation combined with just the stress

00:37:42.220 | and the pressure of the site going down

00:37:44.780 | and everybody wants the site to be up,

00:37:47.100 | just the pressure from people and the number of users

00:37:49.740 | is growing and growing and growing.

00:37:51.420 | So that pressure is just mentally tough.

00:37:53.780 | - Yeah.

00:37:54.620 | - What was your source of strength during that time?

00:37:57.380 | Like somebody that patted you on the back

00:38:02.140 | and said, we got this.

00:38:04.180 | - Yeah, well, it definitely helped to have a co-founder.

00:38:06.820 | So, you know, there's like that old saying about,

00:38:10.060 | it's better to be in a great relationship

00:38:11.780 | than to be single, but it's better to be single

00:38:13.060 | than to be in a bad relationship.

00:38:14.020 | So co-founders actually blow up a lot of companies too.

00:38:17.300 | But when you find the right co-founder,

00:38:18.660 | which I was lucky to find with Fred Urshom,

00:38:21.540 | that was very important.

00:38:22.500 | There was definitely moments where, you know,

00:38:24.900 | I was like kind of, you know, at the wits end or whatever.

00:38:28.820 | And he was like, dude, let's rally.

00:38:31.580 | Like, and he basically carried the team, you know,

00:38:33.380 | a couple of times, like in really key moments.

00:38:35.420 | - What advice would you give to startup founders

00:38:39.020 | about this particular stage,

00:38:41.460 | about surviving it to the five

00:38:44.460 | and through the five employee stage where you--

00:38:47.020 | - Yeah, well, if you're pre-product market fit,

00:38:49.980 | the best advice that I have from that period

00:38:52.740 | is action produces information.

00:38:55.740 | So just like keep doing stuff, you know.

00:38:58.740 | I remember like Paul Graham--

00:39:01.980 | - Good line, it's a good line.

00:39:02.820 | - Yeah, Paul Graham had this great line like that.

00:39:05.580 | I think that's his line.

00:39:06.420 | And he was like, startups are like sharks.

00:39:08.500 | If they stop swimming, they die.

00:39:10.420 | You know, so even if you're like not sure what to do,

00:39:12.260 | like just do anything because when you do it,

00:39:14.380 | it'll produce some information.

00:39:16.100 | Like people liked it, they didn't.

00:39:17.580 | This was very true for me.

00:39:18.620 | There was times where I just did something

00:39:21.500 | instead of debating it endlessly.

00:39:23.940 | And like, just try it, you know, like, all right.

00:39:25.420 | So we shipped it.

00:39:26.260 | And like, there was a couple of times

00:39:27.780 | where like the minute I shipped it,

00:39:29.660 | I was like, I know we built this wrong,

00:39:32.860 | but now I have an idea of what to do next.

00:39:34.380 | And it wasn't, I only would have had the idea

00:39:36.500 | if we'd actually gone through the exercise

00:39:37.940 | of going to build it.

00:39:38.900 | It's like, my other favorite analogy for this is that

00:39:41.700 | you're like at the base of a mountain

00:39:43.980 | that's shrouded in fog.

00:39:45.940 | And you're looking up at the mountain

00:39:47.060 | and you're trying to think like,

00:39:47.940 | okay, how do I get up there?

00:39:48.940 | But you can only see like three or four steps ahead

00:39:50.980 | 'cause the fog is so thick.

00:39:52.540 | So you have to just take steps into the unknown.

00:39:55.860 | And when you take three steps,

00:39:57.620 | another three steps will be revealed ahead of you.

00:39:59.900 | And sometimes you'll end up on some local maximum.

00:40:01.900 | You'll have to retrace your steps or whatever,

00:40:03.500 | but, or come up to a cliff, you know.

00:40:05.980 | But most people in life don't take the steps

00:40:10.580 | into the fog, into the unknown, because it's scary.

00:40:14.140 | Or they're like, I don't know, what if I fail?

00:40:15.820 | Or like, I don't know how that's gonna work.

00:40:17.620 | Or I might run out of money,

00:40:18.460 | or I won't be able to get a job after,

00:40:19.740 | or I don't know, whatever reason.

00:40:21.660 | But that is like one of the things that separates,

00:40:24.460 | I think, entrepreneurial people with that kind of inclination

00:40:27.140 | is that they have sort of a comfort

00:40:29.820 | with this risk tolerance,

00:40:31.660 | but it's actually not really risky if you think about it.

00:40:33.820 | It's not like, you know, at least in most places,

00:40:38.140 | like, you know, if you go to a startup and it fails,

00:40:40.740 | like you're gonna, you're even more valuable

00:40:42.580 | to your next employer, right?

00:40:44.140 | Or you can go raise a seed round, pay yourself a salary,

00:40:47.220 | try it for like two years or three years.

00:40:49.020 | If it doesn't work, go get another job.

00:40:50.500 | It's not like you weren't paying yourself a salary

00:40:52.780 | during that time.

00:40:53.620 | So I think people overestimate the risk of doing a startup,

00:40:56.500 | and they just never, they never start,

00:40:58.180 | because it seems crazy.

00:41:00.900 | And all your friends think it's silly.

00:41:02.140 | Like that's sort of the default nature

00:41:03.620 | of every big startup idea.

00:41:05.620 | - It's just basic fear.

00:41:06.820 | It's the same kind of fear that if you see a,

00:41:08.900 | if you're a guy, see a cute girl at a bar,

00:41:11.700 | it's the fear associated with coming up to her,

00:41:14.300 | you like her, asking her.

00:41:15.820 | It's like, what's the actual risk exactly?

00:41:18.140 | - Right.

00:41:19.300 | She'll say, "No thanks, I'm not interested."

00:41:20.820 | - No thanks.

00:41:21.660 | I guess the risk is like,

00:41:23.380 | that's going to be mentally difficult

00:41:26.020 | to deal with rejection.

00:41:27.680 | So just like it's mentally difficult to deal with failure.

00:41:30.700 | If you had a bunch of ideas and you were excited about them,

00:41:33.780 | and you implement them and you realize they're not good,

00:41:37.140 | that could be difficult to keep pushing through that.

00:41:40.380 | But I suppose that's life.

00:41:41.880 | You're supposed to, you know,

00:41:44.220 | perseverance through the failures.

00:41:46.540 | And then the risk is low.

00:41:48.080 | So that's, and then the whole time through the fog

00:41:50.100 | up the mountain, you're looking for product market fit.

00:41:52.340 | - Yeah, that's right.

00:41:53.340 | So you know you have it when the usage of your product

00:41:55.620 | keeps growing without any marketing dollars

00:41:57.420 | or anything like that.

00:41:58.260 | It's just like more people keep coming back

00:41:59.700 | every week or month.

00:42:01.180 | So you're kind of keep,

00:42:02.020 | you're basically watching your stats.

00:42:04.400 | Nothing is working.

00:42:05.860 | You see these little wiggles of false hope in your metrics.

00:42:09.380 | And you basically just keep talking to customers,

00:42:11.380 | fixing the, improving the product,

00:42:12.700 | talk to customers, improve the product,

00:42:13.900 | talk to customers, improve the product,

00:42:15.660 | you know, and try not to run out of money.

00:42:17.120 | So it'd be really scrappy.

00:42:18.420 | And then if you're lucky,

00:42:20.540 | you hit some kind of threshold where like,

00:42:22.780 | okay, the thing is good enough now,

00:42:24.060 | or we hit on some use case

00:42:25.140 | and then it'll organically start to grow a bit.

00:42:28.340 | And then you have a whole different set of problems

00:42:30.740 | once you hit product market fit,

00:42:31.680 | which is how do we scale this thing?

00:42:34.220 | How do we hire people?

00:42:35.720 | How do we, you know,

00:42:38.220 | hire an executive team or raise more money?

00:42:39.740 | And like, so the problems totally change, but yeah.

00:42:42.740 | - Well, you were there through the whole thing.

00:42:45.080 | So that's the other question that's fascinating.

00:42:48.100 | Again, back to the girl at the bar,

00:42:50.980 | how do you hire people?

00:42:52.260 | It's like, how do you find good friends?

00:42:55.340 | How do you find good relationships?

00:42:57.780 | And in this specific case, how do you hire good people?

00:43:01.100 | Engineers, executive, all of it.

00:43:04.940 | - One thing is I've done a lot of reps

00:43:06.300 | on hiring at this point.

00:43:07.240 | So Coinbase has about 5,000 people,

00:43:10.660 | probably the first 500 people or something,

00:43:14.380 | maybe in that range.

00:43:15.980 | You know, I interviewed every single one of those,

00:43:18.140 | but you have to remember there's probably like,

00:43:20.740 | I don't know, on average,

00:43:21.580 | maybe 10 people that we went in the process

00:43:24.140 | for every one we hired or something.

00:43:25.260 | So it was like, by the time that we had 500 employees,

00:43:29.320 | I had done like 5,000 interviews or something.

00:43:31.260 | I was like very burned out on interviews.

00:43:32.820 | I had been doing, some days I did like seven interviews

00:43:36.380 | in a day or maybe, you know,

00:43:38.500 | you've been doing lots of interviews.

00:43:39.740 | Maybe you wouldn't get burned out,

00:43:40.700 | but different kind of interviews.

00:43:42.460 | - Very different, very different.

00:43:44.140 | - Yeah. - Very different

00:43:44.980 | because you're, so first of all,

00:43:49.140 | most of your interviews lead to rejection.

00:43:51.400 | - Yeah.

00:43:52.540 | - Which is also exhausting.

00:43:54.740 | - Yeah, and there's a whole part of the interview,

00:43:57.460 | which is about candidate experience, right?

00:43:59.180 | Sometimes you know it's not the right person,

00:44:00.900 | but you wanna make sure they have a good experience.

00:44:03.060 | If you're just exhausted and you're on your sixth interview

00:44:05.060 | and you're like, well, thanks for coming in

00:44:06.860 | and you wrap and you just,

00:44:07.780 | and then like, you're gonna create a detractor

00:44:09.820 | or someone who's out there like,

00:44:10.660 | fuck that company or Brian was rude to me or whatever.

00:44:12.700 | So I had to, honestly,

00:44:14.100 | I had to work on that a little bit in the early days

00:44:15.540 | 'cause I was doing so many interviews.

00:44:16.700 | Like I needed to make sure that when people came in,

00:44:20.100 | I was like, you know, made them feel comfortable,

00:44:23.620 | ask them a couple of like warmup questions.

00:44:25.300 | Just like, oh, how was it getting in the office?

00:44:27.060 | Like, did you find it okay?

00:44:27.940 | And like, what have you been up to this week?

00:44:29.220 | And not just like, you know,

00:44:31.580 | like a factory assembly line, like boom, boom, boom.

00:44:33.500 | Like, yeah.

00:44:34.860 | - But also there's a moment,

00:44:35.820 | 'cause I've interviewed a bunch of people

00:44:37.020 | for like teams and stuff.

00:44:38.220 | - Yeah.

00:44:39.060 | - There's also a moment when you early on know

00:44:40.860 | it's not gonna be a good fit.

00:44:42.420 | - Yeah.

00:44:43.260 | - And you still have to land that plane

00:44:44.980 | and all that kind of stuff.

00:44:46.860 | And that could get really, really, really exhausting.

00:44:49.340 | So yeah, anyway, sorry.

00:44:50.380 | So.

00:44:51.540 | - Yeah, so basically we tried all,

00:44:53.260 | we've tried so many things over the years

00:44:54.380 | to make interviews more efficient,

00:44:55.620 | 'cause it's a huge time sink for the team.

00:44:58.860 | So, you know, we basically,

00:45:00.700 | we'll usually get them down to like 25 minutes.

00:45:03.300 | I've seen, if you're trying to hire like a big team,

00:45:05.820 | let's say, you know, of people who are like contractors

00:45:09.820 | or something, not necessarily full-time employees.

00:45:11.220 | I've seen people actually do 10 minute interviews.

00:45:14.260 | You can even interview like a thousand people

00:45:16.380 | almost like in a week or something.

00:45:17.740 | I'm not sure if that quite works out,

00:45:18.900 | but let me listen to that.

00:45:20.820 | But you can basically get six done in an hour

00:45:23.660 | if you're just, I need to get a team of 30 contractors

00:45:25.860 | for whatever purpose.

00:45:26.700 | But if you're talking about full-time employees,

00:45:28.460 | I usually do like 25 minute.

00:45:30.740 | You know, you're oftentimes like,

00:45:32.860 | one thing we've done is we'll put like a Google form online.

00:45:37.300 | And it's like, put some basic hurdles in there.

00:45:39.540 | Like, you know, ask them to put in an answer

00:45:43.100 | of which you can check in a spreadsheet

00:45:44.220 | if it was correct or not.

00:45:45.180 | And like, there was some funny examples

00:45:46.700 | in the early days of Coinbase

00:45:47.540 | where we put in like brain teasers and stuff,

00:45:49.260 | but we don't do that anymore.

00:45:50.460 | We do like normal interviews, we do references.

00:45:52.620 | The kinds of things I ask in interviews,

00:45:54.620 | you know, it's usually like,

00:45:57.780 | I like to think about what do we need this person

00:46:00.340 | to accomplish in this role, right?

00:46:02.980 | And get really specific about that.

00:46:05.260 | It's like usually something pretty hard.

00:46:07.140 | And then I'll ask them a question.

00:46:08.500 | It's like, tell me about a time you did X

00:46:11.340 | and, or tell me about the hardest,

00:46:14.540 | the hardest kind of problem you've had to solve in Y.

00:46:17.380 | And what did you do specifically to overcome it, right?

00:46:20.340 | So I'm asking to see if they can actually do the stuff

00:46:22.380 | we need to get done.

00:46:23.220 | But then I'm also kind of asking like culture questions

00:46:25.820 | if I'm interviewing for that.

00:46:27.420 | And so I'm trying to see like,

00:46:29.380 | are they concise communicators?

00:46:30.820 | Can they just give me a clear answer and stop talking?

00:46:34.420 | Some people like ramble on for like five, 10 minutes

00:46:37.180 | if you ask the first question.

00:46:38.700 | Some people are, you know, they're interrupters,

00:46:41.180 | like church of interruption.

00:46:42.140 | So like they won't stop talking until you interrupt them,

00:46:44.820 | which for me, I'm always patient and I wait.

00:46:46.740 | So that's weird.

00:46:49.340 | I'm looking to see for humility too.

00:46:50.860 | Like, you know, I'll tell, I'll ask people,

00:46:53.340 | tell me about a time something went really wrong.

00:46:55.380 | Like you had conflict with someone on a team or,

00:46:58.340 | what I'm kind of looking for is,

00:47:00.140 | were they part of the solution

00:47:01.260 | or are they still holding onto like blame

00:47:03.180 | and criticism about that and be like,

00:47:04.420 | "Well, I told them it shouldn't do that way,

00:47:06.300 | but they didn't listen to me."

00:47:07.340 | And, you know, these are all like bad signs.

00:47:09.420 | So I'm looking for, yeah.

00:47:10.900 | Can they get the job done?

00:47:11.940 | Will they work together on a team?

00:47:13.580 | Can they communicate effectively?

00:47:15.740 | Do they fit into our cultural values?

00:47:17.380 | And, you know, those kinds of things.

00:47:18.740 | - Yeah, I mean, there's, 'cause I've,

00:47:21.540 | even for help with this podcast here,

00:47:24.420 | but also at MIT and so on, I've done a bunch of hiring.

00:47:27.420 | And I was always looking for, you said brain teasers,

00:47:30.380 | all kinds of simple questions that can,

00:47:33.060 | that can reveal a lot of information.

00:47:35.620 | And it's always been challenging.

00:47:36.860 | I used to, I still ask this question,

00:47:39.060 | but do you think it's better to work hard or work smart?

00:47:45.580 | And, you know, I had this idea that I've,

00:47:50.300 | that I think I've matured about,

00:47:54.900 | which is I kind of believe that people who say

00:47:58.100 | work smart on that question don't actually work smart.

00:48:03.100 | So the right textbook answer is better to work smart.

00:48:07.860 | But the reality is it's people that haven't actually

00:48:12.140 | ever done anything that say work smart.

00:48:15.020 | They're like, they haven't really struggled

00:48:17.860 | because my general belief at the time

00:48:20.620 | was in order to discover what it means to work smart,

00:48:25.620 | to be efficient, you have to work your ass off.

00:48:29.060 | So you have to really fail a lot.

00:48:30.940 | And failure feels like hard work.

00:48:33.460 | And so I was always suspicious of people

00:48:36.380 | that would say work smart.

00:48:37.820 | I would want to interrogate that question.

00:48:40.520 | But then I also, you know, have learned that there is,

00:48:45.220 | people that are just exceptionally,

00:48:47.640 | exceptionally efficient.

00:48:51.340 | They really do know what it means to work smart,

00:48:53.860 | even at a young age.

00:48:55.660 | And so like, you can't just disqualify based on that.

00:48:58.500 | You have to dig in deeper.

00:49:00.340 | But some of the most interesting people I've ever worked with

00:49:02.980 | would say work hard, unapologetically.

00:49:05.020 | And they're usually the ones that know how to be efficient.

00:49:08.580 | Which is, it's just an interesting thing like that.

00:49:11.220 | And I've always searched for questions of that nature

00:49:13.940 | to see, can I get,

00:49:17.060 | can I get a person to reveal something profound about them

00:49:22.460 | in as brief of a question as possible?

00:49:25.600 | And I, you know, and then of course,

00:49:28.580 | there's basic attention to detail and brain teasers

00:49:31.540 | and stuff like that, depending on the role,

00:49:33.420 | programming and so on, to see,

00:49:35.220 | can they solve a tricky puzzle and do so,

00:49:39.100 | like one that doesn't require a lot of effort,

00:49:40.980 | but requires a certain nonlinear way of thinking.

00:49:45.980 | Is there some, I mean, maybe you don't want to reveal,

00:49:49.780 | but is there some questions

00:49:51.760 | that you sometimes find yourself leaning on?

00:49:55.020 | You said like, how did you solve a hard problem

00:49:58.140 | in your past and have them talk through it?

00:50:01.380 | That's one.

00:50:02.200 | - You know, we started with brain teasers periodically

00:50:04.780 | at Coinbase and we got away from that relatively quickly.

00:50:07.700 | And I think one, it's a tough one,

00:50:10.860 | 'cause I actually think it does show

00:50:13.620 | how somebody kind of performs under pressure,

00:50:16.380 | but I don't think it's a super reliable indicator

00:50:18.660 | 'cause there's some people who are really good

00:50:21.820 | in the typical work situation,

00:50:25.140 | but that's not a typical work situation

00:50:26.420 | where somebody puts you on the spot,

00:50:27.600 | like in a live interview.

00:50:28.580 | And sometimes people get nervous

00:50:29.880 | and they can't think clearly

00:50:30.980 | and like they don't have their computer in front of them

00:50:32.660 | or whatever they normally use.

00:50:34.460 | So yeah, I'm a little skeptical now

00:50:39.180 | of the brain teaser thing.

00:50:40.980 | There is a whole, yeah,

00:50:44.940 | there is a whole question about,

00:50:46.340 | like a lot of universities are getting rid of entrance exams.

00:50:48.900 | So if you're hiring right out of universities,

00:50:51.260 | sometimes it's becoming a less reliable indicator

00:50:54.700 | of like, are they in that university?

