Company Building in Crypto: A Conversation between Brian Armstrong and Chris Dixon | Summary and Q&A

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December 21, 2018
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a16z
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Company Building in Crypto: A Conversation between Brian Armstrong and Chris Dixon

TL;DR

Coinbase CEO Brian Armstrong discusses the origins of Coinbase, the potential of cryptocurrencies beyond speculation, and the future of the industry.

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Key Insights

  • 😖 Coinbase was founded by Brian Armstrong, who recognized the potential of cryptocurrencies to disrupt the global financial system.
  • 👯 Cryptocurrencies can provide financial inclusion in emerging markets, where millions of people have cell phones but no access to traditional financial services.
  • 😀 Prediction markets and social apps can leverage cryptocurrencies to tap into the wisdom of crowds and create new business models for content creators.
  • 💆 The scalability, stability, and user experience of cryptocurrencies need improvement to reach mass adoption.

Transcript

hello can you hear me yeah okay good great welcome it's a great crowd um thanks brian thanks for being here yeah all right we're going to have a uh hopefully a kind of a fun casual talk about about uh crypto and coinbase and uh so maybe um maybe if you don't mind go let me go back to how you started started coinbase sure so let's see i studied comp... Read More

Questions & Answers

Q: How did Brian Armstrong start Coinbase?

Brian Armstrong studied computer science and economics and had a passion for disrupting industries. After experiencing hyperinflation in Argentina and witnessing the broken global financial system at Airbnb, he discovered Bitcoin and wanted to be part of the cryptocurrency revolution. He started Coinbase to create an open financial system.

Q: What are the key use cases of cryptocurrencies beyond speculation?

Armstrong highlights three key use cases: 1) Emerging markets, where millions of people have a cell phone but no access to financial services. Cryptocurrencies can provide financial inclusion. 2) Prediction markets, where decentralized platforms can tap into the wisdom of crowds for predictions and decision-making. 3) Social apps that integrate cryptocurrencies, where users can be rewarded with tokens for their contributions.

Q: How can cryptocurrencies be beneficial in emerging markets?

Cryptocurrencies can provide financial services to people without access to traditional banking systems. With a cell phone and crypto wallet, individuals can receive direct cash payments, transfer money, and verify transactions without relying on traditional intermediaries. It can improve financial inclusion and empower individuals in these economies.

Q: How can cryptocurrencies revolutionize creative industries?

Armstrong believes cryptocurrencies can revolutionize creative industries by enabling direct payments between content creators and consumers. Instead of relying on ad-based revenue models, individuals can be rewarded for their creative work and contributions. For example, social media platforms can transform into global monetized communities, where every upvote or like can transfer money to content creators.

Summary

In this video, Brian Armstrong, the CEO of Coinbase, discusses his journey of starting the company and his thoughts on the future of crypto. He talks about his background in computer science and economics, his experiences in Argentina during hyperinflation, and his time at Airbnb where he witnessed the flaws in the global financial system. Armstrong also shares how he discovered Bitcoin and why he believes in its potential. He discusses the challenges of managing a company through the ups and downs of the crypto market, as well as the importance of leadership, communication, and personal development. Finally, Armstrong shares his excitement for the use cases of crypto in emerging markets, prediction markets, and social media apps.

Questions & Answers

Q: How did Brian Armstrong get started with Coinbase?

Brian studied computer science and economics in school, and after working at Airbnb, he became interested in Bitcoin and its potential to disrupt the global financial system. He started working on a prototype for what would eventually become Coinbase and received a check from Y Combinator to pursue the idea.

Q: What did Brian learn from his experiences in Argentina during hyperinflation?

Brian saw firsthand how hyperinflation changed the culture of the country and made him realize the importance of a stable financial system. It inspired him to think about how cryptocurrencies could provide a solution to the flaws he observed in traditional banking.

Q: How did Brian become interested in Bitcoin?

Brian read the Satoshi Nakamoto white paper for Bitcoin during Christmas in 2010 and was captivated by the potential of a global, decentralized protocol for transferring value. He saw it as a transformative technology comparable to the internet and wanted to be part of its early development.

Q: How did Brian navigate the challenges of managing Coinbase during market volatility?

Brian acknowledges the stressful nature of managing a company during market ups and downs. He emphasizes the importance of having enough working capital to handle increased demand during bull markets. He also discusses the psychological challenges of maintaining a positive face while dealing with internal issues.

Q: What are some use cases of crypto beyond speculation?

Brian mentions three use cases that excite him. The first is the potential for crypto to provide financial services to the billions of people in emerging markets who don't have access to traditional banking. The second is the use of prediction markets to harness the wisdom of crowds for various predictions. The third is the idea of social media apps where every upvote or like button is a form of micro-payment, allowing content creators to monetize their work more easily.

Q: How does Brian envision the future of crypto?

Brian sees crypto as being in the "dial-up phase" of the internet, where there is still much work to be done to improve scalability, reduce volatility, and enhance developer tools. He believes that once these challenges are overcome, crypto will have an "iPhone moment" and unlock a new era of innovation and business models.

Q: How does Brian approach personal and professional development as a CEO?

Brian emphasizes the importance of ongoing learning and self-improvement. He specifically mentions the value of executive coaching and working with people who have previous experience as CEOs. He also believes in fostering a feedback culture, both within his company and with the board of directors.

Q: How does Brian view the relationship between Bitcoin and Ethereum?

Brian acknowledges the strengths of both Bitcoin and Ethereum. While Bitcoin is seen as digital gold and a store of value, Ethereum is exciting because of its scripting language that allows for the creation of smart contracts and tokens. He believes that multiple protocols will coexist and drive innovation in the crypto space.

Q: How does Brian envision the future of the internet with native crypto currency?

Brian sees the potential for crypto to revolutionize the business models of the internet by providing a means for easy and seamless transactions. He envisions new possibilities for content creators to be compensated directly, creating a more equitable and sustainable system.

Q: How does Brian address the challenges of managing a growing company?

Brian discusses the shift in management style required as a company grows. He recognizes the need to establish clear values, missions, and communication channels to align everyone towards a common goal. He also emphasizes the importance of hiring and leadership development in order to scale the company effectively.

Takeaways

Brian Armstrong's journey from starting Coinbase to his thoughts on the future of crypto highlight the potential of cryptocurrencies beyond speculation. He sees opportunities in emerging markets, prediction markets, and social media apps, where crypto can provide financial services, harness collective wisdom, and enable new business models. While the industry is still in its early stages and faces challenges in scalability, volatility, and user experience, Brian remains optimistic about the future of crypto as it continues to evolve and unlock new possibilities. He also emphasizes the importance of personal and professional development, effective leadership, and adaptability in managing a growing company.

Summary & Key Takeaways

  • Brian Armstrong shares the story of his journey from studying computer science and economics to starting Coinbase, including his experiences with hyperinflation in Argentina and working at Airbnb.

  • He explains how he discovered Bitcoin and recognized its potential to disrupt the global financial system, leading him to start Coinbase.

  • Armstrong discusses the challenges and lessons learned during the ups and downs of the cryptocurrency market, and the importance of creating an open financial system for the world.

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