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Lex Fridman

00:00

The following is a conversation with Brian Armstrong, co-founder and CEO of Coinbase, the largest cryptocurrency exchange platform with 98 million users in 100 countries, listing Bitcoin, Ethereum, Cardano, and over 100 popular cryptocurrencies. I recorded this conversation with Brian before this week's SEC probe into whether some of the crypto listings are securities and thus need to be regulated as such. As always with conversations that involve cryptocurrency, I try to make it timeless so that the price soaring high or crashing down low doesn't distract from the fundamental technological, economic, social, and philosophical ideas underlying this new form of money, energy, and information. Our world runs on money, the exchange and store of value.

Lex Fridman

00:52

And cryptocurrency seeks to build the next chapter of how money works and what it can do. Coinbase and Brine are trying to do this by working together with regulators and governments, which is a long and difficult road. Bureaucracies resist change, for better and for worse. The latest SEC probe is a good representation of this.

Lex Fridman

01:14

It is a serious attempt to limit fraud, but 1 that also runs the risk of limiting innovation and limiting financial freedom of individuals. This is a complicated mess, and I applaud everyone involved for trying to work through it. I hope in the end, the interest of the individual wins. Decentralization, after all, is a hedge against the corrupting nature of centralized power.

Lex Fridman

01:39

This is the Lex Friedman Podcast. To support it, please check out our sponsors in the description. And Now, dear friends, here's Brian Armstrong. Let's start with the fact that you're a programmer.

Lex Fridman

01:51

What was the first program you've ever written? Or the first 1 that you remember?

Brian Armstrong

01:55

The first memory I have of programming was probably in middle school. And I remember it was recess, and they had this time period where you could read books and the other kids were reading comic books and stuff. And for some reason I had gotten into this idea that I wanted to get into computers and I was playing with computers at home.

Brian Armstrong

02:13

And so I got this book, I think from the library, it was called like, How to Learn Java in 30 Days. So I was reading this book at like, you know, the recess, and I didn't understand anything. And I remember I went home and I tried to get this thing working. And you know, if you've ever written a Java program, the first lines are like, public static void main string args or whatever.

Brian Armstrong

02:35

And it's just like, it's so foreign, and it's so difficult to get started. And so I was kind of frustrated. I was like, I don't understand anything that's happening in this book. So the first thing I wrote was probably just like a Hello World app in Java, but it was so, I felt like I was so confused about what was actually happening that I later learned a bit of PHP and PHP was like more fun for me because it was like, oh, just print out what you want.

Brian Armstrong

03:00

It didn't have all this complexity around it. So then I got more into PHP, started building like some simple websites, I think learned some HTML. So I think that was my introduction to programming, at least the very beginning part.

Lex Fridman

03:13

Yeah, you know, Java has a lot of, out of all the Hello Worlds you can possibly write, Java is the 1 where, I think it's the longest. Which is quite interesting, because Java is often, at least for a long time, was used as the primary programming language to teach people how to program, or at least about object-oriented programming. I think most universities have now switched, in high school switched to Python.

Lex Fridman

03:37

I'm not sure if that's the case.

Brian Armstrong

03:38

Probably better, it's easier to learn. It lowers the, it makes it less scary, there's like less of a hurdle.

Lex Fridman

03:43

And certainly none of them use PHP. I love PHP and I feel like it's a dirty secret I have to keep private to myself. Like it's somebody I'm seeing on the side or something like that because it's just not a respected programming language because I think there's so many ways you can write poor code with PHP, which is why it's not respected.

Brian Armstrong

04:01

Yeah, it's a scripting language more so, although of course Facebook built like a huge stack on top of it and valuable company, but I still love Ruby to this day. Ruby is probably my favorite language. Python's great too, but I just love the idea behind Ruby that it's like, let's make it easier for the human, harder for the computer, and make it a joy to be expressive and all these things.

Brian Armstrong

04:22

So I was never the best computer scientist, but I was a good hacker. I could rapidly prototype products and using languages like Ruby. Do a lot of computer science programs still use like Lisp and Scheme and things like that?

Lex Fridman

04:35

No, no, they do for, that's like, that's if you're hardcore. If you're legit, you're gonna do some of the functional languages. I think there's a few others that popped up, but Lisp is a distant memory for a lot of people.