00:50:56.500 | And I've heard some companies, we haven't done this yet,

00:50:58.460 | but I've heard some companies are actually creating

00:50:59.740 | their own like for college grads,

00:51:01.620 | like their own basically exams,

00:51:05.620 | like standardized testing almost to get people in the door

00:51:08.100 | because the degree almost like doesn't mean what it used to,

00:51:10.980 | which is the whole topic, but.

00:51:12.780 | - Yeah, that's fascinating.

00:51:14.340 | 'Cause it's fascinating both for that,

00:51:17.540 | 'cause it's not just about you trying to hire a great team,

00:51:20.640 | it's also to help them find the right place to work at.

00:51:23.380 | - Yeah.

00:51:24.220 | - It's like a two way street.

00:51:25.940 | All right, so once you found the product market fit,

00:51:32.360 | how did Coinbase become what it is today?

00:51:37.160 | - Ooh, that's a good question.

00:51:40.000 | - Let me ask an engineering question actually.

00:51:42.040 | - Yeah.

00:51:42.880 | - From the Ruby wallet days,

00:51:47.520 | what are some of the interesting challenges there?

00:51:50.400 | Or are they not engineering?

00:51:52.340 | Just the things that had to be solved, what were they?

00:51:56.520 | Engineering, regulation,

00:51:59.120 | financial, hiring, lawyers,

00:52:06.120 | what was it?

00:52:07.720 | - So post product market fit, yeah, a lot of it's scaling

00:52:10.600 | and you gotta build out an actual company.

00:52:12.420 | So I remember I was still writing a lot of code there

00:52:15.480 | for a while and we were hiring in,

00:52:17.200 | we had like maybe 25 people or something.

00:52:19.440 | I remember one of our investors came by one day

00:52:21.080 | and he was like, "Brian, how much of your time

00:52:22.800 | "are you spending writing code?"

00:52:24.320 | And I was like, "Maybe 50% or something."

00:52:27.280 | He was like, "How much time are you spending hiring people?"

00:52:29.600 | I was like, "Probably 20%."

00:52:31.960 | He was like, "I think you need to flip those numbers.

00:52:35.140 | "Like this company is not gonna scale.

00:52:36.640 | "You're the CEO, you don't need to be writing code every day.

00:52:39.300 | "You're gonna have to transition that stuff.

00:52:40.700 | "Like even if people can't,

00:52:41.840 | "all that stuff's locked in your head,

00:52:43.060 | "so maybe they're not gonna do it as well as you

00:52:44.640 | "for the first six months or something.

00:52:46.440 | "But like, if you don't start to transition it,

00:52:48.280 | "you're never gonna build a real company.

00:52:49.640 | "It's just gonna be, you're gonna be the bottleneck."

00:52:52.600 | So, like a lot of founders that took me a while

00:52:55.840 | to like really internalize that lesson.

00:52:57.240 | I'd always heard people say that and,

00:52:59.760 | but I still was holding on too much to decision-making.

00:53:02.880 | And I probably still am by the way,

00:53:04.080 | like even to this day at Coinbase,

00:53:05.360 | where we continually have to push down decision-making

00:53:08.560 | in the org, like even with 5,000 people,

00:53:10.680 | like who are the owners of each of these things?

00:53:12.240 | And so the temptation is people to push it up

00:53:14.160 | and you become a bottleneck and anyway.

00:53:16.120 | So yeah, you basically need to make sure

00:53:19.040 | you have enough money where you don't die,

00:53:21.160 | if there's some kind of a downturn

00:53:23.240 | or hit break even in profitability.

00:53:24.960 | We were in a position where we were periodically profitable

00:53:27.680 | during up periods, but then crypto would go down

00:53:29.280 | and we were unprofitable.

00:53:30.600 | And so we had to kind of manage our own psychology

00:53:33.320 | and the balance sheet to make sure we didn't like die

00:53:35.920 | in the downturn, which a lot of crypto companies did.

00:53:38.960 | We had to basically professionalize

00:53:40.520 | a whole bunch of services that had been

00:53:42.240 | just very quickly thrown together by like 20 year olds.

00:53:45.720 | Whether that was cybersecurity, it's like, okay,

00:53:47.880 | how do you get like a really senior experienced

00:53:50.400 | cybersecurity person, but not someone who's so senior

00:53:52.440 | that they can't get their hands dirty

00:53:53.480 | and they can come into a company with 25, 50 people.

00:53:56.380 | How do you get a finance person to come and do that?

00:53:58.120 | Our finances were a mess.

00:54:00.080 | Like we didn't even really know how much money we had

00:54:01.920 | at certain times and stuff.

00:54:03.000 | I mean, this was, it's embarrassing to say,

00:54:04.880 | but it was true.

00:54:05.720 | Like I remember there was a point where we had raised,

00:54:09.680 | I think like our series C or something like that.

00:54:12.040 | And I think we had our bank accounts.

00:54:14.920 | I just put like $25 million like in a different bank account

00:54:17.800 | that none of this stuff was touched

00:54:18.960 | to the actual operation of the business.

00:54:20.120 | 'Cause I was like, you know, our operations were so messy

00:54:23.600 | and we needed to hire a new finance person.

00:54:25.280 | And I was like this, I'd heard horror stories

00:54:28.300 | of actually startups where they thought they had X amount

00:54:30.360 | of money and then it turned out they had way less.

00:54:33.040 | And then the whole thing was insolvent in like three weeks.

00:54:35.160 | - So you wanted to have some padding

00:54:36.440 | to at least like, all right, I can at least count on this

00:54:38.900 | to save us if we go to like super negative.

00:54:41.400 | - Right, I mean, it was like a cheap hack,

00:54:43.560 | but that was like the only thing I could come up with.

00:54:46.000 | And you know, until we could hire like a real CFO

00:54:48.840 | and finance team who like, okay, now we got our arms around

00:54:51.980 | how much cash we have.

00:54:52.820 | It sounds silly, but we had such high volume

00:54:55.640 | of money coming in and out anyway.

00:54:57.320 | - What was the ordering of hiring by the way?

00:54:59.840 | Like how many engineers was it early on?

00:55:03.400 | You said CFO was not, you didn't even have a CFO for a bit.

00:55:06.600 | - Yeah.

00:55:07.440 | - Like what was the landscape of hiring

00:55:10.860 | as you building up this company?

00:55:12.460 | Was it engineering focused?

00:55:15.240 | - Well, let's see.

00:55:16.080 | I mean, so the first person we hired was just like,

00:55:18.520 | we need to solve customer support.

00:55:20.040 | So we brought someone to do that

00:55:20.960 | 'cause we were all staying up till midnight every night

00:55:22.500 | trying to do customer support.

00:55:23.840 | And then we got more engineers.

00:55:26.400 | And then I think maybe the sixth hire

00:55:27.960 | or something like that was a recruiter.

00:55:29.540 | 'Cause that turned out to be, you need to build,

00:55:31.960 | hire the person who can hire more people.

00:55:33.800 | - Yeah.

00:55:34.640 | - That turned out to be a great force multiplier.

00:55:37.160 | And then you're going down the list.

00:55:39.800 | Eventually you wanna hire some more senior people.

00:55:42.520 | We needed legal and compliance.

00:55:45.200 | We needed that really badly 'cause we,

00:55:47.440 | it was all kinds of questions

00:55:48.320 | about what the legality of it was.

00:55:50.400 | - Was it hard to find legal people that work with crypto

00:55:52.720 | like serious adults?

00:55:54.960 | 'Cause it's such a cutting edge new world.

00:55:57.520 | - Yeah, I mean, there was nobody who had like more than,

00:56:01.100 | nobody had three years of experience with it

00:56:02.380 | 'cause it had only been around a few years.

00:56:03.980 | - That's right.

00:56:04.820 | - So yeah, we were finding people from adjacent fields.

00:56:07.180 | There's a certain personality type of people

00:56:08.860 | who are willing to join early companies

00:56:10.420 | because they have no structure.

00:56:12.500 | You can't really commit to them about,

00:56:14.100 | you're gonna have this team or this boss or whatever.

00:56:16.620 | Like everything's in chaos and flux.

00:56:18.940 | So it takes, yeah.

00:56:21.220 | Hiring is one of the hardest things

00:56:22.340 | in the early stage for sure.

00:56:23.220 | You gotta find people crazy enough

00:56:24.620 | to join you in this journey.

00:56:26.260 | - So one of the interesting things about Coinbase,

00:56:28.180 | and you've written, we'll talk about it a bit.

00:56:31.340 | You're very focused on the mission.

00:56:33.540 | - Yeah.

00:56:34.380 | - You're very kind of, I think that simplifies things.

00:56:37.980 | That makes hiring easier,

00:56:40.700 | that makes working at Coinbase easier,

00:56:42.820 | that makes, I mean, it's similar.

00:56:44.940 | So Elon has the same thing.

00:56:46.780 | It's pretty clear.

00:56:47.740 | It's pretty clear what we're here to do.

00:56:50.460 | So I suppose what's the mission of Coinbase?

00:56:55.540 | - Well, it's to increase economic freedom in the world.

00:56:57.860 | - And what is economic freedom?

00:56:59.940 | - Yeah, so economic freedom is this term

00:57:01.620 | kind of like GDP that economists use.

00:57:04.060 | And it's basically a measure

00:57:05.020 | of different countries around the world.

00:57:06.320 | It looks at things like,

00:57:07.660 | are there property rights enforced?

00:57:09.700 | Is there free trade?

00:57:10.780 | Is the currency stable?

00:57:12.520 | Can you start companies that you wanna start?

00:57:14.100 | And can you join the ones you wanna join?

00:57:15.340 | And is there corruption and bribery prevalent

00:57:18.620 | or is it relatively free of that?

00:57:20.700 | And so there's several different organizations

00:57:24.300 | that basically score countries by economic freedom.

00:57:27.260 | And the really cool thing about economic freedom

00:57:28.900 | is that basically it positively correlates

00:57:31.780 | with things that we all want in society.

00:57:33.380 | Like not only higher growth of the economy,

00:57:36.660 | but also things like higher self-reported happiness

00:57:39.380 | of citizens, better treatment of the environment,

00:57:41.820 | better income for the poorest 10% of people.

00:57:44.380 | And it negatively correlates with things

00:57:45.860 | we don't want in society,

00:57:46.780 | like corruption and bribery and war,

00:57:48.980 | even and things like that.

00:57:50.500 | And so it's this pretty crazy, provocative idea,

00:57:53.980 | which is that if you give people good property rights

00:57:58.580 | and rule of law and allow them to trade,

00:58:01.160 | it basically encourages them to do more good stuff

00:58:03.380 | and the whole society benefits.

00:58:05.260 | Like one of the things, you may have noticed this

00:58:08.340 | growing up in various places you did,

00:58:09.660 | or I spent a year living in Buenos Aires, Argentina

00:58:12.220 | that went through hyperinflation.

00:58:13.340 | And there's a certain like pessimism

00:58:15.820 | that can creep into countries

00:58:18.540 | when they don't have economic freedom,

00:58:21.040 | which it's basically like everyone has this

00:58:23.260 | bit of this vibe, which is like,

00:58:24.780 | don't stick your head up, don't try too hard

00:58:27.620 | 'cause it could all be gone tomorrow.

00:58:28.940 | Like the things that really are valuable in life

00:58:30.900 | are just family and friends,

00:58:32.540 | and the past was better than the future will be.

00:58:35.440 | And so you don't really, people don't try as many,

00:58:37.580 | they don't try hard because you're not really sure

00:58:40.220 | you can actually keep the upside of your labor

00:58:42.060 | if you try hard, so you just don't try as hard.

00:58:44.820 | Whereas in America, historically,

00:58:47.700 | or high economic freedom countries,

00:58:51.060 | people basically like they just try more stuff

00:58:53.700 | 'cause they're like, if I do good for other people,

00:58:55.500 | I'll get to keep part of it for myself

00:58:56.740 | and I can improve my lot in life and for my children

00:58:58.740 | and my community, whatever.

00:59:00.540 | So I realized when I read the Bitcoin white paper

00:59:03.660 | a long time ago, that at least I had a hunch at the time,

00:59:07.060 | I was like, this might be a really powerful piece

00:59:09.300 | of technology that can inject good financial infrastructure

00:59:13.620 | into all these countries around the world

00:59:14.820 | that don't have it.

00:59:15.900 | Basically good economic freedom principles

00:59:17.980 | in like property rights and things like that

00:59:20.660 | into these countries all over the world,

00:59:22.140 | which just, as long as you had a smartphone

00:59:23.580 | and now crypto got invented,

00:59:25.100 | everybody could have economic freedom.

00:59:27.220 | And crypto is kind of really well suited

00:59:28.940 | for economic freedom 'cause if you want property rights,

00:59:31.820 | it's basically, crypto is,

00:59:32.900 | if you can remember a 12 word phrase

00:59:34.580 | or have an app on your phone,

00:59:37.020 | you can store as much wealth as you want

00:59:38.620 | and it can't be taken away from you.

00:59:39.780 | You can even, there's like refugees who need to flee

00:59:42.980 | and they wanna take their wealth with them

00:59:44.660 | and they can't do it often

00:59:46.240 | in the traditional financial system.

00:59:47.500 | And so crypto lets them do that, right?

00:59:49.740 | Crypto is inherently global,

00:59:51.060 | so it allows free trade and cross-border payments.

00:59:53.740 | It makes it easy to accept payments from people globally.

00:59:57.860 | It provides a stable currency to everyone,

01:00:00.060 | not only with Bitcoin,

01:00:00.980 | which is kind of like this new reserve currency,

01:00:03.100 | but also with stable coins, right?

01:00:05.900 | Which are new inventions there.

01:00:08.220 | So yeah, I basically feel like crypto

01:00:10.860 | is this secret hiding in plain sight

01:00:13.140 | that can create economic freedom

01:00:14.780 | for people all over the world

01:00:15.780 | and a more fair and free and global economy.

01:00:18.980 | - Well, so the limit,

01:00:21.060 | and by the way, I didn't know about Argentina.

01:00:22.860 | Why'd you end up in Argentina?

01:00:25.180 | - Okay, so I was basically,

01:00:26.960 | I was living in Houston, Texas after college

01:00:30.180 | where I went to school and I had never studied abroad.

01:00:33.220 | I kind of like, I don't know,

01:00:36.220 | I felt like I needed some adventure or something in my life

01:00:38.140 | and I was running this other startup

01:00:40.220 | that I was trying at the time, a tutoring company,

01:00:41.900 | and I could work from anywhere.

01:00:43.740 | So my plan was, you know what,

01:00:44.940 | I'm just gonna go do like a month

01:00:47.260 | in every city around South America,

01:00:49.100 | just be like, almost like to force myself

01:00:51.260 | out of my comfort zone,

01:00:52.180 | 'cause I had never traveled by myself

01:00:54.660 | to a foreign country or whatever,

01:00:55.720 | and where I didn't really speak the language.

01:00:57.340 | And anyway, I landed in Buenos Aires

01:01:00.420 | thinking I'd go all around South America

01:01:01.740 | where I had never been there.

01:01:03.220 | But I basically, once I was set up in Buenos Aires

01:01:06.560 | with an apartment and a cell phone and stuff,

01:01:08.140 | then I was like, I don't wanna do that all again next month.

01:01:10.260 | So I just stayed there for most of the time

01:01:11.580 | and took some day trips.

01:01:12.420 | But yeah, it was kind of a formative experience

01:01:15.020 | in that regard.

01:01:15.860 | - You got a chance sort of unexpectedly

01:01:18.580 | to experience the social effects of hyperinflation,

01:01:21.460 | which is interesting.

01:01:22.500 | But I also, I've never been,

01:01:24.340 | but I really, really wanna go as a person

01:01:26.100 | who likes tango, as a person who likes

01:01:28.220 | the Argentinian national team and soccer.

01:01:30.940 | - Yeah.

01:01:31.780 | - And steak.

01:01:34.340 | All right.

01:01:35.740 | And all the other things that Argentina's known for.

01:01:38.220 | Okay, so economic freedom.

01:01:41.380 | One of the limits on economic freedom

01:01:43.620 | comes from government and government regulations

01:01:46.300 | and all those kinds of things throughout the world.

01:01:49.340 | So how does cryptocurrency help resist that?

01:01:52.340 | So can you sort of elaborate a little bit further?

01:01:55.540 | What are the things that limit economic freedom

01:01:57.860 | and how does crypto help ease that?

01:02:01.900 | - Today, the world, the traditional financial system

01:02:05.460 | is basically every country of the world,

01:02:07.300 | for the most part, has their own currency.

01:02:10.260 | And so there's a group of people or institutions

01:02:13.300 | in each of those countries that's controlling

01:02:15.420 | that economic policy or that money supply.

01:02:18.620 | And it can be manipulated, right?

01:02:22.420 | So it's not like many of these currencies

01:02:25.140 | are not linked to gold standard.

01:02:26.860 | The US kind of famously came off that in the 1970s,

01:02:29.260 | for instance, but if you read Ray Dalio and all this stuff,

01:02:32.020 | like he talks about, there's thousands of fiat currencies

01:02:34.500 | that have been in existence over time.

01:02:36.700 | And basically all of them eventually get disconnected

01:02:39.660 | from backing of like hard commodities,

01:02:43.700 | and then they get over inflated and printed.

01:02:46.460 | And so in times of stress, with Nixon,

01:02:50.980 | I guess it was like in the US,

01:02:52.620 | it was the Vietnam War or something like that.

01:02:54.900 | It kind of drove government spending.

01:02:56.340 | And so under times of stress, they say,

01:02:57.900 | "Hey, it's a temporary measure, we need to break the peg."

01:03:00.820 | Temporary was like famous words that he used.

01:03:03.100 | And they go print.

01:03:07.500 | And so the bad thing about that, of course,

01:03:09.300 | is that it sort of erodes people's wealth

01:03:11.980 | if they can only hold their assets in cash,

01:03:13.580 | which basically like poor people tend to do that.

01:03:16.460 | If you're wealthy, you can hold stocks

01:03:19.220 | or like real estate and things like that.

01:03:20.740 | But it's really a tax on the poorest people

01:03:22.700 | in society, inflation.

01:03:24.780 | So anyway, crypto in a way is a little bit of like

01:03:29.060 | a return to the gold standard in this digital era, right?

01:03:31.620 | Bitcoin, there's guaranteed scarcity of it,

01:03:33.820 | it's deflationary,

01:03:34.940 | there's never gonna be more than 21 million Bitcoin.

01:03:37.420 | And so that's a really important principle.

01:03:40.740 | I also think, not just Bitcoin,

01:03:44.260 | but like cryptocurrency generally,

01:03:46.060 | it's really important in terms of this,

01:03:48.940 | you asked about regulation, right?

01:03:50.700 | So think about like,

01:03:52.460 | if you wanted to make a global

01:03:54.660 | borrowing and lending marketplace or a global exchange,

01:03:59.100 | you would have to go to all 200 countries in the world,

01:04:01.780 | sometimes like maybe 50 states in the US

01:04:03.740 | and get lending licenses or an operating exchange

01:04:07.820 | or whatever.

01:04:09.020 | And, you know, they're not gonna,

01:04:11.660 | that's just an incredible amount of work

01:04:12.860 | and you can't even do business in many of these countries

01:04:14.860 | because like, you know, you have to bribe somebody

01:04:17.260 | or it's corrupt or whatever.

