WEBVTT - Brian Armstrong 0:00:02.960 --> 0:00:06.560 About a decade ago, a young entrepreneur, Brian Armstrong, who 0:00:06.600 --> 0:00:09.280 was working at Airbnb, left that company to start a 0:00:09.320 --> 0:00:13.720 company to trade cryptocurrencies. The company started, coin Base, became 0:00:13.760 --> 0:00:15.400 one of the hottest I p O s on Wall 0:00:15.400 --> 0:00:18.320 Street This year. Because of the f t X meltdown, 0:00:18.560 --> 0:00:21.440 coin Basis had some challenges. I sat down with Brian 0:00:21.520 --> 0:00:24.840 Armstrong to talk about the future of his company. So, 0:00:24.960 --> 0:00:29.000 for those who don't know much about cryptocurrencies, what exactly 0:00:29.160 --> 0:00:31.760 is coin Base and what does it do? So coin 0:00:31.800 --> 0:00:35.479 Base is the primary financial account for many people participating 0:00:35.520 --> 0:00:38.440 in the crypto economy. So we help people buy and 0:00:38.440 --> 0:00:40.360 sell crypto. We also help them use it in a 0:00:40.440 --> 0:00:43.360 variety of ways. They can use it to send money 0:00:43.520 --> 0:00:46.239 to commerce far and lend or yield on their assets. 0:00:46.600 --> 0:00:49.080 So we think of ourselves as the primary financial account 0:00:49.080 --> 0:00:51.519 for people in that crypto economy. Okay, so I know 0:00:51.600 --> 0:00:54.640 you're different than another company I'll mention, but is this 0:00:54.800 --> 0:00:57.200 what f t X more or less did as well 0:00:57.360 --> 0:01:00.400 theoretically for its clients was to enable them to trade. 0:01:00.920 --> 0:01:02.680 So f t X did one piece of what I 0:01:02.720 --> 0:01:05.280 just mentioned, which is the trading aspect. That's correct. What 0:01:05.360 --> 0:01:08.120 do you think actually happened to f t ACTS. You've 0:01:08.120 --> 0:01:10.600 been quoted as saying you think there was more than 0:01:10.640 --> 0:01:13.720 just occasional bad bookkeeping. You think there was more to 0:01:13.840 --> 0:01:17.280 it than that. Is that right? That's right? And you know, 0:01:17.319 --> 0:01:19.520 obviously I'm sitting here as an outsider, but it seems 0:01:19.600 --> 0:01:22.720 pretty clear to me that it's not just a run 0:01:22.760 --> 0:01:25.080 on the bank or you know, poor management of funds. 0:01:25.440 --> 0:01:28.600 It appears that they took customer funds from their exchange 0:01:28.640 --> 0:01:31.839 and actually commingled them or moved them into their hedge 0:01:31.840 --> 0:01:34.759 fund and then ended up in a very underwater position. 0:01:35.240 --> 0:01:37.279 And that was, I believe, against their terms of service 0:01:37.319 --> 0:01:39.640 and against the law. And so from my point of view, 0:01:39.640 --> 0:01:41.920 it looks like a massive fraud. And we know that 0:01:42.000 --> 0:01:44.960 because they turned off withdrawals and the customer funds which 0:01:45.040 --> 0:01:47.280 should have been held there one to one we're not 0:01:47.360 --> 0:01:49.720 able to be withdrawn. Um, so that appears to be 0:01:49.760 --> 0:01:52.559 a fraud from my point of view. So in your view, 0:01:52.640 --> 0:01:56.440 will the ft X bankruptcy hurt the industry and maybe 0:01:56.480 --> 0:02:00.400 produce enormous amount of regulation that you may not want, Well, 0:02:00.440 --> 0:02:02.520 I do think the f t X downfall is a 0:02:02.520 --> 0:02:05.280 bit of a black mark for the industry. And it's 0:02:05.320 --> 0:02:08.000 not representative of the whole industry of course though, and 0:02:08.080 --> 0:02:10.600 you know we in traditional financial services occasionally you see 0:02:10.639 --> 0:02:12.800 dad actors as well, like Bernie made Off or what 0:02:12.880 --> 0:02:15.920 happened at en Roun. Now, in terms of regulation, you know, 0:02:16.000 --> 0:02:18.359 I do think that it won't be a bad thing. 0:02:18.440 --> 0:02:20.880 We We've actually coin based has been calling for clear 0:02:20.919 --> 0:02:24.160 regulation and trying to work with policymakers for quite a while. 0:02:24.200 --> 0:02:27.320 We've made some progress on that across various G twenty countries. 