Lex Fridman

04:48

That's like somebody that's like, you go to the library, you dust off the book. But Scheme a little bit. I think if you're starting, I mean there's courses about languages themselves, like programming languages. Lisp might be 1 of those, you know how there's languages that nobody uses anymore, like ancient languages?

Lex Fridman

05:07

You might have to go to school in that same way for programming languages. Back in the day, we used to use parentheses. I, of course, still use Emacs as the editor for most things that I do. And Emacs is, you know, a lot of the customization you can do is in Lisp.

Lex Fridman

05:23

And that's the language probably when I first really fell in love with programming is Lisp. Because for a long time throughout the earlier history of artificial intelligence, Lisp was the primary language, but it still had a life in the 90s and the aughts where some people would use it. It was such a beautiful, functional language, but it just somehow didn't pick up. That said, I should say, sort of push back, I feel like it's still true that most of the web runs on PHP, most of the back end is still PHP.

Lex Fridman

06:02

So if you look at, you know, it's like the stuff that people don't talk about. It's like what runs most systems in the world, what runs most backend, what runs most frontend? JavaScript, you know, HTML.

Brian Armstrong

06:16

The Stack Exchange surveys show JavaScript's the most popular language in the world, I think, right?

Lex Fridman

06:20

Oh yeah, in terms of programmers and numbers of, I wonder.

Brian Armstrong

06:25

By survey of number of programmers on Stack, Stack Overflow.

Lex Fridman

06:29

Oh yeah, but That's also the cutting edge, right? Those are the people that are just like excitedly writing code. I wonder if there's people that are just like maintaining gigantic code bases.

Brian Armstrong

06:40

Yeah. I feel like the amount of Java out there just running industrial systems has gotta be enormous.

Lex Fridman

06:46

And then of course in the banking industry, finance, it's like even older stuff, Cobalt and whatnot, but. I've been actually looking for somebody to interview who represents Cobalt and Fortran, like who's the figure still, still there that holds the flag. I did, you know, with Java, founder of Java, a creator of Java, creator of Python, creator of C++, but nobody wants to hold the flag for Cobalt and Fortran, even though some of the most important systems in the world still run on those.

Lex Fridman

07:20

Like power systems and infrastructure systems, which is fascinating. And ATMs and stuff like that. Like a lot of stuff that we rely on that just works, and the reason we don't change it is because it works well. It's written in languages that people don't use anymore.

Brian Armstrong

07:37

Yeah, that'd be a cool series of interviews. Get the stuff that's like tech that was invented 40, 50 years ago but still is being used widely. I mean, Emacs is an example of that.

Lex Fridman

07:47

Let me ask the big question of what are cryptocurrency exchanges and what's Coinbase? How does it work? Before, I'll ask even bigger questions, but it's just a nice kind of palate-cleansing question of what is Coinbase?

Brian Armstrong

08:02

Coinbase is a cryptocurrency exchange, brokerage, custodian, basically. We're the primary financial account for people in the crypto economy, how they buy crypto, how they store it, how they use it increasingly in different ways. We can talk about that.

Brian Armstrong

08:18

So yeah, we wanna be the way that a billion people hopefully access the open financial system globally.

Lex Fridman

08:23

How does it work? What's cryptocurrency? There's Bitcoin, there's Ethereum.

Lex Fridman

08:34

What does it mean to be an exchange? What does it mean to store? What does it mean to transact? How does it, what does Coinbase actually do?

Brian Armstrong

08:43

Okay, so, you know, basically in any given market, there's some people who want to buy some people who want to sell, and there's, you keep an order book of all those prices. And then, you know, if someone's willing to buy for more than the lowest price, someone is willing to sell, then, you know, you get a trade to execute. That's kind of how an exchange works underneath.

Brian Armstrong

09:04

And a brokerage is kind of simpler than that, even you don't have to know, look at the whole order book and everything. But you just go in there and you say, I want to buy $100 of Bitcoin or whatever cryptocurrency, you get a quote, and if you like it, you can hit accept. And you know, the core things that we do to make all that kind of just work, make it seamless, it sounds simple on the surface, is we got to we have to do payment integrations, you know, in a variety of places around the world to make it easy for people to get fiat currency into this ecosystem. We have to work on cybersecurity a lot.

