Latest / The David Rubenstein Show / Brian Armstrong

Transcript

Brian Armstrong · The David Rubenstein Show

0:02
Speaker 1: About a decade ago, a young entrepreneur, Brian Armstrong, who
0:06
Speaker 1: was working at Airbnb, left that company to start a
0:09
Speaker 1: company to trade cryptocurrencies. The company started, coin Base, became
0:13
Speaker 1: one of the hottest I p O s on Wall
0:15
Speaker 1: Street This year. Because of the f t X meltdown,
0:18
Speaker 1: coin Basis had some challenges. I sat down with Brian
0:21
Speaker 1: Armstrong to talk about the future of his company. So,
0:24
Speaker 1: for those who don't know much about cryptocurrencies, what exactly
0:29
Speaker 1: is coin Base and what does it do? So coin
0:31
Speaker 1: Base is the primary financial account for many people participating
0:35
Speaker 1: in the crypto economy. So we help people buy and
0:38
Speaker 1: sell crypto. We also help them use it in a
0:40
Speaker 1: variety of ways. They can use it to send money
0:43
Speaker 1: to commerce far and lend or yield on their assets.
0:46
Speaker 1: So we think of ourselves as the primary financial account
0:49
Speaker 1: for people in that crypto economy. Okay, so I know
0:51
Speaker 1: you're different than another company I'll mention, but is this
0:54
Speaker 1: what f t X more or less did as well
0:57
Speaker 1: theoretically for its clients was to enable them to trade.
1:00
Speaker 1: So f t X did one piece of what I
1:02
Speaker 1: just mentioned, which is the trading aspect. That's correct. What
1:05
Speaker 1: do you think actually happened to f t ACTS. You've
1:08
Speaker 1: been quoted as saying you think there was more than
1:10
Speaker 1: just occasional bad bookkeeping. You think there was more to
1:13
Speaker 1: it than that. Is that right? That's right? And you know,
1:17
Speaker 1: obviously I'm sitting here as an outsider, but it seems
1:19
Speaker 1: pretty clear to me that it's not just a run
1:22
Speaker 1: on the bank or you know, poor management of funds.
1:25
Speaker 1: It appears that they took customer funds from their exchange
1:28
Speaker 1: and actually commingled them or moved them into their hedge
1:31
Speaker 1: fund and then ended up in a very underwater position.
1:35
Speaker 1: And that was, I believe, against their terms of service
1:37
Speaker 1: and against the law. And so from my point of view,
1:39
Speaker 1: it looks like a massive fraud. And we know that
1:42
Speaker 1: because they turned off withdrawals and the customer funds which
1:45
Speaker 1: should have been held there one to one we're not
1:47
Speaker 1: able to be withdrawn. Um, so that appears to be
1:49
Speaker 1: a fraud from my point of view. So in your view,
1:52
Speaker 1: will the ft X bankruptcy hurt the industry and maybe
1:56
Speaker 1: produce enormous amount of regulation that you may not want, Well,
2:00
Speaker 1: I do think the f t X downfall is a
2:02
Speaker 1: bit of a black mark for the industry. And it's
2:05
Speaker 1: not representative of the whole industry of course though, and
2:08
Speaker 1: you know we in traditional financial services occasionally you see
2:10
Speaker 1: dad actors as well, like Bernie made Off or what
2:12
Speaker 1: happened at en Roun. Now, in terms of regulation, you know,
2:16
Speaker 1: I do think that it won't be a bad thing.
2:18
Speaker 1: We We've actually coin based has been calling for clear
2:20
Speaker 1: regulation and trying to work with policymakers for quite a while.
2:24
Speaker 1: We've made some progress on that across various G twenty countries.
2:27
Speaker 1: But I think it will serve as a wake up
2:29
Speaker 1: call in sort of a moment of catalyst where we'll
2:31
Speaker 1: get more clear regulation in the United States. And I
2:34
Speaker 1: think that will actually be a really a good thing
2:36
Speaker 1: for both coin based and the whole industry. So for
2:38
Speaker 1: your company of people who are clients of coin base,
2:41
Speaker 1: you are reassured them I assume regularly or they can
2:44
Speaker 1: find out for sure if their account is managed the
2:47
Speaker 1: way it's supposed to, it's not being used for some
2:49
Speaker 1: additional purposes. That right, That's right. So I mean we
2:52
Speaker 1: actually are very different than what happened with f t X.