01:04:18.820 | And so, but with DeFi, with decentralized finance,

01:04:22.260 | people have published, you know,

01:04:24.220 | like Uniswap is a decentralized exchange.

01:04:26.260 | Everybody in the world,

01:04:27.140 | no matter what country you're in, what jurisdiction,

01:04:29.100 | can interface with that decentralized exchange.

01:04:31.980 | 'Cause it, and there's no central company operating it.

01:04:35.460 | It's a smart contract on the Ethereum blockchain,

01:04:38.580 | which is globally decentralized.

01:04:40.140 | So there's no throat to choke.

01:04:41.220 | There's no one person you can,

01:04:42.620 | or a company you can go to, to like,

01:04:43.940 | hey, shut this thing down.

01:04:45.460 | Even if everybody who's working on Uniswap today stopped,

01:04:48.860 | the Uniswap smart contract would continue to operate

01:04:52.140 | on the Ethereum blockchain.

01:04:53.540 | Similarly for like a borrowing and lending marketplace,

01:04:56.340 | you know, like it's, you know,

01:04:59.220 | if you want, somebody in India wants to borrow

01:05:00.820 | from somebody in the US or whatever,

01:05:01.980 | like there's very difficult to do that

01:05:04.220 | in the traditional financial world.

01:05:06.180 | But in a smart contract that's decentralized,

01:05:08.820 | you can enable anybody to access it.

01:05:10.620 | So it's really kind of this great democratizing force

01:05:14.220 | that is creating a new financial system

01:05:16.260 | that is more fair and more free.

01:05:17.900 | Yeah, and in some ways it is,

01:05:21.100 | it's a clever way that's not,

01:05:26.220 | yeah, it's enabling people to do that in a novel way.

01:05:28.340 | - So is Uniswap in some sense a competitor to Coinbase?

01:05:32.180 | In which way is it, in which way is it not?

01:05:34.660 | So, because for people who don't know,

01:05:38.300 | Coinbase is centralized.

01:05:40.620 | So let me ask, doesn't that go against the spirit of crypto?

01:05:45.620 | Since crypto is decentralized,

01:05:49.060 | what are the pros and cons of being centralized

01:05:51.900 | as an exchange?

01:05:53.940 | - So I don't think Coinbase is fully centralized.

01:05:55.940 | We have many different products,

01:05:57.300 | and the way that I think about it is that our exchange

01:06:01.060 | or our brokerage is a centralized,

01:06:03.700 | regulated financial service business.

01:06:06.060 | And it's actually important for the crypto ecosystem

01:06:08.100 | to have that because you wanna allow a lot of the fiat money

01:06:11.460 | in the world to flow into the crypto economy.

01:06:13.340 | So we, you know, we're very proud of that,

01:06:15.900 | and I think we've helped a lot of that money flow in.

01:06:18.580 | Now, once people have money in crypto,

01:06:20.580 | they can choose to hold it in a variety of ways,

01:06:22.220 | and they can choose to hold it in a self-custodial wallet,

01:06:24.620 | which is more decentralized.

01:06:26.180 | They can choose to use decentralized exchanges,

01:06:29.540 | which we love, and Uniswap is not really,

01:06:32.740 | I don't think of them as like a direct competitor to us.

01:06:34.860 | We basically have integrated Uniswap

01:06:37.420 | into a number of our products.

01:06:38.300 | We love DeFi, decentralized exchanges, the whole thing.

01:06:41.420 | So Coinbase wallet, which is a self-custodial wallet,

01:06:46.260 | is more decentralized, and it allows people

01:06:48.780 | to hold their own crypto.

01:06:51.460 | They don't have to trust us.

01:06:52.460 | - Can you explain what a self-custodial wallet is?

01:06:55.820 | What is a wallet, and what is a self-custodial wallet?

01:06:58.820 | - Yeah, so it's confusing.

01:07:00.580 | So a custodial wallet means you're trusting Coinbase

01:07:04.180 | to store your crypto, the private keys themselves.

01:07:08.340 | And, you know, for some people in institutions

01:07:10.540 | and everything, just meeting them where they are today,

01:07:12.860 | that's nice because it's simpler, you know,

01:07:15.940 | they're not afraid of losing their crypto

01:07:18.620 | if they make some accidental mistake.

01:07:21.140 | So, you know, custodial crypto products are important

01:07:25.060 | to help get a bunch of people into the ecosystem.

01:07:27.420 | But I'm very supportive of self-custodial wallets.

01:07:30.500 | And I think in some ways they are the future

01:07:32.420 | because more and more people are gonna wanna store

01:07:34.540 | their own crypto, not trust a third-party institution

01:07:36.940 | to do it.

01:07:37.780 | And in some ways that is much more authentic

01:07:38.900 | to the ethos of crypto.

01:07:40.100 | So Coinbase will help you convert the fiat into crypto.

01:07:44.540 | Frankly, that's a more centralized thing.

01:07:45.980 | But once you have crypto, you can then go

01:07:47.700 | to the self-custodial world, store it yourself.

01:07:50.100 | To get into the technical details, just for a second,

01:07:53.460 | it's basically saying you're gonna store the keys

01:07:56.460 | on your own device.

01:07:57.860 | And so even if Coinbase, you know,

01:08:01.140 | gets some court order to seize it, we actually can't.

01:08:03.620 | Like from an architecture point of view, we can't do it.

01:08:06.540 | Or, you know, if Coinbase gets hacked or something,

01:08:08.460 | we can't lose your funds.

01:08:09.500 | Like now you, the thing is you have to take

01:08:11.500 | the responsibility 'cause we're not taking it.

01:08:13.060 | So the individual person could get hacked, right?

01:08:15.860 | And there's a whole bunch of really cool research happening

01:08:18.940 | to make self-custodial wallets more resilient

01:08:21.860 | to accidental loss, hacks, and just user error.

01:08:25.780 | Like, you know, I don't know how much you've looked

01:08:28.900 | at like various cryptography things,

01:08:30.340 | but there's like, basically you can have multiple key,

01:08:33.340 | multi-sig, multiple signatures from different keys

01:08:36.460 | on different devices where you need like two of the three

01:08:38.540 | or three of the five.

01:08:39.740 | There's a whole technology called multi-party computation

01:08:43.220 | or threshold signing signatures, which is really cool.

01:08:46.460 | - But those are the things you would run locally?

01:08:49.060 | - Yeah. - Like what,

01:08:49.900 | these are all security measures, like cryptography measures

01:08:52.460 | to protect you without a centralized component?

01:08:56.620 | - Right.

01:08:57.460 | So like a simple example would be,

01:08:58.980 | let's say you had a two of three key signature

01:09:02.340 | and, you know, one key might be stored at Coinbase,

01:09:04.820 | but that's not a quorum.

01:09:06.220 | So we couldn't unilaterally move your funds.

01:09:08.180 | But another key is on your device, on your phone, let's say.

01:09:10.780 | - Oh, cool.

01:09:11.700 | - So that, so in a normal situation,

01:09:13.820 | you have a key on your phone, we have one,

01:09:15.900 | but you, and so two out of three, now just, you know,

01:09:19.700 | it can all get signed very quickly for day-to-day use.

01:09:21.940 | But let's say you lose your phone or something.

01:09:23.980 | Now there has to be a third key,

01:09:25.420 | and that's where, you know,

01:09:26.660 | you could store it in a backup somewhere,

01:09:28.700 | like in Google Drive or iCloud.

01:09:31.860 | You could trust a third party that's not Coinbase

01:09:34.860 | to also have that one key,

01:09:36.260 | and they can't do anything unilaterally with that one key.

01:09:39.180 | So that's a simple example.

01:09:40.660 | You can get way more complicated.

01:09:42.260 | - Yeah, that's an awesome idea.

01:09:43.260 | And so like, if your funds get seized,

01:09:46.380 | Coinbase can't do anything.

01:09:49.220 | - Right.

01:09:50.060 | - But you better not lose your phone, maybe, in that case.

01:09:52.300 | - Yeah.

01:09:53.140 | - So that's, okay.

01:09:53.980 | - Well, then it, but it provides a, there is,

01:09:55.700 | so even if you lose your phone,

01:09:56.620 | then there is a recovery mechanism,

01:09:57.820 | 'cause you can get the one key from Coinbase,

01:09:59.140 | the one from your backup provider,

01:10:01.460 | and recover a new one back on your phone.

01:10:03.860 | - I know, yeah.

01:10:04.700 | But what if Coinbase is no longer,

01:10:06.820 | but because of government,

01:10:08.380 | because of, say it's in North Korea,

01:10:10.980 | government says you're no longer,

01:10:12.620 | like Coinbase is shut down in that country

01:10:14.740 | or something like that.

01:10:15.820 | Then you can get it, even if you have access to those two.

01:10:18.740 | - Right.

01:10:19.580 | - So again, perhaps a silly question,

01:10:23.180 | but isn't a self-custodial wallet

01:10:25.780 | a competitor as a notion to Coinbase?

01:10:29.860 | - No, I mean, so we offer a self-custodial wallet.

01:10:33.460 | We've built one and it's like-

01:10:34.620 | - But doesn't it bleed the,

01:10:36.460 | like, I guess I'm asking a sort of a financial question,

01:10:39.580 | is like, how does Coinbase make money on transactions?

01:10:43.940 | So does this not, does it does not decrease the number

01:10:47.140 | or does not significantly negatively affect transactions?

01:10:50.700 | Or are you more focused on growing the number of,

01:10:53.020 | the pie of the number of people

01:10:54.820 | that are using cryptocurrency?

01:10:56.700 | - Yeah, like a traditional financial service firm

01:10:58.580 | would probably say, well, we should be storing,

01:11:01.740 | let's keep more of the custody with us

01:11:03.740 | because that's how we prove to the world

01:11:05.780 | that we're valuable or whatever.

01:11:07.540 | I don't really believe that.

01:11:08.660 | Like, I think that actually we kind of want to encourage

01:11:11.020 | our users to move to self-custody over time

01:11:13.020 | for those who are ready and willing.

01:11:15.020 | And that technology needs to mature.

01:11:16.680 | I'm not trying to like force anybody to do it

01:11:18.260 | who doesn't want to do it.

01:11:19.100 | But to me, that's like the future

01:11:21.300 | of how we get billions of people using crypto.

01:11:23.860 | - But doesn't that mean they can go somewhere else?

01:11:26.620 | Easier?

01:11:27.460 | - Yeah, that's sort of the point is like,

01:11:29.660 | we're all using the same protocol.

01:11:31.020 | So there's low switching costs,

01:11:32.340 | which keeps all the companies accountable, right?

01:11:34.520 | Like, if you want to access the Visa network,

01:11:38.540 | there's only one company in the world

01:11:39.620 | you can go through to do that, like Visa.

01:11:41.760 | But if you want to access the Bitcoin network,

01:11:43.540 | there's dozens or hundreds of companies out there

01:11:45.780 | who can do that.

01:11:46.620 | So it's, you know, it's arguably,

01:11:48.980 | you could argue it's worse for us as a company,

01:11:51.340 | but I think it's better for,

01:11:53.160 | it's what makes Bitcoin interesting

01:11:54.580 | and cryptocurrency interesting is that nobody controls it.

01:11:58.040 | There is low switching costs for customers.

01:11:59.980 | It's better for customers.

01:12:01.220 | And that means that all the companies in the space

01:12:03.300 | are going to be held to a high standard

01:12:04.540 | because the minute you lose someone's trust,

01:12:06.100 | they're just going to move their Bitcoin

01:12:07.020 | to some other service.

01:12:08.540 | And that's good for the world.

01:12:10.220 | - Do you think of Coinbase as,

01:12:12.500 | so there's these ideas of layer one, layer two,

01:12:14.940 | layer three technologies.

01:12:16.460 | - Yeah.

01:12:17.300 | - Do you think of Coinbase as layer one,

01:12:20.060 | layer two, layer three?

01:12:21.740 | Now that said, there's so many products

01:12:24.740 | that are under the Coinbase umbrella

01:12:28.780 | that it's hard to answer that question,

01:12:30.180 | but what do you think?

01:12:31.660 | - Yeah.

01:12:32.500 | - Do you acknowledge the existence of layer three?

01:12:34.340 | (laughs)

01:12:35.420 | - So, you know, usually when people are using those terms,

01:12:38.900 | layer one, layer two,

01:12:39.740 | so they're referring to like layer one would be

01:12:41.940 | the blockchain, layer one blockchain itself,

01:12:43.840 | like a Bitcoin or Ethereum or something,

01:12:45.820 | not like a centralized service like Coinbase

01:12:48.180 | or even our decentralized self-custodial wallet.

01:12:51.740 | So, yeah, I wouldn't consider us to be like a layer one.

01:12:56.300 | These are the decentralized protocols

01:12:58.580 | that we're integrating, but we are,

01:13:00.380 | Coinbase itself is not those.

01:13:01.780 | - Yes, but layer two is the thing that

01:13:04.620 | was basically doing transactions

01:13:06.100 | without the settlement on the blockchain.

01:13:09.220 | And so you get to have some of the benefits

01:13:11.220 | of faster transactions without the security

01:13:15.260 | associated with the blockchain.

01:13:16.420 | And layer three is, I suppose,

01:13:20.300 | sort of apps built on top of that.

01:13:23.060 | So, you know, at least I think talking to Michael Saylor,

01:13:26.860 | he considers Coinbase a layer three technology.

01:13:29.940 | - Interesting, okay.

01:13:31.220 | - I don't even, I'm not really particularly familiar

01:13:34.460 | with this kind of distinction of layer three and two.

01:13:37.460 | I don't see them as fundamentally different.

01:13:40.380 | But some of the, okay, I mean, one way of asking that,

01:13:44.740 | is there some layer two like of magic happening

01:13:48.180 | in order to make transactions associated

01:13:50.220 | with the blockchain happen instant,

01:13:53.340 | so that they're quick?

01:13:55.460 | So that-- - On Coinbase?

01:13:56.620 | - On Coinbase, yeah.

01:13:57.620 | Is there some magic going on?

01:14:00.140 | 'Cause you're, okay, we should say,

01:14:01.820 | how many cryptocurrencies are currently on Coinbase?

01:14:04.980 | So it's more than two.

01:14:06.420 | - Yeah. (laughs)

01:14:07.580 | - It's a lot more than two. - Yeah.

01:14:08.940 | - So you have to understand,

01:14:10.500 | you have to incorporate all these technologies.

01:14:12.580 | - Yeah.

01:14:13.900 | - So how do you make that magic

01:14:16.140 | of sort of universal transactions happen

01:14:18.820 | across all of these different cryptocurrencies?

01:14:21.220 | - There's our centralized products

01:14:24.580 | and decentralized products, right?

01:14:25.820 | The centralized products,

01:14:27.100 | we are storing that crypto for you.

01:14:31.100 | And so if you're moving from one of your accounts

01:14:33.460 | to another account, like an ETH1 account to ETH2 account,

01:14:36.100 | or from my ETH Coinbase centralized account

01:14:39.860 | to your ETH centralized,

01:14:40.700 | so we can do that transaction off chain to make it faster.

01:14:43.540 | And it saves the customer fees

01:14:45.420 | and it just confirms instantly.

01:14:47.020 | But it's not truly using the decentralized blockchain, right?

01:14:49.740 | So you can also send any Bitcoin address

01:14:52.260 | or Ethereum address, for instance,

01:14:53.940 | and that is putting the transaction on chain.

01:14:56.420 | Now our decentralized products like Coinbase Wallet,

01:14:59.300 | the self-custodial wallet,

01:15:01.020 | every transaction is happening on chain with that.

01:15:03.580 | And so basically, it just shows a little bit

01:15:05.700 | of the evolution of Coinbase and the blockchains themselves.

01:15:07.980 | Like in the early days,

01:15:09.380 | these networks were not scalable.

01:15:13.220 | And so there were no L2 solutions, for instance.

01:15:16.820 | And so we had to do sort of these hacks,

01:15:18.540 | like moving the crypto off chain,

01:15:20.100 | if you were moving between your own accounts

01:15:21.540 | and stuff like that.

01:15:22.460 | Otherwise, the minor fees would have just eaten us alive

01:15:24.580 | as a company, right?

01:15:25.420 | And we, yeah.

01:15:26.500 | But now that like, the blockchains are starting to scale.

01:15:29.020 | There's a whole bunch more work

01:15:29.940 | that needs to be done on that,

01:15:30.780 | and we're getting L2 solutions.

01:15:32.260 | So I think more and more of the transactions

01:15:33.780 | are going on chain, whether it's L2, L1.

01:15:36.620 | And we shouldn't be like,

01:15:38.860 | ideally, we shouldn't be doing that many transactions.

01:15:43.060 | You know, off chain,

01:15:45.260 | just internal Coinbase ledger or something.

01:15:47.060 | That's not really in the spirit of crypto.

01:15:48.740 | - So when you say on chain,

01:15:49.860 | that includes like a lightning network.

01:15:51.260 | That includes layer two technology

01:15:54.860 | that the blockchain proposes.

01:15:56.740 | - Yeah.

01:15:57.580 | - So you're, when you, yeah, okay.

01:15:58.940 | So I guess I was asking how much fun magic

01:16:01.700 | is happening off chain within Coinbase.

01:16:04.420 | And you're saying in the early days, you had to,

01:16:07.300 | but you're trying to do less and less.

01:16:09.620 | - So look, there's a bunch of like high frequency traders

01:16:11.620 | that use the centralized products

01:16:13.180 | and even just regular retail people,

01:16:15.300 | like they don't want to pay the gas fees and stuff.

01:16:17.660 | And they're trying to, it actually,

01:16:19.460 | back of the envelope, you know,

01:16:22.540 | calculated this out at one point,

01:16:24.180 | and just like, it would be completely infeasible

01:16:26.780 | for like high frequency traders

01:16:28.140 | to put everything on chain at this point.

01:16:29.780 | That's basically what DEXs are doing.

01:16:31.420 | And so both are important.

01:16:33.620 | I think more and more is going to move decentralized

01:16:35.660 | over time, which is great.

01:16:36.900 | And we're basically-

01:16:37.740 | - DEXs are decentralized exchanges, by the way.

01:16:40.340 | - Yeah.

01:16:41.180 | - So anyway, we want to encourage more and more of it

01:16:45.460 | to move decentralized over time,

01:16:46.860 | but I don't, the centralized things aren't going away

01:16:48.740 | for like a long time.

01:16:50.220 | It's a decade from now, there's going to be some

01:16:53.100 | big institution or pension fund or central bank

01:16:56.620 | that's like, all right, we got to hold crypto.

01:16:58.900 | Let's set up the account in a centralized way.

01:17:00.740 | So that's fine.

01:17:01.980 | Both are important.

01:17:03.180 | - Do you know the number of cryptocurrencies currently

01:17:06.260 | on Coinbase?

01:17:07.260 | Do you know that number?

01:17:08.140 | - It's over a hundred, but it depends.

01:17:10.620 | It depends what jurisdiction you're in and, you know,

01:17:13.020 | are you an institution versus retail?

01:17:16.380 | There's so many different categories now.

01:17:18.940 | - But over a hundred.

01:17:20.100 | - Yeah.

01:17:21.580 | - So what does it take to become an asset,

01:17:25.780 | to become a cryptocurrency on Coinbase,

01:17:28.180 | to add your technology to Coinbase?

