🎙 91 - Brian Armstrong and The Future of Coinbase

welcome to bankless where we explore the frontier of internet money and internet finance this is how to get started how to get better how to front run the opportunity this is ryan sean adams i'm here with david hoffman and we're here to help you become more bankless david brian armstrong on the podcast ceo co-founder of coinbase what an episode what a conversation what were some of your thoughts coming out of that i really liked the way that we actually structured the podcast i started talking

about brian the human brian with the the person with the values and visions and then turn that right into how that turned into a company called coinbase you might have heard of it uh and then of course a number of the things that have gone around in the recent news cycle coinbase's fight with the regulators their new nft platform their new nba and wnba sponsorships a lot of things happening in the world of coinbase and also a lot of things happening around the world of coinbase including banks feeling scared mark zuckerberg turning facebook into

meta and then of course we finished again with the conversation about brian armstrong towards the end as a crypto veteran of the 2010s what he thinks the 2020s will look like and why he seems to be immune from this cycle of founders that create something get wealthy and get lazy and then get disrupted he that doesn't that's not brian like he coinbase is yet to be disrupted so what keeps him going why why is he still here fighting this fight um and overall just a nice look into both of the person behind the the company and also the

company itself yeah i love that and i love by the way you just patted ourselves on the back for a brilliantly structured podcast agenda it wasn't that david like i really do think that it was a it was a fantastic conversation got to know brian a bit more got to understand coinbase that's really what i was looking for out of this conversation is i sort of wanted to um not explicitly ask the question but i sort of wanted to find out like is coinbase going to be the d5 friendly exchange the d5 friendly crypto bank or should we wait for another that was kind

of my question going into this and that that's very much why we started with with values and i feel like we've got a ton of values the bankless movement has a lot of values alignment with where brian was going to go and the thing that probably impressed me most was his answer when we asked him would you ask him the question of hey brian how can we make sure that coinbase doesn't just become one of the legacy banks that we all hate already right and his answer to that was exactly what i hoped he

would say right um yeah you know maybe to his detriment i guess like to his own it was not the the rational self-interest it was more the the founder willing to take a risk like here's how i hope the world plays out sort of answer uh and i've got a lot of you know respect for for that type of an answer so overall this is very bullish i think on coinbase's dedication to the bankless ecosystem the d5 ecosystem open credibly neutral protocols the things

that we care the most about on our program so yeah i think you guys will really enjoy this episode in unpacking all of these thoughts we also talked about you know nfts as well the new nft platform we touched upon the regulatory situation in the u.s and guys let's not forget brian has been here since the very early stages too okay before crypto was cool at all like it was not cool when brian ryan was trying to build coinbase at the very beginning it was not cool i mean and so brian is

definitely uh you know some people have called you and i uh og's here recently i've seen that on twitter okay we are not oh geez okay brian armstrong is an og all right um this is somebody who's been in the space building from the very inception the thing the final thing i think i was left with is um this is not a trader okay this is not somebody who is in this for just the money okay this is somebody who is a builder in the space and cares about builder things it's a very

long-term oriented sort of focus and i think that's pretty unique even if you compare you know coinbase to all of the other crypto banks in the world it's kind of unique and there's a lot of that dna in the company itself so anything more that you want to say david or should we get right to it yeah there's so much more i want to say especially exactly what what you're talking about with why brian was interested in making sure that he doesn't turn himself or coinbase into another bank but we'll have to save that for the debriefing

yeah yeah you like that ryan and i spent 20 30 minutes just kind of debriefing unpacking the episode what we thought of it what we thought well our thoughts about the episode itself and that goes out to the premium subscribers of bank list so if you are premium subscribers stay tuned for that debrief lots to talk about there and if you want these debriefs you can go and sign up for the premium version of the bankless newsletter where you will get the private rss feed where you can hear our debriefs every single monday and with that i think we should go right into the conversation with brian armstrong but first a moment to talk about some of these fantastic sponsors that make the show possible