Brian Armstrong

09:33

There's lots of hackers out there trying to break into our systems and steal crypto or to put stolen credit cards and bank accounts and things like that into these systems. We have to integrate with the blockchains themselves, right, which are periodically getting updated and having various airdrops and all kinds of things. So we're integrated with lots of different blockchains. And then we have to store the crypto that people buy securely as well.

Brian Armstrong

09:56

So crypto is kind of like storing, you store the private keys, essentially, And we've invented a lot of cool technology about how to do that securely. That helps me sleep at night as 1 of the largest crypto custodians out there. So those are some of the pieces that had to come together to get that early, simple buy sell experience to work. And yeah, I mean, Coinbase actually has a lot of different products now.

Brian Armstrong

10:19

So we have like an institutional product, we have Coinbase commerce, which is like merchant payments like Stripe for crypto. We've got a self custodial wallet, which we can talk about, there's all kinds of cool applications people are building with web 3, and they can access it through that we just just launched an NFT product. I go on down the list we have. So we're sort of like a portfolio of crypto products.

Brian Armstrong

10:39

Now we're big enough where we can do multiple things. But yeah, that's the core thing we got started with. And still, the majority of our revenue today is people just want to come in and buy and sell some crypto and we help them do that and make it simple and

Lex Fridman

10:50

easy to use. I'll ask you about wallet and NFTs, about what is it called? The Stripe type?

Lex Fridman

10:55

Oh yeah, Coinbase Commerce. Coinbase Commerce. Yeah. I'll ask you about all that.

Lex Fridman

10:59

But order books and exchange, what's the difference between that and stocks, for example, which there's also order books?

Brian Armstrong

11:06

Yes, I mean, stocks trade through order books too, so do commodities.

Lex Fridman

11:09

It's all a similar type of situation. So when I wanna buy 1 Bitcoin and I see Coinbase say the price of that Bitcoin is say $40,000

Speaker 3

11:20

and I press buy, what happens?

Brian Armstrong

11:25

Yeah, okay, so you've gotten a lot. When you press the button on your keyboard, like an electrical signal goes up the wire on your keyboard. No, we won't get that.

Lex Fridman

11:34

Well, that's also important, the timing, right? Because isn't that price fixed?

Brian Armstrong

11:38

Yeah, that's true. It's giving you a quote, right? That's, you know, there's a whole concept of like slippage and like, by the time the quote is executed, if the price has moved too much, like we may reject it.

Brian Armstrong

11:50

And you know, there's there's various things like that. But how do I mean, what's the simple version I can give you? So we you know, we'll, we'll basically check the order book, give you a quote, it's good for some period of time, or for some amount of slippage. And then what's happening is we're initiating a debit to your payment method, whether that's a credit card or bank account, or, you know, you're storing dollars or euros or something on our platform, there's various payment methods.

Brian Armstrong

12:13

So we're basically debiting that. And then we're crediting you the crypto and we're taking a fee for it too. So that's fundamentally what's happening underneath. And then

Lex Fridman

12:24

there's some interesting slippage. How do you calculate how much slippage is allowed? Like how do you know these things?

Lex Fridman

12:33

Because order books are fascinating. The dynamics of that is pretty interesting from the little I know about it.

Brian Armstrong

12:40

Yeah, so there's a lot of people, like traders who get super into this and like high frequency traders and arbitrage and all kinds of interesting topics. Flash Boys was like an interesting book on this whole thing. You want like access to information the fastest, sometimes even putting your, you know, your thing in the data center right next to the thing.

Brian Armstrong

12:57

We don't we don't allow that colo stuff because we want it to be more democratized. But you know, basically, you give a let's say we wanted to just keep it math simple, we want to charge a 1% fee. So if you're buying $100 of Bitcoin, and we'll charge you

Lex Fridman

13:12

$101,

Brian Armstrong

13:12

you know, we've presented you the amount of Bitcoin you're going to get for $100. Now, let's say 10 seconds later, you hit accept, we go to we go to fill the order. So it's going to be some error bound around that 1% fee, right.

Brian Armstrong

13:25

And if we think we're actually losing money on the trade, I think we'll often reject it. So some part of the fee, the slippage is incorporated into that, averaged over

Lex Fridman

13:36

a large number of people. I mean, just, it's fascinating, because even just that little detail probably requires a lot of experimentation.