2:55
Speaker 1: So for one thing, coin base is based right here
2:57
Speaker 1: in the United States. We didn't incorp rate in an
3:00
Speaker 1: offshore jurisdiction like the Bahamas. Um, we're also a public company,
3:04
Speaker 1: which means we meet we need to meet all of
3:05
Speaker 1: the audit requirements of a public company, and so we
3:08
Speaker 1: show in our publicly audited financial statements that you know,
3:11
Speaker 1: corporate cash is separate from customer funds, and you don't
3:14
Speaker 1: have to take our word for it, you know. UM,
3:16
Speaker 1: you know, a Big four accounting firm has come in
3:18
Speaker 1: and proven that in these cases. So there's there's other
3:21
Speaker 1: differences as well. You know, we're we have we operate
3:23
Speaker 1: an exchange, but we've never created an exchange token like
3:26
Speaker 1: the way f t X did. We never operated our
3:28
Speaker 1: own market maker or hedge fund in the way that
3:30
Speaker 1: that ft X did because we believe that that would
3:32
Speaker 1: be a conflict of interest. So the difference between the
3:34
Speaker 1: two firms, I think cannot be overstated, and it's really
3:37
Speaker 1: a validation of the approach that we've taken at coin
3:40
Speaker 1: based over the last ten years to sort of build
3:42
Speaker 1: this this business and entrusted and compliant way as opposed
3:45
Speaker 1: to what happened with f t X. So for people
3:48
Speaker 1: who may not be that familiar with what your services,
3:51
Speaker 1: let's Suppose, um, I wanted to buy a stock, I
3:53
Speaker 1: would call a stockbroker or somebody that's a market maker,
3:56
Speaker 1: say I want to buy a certain share. They would say, okay,
4:00
Speaker 1: you pay a commission. Um. If somebody wants to trade
4:04
Speaker 1: a cryptocurrency, they in effect have an account with you,
4:07
Speaker 1: I assume, and they pay some kind of fee for
4:10
Speaker 1: the exchange. Is that right? That's right. Trading fees is
4:15
Speaker 1: one of our major sources of revenue, and yeah, we've
4:18
Speaker 1: we've begun to diversify that as well, so we we
4:20
Speaker 1: have a different category of revenue we call subscription and services,
4:23
Speaker 1: which is has started to grow. So that's about thirty
4:25
Speaker 1: six percent of our revenue in our last in Q
4:28
Speaker 1: three of this year. But today people have accounts with you,
4:32
Speaker 1: they have it clear that you you if they want
4:34
Speaker 1: to pull their account out, they can get the money,
4:37
Speaker 1: I guess, because you are not subject to a run
4:39
Speaker 1: on the bank on effect, that's correct. All customer funds
4:44
Speaker 1: are clearly segregated and help assets are held one to
4:47
Speaker 1: one for customers. So there's really no such thing as
4:51
Speaker 1: a run on the bank in coin bases world, because well,
4:53
Speaker 1: number one, we're not regulated as a bank, so we
4:55
Speaker 1: don't do fraction reserve lending. UM. But also UM, you
4:59
Speaker 1: know a h of custo were funds are stored one
5:00
Speaker 1: to one. So if if a hundred percent of people
5:02
Speaker 1: want to come withdraw, they can do that and we'll
5:04
Speaker 1: have their funds for them. Okay, So you started the
5:07
Speaker 1: company in and you took a public I think in April,
5:13
Speaker 1: the I p O was enormous success, and I think
5:16
Speaker 1: at the end of that day, uh, your company was
5:18
Speaker 1: worth maybe seventy five billion or more. UH, and you
5:21
Speaker 1: were personally worth I think about ten billion dollars or more.
5:25
Speaker 1: The company's stock has come down about uh in recent times,
5:29
Speaker 1: in part because of the the ft X and other things
5:31
Speaker 1: that happened in the crypto world. So how does it
5:33
Speaker 1: feel to be worth ten billion dollars one day and
5:35
Speaker 1: not too long after a lot less. Well, you know,
5:39
Speaker 1: it's obviously been a difficult market for not just crypto
5:41
Speaker 1: but also really all growth tech and biotech, I would
5:44
Speaker 1: say too, So you know, we're in good company. Netflix
5:47
Speaker 1: and Spotify and all these these companies have also come
5:49
Speaker 1: down similar amounts. We knew that going public would not
5:53
Speaker 1: be an easy path, especially with as a in a
5:55
Speaker 1: new industry being a leader. We wanted to be the
5:57
Speaker 1: first crypto company to go out there and kind of
6:00
Speaker 1: assumed that it would take, you know, three or four
6:02
Speaker 1: years to go through a cycle, begin to educate, build
6:04
Speaker 1: trust in the public markets. And so that's the process
6:06
Speaker 1: we're going through now. And you know, my own personal
6:10
Speaker 1: um net worth is is not something that is particularly
6:13
Speaker 1: motivating to me in the sense of like driving personal
6:15
Speaker 1: consumption or something like that. I'm I'm excited about building
6:18
Speaker 1: the things with technology and cryptocurrency is one of the
6:20
Speaker 1: most exciting areas out there right now. So um, you know,
6:23
Speaker 1: I'm gonna I'm gonna keep working in this company for
6:25
Speaker 1: the next hopefully decade or two, and um, I think
6:28
Speaker 1: it's an exciting road ahead. All right, let's go to
6:31
Speaker 1: talking about the time that you started the company and
6:33
Speaker 1: what we were doing around about the time you did started.
