Relentless
00:17:17 · Brian Armstrong
[00:17:17] S0: Yeah. Well, Fred Ehrsam, who co founded Coinbase with me, I mean, he's he's a beast. You know? And there's a lot of things I saw early on as we started working together. But I think the key thing that made me... I'll I'll talk about that in a second. I think the key thing that made me wanna give him more equity was I knew we were just starting out on this journey. He had... We had tried working together for a few months or something like that, and I was like, okay. This guy is the real deal. Like, he's... This is going much better than I expected. And I knew the company was gonna go through crazy ups and downs. And, you know, if I ever... If I felt... I knew... I was basically preempting this moment where there was gonna be a big down, and if he didn't feel like he had real ownership, then he would probably... He would bail or whatever. You know? And so I was like, okay. I... If this is the real deal, I gotta get this guy even more bought in. I I like Fred Wilson's comment, and it made... It makes me sound, like, magnanimous. I think it was... It... You know, it was all mutually beneficial, but that's the point of, like, building something with someone is you can actually... It's greater greater than the sum of the parts of what you could do individually. But, yeah, what I noticed with working with Fred early on, because Coinbase had just come out of Y Combinator. Fred was really the first person that I connected with, and we're like, all let's try working together for a few weeks. And he started adding value from day one. I mean, had studied computer science, but he also had done FX trading at Goldman Sachs. He deeply understood finance. He was a jack of all trades. So he was just like, I'm going to start recruiting people. I'm going to start doing customer support. I'm going to write some code. And then he also started doing a bunch of stuff that I didn't even think of, which is like analyzing the flow of funds through the app. And he came back one day and he was like, I think we're losing money on every sale of Bitcoin. And I'm like, how could that be possible? And he whiteboarded the whole thing out, and then there was time value of money on this step and blah, blah. And I was like, oh, my gosh. He's right. So this was an... That was just one example. The other big thing was his work ethic.
00:19:06 · Brian Armstrong, Ty Morse
I mean, we were there till, like, you know, one or two in the morning every night, just working crazy hours, and he was all in for that. He's he's a very intense competitive person, and when he puts his mind to something, there's, like, nothing stopping him. And I think that relentless drive was really critical to Coinbase's success. And, yeah, I mean, Coinbase wouldn't have succeeded, I don't think, without Fred there in the early days helping get it off the ground. [00:19:28] S1: What do you think that he did that you just could not have done on your own?
00:19:28 · Ty Morse, Brian Armstrong
[00:19:28] S1: What do you think that he did that you just could not have done on your own? [00:19:32] S0: Yeah. So I think, you know, I was definitely still a little bit in my a little more awkward engineer introvert phase. Like, was writing a ton of code, and I was... For, like, half the day, I'd be, like, locked in, you know, like, headphones in and just trying to keep the site going, and I was writing a ton of code. And then the other half of the day, would try to go do all the million other things that we all had to go do. And Fred was a really nice balance to that. He was often kind of like external facing. He was really kind of like shielding me from a bunch of stuff that had to be done where it was like, okay. I'm gonna go talk to these 14 investors, and, you know, I'm gonna go put on a suit and talk to these regulators. And he would just... He would do anything. And so anyway, we we both could do these things, but we each played to our strengths. And eventually, I stopped writing so much code, and I was like, alright. Let me let me try to lean into that, some of these other duties as well. But, yeah, he he was a perfect, like, cofounder in that sense of just willing to do anything, get shit done, and it was super collaborative. [00:20:32] S1: So the exact quote is all the decisions in the early days. Me and Fred would just get in a room, hash out the options, choose the least bad one, and move forward. What were some of those decisions that you had to make that were just the least bad ones?
00:20:46 · Brian Armstrong
[00:20:46] S0: I mean, I remember one of them was the decision to go get a bunch of money transmission licenses. I don't know. It might sound like kind of in the weeds, but... And there's probably, like, four or five of these kind of things every week, right, that were not the easy decisions, but the the the hard ones. And, you know, I remember we we launched the product under this legal understanding that we were not a money transmitter, but we felt as we grew in scale, we'd just get more and more scrutiny, we eventually had to go get it. And I remember we had a lawyer at that time who kind of told us, I don't think you need this. Like, why don't you guys just fly under the radar for a while? And we and we made the... We said, that doesn't sound right to us. Like, we wanna start investing in this thing now because it would it would decrease legitimacy. It would help us land bigger clients. And they said it would take about $5,000,000 and maybe three or four years to get money transmission licenses in all 50 states in The US, and we made it kind of contrarian bet at that time to actually go and do that. As a young company. It was a huge percentage of what we had raised. It was a major amount of work. Some of the states came back and said, we don't even know what Bitcoin and crypto is. Like, we're not going to give you the license. And we said, well, what if we were storing dollars? We're doing that too. Can we get the license for that? It was such an interesting meeting of like 50 different states with their own culture and everything and trying to understand... Get them to understand what we were doing. I mean, that was just one random example. A lot of it was the people stuff. It's like, okay. These two teams aren't getting along. So do we fire this one or this one or both? You know? Because, like, they're just refusing to work with each other. So... Yeah. I'd say the personnel decisions were, like, some of the harder ones.
00:22:23 · Ty Morse, Brian Armstrong
[00:22:23] S1: How did you kinda sort that in your mind and get better at making those personal decisions over time? [00:22:28] S0: I think the first thing was we had a real scarcity mentality for a while about people. And, you know, I think to a large degree, that's healthy. If you find great people, you have to really work to retain them. But we were such a scarcity mindset because we we started... It was hard to get anybody to join, and we were we were in the midst of this kind of, like, zero interest rate phenomenon in Silicon Valley where every engineer was getting, like, five offers from, like, Google and Meta, and, like, you know, we were this little start up. And so, you know, we were kind of walking on eggshells in some ways, and this actually created, I think, bit of a negative cultural environment in Silicon Valley for a while, led to some of that employee activism and stuff. But, you know, we were so afraid of losing anyone that I think once we shifted a little bit, like the zero interest rate phenomenon went away, we became like a remote first company, so we have access to pools of talent, like, in much larger segments of the world. And it allowed us to really have a healthier relationship, I think, where we said, we want the right person and the right job, and if someone's not living the values or they're not collaborating well with their colleagues, like, we just had less tolerance for that, and we were able to make quicker decisions.
00:23:31 · Ty Morse
[00:23:31] S1: I find it interesting that you worked at Airbnb directly before Coinbase, and the way that they initially figured out monetization was Brian at, like, South by Southwest stays with, you know, a host and forgets to pay over the course of, like, three separate nights. He committed that he was gonna bring the money the next day, forgets to pay, bringing the next money the next day, forgets to pay. And at the end, you know, the host thinks that basically the founder of this platform is freeloading off of it. And I find it funny because the way that Coinbase initially figured out monetization was also this obvious thing that was basically what if you could just buy Bitcoin? And that wasn't the first version of the product that you you released. Yeah. Do you see any, like, similarities in the story of Coinbase and Airbnb in that way?