0:02:27.639 --> 0:02:29.360 But I think it will serve as a wake up 0:02:29.400 --> 0:02:31.960 call in sort of a moment of catalyst where we'll 0:02:31.960 --> 0:02:34.440 get more clear regulation in the United States. And I 0:02:34.440 --> 0:02:36.160 think that will actually be a really a good thing 0:02:36.240 --> 0:02:38.680 for both coin based and the whole industry. So for 0:02:38.720 --> 0:02:41.480 your company of people who are clients of coin base, 0:02:41.880 --> 0:02:44.280 you are reassured them I assume regularly or they can 0:02:44.320 --> 0:02:47.239 find out for sure if their account is managed the 0:02:47.240 --> 0:02:49.120 way it's supposed to, it's not being used for some 0:02:49.360 --> 0:02:52.880 additional purposes. That right, That's right. So I mean we 0:02:52.919 --> 0:02:55.679 actually are very different than what happened with f t X. 0:02:55.760 --> 0:02:57.960 So for one thing, coin base is based right here 0:02:57.960 --> 0:03:00.480 in the United States. We didn't incorp rate in an 0:03:00.520 --> 0:03:04.120 offshore jurisdiction like the Bahamas. Um, we're also a public company, 0:03:04.160 --> 0:03:05.920 which means we meet we need to meet all of 0:03:05.960 --> 0:03:08.680 the audit requirements of a public company, and so we 0:03:08.919 --> 0:03:11.480 show in our publicly audited financial statements that you know, 0:03:11.560 --> 0:03:14.480 corporate cash is separate from customer funds, and you don't 0:03:14.520 --> 0:03:16.440 have to take our word for it, you know. UM, 0:03:16.480 --> 0:03:18.200 you know, a Big four accounting firm has come in 0:03:18.200 --> 0:03:21.120 and proven that in these cases. So there's there's other 0:03:21.160 --> 0:03:23.600 differences as well. You know, we're we have we operate 0:03:23.600 --> 0:03:26.160 an exchange, but we've never created an exchange token like 0:03:26.200 --> 0:03:28.520 the way f t X did. We never operated our 0:03:28.560 --> 0:03:30.520 own market maker or hedge fund in the way that 0:03:30.600 --> 0:03:32.359 that ft X did because we believe that that would 0:03:32.400 --> 0:03:34.960 be a conflict of interest. So the difference between the 0:03:34.960 --> 0:03:37.960 two firms, I think cannot be overstated, and it's really 0:03:37.960 --> 0:03:40.080 a validation of the approach that we've taken at coin 0:03:40.160 --> 0:03:42.120 based over the last ten years to sort of build 0:03:42.160 --> 0:03:45.920 this this business and entrusted and compliant way as opposed 0:03:45.920 --> 0:03:48.760 to what happened with f t X. So for people 0:03:48.800 --> 0:03:51.040 who may not be that familiar with what your services, 0:03:51.120 --> 0:03:53.920 let's Suppose, um, I wanted to buy a stock, I 0:03:53.920 --> 0:03:56.600 would call a stockbroker or somebody that's a market maker, 0:03:56.920 --> 0:04:00.640 say I want to buy a certain share. They would say, okay, 0:04:00.680 --> 0:04:04.280 you pay a commission. Um. If somebody wants to trade 0:04:04.480 --> 0:04:07.840 a cryptocurrency, they in effect have an account with you, 0:04:07.880 --> 0:04:10.640 I assume, and they pay some kind of fee for 0:04:10.760 --> 0:04:14.680 the exchange. Is that right? That's right. Trading fees is 0:04:15.000 --> 0:04:18.160 one of our major sources of revenue, and yeah, we've 0:04:18.279 --> 0:04:20.640 we've begun to diversify that as well, so we we 0:04:20.680 --> 0:04:23.280 have a different category of revenue we call subscription and services, 0:04:23.320 --> 0:04:25.880 which is has started to grow. So that's about thirty 0:04:25.920 --> 0:04:28.560 six percent of our revenue in our last in Q 0:04:28.760 --> 0:04:32.320 three of this year. But today people have accounts with you, 0:04:32.440 --> 0:04:34.840 they have it clear that you you if they want 0:04:34.880 --> 0:04:37.359 to pull their account out, they can get the money, 0:04:37.400 --> 0:04:39.880 I guess, because you are not subject to a run 0:04:39.880 --> 0:04:44.159 on the bank on effect, that's correct. All customer funds 0:04:44.200 --> 0:04:47.760 are clearly segregated and help assets