6:36
Speaker 1: So you started in two thousand twelve. As I mentioned,
6:38
Speaker 1: what were you doing before you started? Did you know
6:40
Speaker 1: a lot about a cryptocurrencies, what we're Where were you working? Yeah,
6:44
Speaker 1: So before this, I was a software engineer and product
6:47
Speaker 1: manager at Airbnb, which you know, the travel home rental company.
6:52
Speaker 1: And you know, I'd studied computer science and economics and school.
6:55
Speaker 1: I had tried creating a couple other startups that were
6:57
Speaker 1: not very successful at one one of them in the
6:59
Speaker 1: education s days, and so while I wasn't working at Airbnb,
7:03
Speaker 1: you know, I kind of got to see they had.
7:04
Speaker 1: They were trying to move money to a hundred ninety
7:06
Speaker 1: different countries all over the world, both collecting payments and
7:08
Speaker 1: then paying out the people renting their homes. And I
7:11
Speaker 1: was one of the engineers kind of working on that,
7:12
Speaker 1: seeing how difficult it was to move money globally both
7:15
Speaker 1: you know, how opaque the fees were, how long the
7:17
Speaker 1: delays were, the chargebacks, all kinds of things like that. So,
7:22
Speaker 1: you know, at that time, I I this was around
7:24
Speaker 1: December of two thousand and ten, I believe I read
7:26
Speaker 1: the Bitcoin white Paper which came out, and I really
7:30
Speaker 1: it captured my attention in a really profound way. I
7:32
Speaker 1: remember reading it and thinking this might be one of
7:34
Speaker 1: the most important things I've ever read, and it it
7:37
Speaker 1: was saying something. It was describing something kind of like
7:40
Speaker 1: the Internet, which was global and decentralized, a new protocol,
7:43
Speaker 1: but instead of for moving information around, this was for
7:45
Speaker 1: moving value around in different forms and I basically just
7:49
Speaker 1: couldn't stop thinking about this paper for the last For
7:51
Speaker 1: the next six months. After that, I attended some meetups
7:54
Speaker 1: in San Francisco, um some early bitcoin meetups, and met
7:57
Speaker 1: some of the early people working on it, and eventually
7:59
Speaker 1: I just couldn't get this idea out of my head
8:00
Speaker 1: and I decided I had to go try to build
8:02
Speaker 1: a prototype that would make this this technology easier to
8:05
Speaker 1: use and trusted for the average person. So what was
8:08
Speaker 1: the valuation of your company for the first round from
8:12
Speaker 1: the first investors? Oh? Well, um, you know, I think
8:16
Speaker 1: why Combinator probably got seven percent of the company for
8:19
Speaker 1: the one thousand, so, you know, not a not a
8:24
Speaker 1: very high valuation. And then I think the Series A
8:26
Speaker 1: was I think we raised five million a million post
8:30
Speaker 1: so um. You know obviously that those investors did well.
8:33
Speaker 1: So when their company went public, they return on the
8:37
Speaker 1: initial investments were staggering. I remember reading about it at
8:39
Speaker 1: the time, so I guess they were very happy with uh,
8:42
Speaker 1: with you at that time. I don't know whether they've
8:44
Speaker 1: sold their shares or they still hold them, but still
8:46
Speaker 1: it's very profitable even at today's valuation. I sue, yeah,
8:50
Speaker 1: that's correct. I mean and they earned it, right. So
8:54
Speaker 1: that's that's the nature of these bets, is that if
8:57
Speaker 1: you can see something early on that most people are
9:00
Speaker 1: epical of in your contrarian but right, you know, occasionally
9:03
Speaker 1: you get these massive winds that come out of it.
9:05
Speaker 1: And I think, you know, a thousands when point Base
9:07
Speaker 1: went public, a thousand people employees I believe, became millionaires.