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is an unknown figure in crypto this is brian armstrong he is the ceo and co-founder of coinbase brian it's fantastic to have you on bankless how you doing sir doing great thanks for having me guys i've been a listener for a while and just been very impressed with all the content you're putting out there so thanks for having me well that's awesome i guess i would say join the mutual admiration club because i've been a coinbase a customer for quite some time in fact i think a lot of people listening to this podcast um will probably recognize coinbase as maybe like the first place they actually

got into crypto that was certainly my case my first bitcoin buy ever was on coinbase and i remember at the time um you i i didn't really know too much about crypto i was kind of sketched out by many of the other exchanges out there and coinbase really made the experience feel safe made it feel easy and it got me over the hump so i i guess i would start by saying brian thanks for building coinbase man love the product it's great love what you've done with it thank you i appreciate that yeah we've helped get hopefully millions more people into crypto which has helped the

whole space and uh it's just the beginning so hopefully you know this space just has taken off in a crazy way in the last three four years since we helped people get a little bit of crypto and now our our next big challenge is how do we get people to actually go use that crypto and all kinds of all these all these novel ways and make that just as simple as it was the first time you wanted to buy it yeah that that's super cool we want to discuss a lot of that now you know maybe first let's take you uh down memory lane a little bit just to talk about how far you've come so coinbase as i understand it started in uh 2012 or so

this is relevant news not the first time you guys have been top of the charts in terms of the app store but you top the charts last week coinbase sitting at number one in uh the iphone apple iphone charts um but i want to take you back to like maybe uh 2013. um my friend dan uh tweeted this out a while ago and i just remember reading this this is a picture of you at a coinbase booth and i think you were like single manning the booth maybe at a a um a conference maybe a consensus conference um you know i don't know nine

years ago or so eight or nine years ago so um tell us about the journey right so like i feel like coinbase has had to get a lot of things right in order to get from this single person booth to number one on the app store so number one you have to be in the right place right like which is you know crypto so you have to be right on that you also had to uh have kind of the the timing right about things um and then you also had to to execute so take us from maybe all the way back here to to now where you are

how did all of this happen brian yeah well first of all there so there was three of us there it was myself fred ursum and then olaf carlson we you can see on the left there in the gray t-shirt is that olaf right there yeah he later went on to found polychain and um so it was just us three that we were the only three employees of the company um those gray t-shirts we were giving away there you know was some kind of terrible uh design probably that i threw together at the last minute um got you know probably off 99 designs or something like that

and if anybody still has one of those actually it'd be funny to post like on twitter they're probably collectors items now but um you know it was a very scrappy operation as you can see we had just a couple t-shirts in a little booth um most of the companies who were at that that original uh bitcoin conference you know don't exist anymore but people are still around in some way shape or form and so it was like it was it felt like um the chaos computer club if you think about the early days of like steve wozniak and steve jobs and anyway it had a very kind of um

you know kind of altered vibe to it that was a little weird but it was very cool and so how did we get from there to here i mean so many steps along the way i mean basically we just we we were three people at that time just trying to make something that customers wanted and the original idea that i had for coinbase was when i first read the bitcoin white paper i was like hey this is this is about this is cool it's kind of like the internet it's a it's a new global decentralized protocol for moving information or not just removing information around but for moving value around and as somebody who had studied

economics and computer science and was kind of excited about creating more freedom in the world that really caught my attention and so the first thing i could do i thought to do was the only thing i'd think of to do was all right well this technology is really cool but how do we make it easier to use so why don't i make a really simple hosted bitcoin wallet that was the very first idea i had and my analogy at that time was like kind of like github you know is a very simple way to use git or gmail is a simple way to use email it's all hosted it's in the cloud so you don't have to worry about security and backups and i had this thought like you know someone's

probably gonna make a bitcoin company like that like the gmail for bitcoin and i started tinkering around with it on nights and weekends and applied to y combinator and so suddenly we had a little bit of seed funding we had two employees and here i was at this conference so you know right around that time uh we weren't we really didn't have any traction we had no users i called people who would sign up for the site you know i'd post a link on reddit or somewhere like that hey come check out this bitcoin wallet i'm making and some people would sign up but they would never really come back and use keep using the product

and so i called a couple of the people who had signed up i actually just emailed them and said hey i built this app can you can i get on the phone with you and i remember asking them um you know why didn't you come back and people said well i love i thought it was pretty good but like i don't really have any bitcoin and so i didn't have any bitcoin to put to put in the wallet i remember asking them at one point a little light bulb went off and i was like well if we put a simple buy button in there with that which you have bought some and they're like yeah probably um because it's kind of hard to get and so that led us on a bit of a journey to go get a bank integration and figure

out some compliance stuff and integrate with an exchange and eventually made a very simple buy button and from that moment coinbase started to really grow quickly and it actually got to a place where we were not pushing the boulder up the hill every day the boulder started to roll down the hill and we started to chase after it as fast as we could you know with customer support inquiries and keeping the website up and getting enough working capital into the business to keep it running so that was how it got started i'll pause there because there's a million other things to get to where we are today but um that was the beginning yeah i mean i i think we're going to