are held one to 0:04:47.880 --> 0:04:51.120 one for customers. So there's really no such thing as 0:04:51.120 --> 0:04:53.720 a run on the bank in coin bases world, because well, 0:04:53.800 --> 0:04:55.600 number one, we're not regulated as a bank, so we 0:04:55.600 --> 0:04:59.000 don't do fraction reserve lending. UM. But also UM, you 0:04:59.040 --> 0:05:00.880 know a h of custo were funds are stored one 0:05:00.880 --> 0:05:02.600 to one. So if if a hundred percent of people 0:05:02.600 --> 0:05:04.880 want to come withdraw, they can do that and we'll 0:05:04.880 --> 0:05:07.240 have their funds for them. Okay, So you started the 0:05:07.279 --> 0:05:11.120 company in and you took a public I think in April, 0:05:13.000 --> 0:05:15.960 the I p O was enormous success, and I think 0:05:16.000 --> 0:05:18.520 at the end of that day, uh, your company was 0:05:18.560 --> 0:05:21.640 worth maybe seventy five billion or more. UH, and you 0:05:21.720 --> 0:05:24.640 were personally worth I think about ten billion dollars or more. 0:05:25.279 --> 0:05:29.799 The company's stock has come down about uh in recent times, 0:05:29.800 --> 0:05:31.480 in part because of the the ft X and other things 0:05:31.520 --> 0:05:33.560 that happened in the crypto world. So how does it 0:05:33.560 --> 0:05:35.600 feel to be worth ten billion dollars one day and 0:05:35.880 --> 0:05:39.080 not too long after a lot less. Well, you know, 0:05:39.120 --> 0:05:41.839 it's obviously been a difficult market for not just crypto 0:05:41.920 --> 0:05:44.880 but also really all growth tech and biotech, I would 0:05:44.880 --> 0:05:47.400 say too, So you know, we're in good company. Netflix 0:05:47.400 --> 0:05:49.760 and Spotify and all these these companies have also come 0:05:49.800 --> 0:05:53.520 down similar amounts. We knew that going public would not 0:05:53.560 --> 0:05:55.880 be an easy path, especially with as a in a 0:05:55.920 --> 0:05:57.919 new industry being a leader. We wanted to be the 0:05:57.920 --> 0:06:00.360 first crypto company to go out there and kind of 0:06:00.400 --> 0:06:02.000 assumed that it would take, you know, three or four 0:06:02.080 --> 0:06:04.440 years to go through a cycle, begin to educate, build 0:06:04.440 --> 0:06:06.880 trust in the public markets. And so that's the process 0:06:06.920 --> 0:06:09.799 we're going through now. And you know, my own personal 0:06:10.000 --> 0:06:13.240 um net worth is is not something that is particularly 0:06:13.279 --> 0:06:15.719 motivating to me in the sense of like driving personal 0:06:15.720 --> 0:06:18.320 consumption or something like that. I'm I'm excited about building 0:06:18.320 --> 0:06:20.599 the things with technology and cryptocurrency is one of the 0:06:20.600 --> 0:06:23.640 most exciting areas out there right now. So um, you know, 0:06:23.680 --> 0:06:25.599 I'm gonna I'm gonna keep working in this company for 0:06:25.640 --> 0:06:28.480 the next hopefully decade or two, and um, I think 0:06:28.480 --> 0:06:30.760 it's an exciting road ahead. All right, let's go to 0:06:31.000 --> 0:06:33.400 talking about the time that you started the company and 0:06:33.440 --> 0:06:35.719 what we were doing around about the time you did started. 0:06:36.080 --> 0:06:38.440 So you started in two thousand twelve. As I mentioned, 0:06:38.600 --> 0:06:40.680 what were you doing before you started? Did you know 0:06:40.720 --> 0:06:44.840 a lot about a cryptocurrencies, what we're Where were you working? Yeah, 0:06:44.839 --> 0:06:47.640 So before this, I was a software engineer and product 0:06:47.640 --> 0:06:52.600 manager at Airbnb, which you know, the travel home rental company. 0:06:52.760 --> 0:06:55.880 And you know, I'd studied computer science and economics and school. 