9:11
Speaker 1: And you know, a lot of the early people wrote
9:14
Speaker 1: me incredible letters telling us how they you know, we
9:17
Speaker 1: had changed their life and all these things. So that
9:19
Speaker 1: was a really powerful moment. And as being a public
9:22
Speaker 1: a trading company CEO, I pleasurable experience or not. You know,
9:27
Speaker 1: I actually when I before we went public, I didn't
9:29
Speaker 1: really know much about what it would be like, and
9:31
Speaker 1: I went and did a bunch of research. But um,
9:34
Speaker 1: my research played out roughly how I expected. And I
9:36
Speaker 1: actually kind of enjoy being a public company CEO. UM.
9:39
Speaker 1: It's a good forcing function for us to get feedback
9:42
Speaker 1: from the market, UM, to get input from analysts and investors.
9:46
Speaker 1: I've found their their thoughts to be actually be quite
9:48
Speaker 1: helpful in terms of operating our business periodically. And then
9:51
Speaker 1: of course, you know, I spend the vast majority of
9:53
Speaker 1: my time really just working with the team on how
9:55
Speaker 1: do we build better products for our customers. I don't
9:57
Speaker 1: want to lose sight of that as the primary objective.
10:00
Speaker 1: So let's talk about yourself for a moment. Earlier in
10:03
Speaker 1: your life. Where were you born? I was born in
10:06
Speaker 1: San Jose, California, in Silicon Valley. Um. Yeah, and where
10:10
Speaker 1: your parents technology people working at tech companies or something
10:13
Speaker 1: like that. Something like that. Yeah. So my mom was
10:16
Speaker 1: a programmer and a manager at IBM. So, um, we
10:20
Speaker 1: had a lot of the early IBM computers in our
10:23
Speaker 1: home and things like that. My dad is a civil
10:25
Speaker 1: engineer and an environmental engineer. So yeah, we definitely had
10:28
Speaker 1: to focus on you know, STEM and math and science
10:31
Speaker 1: and education in my my household growing up. I would say,
10:35
Speaker 1: And when you were growing up, what did you want
10:37
Speaker 1: to be when you were in high school? Did you
10:38
Speaker 1: want to be an athlete or a private equity investor
10:42
Speaker 1: something important like that or what? Um, you know, I
10:45
Speaker 1: don't think I knew exactly what I wanted to be
10:47
Speaker 1: in high school. I remember even in high school, I
10:50
Speaker 1: was learning programming and I was learning computers. Um. I
10:53
Speaker 1: was fascinated with that. I built some early websites. Even
10:56
Speaker 1: started a little business with a friend of mine in
10:59
Speaker 1: high school. We were reselling computer hardware. So I don't
11:02
Speaker 1: think I knew that I wanted to definitely be a
11:04
Speaker 1: tech entrepreneur, but looking back in hindsight, that's certainly where
11:07
Speaker 1: my energy and enthusiasm was, and I was. I was
11:10
Speaker 1: often staying up till two am, you know, learning Linux
11:13
Speaker 1: and computers in my bedroom, whereas and then I'd be
11:15
Speaker 1: sleep deprived and too tired to pay attention in history
11:18
Speaker 1: class the next day at school. But yeah, those were
11:21
Speaker 1: my early interests for sure. Where did you go to college?
11:24
Speaker 1: I went to Rice University in Houston, Texas. And how
11:27
Speaker 1: long were you at Airbnb? And how did you get
11:29
Speaker 1: that job? Now? Was that Airbnb for about a year
11:32
Speaker 1: and a half or so, and they I was employee
11:34
Speaker 1: number forty I think when they joined, when I joined,
11:36
Speaker 1: and they when I left, there was maybe six d people,
11:38
Speaker 1: so it had gone through this incredible period of growth.
11:40
Speaker 1: I learned a lot from them, actually, um just about
11:43
Speaker 1: how to run a great you know, product building process
11:46
Speaker 1: with engineers, how to raise money, how to operate in
11:48
Speaker 1: Silicon Valley, how to how to meet with people like
11:50
Speaker 1: at y Combinator. So I learned quite a lot from
11:53
Speaker 1: that process. When you left to start your own company,
11:57
Speaker 1: did Brian Showsky, the one of the CEOs and wounders
12:00
Speaker 1: are there tell you that you're making a mistake. You
12:02
Speaker 1: should stay at a stable company like Airbnb. Well, my
12:07
Speaker 1: boss at that time was Nate Blecharzick, who was one
12:10
Speaker 1: of the other co founders at Airbnb and one the CTO,
12:12
Speaker 1: and I remember how he he was very supportive and
12:15
Speaker 1: obviously they tried to get me to stay a little bit.