talk about a lot of those those dots and like where we are today and also where you're going but like i'm also curious about this thread because this is also i think a conversation a little bit about about you brian like you know why you founded coinbase and and the reasons for it and the values your dna that's that's kind of imbued in the company one thing that's interesting about that story is so olaf was at the booth you know fred fred was at the booth they have both gone on to fund incredibly successful uh firms um like uh in the investing space like funds in and

of themselves which is absolutely fantastic um you've stayed at coinbase though and you've continued to build so i guess my question is like why did you start the thing in the first place and what's made you stay yeah great question so i think the thing that made me start it in the first place was that i i read the bitcoin white paper in like december of 2010 and it it basically captured my attention in a really profound way it i remember having this thought like wow this might

be the most important thing i've read in in five ten years and the reason that that happened was a few things one was that i was always very passionate about this concept of economic freedom you know i had i had studied a bit of economics i had read some iran you know i was like very passionate about this idea of like if we give people basic ability to keep the upsides of their of their labor and made the global financial system more efficient in terms of how people you know generate wealth keep wealth have a stable currency how do they participate in global trade

property rights how can we make that and i was like that that seems like this kind of secret hiding in plain sight that like what if the world had just better financial infrastructure and property rights and we were able to somehow inject that into all these countries around the world so i hadn't quite phrased it like that in my head but that was sort of the inkling that i had at that time where i was really excited about it and then the other thing was that i had always felt like i had been born a little bit too late to really start a great internet company um because the internet was coming of age as i was in high school and whatnot and by the time i graduated there was like you know

there was google and amazon and paypal and all these things and i it sounds very silly now to say but at the time i was like man maybe how often does an invention like the internet really come along i wish i had been there in the formative stages of the internet to start one of the early internet companies that would have been so cool and so when i saw the bitcoin white paper i was like this sound this is like maybe the next internet you know and i had always wanted to be an entrepreneur even high school i was starting little things with my friends um most of them were not very successful but the bitcoin white paper was this moment where i was like all right i might be crazy my

friends all think this is kind of silly um but i want to start something that's impactful and has hasn't has an impact on the world and this feels like it might be the next big thing and it fits just it just aligns with my values like i want i want there to be more economic freedom in the world so this could be the kind of thing that i could get into for like 10 20 years or more so then you asked i guess why am i still here yeah um so it's fun i mean not every day is fun right there's parts of it that suck uh but um for the most part it's fun because it scratches an itch for me

which is i like learning new things and being the ceo of a company is like always pushing you outside your comfort zone to some new challenge i also love building things with technology that's kind of one of my great passions in life as a you know i studied as a computer scientist or as a software engineer um and i just i just love building things with technology as a way to improve the world like that's even if um you know i retired or i was like stuck in a cabin by myself in the woods for like 10 years i probably would just try to build things that's like who i am and so it scratches that itch and it

basically as coinbase grows we have more and more resources and people to try bigger and bigger things to try more ambitious things to try um more impactful things you know i i want us to eventually get to be having a billion people accessing this open financial system through our products every day and that's fun so as long as it's fun i don't see myself changing on that dimension um but i'm really happy also for a lot of the early people at coinbase including fred and olaf and and dozens of others who went on to start crypto investment funds other companies in the space like one of the things i'm

really proud of is that coinbase has spawned a lot of startups in the crypto space and um that to me felt feels like okay we had this nexus of culture in the very very early days which helped educate a lot of people about this and then they went on to do even greater things and that's by the way that's still true today in an even bigger way we have so many people like coinbase ventures is our investment arm we made like 47 investments in the last quarter like in the last three months of people starting crypto companies and a lot of those were like connected to coinbase or former employees of coinbase so i feel

like the ecosystem is just in the very early days it's just you know the coinbase mafia keeps growing out there yeah it definitely does i mean we've spoken to a number of members of the coinbase mafia i guess antonio the founder of dydx maybe most recently but uh you guys are definitely uh you know spreading um curious curious about values right so you mentioned sort of that the feel of like uh circa 2013 in crypto where it felt sort of homebrew compute club sort of felt like very you know chaotic and very interesting sorry homebrew that's that was the name

of it the chaos is something else yeah yeah yeah yeah so it's like so i i i want to ask a question about like so i think people come to crypto for different reasons right in in like bank list we often class we there's tourists there's sort of mercenaries and then there's like settlers right and some people are here for the money some people are here for the tech hard problems that sort of thing some people are here for the values right and i i'm curious to hear because i i think you can really uh plot the trajectory of an individual based on the reason that they're actually here um