Brian Armstrong

13:44

Yeah, and It's kind of like a giant bug bounty out there because if you get it wrong, there's people who are gonna arbitrage that. And we've had people sort of pen test our systems in really creative ways where like, they'll just fire, like programmatically with APIs, they'll fire off like a million different quotes and look for 1 of them that's out of bounds and then actually take that money right there and you know, we get people doing all kinds of crazy stuff.

Lex Fridman

14:10

So how do you protect against that? How do you protect, so we'll talk about cybersecurity in interesting ways, but there's a lot of clever people trying to do clever things to earn, not even just to break into the system, but to earn an edge of some kind in the system. How do you how do you stay 1 step ahead?

Brian Armstrong

14:28

There's no silver bullet is a bunch of lead bullets, right? So it's, it's like, you know, 1 thing we do is we just have good test suites, right? So you're, you're testing every piece of code that goes out.

Brian Armstrong

14:38

That's like just common good best practice, but it's particularly important in financial services. Another thing we do is we hire third party firms to try to audit this stuff and break in. Another 1 we do is we have a bug bounty program. So we basically pay white hat hackers to find this stuff before the black hats do.

Brian Armstrong

14:57

And we've paid out lots of good bug bounties. So, you know, try all the above. And occasionally you don't get it right, and you lose some money, and then you fix it, and

Lex Fridman

15:05

you keep going, so, yeah. Let's talk about cybersecurity a little bit more. Yeah.

Lex Fridman

15:10

You mentioned using stolen bank accounts. Yeah. So that's another 1, that's another interesting 1. How do you protect against that?

Brian Armstrong

15:17

Okay, so fraud prevention, yeah, is a big topic. So 1 of the, there's a lot of things people do, but 1 of the things they do is that use machine learning, right? So you look at

Lex Fridman

15:29

hundreds- To protect or to attack?

Brian Armstrong

15:30

To protect against it. So what you want to do is kind of build up a labeled data set of all the different people who have turned out to be fraudulent and good actors, and hopefully collect as much data as you can. And then you might feed hundreds or thousands of these factors into your machine learning model and it'll come back with a risk score.

Brian Armstrong

15:51

So, you know, an example of like the kinds of factors people create or put in there, you know, obviously, I don't want to disclose too many of them, because it's, it's, it's a cat and mouse game, but Just kind of, I don't know, relatively well-known stuff might be, you know, you have device fingerprints, right? So like, what kind of device are you on? And what fonts do you have installed? A lot of people who are farming lots of these accounts, they're using emulators and like virtual machines and stuff.

Brian Armstrong

16:15

They're not like, you know, an average person on that device. And then you'll see sometimes like, 1 of my favorite metrics we track for for this was called like improbable travel velocity. So we would you were tracking people's IPs, right? And you might see someone who was 1 day in Austin, Texas, and then like an hour later, they were in London or something.

Brian Armstrong

16:36

It's like, well, that's very improbable. I mean, sometimes people are using VPN. So you got to be careful with that. Because like, there's legitimate people who use VPNs too.

Brian Armstrong

16:44

But If it's not possible for them to have gotten on a plane and gotten there that quickly, then that's usually they're like spoofing a device or IP. Sometimes those are interesting factors. But yeah, if you feed enough of these in, you will, oh, another fun 1 is like, real users will type their credit card like 1 number at a time. Scammers have a list of them and they'll just paste in a whole number.

Brian Armstrong

17:08

So you can look at like the number of milliseconds between keystrokes. Like there's all kinds of stuff people have come up with.

Lex Fridman

17:13

You know, for travel velocity, you could probably incorporate VPNs too because there's probably a travel velocity for VPN switching too, that's human-like. Like if you're using legitimately VPN for something else, that might be, there's like legitimate uses too. Actually, you know, I feel embarrassed that I don't know this, probably should, but the I'm not a robot.

Brian Armstrong

17:37

Capture thing?

Lex Fridman

17:38

Capture thing? Yeah. So that probably works in the same way.

Lex Fridman

17:42

Yeah. Like how do you move your mouse maybe? Or how, the dynamics of the clicking. Totally.

Lex Fridman

17:49

But how does that even work that well then? And why can't it be faked? I need to look into this. Because it's such a trivial capture.