12:17
Speaker 1: But you know, generally there's a really incredible culture in
12:20
Speaker 1: Silicon Valley of how you know employees who who are
12:23
Speaker 1: joining these early startups that sometimes they go on to
12:25
Speaker 1: do their own startups, and it's it's very much a
12:28
Speaker 1: positive some environment. You know. One of the things I'm
12:30
Speaker 1: most proud of is actually a lot of early coint
12:32
Speaker 1: based employees have gone on to found other companies in
12:35
Speaker 1: crypto and um. That's been really positive and rewarding for
12:37
Speaker 1: us to see as well. So you told your parents
12:40
Speaker 1: you're going to start at cryptocurrency Exchange. What did they say? Uh?
12:45
Speaker 1: I don't think they quite understood what it was at
12:47
Speaker 1: that moment um. And my mom, you know, asked me
12:50
Speaker 1: if I was gonna have health insurance, which you know
12:53
Speaker 1: I learned. You know, even if you're creating a new company,
12:56
Speaker 1: you can you can pay for your own health insurance.
12:57
Speaker 1: And there's little things like that that made her you
13:00
Speaker 1: better at night. But I think ultimately they trusted me
13:03
Speaker 1: and they supported me, even if they didn't quite understand
13:05
Speaker 1: what it was. And they said, well, you know, if
13:08
Speaker 1: this doesn't work out, hopefully you can go get another
13:10
Speaker 1: job and help be fine. But they sort of knew
13:12
Speaker 1: I was always gonna try new things like this, and
13:14
Speaker 1: it wasn't worth trying to talk me out of it.
13:16
Speaker 1: At a certain points after coin based, when public, you
13:19
Speaker 1: decided to join the Giving Pledge was started by Bill
13:23
Speaker 1: and Melinda Gates and Warren Buffett. So why did you
13:26
Speaker 1: decide as such a young age and you're going to
13:29
Speaker 1: give away so much of your money and that anybody
13:31
Speaker 1: say to you, why don't you to save the money
13:33
Speaker 1: and not give it away? Well, to be honest, um, yeah,
13:37
Speaker 1: I mean I was. I just wanted to learn about philanthropy. Um.
13:40
Speaker 1: I don't think I'm very far along that journey, especially
13:42
Speaker 1: you know, given the markets correcting and everything, like that.
13:44
Speaker 1: It's not that I have, you know, as much money
13:47
Speaker 1: as I would like to give away, but I want
13:49
Speaker 1: to start to learn about it and just think about
13:50
Speaker 1: where where can you do well? Where can you do
13:53
Speaker 1: good in the world with capital? I think actually building
13:55
Speaker 1: private companies, and I've invested in some private companies with
13:58
Speaker 1: my wealth. I think those have potential to do a
14:00
Speaker 1: lot of good as well. There's there's some areas I'm
14:02
Speaker 1: passionate about in scientific research and things like that. UM,
14:06
Speaker 1: But I think philanthropy can also be helpful. It can
14:08
Speaker 1: also just like startups. You know, a large percentage of
14:11
Speaker 1: philthropic organizations are probably not well managed and not effective,
14:14
Speaker 1: and so you have to be, you know, good at
14:16
Speaker 1: finding the ones that are actually high impact and rewarding.
14:20
Speaker 1: How old are you now? Thirty nine, so you'll be
14:24
Speaker 1: forty presumably next year, and so you're still very very
14:27
Speaker 1: young by the standards of most CEOs that I know.
14:30
Speaker 1: So what do you do to UM relieve the pressure
14:33
Speaker 1: to you? Are you a mountain climber, a bike rider?
14:36
Speaker 1: Do you do you have any other exercise or hobbies?
14:40
Speaker 1: You know? I think the thing I'm most passionate about
14:42
Speaker 1: in life it just broadly is how technology can be
14:45
Speaker 1: used to improve the world and improve the human condition.