i recall re reading a uh an interview i think this was forbes of uh an exchange founder this was a a recent forbes article in october uh and uh the interviewer i asked him the questions like hey if you if you could abandon crypto and just trade like uh orange juice futures you know would you do it uh and uh his answer was yes right like i'm kind of here for the money right now i want to give that money to philanthropic philanthropic uh causes i believe in altruism but i'm not actually here for

crypto values so i'm curious when it comes to brian armstrong as like the reason you're in crypto and you had to rate money tech and values which comes first on your list yeah so i think it started with values for me um i love that i love the tech also i mean look money is money is great i think that it gets a bad name people think oh well it's just profit driven i you know i'm a capitalist at heart i think probably a contrarian view even in today's climate but i think capitalism is a force for good for the world and um

if you accumulate capital you can do even better things to improve the world so i don't want to shy away from capital at all but the thing that that certainly got me excited about crypto in the first place was the values it was really this idea that um i it just never made sense to me like why does every country have some small number of people with their fingers on the dials manipulating the currency that seems like a huge conflict of interest especially since we got off the gold standard in the 1970s with nixon and all that and actually i spent a year living in buenos

aires argentina in 2009 and i got to see firsthand what it looks like a country that had gone through hyperinflation where it was not just a little bit of an issue it was like it was a massive issue and inflation is like this really insidious thing because it actually erodes well from the poorest people in society like you know wealthy people can buy assets that adjust for inflation like real estate that's that's guaranteed scarcity or they can buy stocks or whatever but poor people are holding their money in cash and it's really like a tax on the poorest people in society so it's this completely unethical thing um it's

hiding in plain sight like most people in the world don't really quite understand or appreciate what it is because they've never lived in a higher inflation country like outside the u.s um although frankly you know the u.s may be in danger of becoming a higher inflation country here which is something we could talk about too but um that was something you know i also i had worked at airbnb as an engineer and they were they were trying to move money into and out of 180 countries around the world uh for the for their business and i got to see just how inefficient it was and if you compare it to things that we know of and use in tech like

email or whatsapp or web pages or whatever you know if you send a whatsapp message it goes anywhere in the world it doesn't care what country you're in um not every country is using their own proprietary messaging system you know that that would just be silly um there's not a tax at the border when it crosses and it arrives instantly right but money is not like that it's like every country of the world has their own proprietary system it's like not super interoperable with the other countries there's a high fee whenever you move the money there's also delays and so i just think of it as this huge unnecessary friction

uh on the world economy which is how money moves and how everybody's on a proprietary system usually there's a couple oligopoly players in each market who um control payments into and out and it's a lot of corruption too it's just like in a lot of countries you know they they're not issuing bank licenses anymore like you need to be the cousin of the president or whatever or bribe somebody to actually get a bank license in a lot of countries and so this corruption basically just hurts the idea of good property rights and a well-functioning economy and it just i experienced that as an

entrepreneur i experienced it at airbnb i experienced it while living in buenos aires argentina and so i had just like kind of felt it viscerally that this was unfair you know and so um that's what got me excited about crypto i was never really a trader or anything like that to be honest i was more of like a tech guy um i still to this day like we have we have a huge institutional business and i go to wall street and i talk to all these firms that are on boarding and now like big institutional traditional players are all moving a bunch of money into crypto and frankly it's they speak like a different language i'm still like

trying to learn the language after you know many many many years and i have a bunch of amazing people on our team who come from that world and are able to grow that part of our business but um i yeah i i don't really actively trade crypto either i just i buy and hold um you know i'm in the camp of like i i never really want to sell big uh bitcoin or other crypto that i own like unless i need to buy something um specific so i i feel like this is the future of the financial system um i think in 20 years it'll be a substantial portion of global gdp and i'm just i'm

in it to create more freedom that's that's what i'm all about so there's no brian armstrong meme coin uh portfolio dgen portfolio out there then you're a buy and hold guy uh no i mean look there's a lot actually one thing that kind of bugs me about the crypto industry at times is like i do think there's too much focus on like short term thinking and get rich quick and all that like the lambos and all that i think it's i think it's unhealthy um because first of all a lot of people are just going to get in for the wrong reasons and then something's going to crash and they're going to lose money and that's not good for any of us that's

what really pisses off regulators and people like that as they come in hey this consumers aren't being protected right so i've always tried to think of this as long-term thinking how do we ensure that consumers have appropriate disclosures how are they making it you know well-informed choices like dollar cost in average in with a small amount of your net worth and hold for the long term and how do it's not really about the speculation too it's about how do we actually use this stuff for more and more parts of the economy because as we get more and more people actually using crypto everything else makes sense it's no longer it's no longer speculation and