0:06:55.920 --> 0:06:57.760 I had tried creating a couple other startups that were 0:06:57.760 --> 0:06:59.320 not very successful at one one of them in the 0:06:59.440 --> 0:07:03.000 education s days, and so while I wasn't working at Airbnb, 0:07:03.160 --> 0:07:04.279 you know, I kind of got to see they had. 0:07:04.279 --> 0:07:06.320 They were trying to move money to a hundred ninety 0:07:06.320 --> 0:07:08.599 different countries all over the world, both collecting payments and 0:07:08.600 --> 0:07:11.040 then paying out the people renting their homes. And I 0:07:11.080 --> 0:07:12.680 was one of the engineers kind of working on that, 0:07:12.760 --> 0:07:15.760 seeing how difficult it was to move money globally both 0:07:15.880 --> 0:07:17.880 you know, how opaque the fees were, how long the 0:07:17.920 --> 0:07:21.800 delays were, the chargebacks, all kinds of things like that. So, 0:07:22.160 --> 0:07:24.200 you know, at that time, I I this was around 0:07:24.480 --> 0:07:26.560 December of two thousand and ten, I believe I read 0:07:26.600 --> 0:07:30.400 the Bitcoin white Paper which came out, and I really 0:07:30.600 --> 0:07:32.680 it captured my attention in a really profound way. I 0:07:32.840 --> 0:07:34.960 remember reading it and thinking this might be one of 0:07:34.960 --> 0:07:37.520 the most important things I've ever read, and it it 0:07:37.600 --> 0:07:39.960 was saying something. It was describing something kind of like 0:07:40.000 --> 0:07:43.640 the Internet, which was global and decentralized, a new protocol, 0:07:43.880 --> 0:07:45.880 but instead of for moving information around, this was for 0:07:45.960 --> 0:07:49.040 moving value around in different forms and I basically just 0:07:49.040 --> 0:07:51.480 couldn't stop thinking about this paper for the last For 0:07:51.520 --> 0:07:54.320 the next six months. After that, I attended some meetups 0:07:54.360 --> 0:07:57.480 in San Francisco, um some early bitcoin meetups, and met 0:07:57.520 --> 0:07:59.440 some of the early people working on it, and eventually 0:07:59.440 --> 0:08:00.800 I just couldn't get this idea out of my head 0:08:00.800 --> 0:08:02.400 and I decided I had to go try to build 0:08:02.480 --> 0:08:05.680 a prototype that would make this this technology easier to 0:08:05.760 --> 0:08:08.720 use and trusted for the average person. So what was 0:08:08.760 --> 0:08:11.480 the valuation of your company for the first round from 0:08:12.080 --> 0:08:16.520 the first investors? Oh? Well, um, you know, I think 0:08:16.560 --> 0:08:19.760 why Combinator probably got seven percent of the company for 0:08:19.920 --> 0:08:23.960 the one thousand, so, you know, not a not a 0:08:24.040 --> 0:08:26.480 very high valuation. And then I think the Series A 0:08:26.680 --> 0:08:30.000 was I think we raised five million a million post 0:08:30.560 --> 0:08:33.000 so um. You know obviously that those investors did well. 0:08:33.679 --> 0:08:37.000 So when their company went public, they return on the 0:08:37.040 --> 0:08:39.640 initial investments were staggering. I remember reading about it at 0:08:39.640 --> 0:08:42.480 the time, so I guess they were very happy with uh, 0:08:42.600 --> 0:08:44.640 with you at that time. I don't know whether they've 0:08:44.640 --> 0:08:46.840 sold their shares or they still hold them, but still 0:08:46.880 --> 0:08:50.760 it's very profitable even at today's valuation. I sue, yeah, 0:08:50.840 --> 0:08:54.240 that's correct. I mean and they earned it, right. So 0:08:54.360 --> 0:08:57.160 that's that's the nature of these bets, is that if 0:08:57.160 --> 0:08:59.800 you can see something early on that most people are 0:09:00.000 --> 0:09:03.760 epical of in your contrarian but right, you know, occasionally 0:09:03.760 --> 0:09:05.640 you get these massive winds that come out of it. 0:09:05.679 --> 0:09:07.920 And I think, you know, a thousands when point Base 0:09:07.960 --> 0:09:11.480 went public, a thousand people employees I believe, became millionaires. 