Lex Fridman

17:56

It feels like it should be very crackable. And yet a lot of high security places use that. Yeah. It's really interesting.

Brian Armstrong

18:03

It's another cat and mouse game. So I think they've, yeah, but it's using a lot of similar signals, like mouse movements, keystrokes, and then obviously all the stuff that comes over the wire with your browser. So like what operating system, what fonts, you know, what headers are being sent over.

Brian Armstrong

18:20

And there's actually, there's an old website. I can't remember what it's called. It was kind of like Panoptic Click or Panopticon or something. But it basically was like a proof of concept site that they would just show you all the data that was kind of getting sent over with your request and like say that there's only 1 person in the world who has this exact set of data, it's you.

Brian Armstrong

18:38

And so it's almost like a workaround, a clever workaround to track somebody, identify a unique person, even if like there wasn't a cookie involved or something.

Lex Fridman

18:48

Yeah, this is a fascinating world. Where you can't see anybody, you're in the dark, and yet you have a lot of signal and you have to figure out who's a real person, who's not, who's a robot, who's not. Yeah.

Lex Fridman

18:58

Let me step back, we're gonna jump around all over the place.

Brian Armstrong

19:01

Great. Let me step back. That's why I like your interviews. You get into technical topics.

Lex Fridman

19:05

So just let's use Bitcoin as a measure of time. You started Coinbase when Bitcoin was $10. And you just mentioned an incredible system with security, with transactions, everything is thought through, there's a lot going on, but what was version 1 back in those early days, the first prototype of Coinbase?

Lex Fridman

19:26

What did that look like? Like what did it take to write it, to think through it, and make it work enough to at least make you believe that it's gonna work?

Brian Armstrong

19:38

Well, I definitely didn't know if it was gonna work. I mean, it was kind of, I felt like I was just following my gut. So, I mean, I was working at Airbnb, I was a software engineer there, project manager, I was working on some fraud prevention stuff, for instance.

Brian Armstrong

19:53

And I read the Bitcoin white paper in kind of December of 2010. I started going to some Bitcoin meetups in the Bay Area, met lots of interesting people there, like crazy people, anarchists, you know, like really brilliant people, all the above. And so I started nights and weekends trying to put together a prototype. And my initial thought was, well, you know, SMTP is a protocol that runs email.

Brian Armstrong

20:17

And you know, Git is a protocol for version control that people made like Gmail and GitHub, they don't, most people don't want to run their own email server, or even their own Git server, they just want to like, use a hosted thing that, you know, will do all the security and backups for them. So the thought in my head at that time was bitcoins this new protocol, there's probably going to be somebody who makes a hosted service that does all the security and backups for you makes Bitcoin as a protocol easy to use. So maybe I should, maybe I should make like a hosted Bitcoin wallet or something that was that was my it was gonna make Gmail for Bitcoin or something. And a bunch of people told me that was a bad idea.

Brian Armstrong

20:52

Like most of my smart friends who I told about it, they were like, well, first of all, I don't really get what you're doing at all. Like Bitcoin sounds like a scam or something you've gotten involved in. But then other people who understood what Bitcoin was told me they thought it was a dumb idea because they're like, dude, if you store all this Bitcoin, you're just going to get hacked like nobody, you know, why would you why would you do that? And So I kind of had this thought like, you know what, I'm not going to go all in and like make a store everyone's Bitcoin.

Brian Armstrong

21:21

That would be too much right now. I have a job. I have a day job, you know. But let me just make a prototype.

Brian Armstrong

21:26

And I'll tell people this is like a beta thing, like don't put any real money in it and just see if there's interest. And if I feel like I'm onto something, maybe I'll go do this as a company because I did I really wanted to be an entrepreneur at that time. I was like, I was 29. I was almost turning 30.

Brian Armstrong

21:38

And I was I always wanted to like start a company. But I was, I was, you know, I wasn't yet I was an employee at a company that was great. But so anyway, I had this prototype, I was hacking together nights and weekends, I actually wrote a whole Bitcoin node in Ruby, which turned out to be a maybe a weird decision in hindsight, because Ruby wasn't the most performant language, we've subsequently had to rebuild that many times. But Yeah, I had this hosted Bitcoin wallet and the thing that I didn't have any users for it by the way, I applied to Y Combinator because I was like, maybe if somebody there writes me a check, this will like make it feel like a real company.