the good news is that's finally happening i can't i can't tell you how many years i would go to conferences and people would ask me these questions like so when are the use cases coming you know and like nobody asked me that question anymore tens of millions of people in the united states alone and not mention the world are using crypto for a lot of stuff now so i feel like that that ship has sailed which is really good brian one of the themes we like to explore the most on bankless is how the the values of the person impacts the things that they create whether that's

networks or companies in your case so how have your values that you've learned throughout your your time in argentina and you know just being being a human in this world how has that come to impact the the drive and the vision of coinbase because coinbase is very famously a tunnel vision company as in they have the future of the world that they want to see manifest and then have that you know future version actually be manifested so how have your values come to become instantiated inside of coinbase and then what are coinbase's values if they at our i are different than yours

yeah that's a great question so you know i think actually companies really demonstrate the values of the founders not all companies have founding ceos still because they they move on some sometimes but really especially in startups and any company that still has a founding ceo there's a there's a very direct link often to the values of that person i think that's true in our case as well so one of those examples of our of our values and by the way you can look up online we we used to distinguish these are our values these are this is our

culture doc i eventually just combined those and so now we call it just our culture doc you could if you if you google coinbase culture you can find a list of them but some of the areas i'll just talk about how those manifest inside the company so one of them is this idea of long-term thinking and just not cutting corners so we really try to be the most trusted brand in the space that means focusing on cyber security it means focusing on um compliance proactively working with regulators it means not trying to like add every um coin under the sun we were very thoughtful about

like doing rigorous analysis about securities laws and compliance and all this kind of stuff by the way to our own detriment there sometimes there was there was times where i would have said man can't we just make everything available and let the market decide and we'd have more innovation but you know we do want to create trust and so it's always i think you know taking the balance of those other stuff that came from me so i i love efficient execution i love it when um companies get rid of bureaucracy people get a lot of high quality work done quickly they do that in a bunch of

ways they do it by not letting a bunch of tech debt accumulate they do it by having really clear communication like one thing you'll notice if you come to coinbase is almost everybody is a very clear and concise communicator i'm kind of obsessive about that i also love this idea of companies companies really are only as good as their products and the products come from the people that are there and so we try we have this idea of like championship team at coinbase we try to just only hire people where we're hell yes you know it's not like if you're not a hell yes you're no in terms of hiring i mean there's a bunch of others but one

last one i'll mention is that i really love this idea of continuous repeatable innovation and so a lot of companies i think they they get one product to work and they have they're kind of a one hit wonder and they're like okay let's just scale that thing and i really wanted coinbase to be a multi-product company that kept building new stuff i was very inspired by like google and amazon in this regard and so what we do is um we take 10 of our resources and we put it towards venture bets or like moonshot type bets and so a lot of the a lot of things have come out of that like um coinbase wallet our self

cus custodial wallet came out of that coinbase commerce we're launching our nft thing next and so i never want us to be a company that kind of gets complacent and rests on our laurels and says oh we're so great because this thing is growing around the world it's like no technology always moves faster and there's always going to be some new thing on the horizon that's going to come disrupt us so let's always be building the future you know with 10 of our resources while we're putting the rest towards more adjacent bets or the existing core infrastructure you don't want to neglect that either so those are some of the values that

have crept in that it kind of came from from me and the early folks one of the hard things about coming to understand how this industry works and what it is for for people who are just learning about it is that the definitions and lines around crypto are very very blurred like is it a security is it a commodity uh and that's not just a conversation about the assets but also about the companies inside of the space as well uh and so uh i want to ask with the vision of coinbase now like kind of you know in the listener's head what does coinbase want to be when it when it grows up in the next five ten years

because is it a bank is it is it a tech company like now you guys have this nft platform you would never see a bank have an nft platform uh and so like what is coinbase and what what is it trying to aspire to be when it is in its you know maximally successful version of itself yeah yeah so i think of it as a spectrum you know there's like there's financial service companies on the left like like banks and then there's tech companies to the right of that and then if you go even further there's crypto companies i think crypto companies are like the next evolution of

tech companies and so we want to be a crypto company um i'd rather be a tech company than a financial service company but i'd rather be a crypto company than a tech company and i think the best tech companies are going to all become crypto companies so in your mind brian this is like an evolution right it's like bank tech company crypto is kind of a long an evolution you you don't see coin bases being somewhat in between a bank in a financial company you see it being sort of this this third thing this more evolved state is that right yes and that