01:17:32.220 | - Okay, well, so we're trying to get away from this idea

01:17:36.420 | of being listed on Coinbase as being seen as like

01:17:39.220 | an endorsement or something,

01:17:40.380 | because I actually think it's very important

01:17:42.660 | that we are not considered judge and jury about, you know,

01:17:47.660 | like imagine it was the early days of the internet

01:17:49.420 | and you were like, what's a good webpage

01:17:50.660 | and what's a bad webpage?

01:17:51.500 | Like you would have been totally wrong.

01:17:52.700 | Or anytime big tech companies try to make these review

01:17:57.460 | boards of like, you know, Apple famously gets in trouble

01:18:00.020 | for this a lot with their app store review process, right?

01:18:02.780 | And so something that you think like a committee of people

01:18:06.140 | somewhere thinks look silly may turn out to be

01:18:08.180 | the next big thing, right?

01:18:09.260 | And so it's very difficult.

01:18:10.620 | So what do we do?

01:18:11.460 | I mean, we basically have a test of legality, right?

01:18:15.060 | We check, you know, do we believe this is a security?

01:18:19.820 | If so, it can't be listed on Coinbase.

01:18:21.660 | And there's a very rigorous process we go through for that.

01:18:25.100 | Just currently the way the laws are in the US,

01:18:26.660 | you can't do that.

01:18:27.940 | And we've been, we acquired a broker to your license

01:18:30.220 | from the SEC.

01:18:31.060 | We're trying to work with them to get that operational.

01:18:32.860 | And hopefully someday we can trade real crypto securities,

01:18:35.300 | but today that's not possible in the US at least.

01:18:38.900 | Then we look at sort of the cybersecurity

01:18:40.940 | of the crypto asset.

01:18:42.540 | Does it, do we see that there's some flaw

01:18:44.300 | in the smart contract or, you know,

01:18:47.060 | a way that somebody could manipulate it

01:18:49.340 | without the customer's permission?

01:18:51.280 | We look at some compliance pieces to it as well,

01:18:54.740 | like the actors behind it and like, you know,

01:18:57.540 | their any kind of criminal history, anything like that.

01:19:00.140 | But if we believe it meets our listing standards,

01:19:02.980 | basically this test of legality and everything

01:19:06.300 | for customer protection,

01:19:08.180 | then we wanna list it because we want the market

01:19:10.500 | to at that point decide.

01:19:11.660 | And it's kind of like,

01:19:12.860 | it's kind of like Amazon or something like that,

01:19:16.140 | where, you know, a product might have three stars

01:19:18.880 | or it might have five stars,

01:19:19.940 | but if it starts to get one star consistently,

01:19:22.460 | like it's probably a fraudulent or it's defective

01:19:24.680 | or something like maybe Amazon will remove it.

01:19:26.700 | But otherwise you wanna let the market decide

01:19:29.080 | what these things are.

01:19:30.180 | So that's generally how we do it.

01:19:32.920 | And by the way, more and more of these assets,

01:19:36.220 | I think, especially like low market cap assets

01:19:38.420 | are gonna be traded on DEXs through Coinbase.

01:19:40.520 | It's not that we,

01:19:41.640 | we don't need to list every asset on a centralized exchange.

01:19:45.260 | I think DEXs are really good for the long tail.

01:19:47.820 | And then it becomes an even,

01:19:49.660 | it's even more clear to people,

01:19:50.900 | like this is not some endorsement by Coinbase of like,

01:19:54.020 | this asset's good and this one's bad.

01:19:55.400 | Like, you know, my belief is there's gonna be millions

01:19:57.940 | of these assets over time.

01:19:59.060 | And so I hope it doesn't like make news

01:20:02.380 | every time we add one in the future, basically.

01:20:03.820 | - Yeah, I wonder how you get there

01:20:06.020 | because even I look to Coinbase for example,

01:20:10.620 | you know, people, as you can imagine,

01:20:13.060 | sort of tag me on Twitter or something like that

01:20:15.340 | and all that, like you should interview our sort of this,

01:20:20.340 | the founder of this particular coin, right?

01:20:23.180 | - Yeah.

01:20:24.020 | - And it's so hard for me to know what's,

01:20:27.340 | first of all, what's the interesting technology?

01:20:29.700 | Who's a scammer or not?

01:20:34.820 | Who's actually legitimately representing

01:20:37.340 | an ambitious new thing versus a scam.

01:20:42.340 | And I, you know, there's very few sources

01:20:46.180 | of like verification signal.

01:20:50.540 | And unfortunately Coinbase in part has become

01:20:54.060 | a little bit of that too.

01:20:55.580 | And you're trying to get away from that

01:20:57.500 | because you're trying to get as many,

01:20:58.740 | sort of let the people decide.

01:21:00.740 | So you're thinking of like Amazon star type system

01:21:03.940 | where the people could rate.

01:21:05.660 | - Yeah, so I think we'll actually probably add

01:21:07.340 | like user ratings and reviews.

01:21:09.060 | So, and we'll be very cautious about like,

01:21:12.460 | you know, these are real people.

01:21:14.060 | There's a bunch of stuff we have to do for that already.

01:21:17.340 | So I think wisdom of the crowds is good

01:21:19.780 | in terms of getting feedback on items.

01:21:21.940 | But we also, we're gonna do our own review,

01:21:24.180 | which I mentioned earlier, right?

01:21:25.180 | Which is like, okay, it meets this minimum bar

01:21:27.620 | to be listed on our site.

01:21:28.700 | - Yeah.

01:21:29.540 | - So I think, yeah, both are important.

01:21:32.220 | - How do you know if a coin is a scam or not?

01:21:35.300 | - Well, you can see a few things.

01:21:39.100 | So, you know, I hate to use the word scam

01:21:41.140 | because a lot of these are judgment calls.

01:21:42.580 | You gotta, I kind of, a court may or a jury

01:21:45.140 | may land either way.

01:21:45.980 | But things that would be red flags to look at would be,

01:21:48.980 | you know, is a bunch of the asset owned by an insider

01:21:53.620 | or insiders with short vesting periods,

01:21:59.020 | you know, are, does the background of the founders,

01:22:02.940 | like they may have criminal records

01:22:04.820 | or if they've perpetrated other frauds in the past, right?

01:22:08.260 | There's a difference between something which is

01:22:11.340 | just a me too product that's like,

01:22:14.540 | doesn't have anything interesting about it

01:22:16.100 | and something that's an actual fraud or outright scam.

01:22:18.220 | And you have to, a lot of this data,

01:22:21.300 | what's cool about it is that it's now available on chain.

01:22:23.540 | You can look at like the tokenomics behind it

01:22:25.500 | and see who owns it.

01:22:26.340 | - Tokenomics, I love that term.

01:22:27.540 | - Yeah, and are they selling it, you know,

01:22:30.340 | in like inappropriately or are they pumping it

01:22:34.020 | on like YouTube and Twitter and making promises about,

01:22:38.160 | hey, the value of this thing may be a higher in the future.

01:22:40.260 | And like, all those are just big, big no-nos that we would,

01:22:43.260 | you know, we just don't wanna go there.

01:22:45.860 | So our whole thing is like,

01:22:48.260 | we want to enable the innovation in this space,

01:22:50.940 | but not allow anybody to curtail the advancement

01:22:54.660 | of this industry by like doing some kind of fraudulent thing

01:22:57.380 | or get rich quick thing.

01:22:58.420 | So.

01:22:59.260 | - It's a tricky industry,

01:23:00.100 | 'cause I'm trying to figure out who to, you know,

01:23:02.660 | what's interesting to understand, to research.

01:23:07.580 | - Yeah.

01:23:08.420 | - And it's hard to know.

01:23:09.860 | Let me ask you about a tricky one to add

01:23:12.100 | to a centralized exchange,

01:23:13.460 | which is privacy-preserving cryptocurrency.

01:23:16.300 | So like Monero.

01:23:17.380 | - Yeah.

01:23:18.220 | - Is that technically difficult or is that why,

01:23:21.660 | why is like Monero, for example, forget that specific one,

01:23:24.580 | but like privacy-preserving cryptocurrency blockchains,

01:23:29.580 | why is that, is that ever possible to add?

01:23:32.220 | - So that's a great question.

01:23:35.100 | So the answer is maybe.

01:23:36.860 | So here's the reason why.

01:23:40.260 | So because we're a regulated financial service business,

01:23:43.660 | we have various licenses to do that.

01:23:46.300 | We are regulated by various regulators.

01:23:48.460 | Part of those licenses requires us to have a quote,

01:23:51.020 | reasonable program to monitor for suspicious activity,

01:23:56.020 | you know, an AML program, anti-money laundering, right?

01:23:59.620 | And so if a coin is 100% anonymous

01:24:03.820 | and we can't really do blockchain analytics

01:24:05.500 | to track source of funds

01:24:07.780 | and where these things might be going,

01:24:09.660 | it makes it harder to have a reasonable program around that,

01:24:14.660 | that's defensible.

01:24:15.980 | Now there are privacy-preserving coins like Zcash,

01:24:19.380 | which have something called a view key.

01:24:21.180 | And a view key is basically another key,

01:24:23.260 | which allows you to de-anonymize the transactions

01:24:26.020 | in specific situations where you want that.

01:24:28.060 | So for instance, you know, we do support Zcash.

01:24:30.780 | And one of the ways we got comfortable with that

01:24:32.380 | is that when you're buying it on Coinbase,

01:24:35.140 | you know, you can basically have a view key.

01:24:38.340 | The transactions are not anonymous while you're buying it.

01:24:41.060 | And we can see where it goes afterwards

01:24:42.620 | and do our whole standard program.

01:24:44.380 | Now, if it gets a few hops away down the road,

01:24:47.980 | I mean, people could eventually

01:24:49.580 | turn on privacy-preserving aspects.

01:24:51.780 | So, you know, these are tough judgment calls,

01:24:53.820 | but at least in terms of our interaction

01:24:55.700 | with the customer and everything,

01:24:56.900 | we feel comfortable at that.

01:24:58.540 | I think there's a broader point here,

01:25:00.340 | which is that I actually think privacy coins

01:25:03.220 | are a good thing for the world

01:25:04.300 | and they should be allowed.

01:25:05.740 | And more like, you know,

01:25:07.900 | despite we've made this judgment call

01:25:09.740 | to operate in a regulated and safe and compliant way,

01:25:11.860 | but just taking my Coinbase hat off for a minute,

01:25:15.140 | I think the world would be a better place

01:25:17.540 | if there were more privacy coins,

01:25:19.060 | because it's kind of like the internet

01:25:20.700 | when it first came online,

01:25:21.740 | like there was no HTTPS, everything was HTTP.

01:25:25.500 | And there was, you know,

01:25:26.580 | so people were afraid to put their credit cards

01:25:28.100 | on the internet and your messages could be intercepted

01:25:31.540 | and all this stuff.

01:25:32.380 | And now the whole internet has basically moved to HTTPS

01:25:34.500 | with a little lock icon in your browser, which is better.

01:25:37.300 | Like, and financial information

01:25:39.220 | is like the most important information to keep private.

01:25:41.460 | Right?

01:25:42.580 | So there's times where,

01:25:44.180 | like let's say you're running a charity or something

01:25:46.020 | and you want to have total auditability,

01:25:47.900 | transparency for the whole world,

01:25:49.700 | who donated and where did the money go?

01:25:51.260 | That's great.

01:25:52.100 | You want it to be public.

01:25:53.220 | But if it's like your personal money

01:25:55.100 | or something like that,

01:25:56.060 | you don't want to be broadcasting that to the whole world.

01:25:58.060 | And in some ways that's what blockchains are doing,

01:26:00.580 | you know, pseudonymously,

01:26:01.900 | 'cause like, but it is a public ledger.

01:26:03.700 | And so if you can know who owns each address,

01:26:05.780 | you can basically de-anonymize it.

01:26:07.740 | I, you know, I think basically the people should fight

01:26:11.460 | for privacy and freedoms of all kinds,

01:26:13.940 | but privacy of money is a good thing.

01:26:15.980 | So I would like to see more of that in the future.

01:26:17.500 | - You've chosen with Coinbase

01:26:19.740 | to have a seat at the table with the regulators.

01:26:24.740 | - Yeah.

01:26:25.820 | - So what kind of conversations are there at that table?

01:26:30.820 | What are the regulations like?

01:26:33.500 | What is the level of understanding with regulators?

01:26:36.860 | What are they worried about?

01:26:38.140 | What are they thinking about?

01:26:39.260 | What are the positive

01:26:40.380 | and what are the negative regulations that you're facing?

01:26:44.580 | That you're educating, struggling with,

01:26:47.100 | pushing back on, supporting, all that kind of stuff.

01:26:49.780 | - Yeah.

01:26:51.220 | Oh man, there's so many, 'cause we're,

01:26:53.020 | I mean, we're live in like, you know,

01:26:55.540 | maybe a hundred countries or more at this point.

01:26:56.980 | So the conversations are all over the map.

01:26:59.900 | I'm trying to think what broad strokes

01:27:01.260 | I could paint for you.

01:27:02.100 | So I'd say one trend that's positive

01:27:05.260 | is that basically regulators around the world

01:27:07.460 | are more and more,

01:27:09.180 | over the last five years I would say,

01:27:11.460 | it's more and more common to find a regulator today asking,

01:27:15.780 | how can we preserve the innovation potential

01:27:17.740 | of this technology while keeping the bad actors out

01:27:21.140 | than it was five years ago where they were saying,

01:27:23.500 | this is all bad activity, how do we prevent it?

01:27:25.780 | And so maybe this is-

01:27:28.500 | - When you say more and more, what fraction?

01:27:32.460 | (laughing)

01:27:33.300 | - Okay, so just, I'll give you like a US specific example,

01:27:36.500 | although we operate in many countries.

01:27:38.220 | So when I go to DC now, I would say,

01:27:41.380 | you know, 50, 60% of the people who I meet with

01:27:44.980 | are basically, you know, they're in the camp of,

01:27:48.100 | crypto has a lot of potential,

01:27:50.300 | we should regulate it to make sure the bad people

01:27:52.340 | don't do something bad with it,

01:27:53.580 | but this is here to stay and it has a lot of upside,

01:27:56.260 | we should basically create the awful regulation

01:27:59.380 | and celebrate it and actually encourage this innovation

01:28:02.020 | to happen in the US.

01:28:03.220 | That's a huge change from just three years ago

01:28:06.620 | where it was probably 30% of people saying that,

01:28:08.380 | now it's like 60, it's like almost double.

01:28:10.420 | It's getting harder to find like true crypto skeptics in DC.

01:28:15.420 | I'd say that, you know, maybe only like 20 or 30% of people

01:28:19.580 | are like willing to say something negative,

01:28:21.900 | like they actually think it's net negative,

01:28:23.580 | it's like, it's really hard to defend that position

01:28:25.700 | at this point 'cause almost like one in five Americans

01:28:28.660 | have used or tried crypto at this point.

01:28:30.100 | So you're kind of condemning 20% of your fellow citizens

01:28:32.940 | if you say that at this point.

01:28:35.860 | You know, especially with NFTs and all these things,

01:28:37.260 | like a huge segment of people who don't even care

01:28:39.180 | about investing or whatever came into the space.

01:28:41.660 | And then basically that same conversation is happening,

01:28:46.660 | but, you know, delayed by a few years in like India

01:28:50.820 | and Europe and in some Asian countries.

01:28:53.100 | And some countries have really embraced crypto

01:28:56.260 | and they're like trying to really,

01:28:58.100 | they're ahead of where the US is

01:29:00.900 | 'cause they're trying to actually attract the best startups

01:29:04.100 | and entrepreneurs like, you know, like Dubai and the UK

01:29:06.820 | and Australia and all are kind of pushing good regulation.

01:29:09.500 | El Salvador actually, I guess, adopted it as like Bitcoin

01:29:12.500 | as a legal tender.

01:29:13.500 | There was another country, Central African Republic,

01:29:15.560 | I think that is supposedly did that as well.

01:29:18.220 | But, you know, there's countries like China

01:29:20.500 | that are more autocratic that are saying,

01:29:22.060 | "Hey, this is a threat to our power

01:29:24.540 | and like we're gonna try to really curtail it."

01:29:26.380 | - So what kind of regulations are there

01:29:28.820 | that you feel the most that are limiting

01:29:31.860 | or that are empowering?

01:29:33.220 | Like, is there specific examples?

01:29:35.260 | - Yeah, okay, so, I mean, basically,

01:29:38.060 | I think the securities laws in the US need to be clarified

01:29:40.980 | about what, crypto is many different things.

01:29:45.580 | That's what people don't realize.

01:29:46.620 | So like some crypto like Bitcoin, Ethereum

01:29:49.660 | and many others are probably more like commodities.

01:29:53.140 | They're not controlled by any one person, you know,

01:29:55.260 | like anyway, there's people who wanna raise money

01:29:58.140 | for a company that sounds more like a security

01:30:00.300 | that should be regulated by the SEC.

01:30:02.380 | Commodities regulated by the CFTC.

01:30:04.540 | Then there's some cryptocurrencies

01:30:06.380 | which are more like currencies, like stable coins

01:30:09.220 | and central bank digital currencies.

01:30:10.780 | And those are probably, you know,

01:30:12.860 | should be regulated by the treasury or someone like that.

01:30:15.140 | And then there's a whole another category

01:30:16.580 | of cryptocurrencies, which are none of those things.

01:30:18.340 | They're NFTs like artwork or they're metaverse items

01:30:21.740 | or decentralized identity or voting.

01:30:23.580 | And so I think that there's a very unhelpful point of view

01:30:30.580 | out there by some folks, which is, hey, this is all,

01:30:34.220 | most of this is like bad activity.

01:30:36.240 | We need to shut it down.

01:30:37.740 | So we're just gonna pursue enforcement actions

01:30:39.860 | or something like that.

01:30:40.980 | Most people in DC don't feel that way anymore.

01:30:43.020 | And I think the people of the US don't feel that way anymore

01:30:45.780 | 'cause a lot of them are using this stuff.

01:30:47.020 | And their general view is,

01:30:49.180 | there's a lot of upside potential here.

01:30:50.820 | We can all agree, let's get rid of the fraud and the scams.

01:30:52.940 | We all wanna get rid of that.

01:30:54.380 | So let's create a relatively simple test, which says,

01:30:58.900 | you know, if it's like, nobody controls more than 20%

01:31:02.700 | of it or some threshold,

01:31:03.700 | it probably is more like a commodity.

01:31:05.540 | If someone's raising money for,

01:31:07.580 | they're selling this thing for a business,

01:31:09.980 | then it's probably a security.

01:31:11.100 | And then, you know, if it's more like a medium of exchange,

01:31:14.360 | it's a currency.

01:31:15.200 | And if it's none of those things,

01:31:16.060 | maybe it's artwork or whatever.

01:31:18.300 | A legal test like that would help clarify who,

01:31:21.460 | which regulator is regulating what.

01:31:23.580 | And then, you know, we also wanna have probably

01:31:26.060 | like a sandbox for innovation,

01:31:27.740 | where if you're a startup and you're doing less than,

01:31:30.420 | I don't know, some number,

01:31:31.720 | less than some amount of payment volume

01:31:34.980 | or customer funds you're storing,

01:31:36.380 | it's like, just let those things get off the ground

01:31:38.700 | without a soul crushing amount of legal bills,

01:31:41.540 | you know, and uncertainty.