Brian Armstrong

22:12

And I was trying to find a co-founder at that time unsuccessfully. So I was basically just wandering in the desert. I had a lot of self-doubt about this, because I was like, I don't know, all my friends don't think this is kind of dumb. And maybe Bitcoin is just going to get shut down.

Brian Armstrong

22:27

And like, this is all be some stupid thing. So there was definitely a feeling of just wandering lost in the desert, lots of self doubt. Paul Graham and the Y Combinator group kind of wrote me the first check after I went and interviewed and stuff. And they they wrote me a check for like 150k.

Brian Armstrong

22:42

And that was the first time somebody who I really looked up to kind of said this is this is worth pursuing. Like maybe maybe you're onto something, maybe you're not, but like, let's at least try it. And so I, that was kind of what gave me the confidence to quit my job and try it. And I'll wrap the story here by saying that, like, we, you know, I found the right co founder after Y Combinator.

Brian Armstrong

23:02

We still didn't have any customers. The thing that, you know, I basically launched the hosted Bitcoin wallet, there were people signing up, I just posted on Reddit and places like that. And you know, maybe like 100 people would sign up and then nobody would come back. And so I was like, I just in in Y Combinator, they often tell you like, you know, talk to your customers and improve your product, talk to your customers, improve your product, that's all you're supposed to be doing, try to find product market fit.

Brian Armstrong

23:25

So I emailed like 5 of the users that had signed up. And I was like, Hey, I worked on this app, I saw you signed up, can I get on the phone with you? I get on the phone with like 5 of these folks. And I was like, you know, why didn't you come back?

Brian Armstrong

23:36

And the guy was like, Well, the app was okay for a for a beta, but like, I don't have any Bitcoin. So I didn't really know what to do with it. And I remember this light bulb kind of went off my head. I was like, well, if I put a buy Bitcoin button in there, would you have used it?

Brian Armstrong

23:49

And he was like, yeah, maybe. So then I had this, we went about the process, my co founder, at that time, we like got bit basically had to get like a bank partnership payment rails, you know, an exchange basic exchange functionality, all that stuff I was mentioning earlier in place. And the minute we launched that feature where you could just click buy, put in your bank account or credit card, buy it, buy Bitcoin, it showed up in your account. From that day forward, like the number of users started to go up like this.

Brian Armstrong

24:12

And so we finally had found product market fit after 2 years of wandering in the desert.

Lex Fridman

24:17

So you weren't even thinking about to buy the on-ramps. You were thinking it would be just a wallet, a place to store Bitcoin that you've already gotten. Yeah.

Lex Fridman

24:26

Okay, this is, I mean, because that's such a pain to do, to have to work with others to convert dollars and fiat currency into Bitcoin. Yeah. So did you, I mean, were you overwhelmed by the immensity of the task here, or were you just sort of not allowing yourself to think too deeply through this whole thing and just letting the optimism take over here?

Brian Armstrong

24:58

You know, I was really looking forward to like doing something crazy and like a big challenge. And I wanted to, I love kind of crisis moments like that, where, you know, I'm very determined, right, especially when I get like, very set on something. And I'm just like, you know what, I'm gonna figure out a way to make this fucking thing work, like no matter what.

Brian Armstrong

25:20

And so I reveled in that. I was sort of, I had read all these books about startups and like every startup has these like, you know, major setbacks and just like nothing works. And so. So that

Lex Fridman

25:31

was a sign that you're doing something right.

Brian Armstrong

25:33

I had no idea if I was doing anything right at all, but I was like, I was kind of loving the experience of it in a weird way. It felt stressful at the time, like, you know, nothing was working, but I was just, I felt like I was on the right path somehow, and so I just kept going, I don't know.

Lex Fridman

25:50

What was the darkest moment that you've gone to in your mind during that time? What were some of the tougher moments? You said self-doubt.

Lex Fridman

26:00

Yeah. Yeah, where'd you go? Where'd you go in your mind? Is there a moment where you're just like laying there, this is hopeless?

Brian Armstrong

26:13

Well, there's a couple moments I'm remembering. I mean, so for whatever reason, I had this like big chip on my shoulder at that time. And I was like, I really want to do something important in the world.