14:48
Speaker 1: And I think that's been true going back to you know,
14:51
Speaker 1: the first time somebody invented fire, or you know, putting
14:54
Speaker 1: shoes on their feet or whatever. Technology is a way
14:56
Speaker 1: that we can prove everything from healthcare to education to
15:00
Speaker 1: global economic freedom with cryptocurrency, and so I'm passionate about
15:04
Speaker 1: how we can accelerate that the pace of scientific and
15:07
Speaker 1: technological advancement. And so what do you say to some
15:09
Speaker 1: of the old line investors old line mean people my
15:12
Speaker 1: age or older or maybe slightly younger than me, who
15:15
Speaker 1: say that cryptocurrency really serves no useful social purpose and
15:19
Speaker 1: ultimately all cryptocurrencies will go to zero. How do you
15:22
Speaker 1: respond to them? Yeah, well, look, I think there's a
15:25
Speaker 1: long history in technology of bubbles being created and then corrections,
15:30
Speaker 1: and you know, there's hype cycles and doom cycles. And
15:33
Speaker 1: this has been true obviously with the Internet in recent memory.
15:36
Speaker 1: But even if you go back to the railroads and
15:38
Speaker 1: you know, the telephone and all these things, studying the
15:41
Speaker 1: history of this, you see that when a big technology
15:43
Speaker 1: innovation happens, early adopters come in, you see a bubble form,
15:47
Speaker 1: there's oftentimes a rational exuberance and then a correction happens,
15:50
Speaker 1: but ultimately there is a breakthrough there and it takes
15:53
Speaker 1: sometimes you know, a decade or more for these these
15:56
Speaker 1: benefits to come to fruition. So that's exactly what's happening
15:59
Speaker 1: here with Cryptocurreny see, you know, one in four US
16:02
Speaker 1: households have now used cryptocurrency. It's not a niche thing.
16:06
Speaker 1: It does tend to skew towards a younger audience and
16:08
Speaker 1: so sometimes people who grew up in their whole their
16:11
Speaker 1: whole career was in traditional financial services, it's hard for
16:14
Speaker 1: them to you know, this is the innovator's dilemma, right
16:17
Speaker 1: if you if you can, if people are familiar with
16:18
Speaker 1: the Clay Christensen book, it's hard for them to see
16:21
Speaker 1: this new thing coming along and seeing what the disruptive
16:23
Speaker 1: potential of it would be. And there's sometimes a little
16:25
Speaker 1: bit of blindness that happens with that. But um nevertheless,
16:29
Speaker 1: the change is happening and more people are using crypto
16:31
Speaker 1: through every cycle that happens. Well before you started the
16:35
Speaker 1: company or while you were starting, uh your company coin base,
16:38
Speaker 1: did you buy some cryptocurrencies yourself just to sell show
16:42
Speaker 1: that you were a believer in it, or do you
16:43
Speaker 1: not want to have a conflict by owning some of
16:45
Speaker 1: these cryptocurrencies. I mean, I really didn't have much money
16:48
Speaker 1: when I started coin base. You know, I had just
16:50
Speaker 1: left Airbnb. I had a little bit of money saved,
16:53
Speaker 1: but I had to I wanted to exercise my options
16:55
Speaker 1: and Airbnb when I left, and that actually almost cleaned
16:58
Speaker 1: out my bank account. So I think I had maybe
17:00
Speaker 1: like like three or four thousand dollars or something like
17:02
Speaker 1: that when I left over when I started Point based,
17:05
Speaker 1: So you know, I certainly bought a little bit of
17:07
Speaker 1: bitcoin early on, but we're talking about like a thousand
17:09
Speaker 1: dollars or something in that range for the first you know,
17:13
Speaker 1: five years or actually I mean still to a large
17:16
Speaker 1: degree to this day. I mean not myself and other employees.
17:19
Speaker 1: Early employees at Point based, we took our salary actually
17:21
Speaker 1: in bitcoins, so you can imagine that had some interesting
17:23
Speaker 1: appreciation value. You know, we had to sell a lot
17:25
Speaker 1: of it to sort of pay rent and things like that,
17:27
Speaker 1: so it wasn't um like we were able to hold
17:30
Speaker 1: all of it, but yeah, that there was definitely some
17:33
Speaker 1: appreciation there. But I wish I'd had more money in
17:35
Speaker 1: the early days for sure. Okay, So, um, how do
17:37
Speaker 1: you respond to the idea that many people don't know
17:40
Speaker 1: what they're doing when they're buying cryptocurrencies. They're not that
17:42
Speaker 1: well informed, they're very young, and they're gonna wind up
17:45
Speaker 1: losing their money because they're just not experienced. How do
17:48
Speaker 1: you respond to that concern? Right? Well, I think that's
17:52
Speaker 1: a very valid concern across really any type of investment
17:55
Speaker 1: that people might make, not just in crypto, but um
17:57
Speaker 1: in stocks and in everything. So my person shin is
18:00
Speaker 1: that we actually do need more clear regulation that's crypto specific.