0:09:11.520 --> 0:09:14.080 And you know, a lot of the early people wrote 0:09:14.080 --> 0:09:16.960 me incredible letters telling us how they you know, we 0:09:17.000 --> 0:09:19.240 had changed their life and all these things. So that 0:09:19.320 --> 0:09:22.080 was a really powerful moment. And as being a public 0:09:22.120 --> 0:09:27.280 a trading company CEO, I pleasurable experience or not. You know, 0:09:27.480 --> 0:09:29.520 I actually when I before we went public, I didn't 0:09:29.520 --> 0:09:31.320 really know much about what it would be like, and 0:09:31.360 --> 0:09:34.000 I went and did a bunch of research. But um, 0:09:34.000 --> 0:09:36.640 my research played out roughly how I expected. And I 0:09:36.840 --> 0:09:39.880 actually kind of enjoy being a public company CEO. UM. 0:09:39.920 --> 0:09:42.199 It's a good forcing function for us to get feedback 0:09:42.200 --> 0:09:45.520 from the market, UM, to get input from analysts and investors. 0:09:46.000 --> 0:09:48.000 I've found their their thoughts to be actually be quite 0:09:48.320 --> 0:09:50.719 helpful in terms of operating our business periodically. And then 0:09:51.000 --> 0:09:52.960 of course, you know, I spend the vast majority of 0:09:53.000 --> 0:09:55.040 my time really just working with the team on how 0:09:55.040 --> 0:09:57.240 do we build better products for our customers. I don't 0:09:57.240 --> 0:09:59.480 want to lose sight of that as the primary objective. 0:10:00.160 --> 0:10:03.160 So let's talk about yourself for a moment. Earlier in 0:10:03.200 --> 0:10:06.440 your life. Where were you born? I was born in 0:10:06.480 --> 0:10:10.360 San Jose, California, in Silicon Valley. Um. Yeah, and where 0:10:10.360 --> 0:10:13.480 your parents technology people working at tech companies or something 0:10:13.520 --> 0:10:16.800 like that. Something like that. Yeah. So my mom was 0:10:16.920 --> 0:10:20.880 a programmer and a manager at IBM. So, um, we 0:10:20.920 --> 0:10:22.960 had a lot of the early IBM computers in our 0:10:23.000 --> 0:10:25.480 home and things like that. My dad is a civil 0:10:25.480 --> 0:10:28.880 engineer and an environmental engineer. So yeah, we definitely had 0:10:28.920 --> 0:10:31.920 to focus on you know, STEM and math and science 0:10:31.960 --> 0:10:35.320 and education in my my household growing up. I would say, 0:10:35.559 --> 0:10:37.280 And when you were growing up, what did you want 0:10:37.280 --> 0:10:38.680 to be when you were in high school? Did you 0:10:38.679 --> 0:10:42.439 want to be an athlete or a private equity investor 0:10:42.440 --> 0:10:45.679 something important like that or what? Um, you know, I 0:10:45.679 --> 0:10:47.680 don't think I knew exactly what I wanted to be 0:10:47.760 --> 0:10:50.240 in high school. I remember even in high school, I 0:10:50.240 --> 0:10:53.839 was learning programming and I was learning computers. Um. I 0:10:53.880 --> 0:10:56.880 was fascinated with that. I built some early websites. Even 0:10:56.920 --> 0:10:58.880 started a little business with a friend of mine in 0:10:59.160 --> 0:11:02.839 high school. We were reselling computer hardware. So I don't 0:11:02.840 --> 0:11:04.880 think I knew that I wanted to definitely be a 0:11:04.920 --> 0:11:07.840 tech entrepreneur, but looking back in hindsight, that's certainly where 0:11:07.840 --> 0:11:10.319 my energy and enthusiasm was, and I was. I was 0:11:10.360 --> 0:11:13.120 often staying up till two am, you know, learning Linux 0:11:13.160 --> 0:11:15.800 and computers in my bedroom, whereas and then I'd be 0:11:15.840 --> 0:11:18.240 sleep deprived and too tired to pay attention in history 0:11:18.240 --> 0:11:21.000 class the next day at school. But yeah, those were 0:11:21.040 --> 0:11:23.280 my early interests for sure. Where did you go to college? 0:11:24.360 --> 0:11:27.400 I went to Rice University in Houston, Texas. And how 0:11:27.440 --> 0:11:29.439 long were you at Airbnb? And how did you get 0:11:29.480 --> 0:11:32.240 that job? Now? Was that Airbnb for about a year 0:11:32.280 --> 0:11:34.360 and a half or so, and they I was employee 0:11:34.400 --> 0:11:36.280 number forty I think when they joined, when I joined, 0:11:36.280 --> 0:11:38.160 and they when I left, there was maybe six d people, 0:11:38.200 --> 0:11:40.240 so it had gone through this incredible period of growth. 