Brian Armstrong

26:23

Like, you know, I could have a good life and like work for some good companies and write some software. And I'm, for some reason, I never wanted that for myself, that probably would have been healthier, honestly, just like that as an expected value outcome, that's probably a better thing in life. But I was like, I was like, man, I really want to do something important and have a bigger impact. And I was like, I was willing to sacrifice a lot for that I was like, sleep and not going out with friends and stuff.

Brian Armstrong

26:49

I remember 1 of the just for like years working on this stuff. I remember 1 of the darker moments was we probably had like maybe 5 employees at that time. And I remember like a bunch of bad things happened all at once. And it was, so first of all, you have to remember at this time, we were all very sleep deprived, which exacerbates everything.

Brian Armstrong

27:11

If you look at the Exxon Valdez spill and all these natural disasters, sleep deprivation is often involved. So, because the reason why we were so sleep deprived is not just because we're working so much, but like the site would go offline in the middle of the night and we'd get I get paged. I was like on pager duty. So I get woken up sometimes like 2 or 3 times a night, like have to try to fix something, go back to sleep.

Brian Armstrong

27:31

So in that environment, you can kind of get you can get discouraged. So 1 bad thing that happened was, we had a bug on the website. And there was thousands of people on Reddit and Twitter who were all like, pissed at Coinbase, because like the balances were showing wrong and they were just like, you know, fuck this company, it's over, like I hate these guys. And so that was, I'd never had this feeling of a thousand people mad at me at the same time.

Brian Armstrong

27:57

You know, I feel like I'm a pretty chill guy. Like most of the time people don't get mad at me. So that was 1. Another 1 was that...

Lex Fridman

28:03

Can we pause on that? That's so interesting. So you were saying like, here's a dream, I'm trying to create something, and now forever the reputation of this dream is ruined.

Lex Fridman

28:13

It will never, it's irrecoverable, it's over. That kind of feeling.

Brian Armstrong

28:17

Yeah, well, you're right. I didn't know at that time. I was like, is this the end?

Brian Armstrong

28:21

Like, everybody, we're so tiny now, everybody hates us. So is it over?

Lex Fridman

28:26

Yeah.

Brian Armstrong

28:28

Nobody told me this before starting a company that like, a bunch of people will hate you for this, which is like a very counterintuitive thing. Cause you know, most companies I think are doing good things in the world, at least you're trying, right? And so even if someone's like trying, but they're not, they're failing, I'm generally rooting for them, at least you're trying,

Lex Fridman

28:44

right?

Brian Armstrong

28:45

But that's not the case at all. And most founders I've known have gone through this too, where they're very surprised at the amount of hate that they get. And I think it's actually like a muscle you can build, your tolerance to it.

Brian Armstrong

28:58

Like, because you go talk to somebody who's like, for you it feels terrible because you're at the center of this storm. But if you go, then you go talk to your family or some other person, like, dude, I didn't even hear about that. They're just busy in their own life. And so they have no idea that you had all this negative press or whatever it was.

Lex Fridman

29:16

Can I once again linger on that? Yeah. There's an interesting person I'd like to bring up, just as an example, Bill Gates.

Lex Fridman

29:27

Yeah. So he gets a very large amount of hate on the internet. And there's something about him, this is me talking, not you, that he seems out of touch about that hate. I believe, at least in my understanding, with the resources he has, he's trying and is actually doing a lot of good.

Lex Fridman

29:50

And yet there's a gigantic amount of hate, conspiracy theories and stuff like that. And it feels like that's the case because he's somehow out of touch with people. So I wonder how you stay in touch with the voice of the people without being destroyed by the outrage. Is there any wisdom you have to that?

Brian Armstrong

30:11

Or? Or? I don't know about wisdom, but I've thought about this too, because, yeah, you wanna always be open to feedback, especially from people who have like your best interests at heart, right? And if you can become isolated from it and just like, you know, surrounded by yes people and I mean, who knows, maybe, maybe like she and Putin and people like that are in situations I have no idea.