01:31:42.880 | So if the US can get there, that would be great.

01:31:46.020 | I think a bunch of other countries now

01:31:47.500 | are rushing around the world to sort of

01:31:49.260 | create that regulation that it does attract innovation.

01:31:52.560 | And so in the international bodies like IMF and G20

01:31:57.100 | and stuff, they're starting to look at proposed regulation.

01:32:00.100 | I hope that Coinbase and a bunch of other crypto companies

01:32:02.100 | can help in that conversation too.

01:32:03.280 | We have a whole policy effort.

01:32:04.860 | I think actually crypto policy efforts

01:32:07.060 | are like probably one of the biggest things in DC right now.

01:32:09.100 | So it moves slow at the speed of government, but yeah.

01:32:14.100 | And in the meantime, we're just trying to help

01:32:17.260 | more and more people use crypto

01:32:18.460 | 'cause ultimately that's what, in the democracies,

01:32:20.900 | that's what they care about.

01:32:22.060 | Like they'll do what the people of the country want.

01:32:24.740 | - So you want governments to start understanding

01:32:27.020 | the differences between in the crypto space,

01:32:29.460 | commodities, securities, currencies, NFTs.

01:32:32.460 | I still don't understand.

01:32:34.020 | What are the supposed to make sense of NFTs?

01:32:37.060 | What is NFTs exactly from a perspective of a regulator?

01:32:41.100 | - Yeah, so-

01:32:42.980 | - Is it the other categories?

01:32:44.820 | - Yeah, you know, most NFTs you could think of

01:32:46.500 | as like artwork, although it's,

01:32:48.100 | who knows where it's gonna go?

01:32:49.020 | It could be-

01:32:49.860 | - You mentioned metaverse, right?

01:32:50.700 | You mentioned some kind of unique identity of a thing.

01:32:54.860 | - Yeah, like-

01:32:55.700 | - Isn't everything art, man?

01:32:57.180 | - People sell on virtual land in NFTs.

01:32:59.860 | I actually, I bought this NFT that's like,

01:33:02.740 | it's like citizenship in this like city,

01:33:04.740 | Dow in Wyoming, like I've never been there,

01:33:06.780 | but it's almost like a badge or attestation

01:33:11.540 | like to get access to this location.

01:33:13.340 | There's like people doing like tickets to events,

01:33:17.380 | like, you know, they're called a POAPs,

01:33:19.660 | like proof of attendance and things like that.

01:33:23.620 | So it'll be very interesting to see where NFTs go over time.

01:33:27.820 | It could get, and that's the danger.

01:33:29.940 | You don't wanna try to like define the regulation

01:33:31.740 | if you don't even know where this thing's gonna go, so.

01:33:33.380 | - And so your efforts in the policy arm is education?

01:33:37.540 | - Yeah, education, advocacy.

01:33:39.900 | We're just trying to be like

01:33:40.740 | a helpful educational resource essentially.

01:33:42.620 | And then if they give us feedback and like,

01:33:44.180 | hey, don't do this or don't, or do this,

01:33:46.740 | like we're more than happy to do anything that's requested.

01:33:50.580 | We generally go get licenses

01:33:52.500 | and we've just tried to do the right thing

01:33:53.820 | in the absence of clarity,

01:33:54.940 | because if it's not clear what the law says,

01:33:59.180 | then you should just basically do good things

01:34:01.180 | that you think may be required in the future

01:34:02.780 | to show good faith effort towards the right thing.

01:34:05.100 | And that's part of like innovating in a regulated field,

01:34:08.700 | which is, you know, a whole topic in itself.

01:34:11.060 | - So if you are at the table,

01:34:13.820 | I mean, this is less the case in the United States,

01:34:17.280 | but can government agencies seize a person cryptocurrency

01:34:20.780 | by forcing Coinbase to hand it over?

01:34:24.820 | So when you're centralized,

01:34:26.340 | they have a phone number to call.

01:34:28.180 | - Okay, so this is a complicated topic.

01:34:30.440 | Like if you really wanna be sure that,

01:34:34.780 | this is why people wanna store their own crypto, right?

01:34:36.660 | Like with self-custodial wallets,

01:34:37.940 | like with Coinbase wallet and bracing decentralization,

01:34:40.180 | they wanna avoid that.

01:34:42.140 | Now in the US there is rule of law, right?

01:34:44.740 | So we have reasonable protections in place around

01:34:48.220 | like search and seizure and things like that.

01:34:50.460 | You know, Coinbase does,

01:34:52.660 | we publish transparency reports on this.

01:34:54.420 | We get subpoenas, court orders, things like that

01:34:56.940 | from various countries around the world.

01:35:00.300 | And there are situations where we have been ordered

01:35:04.700 | to freeze accounts, things like that.

01:35:06.740 | You know, we have to follow the law.

01:35:09.420 | Is there's no other way to put it.

01:35:10.980 | We're a regulated financial service business.

01:35:12.780 | And so-

01:35:13.620 | - If the money is used as part of breaking the law,

01:35:16.960 | that's what that, in a particular jurisdiction,

01:35:20.860 | in a particular-

01:35:22.500 | - Right, and then the other thing,

01:35:23.920 | sometimes we will actually get court orders

01:35:25.820 | or subpoenas that are overly broad.

01:35:27.220 | We've seen, so they need to follow due process, right?

01:35:30.940 | And so we've seen some in the past that were like,

01:35:34.340 | "Well, we need you to freeze this huge number of accounts."

01:35:36.580 | And it's like, well, we'll actually have gone to court

01:35:39.140 | and like pushed back on some of these and said like,

01:35:40.740 | "What is your, the probable cause?

01:35:42.940 | And has the threshold been met?"

01:35:44.460 | And like, we've won some of those cases

01:35:45.940 | on behalf of our customers.

01:35:46.960 | So yeah, it's actually really,

01:35:50.100 | it's kind of unfortunate and frustrating as a,

01:35:52.040 | you know, as a large business,

01:35:53.140 | you spend a lot of resources basically interacting

01:35:56.740 | with inbound requests by all kinds of lawyers and people

01:36:01.500 | and requesting things.

01:36:03.700 | And some of them are silly and ridiculous

01:36:06.020 | and you have to push back and say no.

01:36:07.420 | And so it's kind of a tax on every company

01:36:10.840 | at a certain size,

01:36:11.780 | which ultimately gets passed on to the customer

01:36:14.340 | in higher fees.

01:36:15.180 | So you have to employ armies of lawyers

01:36:17.540 | to deal with this stuff.

01:36:18.380 | - Can you educate me on something?

01:36:19.820 | How much innovation is there in the legal space?

01:36:23.820 | So for lawyers working with Coinbase,

01:36:26.300 | because it's such a new cutting edge thing.

01:36:30.780 | So you're, there's a lot of gray area

01:36:33.580 | you're supposed to be operating under.

01:36:36.500 | Like how hard is it being a lawyer at Coinbase?

01:36:40.100 | (both laughing)

01:36:41.100 | Like how much precedence is there,

01:36:43.380 | I guess is what I'm asking.

01:36:44.500 | I mean, just like you said, three years.

01:36:46.620 | It's kind of a new space.

01:36:49.580 | - Yeah.

01:36:50.420 | Well, it's probably very hard to be a lawyer at Coinbase

01:36:52.580 | and very fun because, you know,

01:36:54.820 | whenever you're in a new field that's growing fast,

01:36:57.220 | there isn't a lot of case law and just precedent set.

01:37:02.220 | So that's also an opportunity for you

01:37:04.460 | to go create that stuff.

01:37:05.420 | And that's what a lot of legal careers are made out of

01:37:07.620 | is like, take a complex situation

01:37:09.700 | where you have to balance difficult things.

01:37:11.300 | Like how do we prevent bad activity,

01:37:13.100 | but still enable an innovation?

01:37:14.140 | That's a hard question.

01:37:15.900 | And there's, you can go draft legislation

01:37:18.460 | and circulate it to policymakers

01:37:19.740 | or come up with these policies and, you know,

01:37:23.500 | how do you operate a business in an environment

01:37:25.340 | where the law is just unclear, right?

01:37:27.780 | It's like, try to do the right thing,

01:37:29.980 | but like, you know, strike the right balance.

01:37:33.820 | So yeah, a lot of our lawyers have to come up with that.

01:37:36.220 | Very creative stuff.

01:37:37.780 | - You mentioned one of the things you're focused on

01:37:39.540 | is expanding the number of people,

01:37:41.020 | maybe a billion people on Coinbase or using cryptocurrency.

01:37:46.020 | Where are we at now?

01:37:47.180 | How do we get to a billion?

01:37:48.940 | - As of Q4 last year,

01:37:50.620 | we had 89 million verified accounts on Coinbase,

01:37:53.540 | but in any given quarter, only, you know,

01:37:57.060 | maybe like 10 or a little more million of those

01:38:00.100 | are like really active.

01:38:02.020 | So, and then if you look at globally,

01:38:04.860 | I think some of the estimates I've seen is maybe

01:38:07.180 | there's like 200 million people or something like that

01:38:09.180 | who have ever used or tried crypto.

01:38:11.500 | So we're along, you know, we're a ways from a billion,

01:38:15.580 | but it's not like that far off.

01:38:17.540 | - How do you get there?

01:38:19.900 | - Yeah, okay. - How do you get to a billion?

01:38:21.300 | - So a few things.

01:38:22.380 | One is the blockchains have got to become

01:38:23.740 | way more scalable.

01:38:24.700 | It's kind of like we're all running dial-up modems

01:38:27.980 | and we need broadband.

01:38:28.980 | And so it's just like too expensive,

01:38:31.740 | too slow to do all these transactions.

01:38:33.180 | And I think if we just get L2s working and scalability,

01:38:38.020 | you know, we'll see another order of magnitude

01:38:39.900 | kind of come out just from that.

01:38:41.540 | I think the second one would be more clear regulation.

01:38:44.860 | That would help a lot.

01:38:46.820 | I do talk to, you know, pension funds and, you know,

01:38:51.620 | various asset managers, sovereign wealth funds and stuff.

01:38:53.780 | And a lot of them tell me,

01:38:55.700 | we've got 1% of our portfolio in crypto today,

01:38:58.740 | but we really would rather have like 20% in there.

01:39:02.140 | But what we're waiting for is more clear regulation

01:39:06.540 | coming out and saying that clear test that I was saying,

01:39:08.820 | these assets are commodities regulated by SEC,

01:39:10.980 | these are by SEC, these are by treasury, whatever.

01:39:13.700 | So that would be a big unlock.

01:39:15.460 | - Do transactions, so one of the things that you mentioned,

01:39:19.700 | payments, sorry. - Yeah.

01:39:21.460 | - Well, does that unlock a lot of users?

01:39:23.860 | - Yeah, it does.

01:39:26.060 | I mean, remittance is like a huge thing.

01:39:28.220 | People sending money home to their families

01:39:30.060 | and other countries where the fees are super high.

01:39:32.940 | So yeah, if we get blockchains to be more scalable

01:39:35.660 | and there's more global adoption,

01:39:37.020 | like I think we'll see remittance quarters

01:39:40.220 | move over to crypto a lot.

01:39:42.300 | There's also just, the other thing that's driving

01:39:44.420 | a lot of crypto adoption is basically

01:39:46.740 | the creation of more and more third-party apps.

01:39:49.300 | So, or dApps, they're sometimes called decentralized apps.

01:39:52.180 | So a lot of startups now, you know how like,

01:39:55.700 | used in the early 2000s, they called them dot-com startups,

01:39:58.540 | but now you don't need to say dot-com

01:39:59.980 | 'cause everybody's using the internet.

01:40:01.500 | And so now there's like hundreds or thousands

01:40:04.380 | of these crypto startups, but I think in the future,

01:40:06.940 | you won't need to call them crypto startups

01:40:08.180 | 'cause they'll just be called startups

01:40:09.260 | 'cause everyone's using the internet and crypto and whatever.

01:40:11.900 | So anyway, the use cases, the utility of crypto

01:40:15.820 | is getting better and better with like

01:40:17.780 | all these third-party apps getting funded and created.

01:40:20.460 | - Do you think there's gonna be a killer

01:40:22.660 | or a set of killer dApps,

01:40:24.940 | like a thing where nobody can live without?

01:40:27.740 | Are we still waiting for that?

01:40:29.300 | - There's gonna be a bunch of them.

01:40:30.220 | It's just like, it's like the internet,

01:40:31.500 | like what were the killer web companies?

01:40:33.740 | You know, like Uber and Wikipedia and Airbnb and Google.

01:40:37.020 | And like, so there's gonna be some big winners,

01:40:40.420 | but there'll be thousands of,

01:40:42.620 | this is basically the new,

01:40:45.020 | it's like what happened with the dot-com startups

01:40:46.740 | in the early 2000s.

01:40:47.580 | It's like a lot of the best entrepreneurs

01:40:49.140 | are building crypto startups now.

01:40:50.820 | So tons of venture money flowing into the space,

01:40:54.100 | a lot of smart young people, so.

01:40:55.620 | - Do you think Bitcoin or some other cryptocurrency

01:40:57.620 | will become the reserve currency of the world at some point?

01:41:01.700 | - 'Cause this is kind of a controversial idea,

01:41:03.700 | but I actually think yes.

01:41:05.380 | I do think Bitcoin could end up becoming

01:41:08.540 | a reserve currency of the world.

01:41:10.780 | So, you know, I've been reading Ray Dalio recently

01:41:13.300 | with his new book, like "The Changing World Order."

01:41:16.620 | And I thought it was a really well-researched book.

01:41:19.860 | He talks in there, he looks back at history, right?

01:41:21.740 | He looks at like empires and, you know,

01:41:24.780 | going back to various Chinese empires,

01:41:26.660 | the Dutch and Ottomans and everybody,

01:41:28.060 | and how did they rise?

01:41:29.780 | And they were able to have the reserve currency

01:41:31.620 | as they rose.

01:41:32.940 | And what produced that?

01:41:34.220 | Like it came from, you know, good education and innovation

01:41:36.620 | and better trade and anyway.

01:41:39.180 | So the US by some measures is kind of,

01:41:43.620 | looks like it's maybe had a really good run

01:41:46.540 | and it's coming down a little bit.

01:41:47.820 | And China is kind of coming up.

01:41:49.820 | Who knows how that'll play out by the way?

01:41:51.140 | Like the world is very complicated.

01:41:52.460 | It could, that could switch.

01:41:54.020 | But I guess if the US dollar is gonna be seeing

01:41:59.180 | more inflation in the future,

01:42:01.980 | the Chinese Yuan is not like necessarily better, right?

01:42:05.900 | I mean, they have a ton of debt as well.

01:42:08.500 | And, you know, it's not like you could really,

01:42:13.220 | that the Yuan could be inflated as well, right?

01:42:15.500 | It probably will be.

01:42:17.020 | And so I do think that there's this group of people today,

01:42:19.940 | which probably most traditional, I don't know,

01:42:24.460 | like the people who run big banks

01:42:27.340 | and like governments and stuff,

01:42:28.380 | that they're not, this is not really on their radar today,

01:42:29.980 | but I think there's basically a group of younger people

01:42:32.740 | in that kind of, you know, 25, 35 year old range

01:42:35.980 | who are tech savvy.

01:42:37.540 | They're starting to think of crypto as like

01:42:39.420 | the primary thing in their financial life.

01:42:42.100 | It's like, I basically hold my wealth in crypto

01:42:44.900 | and I use dollars or euros or whatever.

01:42:47.900 | If I happen to need something,

01:42:49.420 | I convert it to that at the last minute.

01:42:50.580 | It's like, if I go on, if I'm traveling,

01:42:52.340 | I might convert some local currency in the moment,

01:42:54.060 | but that's not where I hold most of my wealth.

01:42:57.100 | So this segment of the population is not like massive yet

01:43:01.580 | from a GDP point of view,

01:43:02.580 | but I think it's a leading indicator

01:43:05.580 | of where things could be going.

01:43:06.700 | And this is actually good for the world.

01:43:07.940 | It's kind of like, especially if China does continue to rise

01:43:11.340 | and it has a more authoritarian view,

01:43:13.620 | it'll be kind of this very centralized East

01:43:16.900 | versus a decentralized West,

01:43:18.740 | where people are in the West, in the free world,

01:43:21.860 | really kind of embracing crypto

01:43:24.420 | in a more open, fair, free, global financial system,

01:43:27.740 | which I think will be enormously beneficial for humanity.

01:43:31.020 | And I do think basically Bitcoin is the reserve currency,

01:43:33.900 | the gold standard of the crypto economy.

01:43:36.180 | So that's pretty crazy.

01:43:39.260 | - Yeah, the gold standard.

01:43:40.340 | I mean, it's also like with Ray Dalio,

01:43:43.620 | I feel like China will drive a lot of this,

01:43:47.820 | either in response or directly.

01:43:49.900 | I mean, I think the ruble,

01:43:52.340 | I'm not paying as close attention to the financial systems,

01:43:55.380 | but I think they're trying to tie it to gold once again.

01:43:59.940 | So that's an interesting,

01:44:01.660 | maybe it'll be one of the more authoritarian regime

01:44:04.580 | that will switch to a Bitcoin standard first.

01:44:07.900 | And then it's the West that will,

01:44:11.340 | out of that pressure will catch up

01:44:14.900 | versus the other way around.

01:44:18.500 | It's fascinating to think of what is the forcing function,

01:44:23.100 | what kind of perturbation is required to switch,

01:44:26.260 | to change anything, honestly, about the financial system.

01:44:28.540 | But it could be, as you're saying,

01:44:32.660 | just waiting for the people that are young now

01:44:34.940 | that are embracing crypto

01:44:36.620 | to enter the positions of power, essentially.

01:44:40.980 | But I hope that's not the case,

01:44:42.340 | 'cause that's, if for any innovation, we have to wait,

01:44:47.340 | I'm sorry to say, for the older folk to pass away.

01:44:50.940 | - Yeah.

01:44:51.860 | - That's not an efficient way to make change.

01:44:54.700 | - Yeah, that's a super interesting topic

01:44:57.460 | of how people's minds become less plastic as they age.

01:45:01.460 | - I guess it's a feature.

01:45:04.700 | It's called wisdom,

01:45:06.540 | but then we also need the wild ones to explore,

01:45:09.100 | exploration versus exploitation.

01:45:11.120 | You wrote a blog post that's really interesting

01:45:14.500 | in September 2020 titled Coinbase is a mission-focused

01:45:18.540 | company, like what we're talking about.

01:45:20.660 | So one interesting thing you said in that blog post

01:45:23.540 | is that we're not going to be distracted

01:45:27.540 | by sort of activism within the company

01:45:30.980 | that's not related to the mission of the company.

01:45:35.160 | Now, that's a rare thing for a company to state,

01:45:38.580 | for a company CEO to state, especially in this climate.

01:45:42.520 | Can you, first of all, describe in a little more detail

01:45:47.520 | what you meant?

01:45:50.320 | Did you receive blowback for this?

01:45:52.400 | - I definitely received some blowback,

01:45:53.620 | but yeah, I'll describe what I meant.

01:45:55.020 | And if you wanna talk about how it came to that too,

01:45:57.680 | we can talk about that.

01:45:58.520 | But what I meant is that there's a lot of companies

01:46:03.440 | right now, including tech companies,

01:46:05.360 | but not exclusively where,

01:46:07.440 | I think like great companies,

01:46:11.420 | they have an important mission.

