Company Building in Crypto [Dec 2018]
Chris Dixon + Brian Armstrong
How did Coinbase start?
Armstrong Studied CS and Economics
Saw hyperinflation in Argentina
Worked at AirBnB
Front row seat to international commerce at scale
Saw a lot of broken things
2010: read Satoshi’s white paper
Decentralized protocol for moving value, along with information
Even in 2011, felt like he might be too late
Worked on Coinbase prototype on nights/weekends
Got into YC
Andreessen felt he might’ve missed the internet revolution in ’93 🙃
Dixon considers himself an innovation maximalist
Thinks VR is about to come back
Crypto feels like one of the big paradigms; few come along in a career
Time is tough, though
Nerd energy (nights/weekends) still funneling towards ML and Crypto
A16Z invested in Coinbase in 2013
Series of run-ups, and declines
Challenge for Armstrong in managing his psychology, his team’s psychology
Friends and family could be tough; “you’re working on the scam thing?”
People who make companies successful need passion that transcends 2-3 years
Those initial years are full of setbacks; maybe you see success after 8-10 years
Most initial activity was in one protocol: Bitcoin
Scaling concerns started to bubble
Realized that Coinbase couldn’t just be a Bitcoin company; might just be digital gold
ETH, then expanded to 5. More coming
Not going to be like TCP/IP, where it’s one protocol to rule them all
Handful will likely succeed; e.g. JPEG, PNG for images
Traded risk for complexity in the landscape
Aiming to be the most trusted, and easiest to use, in the crypto world
Ethereum’s appeal
JS-like, Turing-complete language that’s relatively easy to use
Enabled a new set of tokens; comprehensive smart contracts; etc
Half a developer maintained SSL; there was no money for funding it
ETH has inspired a renaissance in protocol development
..and maybe there’s a business model for maintaining them
New design space unlocked, where you can't assume that you have total control over the distributed computer
Coinbase is a little over 500 people, now
Things like mission statements, OKRs start to feel necessary when you cross Dunbar’s number
Executive coaching has been really helpful
Armstrong wants to run a big, public company someday
Keen to learn / professionally develop
Does NPS feedback after every big meeting
What is crypto useful for, beyond speculation?
Access to financial services in emerging markets
Recipients can verify payment with just math; not third party
Prediction markets
Wisdom of the crowds
Social apps, decentralized
Endorsements and up-voting resulting in payment
Can you reduce the friction with moving little amounts of money around?
Putting in a credit card is still very high friction
(Armstrong doesn’t know who PewDiePie is)
Dixon: the idea that we’re only 20 years into the internet and compensation modalities are done?
Feels short-sighted; ads not likely to be the end-all-be-all
Quality of crypto teams is a high quality as any other types that A16Z sees
A16Z’s initial foray into Crypto
2013; was a contrarian move to dive in
Dixon was in the security space; has always found it interesting
HashCash was interesting, in the context of surmounting spam
You can always find reasons to be a detractor, but on net, there’s much to be excited about