Brian Armstrong

30:36

But if you listen to too much of it and you just try to please everyone, you'll never get anything done. And I mean, most of the best leaders are people who they can act when they believe that they're doing something net positive for the world and humanity, and they actually don't really care if they piss off some portion of the people. Almost anything you're going to do of significance in the world today is going to piss off 5% of people, maybe 49% of people or whatever, maybe 60% I don't know. So you never want to become so surrounded by people who just work for you and will say yes.

Brian Armstrong

31:09

And then you think like, well, I'm a genius. And I'm like, I'm a that's how you become a dictator or whatever. But you also can't care so much about what people think because then you'll never do anything that's truly authentic to yourself. 1 other thought on that, by the way, I think it's a really good question.

Brian Armstrong

31:24

So I've thought about this a lot, like why, you know, people generally kind of hate on Zuck and they hate on Bill Gates and they hate on, they don't really hate on Elon. Actually, Elon has a lot of haters too, but it's

Lex Fridman

31:36

a different thing. This is measured, this is measured. I was looking at some surveys.

Lex Fridman

31:41

So I think Zuck is the most, so loved and hated, right? Yeah. Zuckerberg is the most both loved and hated. He's the most hated.

Lex Fridman

31:52

And then I think it's Bill Gates and Elon is down there. I think it's like 40% hate Zuck, people asked. And then Elon is in the double digits, but low double digits. And so it's interesting, you just look at this data, ask yourself why.

Brian Armstrong

32:08

Right, so I ask myself this sometimes too, because I don't claim to know any of these people well, but I've met them briefly, and my impression is that they're actually all smart people trying to do good things in the world. So there's not too much difference there despite public perception, perception. So why is it that some are really hated and some aren't?

Brian Armstrong

32:25

I mean, it's a complicated question. Obviously. It's, you know, Zuck and his Facebook got blamed for the whole election thing and all that didn't help. Social media has gotten a lot of pressure just from like, hey, why aren't you solving all of society's tough problems?

Brian Armstrong

32:40

It's like, well, they're just 1 company. But 1 thing I've noticed is that a lot of these people, they have like Asperger's, right? A little bit. And sometimes people with Asperger's don't really emote in the same way.

Brian Armstrong

32:54

And so I think it's almost a form of like, like bias against their cognitive type or something, which is like, that person doesn't emote right. I don't trust their intentions. And the other thing I've thought about too, is that sometimes I think some leaders, you know, like maybe Zuck or Bill Gates, they can come across as like a little bit PR rehearsed. Like they're basically, they're giving the PR approved answers where Elon just says whatever he thinks like to a fault.

Brian Armstrong

33:29

So even if people hate what he says, they're like, at least I believe it's authentic. So I've always thought about that too for myself. I'm like, how do I, cause you can fuck it up on both sides, right? Like if you just come out and you're like saying whatever's stream of consciousness, you'll often end up like pissing off people on your team or like saying, tripping over some like regulation that you, you know, there's all kinds of things about running a public company, you can't say certain stuff, but if you're too PR approved in your answers, nobody trusts you, what you're saying.

Brian Armstrong

33:58

And so, anyway, this is something I think about a lot. I don't think I have the right answer, but I'm trying to find that balance.

Lex Fridman

34:02

And more and more with the internet, there's a premium on authenticity, just like you're saying. People really, really appreciate that. So for leaders, it's a challenge to be, how do I make sure I'm authentic, but also don't say stupid shit?

Lex Fridman

34:19

And so that's an interesting thing. I've noticed that just having interacted with a bunch of leaders that you have to be careful how much you surround yourself with PR folks. Because

Speaker 3

34:31

the best, I would say, let me just say a nice thing about marketing and PR folks, the best marketing folks are extremely good.

Lex Fridman

34:40

So they understand exactly what great marketing is and great PR, it's authenticity, it's revealing the beauty, As opposed to PR and marketing out of fear. Oh, don't say that, don't say this, don't that. Because then you start living in this kind of, that pushes you towards a bubble, where you can't express your beautiful quirks and weirdness and all that kind of stuff.

Lex Fridman

35:03

And also the cool, the beautiful things about what you're doing. I find like, especially with the tech thing, like even like Coinbase, the way to reveal the beauty of it is not only by showing all the things you could do with it, but showing that there's great engineering going on underneath. So letting the nerds shine too. It doesn't have to be like these kind of commercials where it's like a happy family using Coinbase to send a transaction about flowers for mom or something like that.