0:11:40.800 --> 0:11:43.360 I learned a lot from them, actually, um just about 0:11:43.679 --> 0:11:46.520 how to run a great you know, product building process 0:11:46.520 --> 0:11:48.560 with engineers, how to raise money, how to operate in 0:11:48.559 --> 0:11:50.240 Silicon Valley, how to how to meet with people like 0:11:50.280 --> 0:11:53.320 at y Combinator. So I learned quite a lot from 0:11:53.400 --> 0:11:56.800 that process. When you left to start your own company, 0:11:57.200 --> 0:12:00.320 did Brian Showsky, the one of the CEOs and wounders 0:12:00.360 --> 0:12:02.520 are there tell you that you're making a mistake. You 0:12:02.520 --> 0:12:07.640 should stay at a stable company like Airbnb. Well, my 0:12:07.679 --> 0:12:10.200 boss at that time was Nate Blecharzick, who was one 0:12:10.200 --> 0:12:12.560 of the other co founders at Airbnb and one the CTO, 0:12:12.760 --> 0:12:15.200 and I remember how he he was very supportive and 0:12:15.280 --> 0:12:17.080 obviously they tried to get me to stay a little bit. 0:12:17.120 --> 0:12:20.439 But you know, generally there's a really incredible culture in 0:12:20.480 --> 0:12:23.280 Silicon Valley of how you know employees who who are 0:12:23.400 --> 0:12:25.280 joining these early startups that sometimes they go on to 0:12:25.360 --> 0:12:28.400 do their own startups, and it's it's very much a 0:12:28.440 --> 0:12:30.679 positive some environment. You know. One of the things I'm 0:12:30.720 --> 0:12:32.240 most proud of is actually a lot of early coint 0:12:32.240 --> 0:12:34.959 based employees have gone on to found other companies in 0:12:35.040 --> 0:12:37.880 crypto and um. That's been really positive and rewarding for 0:12:37.960 --> 0:12:40.280 us to see as well. So you told your parents 0:12:40.320 --> 0:12:45.320 you're going to start at cryptocurrency Exchange. What did they say? Uh? 0:12:45.480 --> 0:12:47.400 I don't think they quite understood what it was at 0:12:47.400 --> 0:12:50.760 that moment um. And my mom, you know, asked me 0:12:50.840 --> 0:12:53.679 if I was gonna have health insurance, which you know 0:12:53.880 --> 0:12:56.000 I learned. You know, even if you're creating a new company, 0:12:56.040 --> 0:12:57.760 you can you can pay for your own health insurance. 0:12:57.800 --> 0:13:00.080 And there's little things like that that made her you 0:13:00.160 --> 0:13:03.440 better at night. But I think ultimately they trusted me 0:13:03.480 --> 0:13:05.600 and they supported me, even if they didn't quite understand 0:13:05.679 --> 0:13:08.200 what it was. And they said, well, you know, if 0:13:08.200 --> 0:13:10.400 this doesn't work out, hopefully you can go get another 0:13:10.520 --> 0:13:12.440 job and help be fine. But they sort of knew 0:13:12.440 --> 0:13:14.679 I was always gonna try new things like this, and 0:13:14.920 --> 0:13:16.360 it wasn't worth trying to talk me out of it. 0:13:16.360 --> 0:13:19.800 At a certain points after coin based, when public, you 0:13:19.880 --> 0:13:23.560 decided to join the Giving Pledge was started by Bill 0:13:23.600 --> 0:13:26.600 and Melinda Gates and Warren Buffett. So why did you 0:13:26.679 --> 0:13:29.079 decide as such a young age and you're going to 0:13:29.160 --> 0:13:31.680 give away so much of your money and that anybody 0:13:31.720 --> 0:13:33.200 say to you, why don't you to save the money 0:13:33.240 --> 0:13:37.120 and not give it away? Well, to be honest, um, yeah, 0:13:37.120 --> 0:13:40.200 I mean I was. I just wanted to learn about philanthropy. Um. 0:13:40.280 --> 0:13:42.800 I don't think I'm very far along that journey, especially 0:13:42.800 --> 0:13:44.679 you know, given the markets correcting and everything, like that. 0:13:44.720 --> 0:13:47.280 It's not that I have, you know, as much money 0:13:47.280 --> 0:13:49.000 as I would like to give away, but I want 0:13:49.000 --> 0:13:50.760 to start to learn about it and just think about 0:13:50.840 --> 0:13:53.120 where where can you do well? Where can you do 0:13:53.160 --> 0:13:55.360 good in the world with capital? I think actually building 0:13:55.360 --> 0:13:58.160 private companies, and I've invested in some private companies with 0:13:58.200 --> 0:14:00.160 my wealth. I