01:46:12.680 | They're trying to do something really good for the world.

01:46:15.080 | And unfortunately, they're getting a little distracted

01:46:17.640 | from that at times because of employee activism

01:46:20.840 | that is causing the company to basically jump

01:46:25.340 | into whatever the current thing is and try to help,

01:46:29.080 | is like the positive interpretation.

01:46:30.760 | The negative interpretation would be to virtue signal.

01:46:33.480 | And my view is that this is actually kind of destructive

01:46:37.480 | to, this is largely an American company phenomenon,

01:46:40.440 | by the way.

01:46:41.280 | I do worry that this is making America less competitive,

01:46:45.640 | even though I think of myself

01:46:46.480 | as kind of internationally minded,

01:46:47.800 | but I am a US citizen, have a lot of my whole life here.

01:46:50.040 | So when we put out this statement,

01:46:53.960 | we had employees that were not in the US

01:46:56.000 | who were confused by it.

01:46:57.180 | They were like, why did Brian need to say that?

01:46:59.520 | We're just saying you're gonna work, focus on work at work.

01:47:02.460 | That's what we were doing already.

01:47:04.460 | And there was certain pockets of the US, certain cities,

01:47:08.620 | in particular, where we had employees

01:47:10.300 | that a very peculiar cultural phenomenon had evolved,

01:47:15.300 | where I think people really wanted the company

01:47:19.060 | they worked at to be almost acting

01:47:24.060 | like the government or something,

01:47:25.240 | and trying to solve the hardest societal issues

01:47:28.180 | and at least have an opinion on it,

01:47:30.380 | if not contribute to the solution on almost everything.

01:47:35.500 | And for me, it was a very uncomfortable situation

01:47:39.780 | for me as a CEO.

01:47:40.620 | I'd never quite been in this situation

01:47:42.020 | where most of the time when employees in the past

01:47:45.060 | were kind of asking me questions,

01:47:47.460 | they would be asking about,

01:47:49.580 | how do we make this product better?

01:47:51.100 | What do we do with this competitor?

01:47:52.340 | What about this regulator?

01:47:53.700 | And it got to a place around that time

01:47:56.700 | where most of the questions we were receiving

01:47:59.380 | were, I think, even about things not related to the company.

01:48:02.060 | They were about broader societal issues,

01:48:03.260 | like, Brian, what's your stance

01:48:04.380 | on XYZ controversial thing?

01:48:06.660 | And I often didn't have an opinion on these.

01:48:10.860 | These were really hard questions, right?

01:48:12.100 | And I felt like it was distracting the company.

01:48:15.820 | People internally were getting into fights a lot, too,

01:48:17.780 | like disagreeing with each other.

01:48:19.620 | There was a thing where Slack internally

01:48:22.500 | was turning into social media almost

01:48:24.140 | with people putting in flame wars.

01:48:26.340 | So, and this culminated, by the way,

01:48:27.980 | with a walkout that happened in the company.

01:48:31.300 | We had received some demands from employee groups

01:48:34.660 | about various things,

01:48:35.500 | and there was basically an antagonistic thing

01:48:37.660 | with management and employees.

01:48:39.220 | I was like, we're all on the same team here.

01:48:42.020 | If you wanna be antagonistic,

01:48:43.260 | let's do it with somebody else outside the company

01:48:46.500 | that we're trying to improve the world in that dimension.

01:48:48.500 | So, yeah, eventually I was like,

01:48:50.740 | okay, the company is not aligned on this.

01:48:52.780 | I just don't feel, I don't like the job as CEO, frankly.

01:48:57.380 | If the job is to come in here every day

01:48:58.820 | and have to squirm in front of

01:49:01.140 | these most difficult societal questions,

01:49:03.140 | I don't think I wanna do that job.

01:49:05.380 | So either they're gonna have to go,

01:49:06.700 | or I'm gonna have to go.

01:49:08.140 | And I founded this company,

01:49:09.380 | and I really believe in the mission,

01:49:10.340 | so they're gonna have to go.

01:49:11.380 | And what I realized was that,

01:49:14.140 | so I basically, I made an exit package available

01:49:16.940 | to anybody who wasn't on board with this direction.

01:49:19.340 | 5% of employees took it.

01:49:21.180 | I got the company realigned towards this mission.

01:49:23.900 | We're all here to do work.

01:49:25.140 | By the way, people can, they can go do anything

01:49:27.460 | like political or social activism outside of work.

01:49:29.740 | It's totally fine.

01:49:30.580 | Like we all, everybody has stuff like that

01:49:33.340 | in their personal life.

01:49:34.220 | But while at work, we can also disagree at work,

01:49:36.300 | by the way, on the work.

01:49:37.780 | This is not like a no disagreement culture.

01:49:39.780 | Like we should, let's try to get the truth.

01:49:42.300 | But don't bring stuff into work

01:49:44.020 | that's just gonna create division.

01:49:46.260 | Make the workplace a refuge from division

01:49:48.420 | about all these crazy things.

01:49:49.420 | And like, we're all aligned here to work on the mission.

01:49:51.700 | Let's do that.

01:49:52.620 | - Yeah, that was really, really, really refreshing to hear.

01:49:57.220 | So this is me speaking,

01:49:59.060 | but there's a sense when companies

01:50:01.660 | take on these issues publicly,

01:50:03.460 | from a CEO position or anywhere else,

01:50:06.100 | that it does seem to optimize for virtue signaling

01:50:10.920 | versus solving a particular problem.

01:50:13.500 | Because to solve a particular problem,

01:50:15.620 | you really have to, really put in a huge,

01:50:18.820 | you have to hire a huge number,

01:50:20.500 | you basically have to create a company

01:50:21.900 | within a company to take on a particular thing.

01:50:24.620 | - Right.

01:50:25.460 | - But if you allow yourself to internally care

01:50:29.420 | about a particular issue,

01:50:30.580 | you're basically pacifying some number of employee,

01:50:34.180 | like making sure Slack doesn't get out of hand.

01:50:36.980 | And then you're doing this kind of, from my perspective,

01:50:40.140 | especially on issues I care about, fake virtue signaling,

01:50:43.740 | basically trying to understand

01:50:45.540 | what will make me look the best,

01:50:47.200 | what would make the company look the best

01:50:48.700 | in this particular aspect.

01:50:50.260 | And it just seems very shallow.

01:50:52.100 | And it's optimizing for the wrong thing,

01:50:54.260 | not for the solving of the problems,

01:50:56.860 | but for the making yourself look like the good guy,

01:51:01.860 | and trying to then leverage that to say,

01:51:04.940 | I'm the good guy in all situations.

01:51:07.500 | And it's the wrong thing.

01:51:09.740 | And perhaps from your perspective as a CEO, as a leader,

01:51:13.860 | it's also creating division,

01:51:16.540 | unnecessary division within people.

01:51:19.300 | Like they get, yeah, there's something about us

01:51:21.260 | who gets extremely argumentative about certain topics.

01:51:25.820 | They really bring out the emotion.

01:51:27.820 | - Yeah.

01:51:28.660 | - And I think that probably, as you were saying,

01:51:30.840 | that emotion is even probably okay, maybe productive,

01:51:34.900 | when that emotion has to do with the mission of the company.

01:51:37.660 | Like you really care about those disagreements

01:51:40.400 | versus like something that has nothing to do

01:51:43.860 | with the particular,

01:51:45.140 | with increasing economic freedom using crypto.

01:51:50.980 | Yeah, it's fascinating.

01:51:52.700 | But it was so refreshing because it's rare.

01:51:55.420 | Why do you think that's a rare?

01:51:57.300 | So the city you're mentioning,

01:51:59.820 | I mean, there's a bunch of cities,

01:52:01.960 | but San Francisco is one such city with that culture.

01:52:06.960 | And it's sad because San Francisco is also,

01:52:12.340 | the Bay Area is also the hub historically

01:52:16.660 | of some of the greatest innovation in human history.

01:52:20.180 | - Yeah.

01:52:21.020 | - So there's that tension.

01:52:22.040 | How did that culture emerge there,

01:52:24.380 | where like the innovation was done by people

01:52:27.340 | that are very mission-driven.

01:52:29.000 | You get a bunch of smart people together

01:52:30.800 | to solve a difficult problem.

01:52:32.640 | They get maybe sometimes too much blinders on,

01:52:35.660 | but they try to balance that

01:52:37.580 | 'cause it requires that focus to solve an actual problem.

01:52:41.420 | And yet that's also the place where this culture emerged.

01:52:44.700 | It's a fascinating human dynamic.

01:52:47.300 | I don't know.

01:52:48.140 | Somebody will one day tell the history of Silicon Valley,

01:52:52.380 | not just the innovation,

01:52:54.240 | but the social dynamics that occurred there.

01:52:56.180 | Anyway, why do you think that's so rare?

01:52:58.180 | - Well, because people don't wanna get attacked.

01:53:01.700 | It's like super, you don't wanna get canceled, right?

01:53:04.100 | It's super uncomfortable.

01:53:07.660 | Nobody wants to be called a racist

01:53:08.980 | or whatever people wanna say on Twitter.

01:53:11.940 | - To get attacked?

01:53:14.540 | - Yeah, yeah, I definitely got attacked.

01:53:15.980 | I mean, and I knew it would be controversial.

01:53:17.940 | The only reason I did it, frankly,

01:53:19.580 | was that I was kind of at my wits end.

01:53:22.540 | I was like, well, like I said earlier,

01:53:24.740 | like the job, the CEO job sucks.

01:53:26.420 | Like either I don't wanna do it or they have to go

01:53:29.420 | and I'm gonna make the company into something that I want.

01:53:31.280 | And I'd spent eight or nine years in my life at that point

01:53:36.280 | kind of building this thing.

01:53:37.300 | I was like, well, I could go start another company,

01:53:39.140 | but it takes a long time to get momentum with these things.

01:53:41.180 | And Coinbase is a very rare thing

01:53:43.500 | that happened in the world.

01:53:44.380 | I feel very passionate about it.

01:53:46.180 | So yeah, I'm not gonna go.

01:53:48.780 | Like I need to make this the company that I wanna work at.

01:53:50.980 | And what was really interesting

01:53:53.020 | was that there was such a huge outpouring of support.

01:53:56.740 | So I knew that it would be controversial

01:53:58.180 | and I would get attacked.

01:53:59.020 | And predictably, there was some journalists

01:54:02.940 | and New York Times and all these people

01:54:04.460 | who kind of like went and started writing hit pieces

01:54:06.780 | on the company shortly thereafter.

01:54:09.420 | And they basically just call people who've left the company

01:54:12.060 | and can get quotes on whatever they want

01:54:14.620 | and then they'll write a story.

01:54:16.260 | So mainstream media,

01:54:17.540 | I lost a lot of trust in mainstream media,

01:54:19.220 | frankly, after that.

01:54:20.060 | And of course, it's kind of become obvious since then

01:54:22.640 | that most mainstream media is like hyper politicized

01:54:25.900 | at this point.

01:54:26.740 | It's basically either super left or super right.

01:54:28.500 | And it's not really that focused on truth.

01:54:32.980 | So that's kind of unfortunate

01:54:35.500 | 'cause I think journalism is actually like

01:54:36.820 | really important in society.

01:54:37.900 | So that whole thing got eroded in the US.

01:54:40.740 | Luckily, there's sort of new media, people like you

01:54:43.340 | and a whole bunch of people.

01:54:44.660 | - Did that blog post help that statement,

01:54:47.620 | the 95 people that remained,

01:54:50.540 | is this still something you struggle with?

01:54:52.500 | Because it's also a culture of the broader tech space.

01:54:56.580 | - Okay, so that was an interesting thing,

01:54:57.980 | which was that, so the 95% of people stayed.

01:55:00.620 | I got a huge outpouring of support from people who said,

01:55:04.940 | "Thank God you finally spoke up and said something."

01:55:07.200 | Because frankly, it was making it not a very fun place

01:55:10.860 | to work either.

01:55:12.280 | And I realized that there is,

01:55:15.220 | I think there was a, I think Nassim Taleb

01:55:17.700 | has this blog post about the tyranny of the 1%

01:55:21.300 | or something like that.

01:55:22.340 | But there's basically a relatively small group,

01:55:24.020 | one in 5% or something like that,

01:55:25.500 | that is really upset about something.

01:55:28.340 | It's not the majority of the company, it's like 5%.

01:55:30.820 | There's another 15% or something

01:55:32.380 | that are sympathetic to the cause.

01:55:34.180 | They're actually somewhat suggestible.

01:55:35.940 | They will go along with whatever,

01:55:37.520 | because it sounds reasonable.

01:55:38.680 | These are like real issues they're talking about.

01:55:40.360 | It's not to say that it's not real.

01:55:42.620 | And they'll kind of get swept up in it.

01:55:44.900 | But there's an 80% of the company that basically

01:55:48.460 | doesn't agree or just wants to get their work done

01:55:50.360 | without all this drama or distraction.

01:55:52.880 | And they're afraid to speak up because if they speak up,

01:55:56.600 | they're afraid of being, again, called a racist,

01:55:58.740 | like fired, ostracized amongst their peers.

01:56:01.920 | And so it did require it to get to a bad enough place

01:56:06.600 | for me to finally say, you know what,

01:56:07.760 | I just, I feel like I have to do this.

01:56:10.080 | Live through the short-term attacks of the press,

01:56:12.560 | which ultimately was very freeing for me

01:56:14.300 | because now I don't really care.

01:56:16.320 | And now I can actually just build the company

01:56:18.060 | that I want to build without caring about that.

01:56:20.720 | So, and then what was cool was a lot of really great people

01:56:24.160 | reached out to the Coinbase too after that.

01:56:25.940 | And were like, I'm an early engineer at Google or whatever.

01:56:29.700 | And like this culture has gotten kind of messed up

01:56:33.000 | and like, I want to work at a company

01:56:34.200 | that's willing to stand for that.

01:56:35.240 | And so we've gotten a lot of good people come over.

01:56:37.360 | Basically what I realized, and by the way,

01:56:38.880 | our diversity numbers and all that stuff,

01:56:40.360 | like people told me when I was drafting this post,

01:56:42.400 | they're like, don't post this.

01:56:44.400 | You're like, people, underrepresented groups

01:56:46.240 | will never want to work at this company again.

01:56:47.840 | I was like, I don't think that's true.

01:56:49.740 | Like I talked to like our ERG groups

01:56:52.680 | and they're not telling me they care

01:56:53.720 | about this stuff that much.

01:56:54.840 | They're telling me they just want to like be respected

01:56:56.800 | at work and do good work and contribute.

01:56:58.840 | So my gut was telling me that that advice was wrong.

01:57:01.620 | And like, I can tell you a year after doing it,

01:57:04.820 | like our diversity numbers are basically

01:57:06.540 | either the same or better in every category.

01:57:08.840 | So that turned out to be false.

01:57:10.380 | Look, I hate to be like, you know,

01:57:15.420 | polarizing on in either dimension here.

01:57:17.240 | Like I just want to get good work done

01:57:18.540 | and build good stuff with technology.

01:57:19.980 | So, you know, I think companies should just have

01:57:23.800 | like reasonable policies.

01:57:25.580 | Like you want to get rid of bias in hiring.

01:57:27.300 | You want to attract great people

01:57:28.660 | from all different backgrounds.

01:57:30.600 | Like, you know, we have pledge 1%.

01:57:32.860 | We put 1% of the company equity into a foundation.

01:57:34.980 | Like I hope we're able to do good stuff with that.

01:57:36.820 | That's, you know, give back in some way.

01:57:39.120 | But like the main message, I guess for me is like

01:57:43.700 | the core mission, the core work that we're doing

01:57:47.460 | on economic freedom and just all of our products,

01:57:49.980 | that is like the main value

01:57:51.300 | that we're contributing in the world.

01:57:52.340 | Like, let's just do that more.

01:57:53.520 | And hopefully we can get from 89 million verified users

01:57:56.580 | to a billion or whatever.

01:57:58.140 | And then I just think that's how we'll have

01:58:01.240 | the biggest impact.

01:58:02.280 | - It's tempting though.

01:58:03.460 | It's so interesting how companies get tempted to help.

01:58:06.820 | - Yeah.

01:58:07.660 | - It's like, and you step in and it's almost like a drug

01:58:10.180 | and then you can't, you forget.

01:58:11.940 | I mean, like all of us in life,

01:58:13.780 | it doesn't have to be companies, you get distracted.

01:58:16.260 | - Yeah.

01:58:17.100 | - And maintaining focus, like you're absolutely right.

01:58:19.780 | The way for Coinbase to add value to the world

01:58:22.100 | is to maximize the mission that it's on,

01:58:25.180 | not other stuff.

01:58:27.340 | And when you get wealthier and more successful,

01:58:29.220 | there's, it becomes more and more tempting

01:58:31.940 | to just help out in some other shallow ways.

01:58:34.260 | And it's fascinating.

01:58:35.900 | And you just kind of brought that to light.

01:58:37.540 | So it was very refreshing

01:58:38.740 | and it shouldn't be controversial

01:58:40.260 | to sort of focus on just getting stuff done.

01:58:43.980 | - Well, let me ask you, I mean, do you think that this,

01:58:46.220 | it's all these things tie together.

01:58:47.660 | There's like a general trend of like more censorship,

01:58:50.140 | you know, there's like more cancel culture.

01:58:54.060 | There's some of these like freedom values

01:58:57.300 | are kind of, you know, even like freezing people's accounts,

01:59:00.660 | like the trucker thing that happened.

01:59:02.460 | And it seems like there's a general trend

01:59:05.060 | of more authoritarian, you know, policies there.

01:59:10.060 | But do you think that,

01:59:12.460 | do you feel like the tide is turning on that?

01:59:13.900 | Like there's counter examples to it we've seen recently.

01:59:16.340 | - Yeah, I think it's the last gasp

01:59:19.340 | of old way of doing things.

01:59:20.900 | And so there's desperation and so on.

01:59:22.900 | 'Cause to be fair, it's kind of the internet,

01:59:27.100 | which is where's the source of a lot of this,

01:59:29.660 | where people have a voice,

01:59:31.180 | is making the power centers of the world really nervous.

01:59:34.300 | And so that's where that's coming from, I think.

01:59:36.540 | And the internet is tricky.

01:59:38.780 | It's weird.

01:59:39.980 | It's full of bots.

01:59:41.660 | It's full of like misinformation of all kinds,

01:59:45.780 | full of large groups with conspiracy theories and so on.

01:59:49.820 | And I mean, misinformation broadly,

01:59:51.580 | people are misusing the word misinformation.

01:59:53.780 | They're just, governments are just labeling random things

01:59:56.780 | with misinformation just to censor them.

01:59:59.040 | But I just think it's just like a new world

02:00:03.540 | where the internet is really finally taking hold,

02:00:06.100 | where there's billions of devices and everybody has a voice.

02:00:09.260 | It's almost, basically governments and powerful people

02:00:14.260 | are slightly losing hold of power

02:00:18.400 | and they're starting to freak out a little bit.

02:00:20.540 | That's it.

02:00:21.420 | And so, and then once you have young people

02:00:23.900 | that are coming up now,

02:00:25.620 | gain power, I think will rebalance everything.

02:00:28.700 | And then there's, yeah, like you said, promising signs

02:00:31.540 | that it's obvious that the majority of people want freedom.

02:00:38.220 | And that means a lot of things.