18:03
Speaker 1: I mean crypto businesses like coin based were already regulated
18:06
Speaker 1: like a traditional financial service business. And you know, we
18:09
Speaker 1: have a CFDC license, and we have Finns were registered
18:12
Speaker 1: with finn Send, we have a New York bit license
18:14
Speaker 1: and various money money transmission licenses. That's that's just in
18:17
Speaker 1: the US, UM. But I think we need more crypto
18:19
Speaker 1: specific regulation in the US, both around stable coins, how
18:25
Speaker 1: centralized exchanges and custodians are, you know, the best practices
18:28
Speaker 1: they should have in place around audits and you know,
18:31
Speaker 1: not commingling funds. Many of those things we're already doing,
18:33
Speaker 1: and then the big piece will be actually getting clarity
18:36
Speaker 1: around what's a commodity, what is the security, what's a
18:38
Speaker 1: stable coin? And we need sort of an updated version
18:41
Speaker 1: of the Howie test, which is um something that the
18:44
Speaker 1: SEC uses two that applies more to cryptocurrency. So there's
18:48
Speaker 1: a lot of legislation being put through Congress now and
18:51
Speaker 1: coin based has been very active in DC working with policymakers.
18:55
Speaker 1: They're they're strong bipartisan support in the US to actually
18:58
Speaker 1: get clear crypto regulation UM. The FTX situation created a
19:02
Speaker 1: little bit of a delay in in the legislation that
19:04
Speaker 1: I was hoping was going to be coming getting past
19:06
Speaker 1: in the next quarter or so, But I think within
19:08
Speaker 1: the next year we can hopefully get something there in
19:11
Speaker 1: the US and then go for the rest of the
19:12
Speaker 1: G twenty as well. So Sam Bankman Freed was well
19:15
Speaker 1: known for giving money to politicians as campaign contributions and
19:20
Speaker 1: for lobbying members directly in Capitol Hill. Do you go
19:23
Speaker 1: to Capitol Hill very much the lobby directly for legislation
19:26
Speaker 1: and one type or another. Are you very involved in
19:28
Speaker 1: political contributions? So I go to d C. Historically I've
19:32
Speaker 1: gone to d C and maybe two or three times
19:34
Speaker 1: a year, and um, I imagine that may even be
19:36
Speaker 1: more frequent now in the next year or two. Um,
19:39
Speaker 1: we've made small donations to certain candidates that are pro
19:42
Speaker 1: crypto and we you know, but just standard stuff like
19:45
Speaker 1: you know, five thousand hundred dollars or these kind of
19:47
Speaker 1: basic minimums. We don't actually we've never made any kind
19:50
Speaker 1: of donations on the scale that Sam Makman Freed was
19:52
Speaker 1: doing through through these large packs and things like that.
19:55
Speaker 1: And um, you know, part of it is like it's
19:58
Speaker 1: how the game is played. You need to sort of
20:00
Speaker 1: make relevant donations. That's what all companies do, public companies
20:04
Speaker 1: do around policy issues. But it does seem like the
20:06
Speaker 1: way that Sam was doing it, where he was so
20:09
Speaker 1: visible in d C, there was such a large amount
20:11
Speaker 1: of money I think I think he was the second
20:13
Speaker 1: largest donor to the Democratic Party or something like that,
20:15
Speaker 1: it does seem like it was happening at a different scale.
20:18
Speaker 1: And UM, you know, I think there's some really serious
20:21
Speaker 1: questions to be asked now about should should some of
20:23
Speaker 1: that money be clawed back because it appears that it
20:26
Speaker 1: was stolen from customers. So when you come to Washington,
20:29
Speaker 1: you meet with members of Congress, do they really understand
20:32
Speaker 1: cryptocurrencies or you have to educate. I'm a fair bit
20:36
Speaker 1: you know. When I first started going to d C
20:38
Speaker 1: maybe eight or nine years ago, I think many of
20:41
Speaker 1: them didn't understand crypto at all, and there was a
20:43
Speaker 1: lot of very basic conversations. I think today probably of
20:46
Speaker 1: Congress maybe understands the basics, and they understand the potential
20:51
Speaker 1: of this technology that it has. It has a lot
20:53
Speaker 1: of innovation potential which we want to preserve, but it
20:56
Speaker 1: also has some risks, and unfortunately it's attracted some some
20:59
Speaker 1: bad actors to try to come into this industry to
21:01
Speaker 1: try to profit from it, and so they recognize the
21:03
Speaker 1: balance the need for both clear regulation and preserving that
21:06
Speaker 1: innovation potential. There's still probably, i would say, of Congress
21:10
Speaker 1: where they're either just very hostile to it or or
21:15
Speaker 1: just ignorant of it. But it's not the majority view
21:17
Speaker 1: at this point. I've actually been very pleasantly surprised to
21:20
Speaker 1: see strong by bipartisan support to get clear regulation but
21:23
Speaker 1: help this industry grow. You know here in the United States,
21:26
Speaker 1: in the financial center of the world, um as opposed
21:30
Speaker 1: to it being built, you know, in these havens or
21:33
Speaker 1: off offshore jurisdictions where we've seen that customers can get hurt,
21:36
Speaker 1: including U S citizens who may be attracted to to
21:38
Speaker 1: those kinds of products. I suppose I say, I listened
21:41
Speaker 1: to your interview and I like to buy some cryptocurrencies.