think those have potential to do a 0:14:00.200 --> 0:14:02.240 lot of good as well. There's there's some areas I'm 0:14:02.480 --> 0:14:05.959 passionate about in scientific research and things like that. UM, 0:14:06.000 --> 0:14:08.120 But I think philanthropy can also be helpful. It can 0:14:08.120 --> 0:14:10.680 also just like startups. You know, a large percentage of 0:14:11.480 --> 0:14:14.439 philthropic organizations are probably not well managed and not effective, 0:14:14.679 --> 0:14:16.600 and so you have to be, you know, good at 0:14:16.640 --> 0:14:19.480 finding the ones that are actually high impact and rewarding. 0:14:20.080 --> 0:14:24.120 How old are you now? Thirty nine, so you'll be 0:14:24.200 --> 0:14:27.480 forty presumably next year, and so you're still very very 0:14:27.520 --> 0:14:29.440 young by the standards of most CEOs that I know. 0:14:30.040 --> 0:14:33.360 So what do you do to UM relieve the pressure 0:14:33.360 --> 0:14:36.080 to you? Are you a mountain climber, a bike rider? 0:14:36.560 --> 0:14:39.080 Do you do you have any other exercise or hobbies? 0:14:40.000 --> 0:14:42.120 You know? I think the thing I'm most passionate about 0:14:42.160 --> 0:14:45.360 in life it just broadly is how technology can be 0:14:45.440 --> 0:14:48.040 used to improve the world and improve the human condition. 0:14:48.480 --> 0:14:50.960 And I think that's been true going back to you know, 0:14:51.040 --> 0:14:54.000 the first time somebody invented fire, or you know, putting 0:14:54.000 --> 0:14:56.640 shoes on their feet or whatever. Technology is a way 0:14:56.680 --> 0:14:59.760 that we can prove everything from healthcare to education to 0:15:00.640 --> 0:15:04.240 global economic freedom with cryptocurrency, and so I'm passionate about 0:15:04.240 --> 0:15:06.800 how we can accelerate that the pace of scientific and 0:15:07.040 --> 0:15:09.800 technological advancement. And so what do you say to some 0:15:09.880 --> 0:15:12.320 of the old line investors old line mean people my 0:15:12.440 --> 0:15:15.280 age or older or maybe slightly younger than me, who 0:15:15.320 --> 0:15:19.040 say that cryptocurrency really serves no useful social purpose and 0:15:19.160 --> 0:15:22.000 ultimately all cryptocurrencies will go to zero. How do you 0:15:22.000 --> 0:15:25.560 respond to them? Yeah, well, look, I think there's a 0:15:25.600 --> 0:15:30.440 long history in technology of bubbles being created and then corrections, 0:15:30.600 --> 0:15:33.280 and you know, there's hype cycles and doom cycles. And 0:15:33.640 --> 0:15:35.960 this has been true obviously with the Internet in recent memory. 0:15:36.000 --> 0:15:38.160 But even if you go back to the railroads and 0:15:38.520 --> 0:15:40.920 you know, the telephone and all these things, studying the 0:15:41.000 --> 0:15:43.320 history of this, you see that when a big technology 0:15:43.320 --> 0:15:47.280 innovation happens, early adopters come in, you see a bubble form, 0:15:47.320 --> 0:15:50.560 there's oftentimes a rational exuberance and then a correction happens, 0:15:50.600 --> 0:15:53.880 but ultimately there is a breakthrough there and it takes 0:15:53.880 --> 0:15:56.200 sometimes you know, a decade or more for these these 0:15:56.200 --> 0:15:59.240 benefits to come to fruition. So that's exactly what's happening 0:15:59.240 --> 0:16:02.000 here with Cryptocurreny see, you know, one in four US 0:16:02.040 --> 0:16:05.600 households have now used cryptocurrency. It's not a niche thing. 