Dec 21, 2018, 3:28 PM ETFireside Chat, Interview

Company Building in Crypto: A Conversation between Brian Armstrong and Chris Dixon

Brian Armstrong (CEO) studied computer science and economics, driven by an interest in software disrupting healthcare, education, and finance.
Armstrong worked at Airbnb as employee 40, witnessing high fees, delays, and opaque infrastructure in the global payment system across 190 countries.
In 2010, Armstrong read the Satoshi Nakamoto Bitcoin white paper on Hacker News, identifying it as a decentralized protocol for moving value comparable to the Internet's protocol for information.
He initially considered starting a machine learning company in 2008 but concluded the timing was too early, later stating, "You're just wrong on the timing," which is fatal for a startup.
Armstrong joined Y Combinator in 2012 after building a Bitcoin prototype on nights and weekends; his friends deemed the idea "stupid," but YC provided a check validating the concept.
Armstrong cites the "nerd energy" of Silicon Valley engineers voting with their time (e.g., Bitcoin being the #2 elective at Stanford after AI) as a key indicator of the sector's potential.

Coinbase began as a Bitcoin-only exchange, but Armstrong pivoted to a multi-currency platform in 2013-2014 after realizing Bitcoin might not scale sufficiently as a global payment system.
The company survived the "crypto winter" of late 2014-2015, a period characterized by a massive price drop and approximately 25% employee turnover.
Armstrong observed that successful founders often commit to a 10+ year horizon, whereas those focused on short-term gains fail during the "setback after setback" phase of the first few years.
The firm moved from 150 to 500 employees, crossing the Dunbar number threshold where leaders can no longer remember every individual's name or specific tasks.
To manage scaling, Coinbase implemented structured communication channels, OKRs, and all-hands meetings to align leadership and management teams.
Armstrong actively utilizes executive coaching and 360-degree feedback from the board to improve his own leadership capabilities, noting that founding a company does not automatically confer skills in running a large organization.

Armstrong advocates for an "innovation maximalist" view, supporting multiple protocols (e.g., Bitcoin, Ethereum) rather than a single "TCP/IP for money" standard.
He compares the current state of crypto to the "dial-up" phase of the early Internet, predicting a future "iPhone moment" driven by improved scalability, reduced volatility (via stablecoins), and better developer tools.
Ethereum is highlighted for introducing a Turing-complete scripting language that enabled smart contracts and a "Cambrian explosion" of new tokens, privacy coins, and protocols like ZK Snarks.
Armstrong argues crypto unlocks a new field of protocol development, contrasting it with traditional internet protocols (30-40 years old) which relied on government funding or charity due to a lack of business models.
He emphasizes that the Bitcoin script language is deliberately limited for security, whereas Ethereum prioritizes expressiveness to foster innovation.

Emerging Markets: A primary use case is providing financial access to 1-2 billion people with cell phones but no bank accounts or government IDs; Armstrong's charity has already sent direct cash payments to Venezuela.
Creator Economy: Crypto enables direct micro-payments for content creators (writers, musicians), potentially solving the internet's historical failure to monetize individual creative labor effectively.
Prediction Markets: Armstrong sees potential in decentralized prediction markets that aggregate "wisdom of the crowds" for global events and elections.
Social Apps: He envisions social platforms where engagement (e.g., upvotes) directly translates to monetary rewards for users, creating new value-sharing models.
Adoption Strategy: Armstrong predicts 400 million to 4 billion users will adopt crypto not through speculation, but via utility (e.g., paying for games, services, or receiving charity), shifting identity from geographic to digital.
Skepticism Analysis: Armstrong attributes historical and current skepticism of new technologies (from cars to chess to crypto) to an evolutionary human trait of fearing the unfamiliar.
Investment Context: The firm's investment in 2013 was driven by Armstrong's prior experience with Hashcash (a Bitcoin mining algorithm used in anti-spam) and a pattern of observing highly intelligent people dedicating their "nights and weekends" to the technology.

Coinbase aims to be the "most trusted, secure, and compliant" platform while building the "easiest to use" products for average consumers.
Armstrong believes crypto is a "new computing paradigm" and that the technology will eventually redefine the "internet economy identity" for a new generation of digital natives.
The firm expects continued "high-quality team" inflows in crypto, with submission rates rivaling or exceeding other sectors like AI and SaaS.
Armstrong predicts the industry will eventually see a "mental shift" where users view their online identity and crypto assets as more significant than their geographic location.