02:00:39.460 | That means economic freedom.

02:00:40.660 | That means freedom to have a voice,

02:00:43.040 | freedom to move around,

02:00:45.660 | freedom to act in the way they,

02:00:47.980 | without reasonable sort of limitations

02:00:50.980 | by people that don't have their best interests.

02:00:55.020 | And I gain more hope from just regular people

02:00:59.700 | that are fighting and like demanding

02:01:04.340 | being able to have freedom of speech,

02:01:08.620 | or more specifically sort of resisting crude

02:01:13.380 | overreach of government in the acts of censorship,

02:01:16.460 | at least in the United States.

02:01:18.020 | And hopefully that percolates out to the rest of the world

02:01:22.660 | that's struggling on a much more basic level

02:01:25.340 | where people are being put in prison

02:01:26.780 | for the words they say, not just banned from Twitter.

02:01:30.060 | - Right, could be worse.

02:01:31.500 | - What are some lessons from your failures

02:01:35.900 | and your successes about what it takes to run a company?

02:01:40.100 | - I think one of the things that I've learned

02:01:42.980 | about leadership is that,

02:01:46.020 | I never really thought of myself

02:01:47.260 | as a very natural leader, to be honest.

02:01:48.860 | I don't think I was a natural leader.

02:01:51.580 | But so I always envisioned good leaders

02:01:54.060 | as like these military generals,

02:01:55.500 | like they seem so confident

02:01:57.540 | and they're just like bark orders,

02:01:58.980 | charge that hill and do this.

02:02:00.380 | And I was actually like more introverted

02:02:03.260 | and kind of, I wasn't really confident

02:02:06.740 | in the way I communicated.

02:02:08.060 | And so what I realized is that

02:02:11.940 | there's lots of different kinds of leaders.

02:02:13.140 | You can be any kind of CEO you want, right?

02:02:15.020 | I was kind of more of like a product technical focus CEO.

02:02:18.180 | And I preferred to sort of hear everyone's opinion.

02:02:21.740 | And it wasn't just gonna like render a decision in the room

02:02:23.780 | in some like kind of heated moment

02:02:25.100 | and like piss off half the people.

02:02:26.260 | I would be like, all right, I'm gonna go think about it

02:02:28.380 | and I'll send you my decision later today

02:02:30.660 | or tomorrow or whatever.

02:02:32.140 | And so I found ways to kind of make it work for me

02:02:35.020 | where I could basically, I always tried to avoid like,

02:02:38.600 | when people getting like super emotional about something

02:02:42.580 | and like, I think they're thinking

02:02:44.540 | their judgment goes down, right?

02:02:46.460 | And it's like never make a decision when you're angry.

02:02:48.500 | And so if I would always sort of try to get a sense of,

02:02:50.980 | are these people like trying to be right

02:02:52.260 | or are they trying to seek the truth?

02:02:54.660 | And you can do these little tricks like,

02:02:57.260 | okay, you argue that person's position

02:02:59.380 | and you argue the other one

02:03:00.380 | and like see if you can genuinely represent it.

02:03:02.820 | Now I know you're listening and these kinds of things.

02:03:05.380 | But I guess, sorry,

02:03:07.140 | getting back to your question about leadership.

02:03:08.540 | I think I basically just kept doing things

02:03:12.180 | that were a little outside my comfort zone

02:03:15.140 | and then my comfort zone kept getting bigger and bigger.

02:03:17.780 | You know?

02:03:18.620 | And so I think that's how you build confidence

02:03:22.060 | is you do the thing that's scary

02:03:24.940 | and it's like a little outside.

02:03:26.820 | And like when I first started Coinbase,

02:03:29.100 | I had never managed anybody.

02:03:30.220 | I would have been scared to death

02:03:32.060 | to have put out like a very controversial opinion like that

02:03:34.660 | and sort of, all right, 5% of people will go,

02:03:38.180 | you know, we didn't know what percent it was gonna be

02:03:39.300 | by the way, it could have been 1%, it could have been 50%.

02:03:41.380 | Like, but we went into it scary

02:03:44.100 | because it was a scary thing.

02:03:45.220 | I was like, I don't know, I think this is right.

02:03:47.540 | I'm just gonna do it.

02:03:49.420 | So if you do enough scary things,

02:03:50.940 | like you'll build the confidence.

02:03:52.820 | And I feel like I'm still on that journey.

02:03:54.540 | Every year or two at Coinbase,

02:03:57.060 | there's some big thing that comes out.

02:03:58.420 | It's like, oh my God, like I didn't sleep well for a week

02:04:00.620 | and like this is the next level, right?

02:04:03.580 | But that's how you learn and grow.

02:04:05.580 | - So you're still going up that mountain

02:04:07.540 | through the fog one step at a time.

02:04:09.340 | - Yeah.

02:04:10.580 | - Can I just quickly ask you about a couple other efforts

02:04:13.980 | that are super interesting that you're involved with?

02:04:15.860 | So first of all, a little bit more old school,

02:04:18.900 | fascinating effort of Research Hub.

02:04:20.660 | So what's that about?

02:04:24.300 | The GitHub for open science.

02:04:26.980 | - Yeah, okay, so basically I've had a chance

02:04:28.740 | to try to help a couple other companies

02:04:30.100 | get off the ground too

02:04:30.940 | 'cause I wanna see various efforts out there succeed.

02:04:34.620 | And one of them, I've always thought about like,

02:04:37.340 | why is scientific research not more like open source software

02:04:41.300 | or why couldn't it be much faster, right?

02:04:42.700 | And you've probably have seen this

02:04:44.780 | like in an academic setting, right?

02:04:46.020 | But there's all kinds of things

02:04:47.700 | that feel very antiquated to me about scientific research.

02:04:50.500 | Everything from the funding process and grants

02:04:53.740 | to how peer review works, to how you submit to journals,

02:04:57.620 | all the costs associated with journals,

02:04:59.580 | the people you'd think like you'd get paid for this

02:05:02.580 | or something and it would then be available

02:05:03.820 | to all the taxpayers for free,

02:05:05.140 | but no, they're like, they're all paywalled

02:05:06.700 | and there's like these big companies that have sort of,

02:05:09.380 | in my view, kind of held back innovation here.

02:05:12.020 | So, and the preprint servers like bioRxiv

02:05:14.980 | and archive.org have really helped this,

02:05:16.580 | but those websites, they look like they're kind of

02:05:18.580 | from like 15 years ago or something.

02:05:20.380 | - Yeah, it's like Craigslist or something.

02:05:21.780 | - Yeah, so anyway, one of the things I,

02:05:24.780 | once Coinbase went public last year,

02:05:26.340 | I had a little bit of liquidity and I was like,

02:05:27.580 | all right, let me find a small team

02:05:28.900 | and let's see if they can like go off

02:05:31.580 | and make something better here.

02:05:32.700 | So we have a prototype out there.

02:05:35.140 | It's at researchhub.com.

02:05:36.300 | People can check it out.

02:05:37.380 | And it's basically, you know,

02:05:39.700 | the first version is kind of like Reddit for science.

02:05:41.540 | There's like various hubs, which are like journals,

02:05:44.500 | but you know, you can publish papers there.

02:05:46.460 | You can use an electronic lab notebook

02:05:48.260 | to sort of have a modern day paper,

02:05:49.740 | which is not just a PDF that's static,

02:05:51.580 | but it's a living document.

02:05:53.580 | Ideally in the future, you know,

02:05:54.460 | you can get comments and feedback from people in there.

02:05:56.580 | You can update it over time.

02:05:57.980 | We want people to be able to share the code

02:06:00.180 | and the datasets associated with their research paper

02:06:02.660 | is not just a PDF.

02:06:05.020 | In the future, we want to make it even where like,

02:06:07.020 | you know, people can get funding for science

02:06:09.860 | through that site and even license out innovations

02:06:13.660 | that they've made.

02:06:14.500 | 'Cause the other thing I've noticed in life

02:06:16.380 | is that there's kind of like,

02:06:17.940 | there's a bunch of people working on science

02:06:19.220 | and there's a bunch of people building companies

02:06:21.100 | and they very rarely intersect,

02:06:23.340 | but when they do, you get the best things

02:06:25.140 | like SpaceX and Genentech and even Google.

02:06:28.020 | And like even Coinbase was based on a research paper,

02:06:31.020 | the Bitcoin white paper.

02:06:32.460 | And so most business people are like creating

02:06:34.900 | companies that don't have any scientific innovation.

02:06:36.780 | They're just like marketing based on, you know, whatever.

02:06:40.220 | And then a lot of scientists are making things

02:06:42.740 | which never actually benefit humanity

02:06:44.740 | 'cause they're not commercialized and turned into products.

02:06:47.540 | And so if we can somehow create a translation layer

02:06:50.660 | between those two groups and help them,

02:06:53.300 | you know, helps align the market forces,

02:06:56.260 | align scientific research to market forces

02:06:58.100 | so that they're more incentivized.

02:06:59.140 | Like if you discover CRISPR or something like that,

02:07:01.740 | like you should be a billionaire, you know,

02:07:03.220 | and like all the downstream implications of that,

02:07:05.540 | not going through some antiquated tech transfer office

02:07:07.860 | or whatever.

02:07:08.700 | And if you're an entrepreneur,

02:07:11.180 | you should be looking to commercialize

02:07:12.580 | the latest scientific innovations.

02:07:14.780 | And so that's kind of like the long-term vision

02:07:17.060 | for that site.

02:07:18.700 | I think it's just an early step today,

02:07:20.220 | but we've got like a really passionate community on there

02:07:22.580 | that are jumping into like, you know,

02:07:24.820 | computer science or longevity or various bio hubs

02:07:29.740 | or whatever, and like beginning to source

02:07:31.820 | the best innovations, but also discuss them,

02:07:34.220 | improve them, and publish through the site.

02:07:36.260 | - So I have a question about incentives,

02:07:38.260 | but first let me say for people listening

02:07:39.980 | that are outside of academia might not be familiar

02:07:42.700 | with an absurd situation.

02:07:44.300 | So there's journals, like you mentioned,

02:07:47.260 | and scientists publishing those journals,

02:07:51.640 | and the journals provide very little value

02:07:56.340 | except matching you with reviewers that are unpaid.

02:08:01.780 | And so in the digital world,

02:08:05.540 | they're providing basically almost no value

02:08:07.460 | except hosting your paper.

02:08:09.040 | And they put up a paywall and charge people to access that.

02:08:15.300 | And that charge is not like even Netflix fees.

02:08:18.500 | You're talking about a lot of money.

02:08:20.900 | So they're basically blocking your research

02:08:24.060 | that should be wide open from the world

02:08:27.060 | and creating a paywall.

02:08:28.420 | It's a fascinating like scam

02:08:30.620 | that's actually holding back.

02:08:32.300 | It's a shitty scam 'cause you're not making that much money.

02:08:37.300 | I feel like a definition of a scam,

02:08:38.780 | you should at least be making money,

02:08:40.780 | so like significant amount of money.

02:08:42.140 | You're basically making shady money

02:08:44.420 | and holding back all of human knowledge, okay?

02:08:46.860 | So that put aside, and people get a little confused

02:08:49.220 | because the journals aren't the ones paying the scientists.

02:08:53.420 | People think like the journals are somehow

02:08:55.820 | funding the scientists, therefore they have the right

02:08:59.960 | to put up a paywall.

02:09:01.140 | No, no, no, the funding is coming from elsewhere.

02:09:03.460 | Journals are the middleman that nobody asks for,

02:09:07.040 | especially in the digital world.

02:09:08.220 | Anyway, that said, there is a interesting kind of incentives

02:09:13.220 | for scientists, which is prestige and so on.

02:09:16.100 | So there's a thing with journals.

02:09:20.060 | If there's a prestigious journal

02:09:22.300 | and you pass the review process,

02:09:25.180 | you get into that journal,

02:09:26.660 | or a prestigious conference in computer science,

02:09:29.780 | then that's seen as a good thing on your resume.

02:09:33.460 | And not just your resume, within your community,

02:09:36.100 | that's a respected thing.

02:09:37.400 | Is there some way to achieve that same kind of incentive

02:09:40.700 | in the open setting of Research Hub?

02:09:44.760 | So like where I could say, I got X, Y, and Z.

02:09:49.500 | Like look, I'm impressive

02:09:50.820 | because this happened on Research Hub.

02:09:52.700 | - I think you're right.

02:09:53.540 | Like the whole academia progress track

02:09:56.920 | is about where you got published

02:09:58.900 | and how many citations.

02:09:59.860 | And it's kind of like a false economy of reputation

02:10:04.300 | because there's not real money backing it.

02:10:06.940 | And so I think we've thought about this a little bit,

02:10:10.260 | and I think the Research Hub team has an opportunity

02:10:12.220 | to do something here that basically says like,

02:10:14.900 | okay, I had the top paper for 2022 in biology in here.

02:10:19.900 | And you basically publish a list,

02:10:23.220 | a leaderboards of these,

02:10:24.060 | like the top for the month, the year,

02:10:27.600 | in all these different categories.

02:10:29.180 | Then actually, we should probably give out grants and awards

02:10:33.140 | in addition to that.

02:10:34.500 | Fund those people almost like fellows

02:10:36.340 | or even give out like, you know how like the Nobel Prize,

02:10:40.100 | there should be like a Research Hub Prize or something

02:10:42.080 | and like ship people,

02:10:43.940 | maybe even ship like a print version of a journal

02:10:47.740 | that is the top papers in each category

02:10:50.260 | in each month or whatever.

02:10:51.260 | And like people wanna put that in their wall in the lab.

02:10:53.820 | And like, so I do think we need to sort of change,

02:10:57.600 | I don't know, like the traditional folks in academia

02:11:00.000 | or science would probably think this is like crazy idea,

02:11:02.560 | but I think we need to change the culture

02:11:04.580 | to not celebrate getting published in paywall journals,

02:11:09.360 | almost like friends don't let friends publish

02:11:11.400 | in like paywall journals,

02:11:14.160 | like 'cause that's, it's just not helping humanity.

02:11:16.480 | So like, you know, it should be more prestigious

02:11:19.080 | to publish in an open science way and get the top spot.

02:11:23.940 | That should be celebrated above being published

02:11:25.740 | in whatever, I don't even wanna name one of them, you know?

02:11:27.780 | - Well, there's currently,

02:11:30.100 | the culture has already shifted

02:11:31.300 | to where almost everybody publishes on archive

02:11:33.660 | and by archive and so on.

02:11:34.900 | - Yeah.

02:11:36.100 | - But so that the culture is there on that,

02:11:39.060 | that scene friends don't let friends not publish open,

02:11:42.400 | but then the prestige thing is missing,

02:11:44.700 | which is like anyone can publish an archive.

02:11:47.860 | - Yeah.

02:11:48.700 | - That's actually a strong paper.

02:11:50.020 | Now, funny enough, even with the crappy systems we have now,

02:11:55.020 | word of mouth is powerful.

02:11:56.540 | Like you have a, like citation system is pretty powerful.

02:12:00.220 | So like you say, okay, this is a strong paper.

02:12:02.660 | We don't need reviewers.

02:12:04.060 | Our human eyes are the reviewers,

02:12:06.140 | like the community is the reviewers.

02:12:08.500 | So it's already, like that part is there,

02:12:11.020 | but it would be nice to have like, you know, nature level,

02:12:17.220 | like this is respect, this is a respectful accomplishment.

02:12:21.020 | - Yeah.

02:12:21.860 | - And something like a leaderboard,

02:12:23.740 | but a stable kind of system.

02:12:25.940 | - Yeah, and I should mention too,

02:12:27.620 | so there's a crypto angle to this too,

02:12:29.060 | which is, so Research Hub has a coin

02:12:31.100 | associated with Research Coin.

02:12:32.540 | And it's basically if people, you know,

02:12:34.380 | upvote your paper or like support it,

02:12:37.060 | you'll accumulate more Research Coin,

02:12:38.940 | which is basically like rep or like a reward token.

02:12:42.140 | And so that is a way to, I guess,

02:12:45.300 | measure the community's collective view of that paper,

02:12:49.460 | a form of peer review.

02:12:51.140 | And it can even be weighted by like the reputation

02:12:53.100 | of the people voting on it

02:12:54.140 | and that sort of thing over time.

02:12:55.780 | Yeah, I think the last thing I'll just say is that,

02:12:59.460 | so I think from a prestige point of view,

02:13:02.380 | it won't start off that way.

02:13:05.060 | It'll probably start off like being a little more quirky.

02:13:07.380 | Like, you know, like remember when YouTube first started,

02:13:10.100 | it was like people posting weird cat videos and stuff.

02:13:13.260 | And, but now like, you know,

02:13:14.420 | if you have a million subscribers on YouTube,

02:13:16.020 | that's probably better than getting like a TV show on NBC

02:13:18.460 | or whoever the traditional gatekeeper was.

02:13:21.020 | So my hope, it might take 10 years, 20 years, whatever,

02:13:23.460 | but I'm hoping that this can sort of be the new

02:13:27.140 | prestigious way that young people publish in science

02:13:30.060 | and it'll become to be viewed as more prestigious.

02:13:32.500 | The journals, the traditional journals

02:13:34.100 | will be viewed as old fashioned.

02:13:36.020 | - Well, it's definitely a system

02:13:39.460 | that could do a lot better.

02:13:41.440 | And there's a lot of incredible, brilliant people

02:13:43.380 | doing science.

02:13:44.620 | They deserve better, the better platforms.

02:13:47.500 | So another thing you're taking on and helping out with

02:13:50.260 | is this new limit, which is looking at longevity.

02:13:53.820 | What's the idea there?

02:13:55.660 | - Yeah, okay, so as you can see, I'm excited about science.

02:13:58.060 | Like I think, you know, science is sort of the,

02:14:01.120 | basically if you get scientific innovation,

02:14:03.300 | then you get better products

02:14:05.640 | and you get better economic growth.

02:14:07.100 | And then you get all kinds of like surplus in society

02:14:10.300 | that can go to arts and philosophy

02:14:12.500 | and like all kinds of stuff.

02:14:13.340 | But with new limits, so yeah, I kind of got excited.

02:14:17.700 | I started hosting some dinners with scientists last year

02:14:21.080 | and I was learning about all kinds of the latest stuff

02:14:23.620 | happening in bio.

02:14:24.620 | And there's a lot of really cool stuff happening

02:14:26.740 | with like CAR T cells and CRISPR and all these things.

02:14:28.900 | And anyway, one of the topics I started to learn more about

02:14:32.740 | was something called cell reprogramming.

02:14:35.100 | And, you know, people maybe have heard of this

02:14:38.680 | induced pluripotent stem cells,

02:14:39.980 | where you could take like a skin cell

02:14:41.380 | and turn it back into a stem cell.

02:14:43.220 | And Shinya Yamanaka won the Nobel prize for this work

02:14:46.860 | that was done in 2006.

02:14:48.980 | And, you know, it's kind of a crazy thing.

02:14:51.740 | You can turn one cell into another type of cell.

02:14:54.260 | Well, people recently have been experimenting

02:14:57.980 | with different types of transcription factors

02:15:01.260 | that would either not,

02:15:02.860 | you don't want a cell to go all the way back

02:15:04.100 | to being a stem cell.

02:15:05.560 | You can end up getting like cancerous cells

02:15:07.300 | and things like that.