0:16:06.000 --> 0:16:08.400 It does tend to skew towards a younger audience and 0:16:08.400 --> 0:16:11.280 so sometimes people who grew up in their whole their 0:16:11.280 --> 0:16:14.560 whole career was in traditional financial services, it's hard for 0:16:14.600 --> 0:16:17.160 them to you know, this is the innovator's dilemma, right 0:16:17.200 --> 0:16:18.720 if you if you can, if people are familiar with 0:16:18.720 --> 0:16:21.040 the Clay Christensen book, it's hard for them to see 0:16:21.040 --> 0:16:23.120 this new thing coming along and seeing what the disruptive 0:16:23.120 --> 0:16:25.760 potential of it would be. And there's sometimes a little 0:16:25.760 --> 0:16:29.160 bit of blindness that happens with that. But um nevertheless, 0:16:29.200 --> 0:16:31.640 the change is happening and more people are using crypto 0:16:31.720 --> 0:16:35.000 through every cycle that happens. Well before you started the 0:16:35.000 --> 0:16:38.440 company or while you were starting, uh your company coin base, 0:16:38.680 --> 0:16:42.160 did you buy some cryptocurrencies yourself just to sell show 0:16:42.240 --> 0:16:43.800 that you were a believer in it, or do you 0:16:43.880 --> 0:16:45.760 not want to have a conflict by owning some of 0:16:45.800 --> 0:16:48.480 these cryptocurrencies. I mean, I really didn't have much money 0:16:48.480 --> 0:16:50.800 when I started coin base. You know, I had just 0:16:50.920 --> 0:16:53.520 left Airbnb. I had a little bit of money saved, 0:16:53.520 --> 0:16:55.600 but I had to I wanted to exercise my options 0:16:55.600 --> 0:16:58.720 and Airbnb when I left, and that actually almost cleaned 0:16:58.720 --> 0:17:00.320 out my bank account. So I think I had maybe 0:17:00.360 --> 0:17:02.680 like like three or four thousand dollars or something like 0:17:02.720 --> 0:17:04.960 that when I left over when I started Point based, 0:17:05.240 --> 0:17:07.240 So you know, I certainly bought a little bit of 0:17:07.600 --> 0:17:09.879 bitcoin early on, but we're talking about like a thousand 0:17:09.920 --> 0:17:12.919 dollars or something in that range for the first you know, 0:17:13.080 --> 0:17:16.280 five years or actually I mean still to a large 0:17:16.280 --> 0:17:19.000 degree to this day. I mean not myself and other employees. 0:17:19.040 --> 0:17:21.000 Early employees at Point based, we took our salary actually 0:17:21.000 --> 0:17:23.240 in bitcoins, so you can imagine that had some interesting 0:17:23.240 --> 0:17:25.879 appreciation value. You know, we had to sell a lot 0:17:25.960 --> 0:17:27.760 of it to sort of pay rent and things like that, 0:17:27.800 --> 0:17:30.280 so it wasn't um like we were able to hold 0:17:30.320 --> 0:17:33.320 all of it, but yeah, that there was definitely some 0:17:33.359 --> 0:17:35.240 appreciation there. But I wish I'd had more money in 0:17:35.240 --> 0:17:37.679 the early days for sure. Okay, So, um, how do 0:17:37.720 --> 0:17:40.199 you respond to the idea that many people don't know 0:17:40.280 --> 0:17:42.919 what they're doing when they're buying cryptocurrencies. They're not that 0:17:42.960 --> 0:17:45.439 well informed, they're very young, and they're gonna wind up 0:17:45.480 --> 0:17:48.199 losing their money because they're just not experienced. How do 0:17:48.240 --> 0:17:52.040 you respond to that concern? Right? Well, I think that's 0:17:52.080 --> 0:17:55.040 a very valid concern across really any type of investment 0:17:55.080 --> 0:17:57.640 that people might make, not just in crypto, but um 0:17:57.640 --> 0:18:00.359 in stocks and in everything. So my person shin is 0:18:00.359 --> 0:18:03.640 that we actually do need more clear regulation that's crypto specific. 0:18:03.680 --> 0:18:06.880 I mean crypto businesses like coin based were already regulated 0:18:06.920 --> 0:18:09.480 like a traditional financial service business. And you know, we 0:18:09.520 --> 0:18:12.320 have a CFDC license, and we have Finns were registered 0:18:12.359 --> 0:18:14.400 with finn Send, we have a New York bit license 0:18:14.480 --> 0:18:17.080 and various money money transmission licenses. That's that's just in 0:18:17.119 --> 0:18:19.880 the US, UM. But I think we need more crypto 0:18:19.920 --> 0:18:24.879 specific regulation in the US, both around stable coins, how 0:18:25.080 --> 0:18:28.560 centralized exchanges and custodians are, you know, the best practices 0:18:28.600 --> 0:18:30.840 they should have in place around audits and you know, 0:18:31.040 --> 0:18:33.840 not commingling funds. Many of those things we're already doing, 0:18:33.960 --> 0:18:36.080 and then the big piece will be actually getting clarity 0:18:36.080 --> 0:18:38.639