21:45
Speaker 1: What would you recommend as somebody who doesn't know much
21:47
Speaker 1: about crypto about what they do to get educated and
21:50
Speaker 1: would you recommend to that. Suppose somebody is a young
21:53
Speaker 1: professional he or she has a modest amount of money
21:55
Speaker 1: in the bank, would you recommend they put pent in crypto?
21:59
Speaker 1: Five said, how what do you recommend to people that
22:02
Speaker 1: they do if they want to experiment investing in crypto? Right,
22:06
Speaker 1: so we're not a registered investment advisors. I have to
22:07
Speaker 1: be a little carefully. I mean, we're not giving any
22:09
Speaker 1: investment advice to people. But what I would what I
22:11
Speaker 1: do personally and what I would you know, what I
22:14
Speaker 1: would tell people I should say personally is that, um,
22:16
Speaker 1: if this is something new, don't invest in anything that
22:19
Speaker 1: you don't understand. And if you want to learn about it,
22:21
Speaker 1: you know you can put one percent of your net
22:23
Speaker 1: worth into it or something like that that you would
22:25
Speaker 1: be okay if if it all went to zero. But um,
22:28
Speaker 1: if if it's not, then it's a way for you
22:29
Speaker 1: to dip your your toe in the water and hopefully
22:31
Speaker 1: you know, own a little piece of this crypto economy
22:34
Speaker 1: that that's happening more and more on the Internet for
22:36
Speaker 1: the next five or ten years. So, UM, I'm more
22:39
Speaker 1: in the mindset of personally, I don't actively trade crypto
22:42
Speaker 1: or anything like that. I'm more of like a long
22:43
Speaker 1: term buying holder. And then I just try to help
22:46
Speaker 1: the company build good products and services. So I'm not
22:49
Speaker 1: like an active trader of crypto personally. So for somebody
22:52
Speaker 1: that UM is a young person watching, I would say,
22:55
Speaker 1: I want to be Brian Armstrong. I want to be
22:58
Speaker 1: out of be a person who starts a comp a
23:00
Speaker 1: very successful leader in in his industry. What would you
23:03
Speaker 1: recommend as the skill set or the kind of things
23:06
Speaker 1: that somebody should do to become you. Well, it's odd question.
23:11
Speaker 1: I'm sure some people want to do that. Not everybody
23:13
Speaker 1: wants to do that, But for people who do, I
23:16
Speaker 1: think number one is study engineering, science, math, STEM. I
23:21
Speaker 1: think that's that's the language of our future that you
23:24
Speaker 1: can have the most impact. UM, And then I would
23:27
Speaker 1: say try building companies. I think that building technology companies
23:32
Speaker 1: is probably one of the best levels we have to
23:34
Speaker 1: improve the world, regardless of what problem we're talking about,
23:38
Speaker 1: whether you know that's climate change or fixing educational healthcare,
23:41
Speaker 1: anything like that. So, and you know, starting companies is hard. Um.
23:45
Speaker 1: I started a number of companies that didn't work or
23:48
Speaker 1: they were barely successful in some small way, and it was,
23:52
Speaker 1: you know, a coin basis probably the tenth idea that
23:54
Speaker 1: I had that I tried, and that one ended up
23:56
Speaker 1: working really really well. Um, But there's more. There's others
23:59
Speaker 1: that I hope to it in the future, and I'm
24:01
Speaker 1: maybe someone works, some won't. And so you have to
24:03
Speaker 1: be okay with resilience and failures and setbacks along the way.
24:07
Speaker 1: Thanks for listening to hear more of my interviews. You
24:10
Speaker 1: can subscribe and download my podcast on Spotify, Apple, or
24:14
Speaker 1: wherever you listen.