02:15:08.120 | But you want it basically to the cell to revert

02:15:10.500 | a little bit earlier in its, you know,

02:15:13.380 | it would call it the Waddington landscape,

02:15:15.020 | but it's basically like,

02:15:16.620 | it'll start to act like a bit of a younger cell,

02:15:19.700 | but not to de-differentiate and become

02:15:21.860 | more like a stem cell.

02:15:23.180 | And so I decided this might be an interesting area

02:15:25.760 | to go fund.

02:15:27.020 | I think that that team has come together.

02:15:28.780 | There's like some really talented people

02:15:30.900 | who've come together to help get that off the ground.

02:15:32.560 | And they're basically building a platform

02:15:36.080 | that can test a lot of different transcription factors

02:15:38.820 | on different cell types,

02:15:39.840 | and hopefully find ways to rejuvenate

02:15:42.620 | different types of cells and tissues

02:15:44.380 | to extend human health span.

02:15:45.520 | I mean, the moonshot goal here, you know,

02:15:47.760 | the get to Mars is that there could be some therapy here

02:15:51.700 | that in, I don't know, 10 or 20 years that you take

02:15:54.260 | and from a whole body point of view

02:15:56.580 | is sort of rejuvenating tissue,

02:15:58.340 | not just one type of tissue like your immune system,

02:16:00.740 | but eventually your whole body, maybe even your brain,

02:16:02.560 | so that, you know, we don't have that issue

02:16:04.900 | where people who are older have trouble learning

02:16:06.520 | or they're more ossified in their thinking.

02:16:08.620 | To me, this is just, I always think about,

02:16:12.200 | you know, it's actually a little inspired by Elon, right?

02:16:15.540 | Is like, what are some of the biggest things in the world

02:16:18.060 | like that are probably high technology risk,

02:16:20.520 | but if they did work,

02:16:21.540 | maybe they're kind of low chance of working,

02:16:23.560 | but if they did work, would have enormous impact.

02:16:26.020 | I like the idea of trying hard tech problems,

02:16:28.380 | especially for people like founders like me

02:16:30.880 | who've made some money in software,

02:16:32.460 | which I think we're in kind of like a golden age of software

02:16:34.700 | so there's like fortunes to be made.

02:16:36.540 | But if you do make some money in that,

02:16:38.700 | my hope is people will like do atoms, not bits, you know,

02:16:42.700 | and try some of the harder things like in biotech

02:16:45.020 | or, you know, I guess he's doing cars and rockets and stuff,

02:16:48.460 | but anyway, I think we should try hard tech

02:16:52.500 | or, you know, physical science problems as well

02:16:54.660 | and see if that can advance for Team Human.

02:16:58.140 | - Yeah, so he's also doing bio with Neuralink

02:17:02.540 | and I feel like bio is tough 'cause it's messy.

02:17:07.300 | - We don't understand it as well.

02:17:08.340 | - We don't understand it.

02:17:09.420 | The risk is higher in terms of, not the risk is higher,

02:17:14.200 | but like you have to deal with the actual sort of,

02:17:18.220 | to get to human, to get to stuff where it could be therapies

02:17:23.220 | for actual human bodies is tricky

02:17:28.220 | 'cause you have to prove that it's safe, it's effective,

02:17:30.220 | all those kinds of things with FDA.

02:17:33.540 | I mean, it's just, it's tricky.

02:17:34.900 | It's very difficult.

02:17:36.140 | It's a long journey.

02:17:38.500 | I mean--

02:17:39.340 | - If I can give a quick plug.

02:17:41.700 | So yeah, I'm on the board at New Limit.

02:17:43.420 | We're hiring talented scientists that are interested

02:17:45.820 | in the cell reprogramming space.

02:17:47.040 | They don't necessarily have to be coming

02:17:48.860 | from like an aging background or anything like that.

02:17:50.700 | There's sort of a small group of people doing even--

02:17:53.100 | - So this is a new thing?

02:17:54.220 | This is, is New Limit relatively new?

02:17:56.420 | - Yeah, it's very new.

02:17:57.620 | There's a small team today,

02:17:59.580 | just a handful of people.

02:18:00.700 | And so we're hiring more there.

02:18:03.660 | If people are excited about that space, reach out.

02:18:05.580 | And same thing for Research Hub.

02:18:07.940 | There's a small team there that's really awesome

02:18:10.100 | that's doing more like software engineering,

02:18:12.380 | design, product, that kind of stuff.

02:18:15.020 | - What advice would you give,

02:18:16.820 | if you put on your old wise sage hat,

02:18:21.260 | what advice would you give to young people today?

02:18:23.980 | High school, maybe undergrad and college,

02:18:28.340 | about life?

02:18:29.580 | So like career, having a career they can be proud of,

02:18:34.220 | or maybe a life they can be proud of.

02:18:36.380 | - So people can do whatever they want to be happy, right?

02:18:40.460 | So there's not one way to do it.

02:18:42.380 | I do think that some people,

02:18:44.860 | a particular type of people out there,

02:18:46.460 | a lot of people actually,

02:18:47.300 | they want to have an impact on the world.

02:18:48.500 | That's how they get a sense of fulfillment, right?

02:18:50.980 | So, I mean, you need to have like health, physical health.

02:18:53.700 | You need to have good relationships.

02:18:55.020 | Like there's lots of things,

02:18:56.420 | but most people want to do something important.

02:18:58.420 | They want to have fulfilling work,

02:18:59.700 | a way that they can feel like they're contributing.

02:19:01.660 | I think a lot of people, young people today,

02:19:04.380 | are thinking like, you know,

02:19:07.380 | I should be an activist or something like that.

02:19:09.540 | And there's people in the world who have power,

02:19:11.460 | and a lot of people who don't, I don't have power.

02:19:13.820 | And so the way to change the world is to, you know,

02:19:16.620 | speak truth to power or like criticize power

02:19:20.420 | and try to pressure them to change.

02:19:25.420 | To me, I don't think that's the right way

02:19:27.260 | to actually have an impact on the world,

02:19:28.860 | because, you know, everybody has probably,

02:19:33.700 | I think people have more power than they realize.

02:19:36.860 | And by the way, it's easy to be a critic.

02:19:39.500 | It's hard to actually change these things and fix it.

02:19:42.220 | And so you'll get a lot of accolades from friends

02:19:45.500 | and things like that if you kind of go around criticizing.

02:19:47.620 | You know, it's easy to do.

02:19:48.580 | Like everything is broken and could be better,

02:19:50.900 | including, you know, stuff I'm working on.

02:19:53.420 | I find like, it's so frustrating.

02:19:56.100 | There's a million things I want to be better about,

02:19:57.700 | like what we're doing in Coinbase.

02:19:59.380 | So be the person in the arena, you know,

02:20:04.140 | like that Theodore Roosevelt quote,

02:20:05.580 | I think he said it right.

02:20:07.020 | Like, go chew glass and stare into the abyss.

02:20:10.220 | Like, if you really want to have an impact,

02:20:11.900 | either join a company that has a mission

02:20:14.620 | that is trying to fix the thing you're passionate about,

02:20:16.260 | or start that company if it doesn't exist,

02:20:18.980 | or start a charity if it's not suitable to be a company

02:20:22.300 | or whatever it is, but go try to be a part of the solution.

02:20:25.700 | Don't just, you know, criticize or be a part of the problem.

02:20:30.340 | My hope is that more people can, you know,

02:20:35.340 | realize that they actually can have

02:20:38.780 | a meaningful impact that way.

02:20:39.900 | And I think that to me, technology is actually

02:20:43.340 | one of the most important ways to improve the world.

02:20:45.500 | Like if you look at climate change,

02:20:49.260 | like a lot of the best ideas like carbon sequestration,

02:20:52.020 | all these things, it's a technology thing, right?

02:20:53.660 | If you want to try to fix education,

02:20:56.020 | it's like look at like Khan Academy

02:20:57.460 | and all the stuff going online, right?

02:20:59.140 | If you want to fix, you know, whatever,

02:21:02.060 | transportation and like the financial system

02:21:05.100 | and global freedom and like equality of all these things,

02:21:07.860 | like there's typically the way to get something changed

02:21:11.300 | in the world today is with technology.

02:21:13.340 | And so I do think people, it's very bizarre to me

02:21:15.940 | that there's this kind of like anti-tech thing going on.

02:21:19.260 | Look, nothing is perfect.

02:21:20.580 | Like if you create something new and like

02:21:22.580 | tens of millions of people use it

02:21:23.580 | or billions of people use it,

02:21:24.460 | it's like there's going to be some bad people

02:21:26.500 | who use it too, okay?

02:21:27.420 | And there's, you know, society is complicated,

02:21:29.540 | but like I think most of these things

02:21:32.020 | have been net positive because most people

02:21:33.700 | in the world are good, is at least my view.

02:21:36.260 | So yes, we can mitigate like the 1% of bad people

02:21:39.140 | trying to, you know, abuse something,

02:21:41.020 | but 99% of people in the world are good.

02:21:42.660 | And the way you can improve the world is with technology,

02:21:45.060 | joining companies, starting companies

02:21:46.460 | that are working on the right stuff.

02:21:48.260 | So I hope more young people do that.

02:21:50.940 | And just, if you're not sure what to do,

02:21:53.580 | like just get started with anything.

02:21:54.860 | That's how you learn.

02:21:55.780 | - And basically have the optimism

02:21:57.780 | that you have the power to do the change.

02:22:00.260 | So it's easy to distract yourself by being the critic.

02:22:05.140 | That's almost like acknowledging to yourself

02:22:08.180 | that that's all you can be.

02:22:09.600 | But basically everybody has the power to be the fixer.

02:22:16.180 | - I like chew glass and look into the abyss.

02:22:19.820 | That's much more fun than it sounds.

02:22:24.000 | What do you think is the meaning of this whole thing?

02:22:27.420 | Why are we here?

02:22:28.900 | - Life.

02:22:29.980 | - Yep, what's the meaning of life?

02:22:31.740 | What's this existence we got?

02:22:34.140 | You're trying to increase the amount of economic freedom

02:22:36.380 | on this planet Earth, trying to alleviate

02:22:38.260 | some of the suffering, but why?

02:22:40.460 | - I don't really think there is any point to life.

02:22:45.980 | You know, somebody once told me,

02:22:49.220 | you know, if you go into these like kind of

02:22:51.900 | really big existential questions,

02:22:54.600 | it can get a little scary,

02:22:55.700 | 'cause like you stare off the cliff

02:22:58.160 | and there's like, there's nothing there, you know?

02:23:00.560 | This one person told me one time, they were like,

02:23:03.940 | you know, Brian, you should probably snorkel, don't scuba.

02:23:08.180 | I guess, and I think they were trying to say like,

02:23:10.680 | some of my friends have done this, right?

02:23:13.340 | They'll go to like, you know, epic meditation retreats

02:23:16.900 | and like, they'll kind of come back with all this

02:23:20.260 | existential dread of like, what's the meaning of it all?

02:23:22.220 | And then like, as far as I can tell,

02:23:24.060 | we are just some organic molecules in the ocean

02:23:27.700 | started like dividing and replicating

02:23:29.980 | and the selfish gene and all this stuff

02:23:32.460 | like basically ended up here.

02:23:34.580 | And our only, it's some kind of like really naive algorithm

02:23:38.060 | that's just kind of trying to get us to survive

02:23:40.220 | and replicate and we have DNA just like every other animal.

02:23:43.580 | And so we happen to develop these like really cool

02:23:46.020 | neocortexes and so now we're sort of self-aware

02:23:48.600 | and we have all these big questions.

02:23:50.980 | And maybe we'll create another, you know,

02:23:54.060 | as computers get better,

02:23:55.020 | we'll create the simulation inside our thing.

02:23:57.080 | And I think it's cool, like we should basically,

02:23:59.780 | I just wanna keep watching the movie, you know, unfold.

02:24:02.660 | That's part of why I wanna work on like,

02:24:04.900 | New Limit is really cool 'cause it's helped.

02:24:06.420 | If people can live longer,

02:24:07.720 | whether that's uploading their brain to the cloud

02:24:10.660 | or, you know, basically through,

02:24:13.220 | we get biology to work or the strong AI to work

02:24:16.180 | or whatever, one of those two hopefully works out.

02:24:18.780 | And then we get to keep watching the movie

02:24:20.680 | and see how it all unfolds.

02:24:22.180 | I think that's fun.

02:24:23.380 | And so I don't know if that's like an answer,

02:24:25.640 | but I guess, I don't think there's any real purpose.

02:24:27.660 | So just try to have fun.

02:24:28.660 | - Well, the cool thing is that we get to write the movie

02:24:32.740 | as we watch it.

02:24:34.500 | - Yeah, that's exactly right.

02:24:36.620 | I mean, that's like the Steve Jobs quote and all that,

02:24:38.680 | where he's like, "Everything around you was invented

02:24:40.380 | "by somebody who just was like,

02:24:42.140 | "that this was a crazy idea they thought up."

02:24:43.580 | So once you realize you can kind of do anything you want,

02:24:48.580 | then that's what you start to go,

02:24:53.020 | you start to go try crazier stuff.

02:24:55.120 | I mean, this is another one of those areas where,

02:24:57.720 | not to get too out there, but like, you know,

02:24:59.080 | when you're, I think you can build your comfort zone

02:25:02.060 | around like people being upset with you.

02:25:03.980 | You can also build your range

02:25:06.940 | of what you think is possible, right?

02:25:08.180 | Like when I was in my 20s,

02:25:10.500 | I was like reading all these books

02:25:12.180 | about like self-improvement and goal,

02:25:13.860 | how to write down your goals and stuff.

02:25:15.080 | And my goals were like,

02:25:17.900 | "Someday I wanna make $100,000 a year,"

02:25:21.380 | or something like, and that was,

02:25:23.340 | and, you know, and it seemed like a little outlandish

02:25:27.700 | or what, and I wrote down these goals,

02:25:28.980 | like I wanna own rental property or something, anyway.

02:25:31.700 | And then I slowly started to get some of these things done

02:25:35.140 | over a couple of years.

02:25:35.960 | And so I started to think a little bigger.

02:25:38.460 | I remember one time I wrote down this goal where I was like,

02:25:41.060 | what's the craziest thing I could think of?

02:25:42.940 | I was like, "What if I wanna write,

02:25:44.620 | "I wanna start a billion dollar tech company."

02:25:47.300 | That's crazy.

02:25:48.220 | And I had never started like a million dollar tech company

02:25:50.940 | or any tech company really.

02:25:52.220 | So what business did I have writing that goal down?

02:25:54.980 | I remember I wrote that on a piece of paper,

02:25:57.460 | like probably every day for a year or something, almost.

02:26:01.620 | I don't know if it was every day,

02:26:02.540 | but like I wrote it down a lot.

02:26:03.700 | And so little things started to happen.

02:26:06.660 | I was like, "All right, well, maybe I should move back

02:26:08.460 | "to the Bay Area from Buenos Aires.

02:26:09.960 | "Maybe I should try to apply to Y Combinator or whatever."

02:26:13.060 | Like, and I started thinking about these ideas.

02:26:15.260 | And so whatever gets you fired up,

02:26:16.940 | it doesn't have to be like some company goal

02:26:18.780 | or startup thing, it could be anything, right?

02:26:21.620 | Maybe you wanna publish a book

02:26:22.620 | or like do something creatively or whatever.

02:26:25.140 | Anyway, you know, I think like within seven years,

02:26:31.140 | no, it's probably more like 10 years

02:26:33.260 | of me writing that goal down,

02:26:34.780 | Coinbase had a valuation over a billion dollars.

02:26:38.780 | So it was out of my realm of what was even possible.

02:26:42.860 | And then within 10 years,

02:26:44.620 | you can accomplish more in 10 years than you think,

02:26:46.640 | less in a year than you think.

02:26:48.460 | So now I'm like, "Okay, what's the next goal?

02:26:51.580 | "What's the crazy, okay, maybe I wanna get a billion people

02:26:55.520 | "accessing the open financial system

02:26:57.460 | "through our products every day."

02:26:59.620 | You know, that would be cool for humanity.

02:27:01.660 | And that's a pretty crazy goal.

02:27:03.460 | Like it's only 8 billion people or something, right?

02:27:05.060 | So the one out of eight.

02:27:06.260 | Or maybe I can radically,

02:27:09.700 | like if I make some like the right investments

02:27:11.980 | or whatever, I can like help radically extend

02:27:14.860 | human health span or whatever, right?

02:27:17.360 | So try crazier stuff.

02:27:21.220 | I don't know, even if it doesn't work,

02:27:22.480 | like hopefully you'll advance the state of affairs,

02:27:27.480 | like something interesting will happen.

02:27:29.060 | And so most people today,

02:27:31.100 | they look at people trying this stuff and they're like,

02:27:33.380 | "Oh my God, they're so, they're a genius."

02:27:35.300 | Or they're an idiot, like one of the two.

02:27:38.540 | Neither one are true.

02:27:39.540 | It's just like anybody can start

02:27:41.980 | by thinking about what they want and then like go for it.

02:27:45.180 | And then once you get that,

02:27:46.340 | like go for something a little bigger

02:27:47.460 | and like you just have fun with it.

02:27:48.860 | - And the universe is a way of smiling

02:27:51.700 | and helping you out if you just write it down

02:27:55.220 | and you dream big.

02:27:57.100 | There's something about just karma,

02:27:59.820 | about the energy you put into this world.

02:28:02.980 | Other people will help you out, doors will open.

02:28:05.260 | You'll notice that the doors opened

02:28:07.460 | and you could actually have a shot at making it happen.

02:28:10.580 | It's a funny world.

02:28:12.260 | - Yeah, I mean, I don't really subscribe

02:28:14.380 | to all like the woo-woo interpretations of this,

02:28:16.020 | but my very rational brain interpretation of it

02:28:18.340 | is that if you just wake up every day

02:28:20.180 | and write down like what you want to get done

02:28:22.140 | and towards your longer goals, your larger goals,

02:28:24.380 | it's just on your mind that day.

02:28:26.540 | So you start to notice opportunities

02:28:28.020 | and you think about it more.

02:28:29.340 | - So Brian, thank you for dreaming big.

02:28:32.060 | Thank you for doing what you're doing,

02:28:33.420 | doing incredible engineering at scale,

02:28:35.620 | trying to help out people from all over the world

02:28:39.580 | and actually helping me personally get more into crypto

02:28:43.340 | (laughs)

02:28:44.660 | just 'cause it's so easy.

02:28:46.340 | So thank you so much.

02:28:48.020 | And thank you so much

02:28:49.580 | for giving your extremely valuable time today

02:28:51.900 | to this awesome conversation.

02:28:53.300 | - Thanks for your awesome podcast.

02:28:55.020 | I love it and I listen to it often.

02:28:57.540 | - Thanks for listening to this conversation

02:28:58.980 | with Brian Armstrong.

02:29:00.500 | To support this podcast,

02:29:01.700 | please check out our sponsors in the description.

02:29:04.300 | And now let me leave you with some words

02:29:06.180 | from Benjamin Franklin.

02:29:08.300 | "An investment in knowledge pays the best interest."

02:29:12.980 | Thank you for listening and hope to see you next time.

02:29:15.900 | (upbeat music)

02:29:18.500 | (upbeat music)

02:29:21.100 | [BLANK_AUDIO]

Brian Armstrong: Coinbase, Cryptocurrency, and Government Regulation | Lex Fridman Podcast #307

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