The Coinbase Mission, Vision & Strategy

The Coinbase Mission, Vision & Strategy


(audience clapping) – Good evening, everyone. My name is Brian Armstrong, I’m the Co-Founder and CEO of Coinbase, and I wanna tell you a little bit about what we’re all about as a company. Where we’re going in the next 10 years and how we’re gonna actually get there. So we call that our mission,
vision and strategy. And I’m gonna start off by
just telling you a story. So when I was in college, I started a company with my roommate. It was a tutoring company,
we got a bank account set up, we started to have some
money flowing through it, and one day I got a call from the bank, and it started asking me
all these scary questions. Are you an aggregator of funds? Are you a high risk merchant? Do you have business policy
and procedure in place? And do you have this license? And I was kinda taken aback, I mean I almost felt
like I was being treated like a criminal or something. I felt like I was trying to do
something good for the world, and suddenly I was facing
this inquisition of questions. Fast forward a few years later, I was a software engineer at Airbnb, we were moving money to 190
countries all over the world, and this is a photo of Cuba, of Havana. One day somebody came and they
tapped me on the shoulder, and they said, we need to turn
off all the listings of Cuba. And I was kind of upset about
that because these were people who had opened their homes to strangers from all over the world. And there was this rule, this
regulation, that US companies, we couldn’t do business with them, and we had to turn them all off
and affect their livelihood. So throughout my life, you know, this was just
two small examples, but there were many
literal examples like this. Whether it was something got
messed up on my credit score, or I was trying to, you know,
I had a bank overdraft fee, or I was trying to send money somewhere and my credit card got declined. I always had this visceral sense that there was something really broken and kind of inefficient
about the financial system. And it seems just kind of
like it wasn’t keeping up with the rest of the world
in terms of improving. It seemed like it was
holding back innovation and people were trying to
do good things in the world. And so in 2010, I was home with
my family for Thanksgiving, I was having kind of an introvert moment where I just went off to my room to get away from everybody in my family for a little bit of alone time. And I started reading on the internet, I came across this paper, the Bitcoin whitepaper
by Satoshi Nakamoto. And this spark kind of
went off in my head, I was like, wow, this
seems really important. Like I didn’t even really
fully understand it the first time I read it. But it was talking about how the world could have something kind
of like the internet, that was decentralized and global, but instead of for moving
information around, it was for moving value
around and money around. And I got really excited
because I felt like this might be part of the solution to make a financial system that was more fair and more
efficient and open to everybody. And so I kind of couldn’t stop thinking about Bitcoin for about a year and I went to all these
meetups in San Francisco, and I finally started coding a prototype on nights and weekends, which eventually ended
up becoming Coinbase. This was a slide from our seed deck, our seed roundup pitch deck. And tonight, you know, this is sort of the
origin story of Coinbase, I wanna tell you, just give you an update
about our thinking, this is actually one of the first time we’ve shared this with
an external audience. We’re gonna talk about just what we wanna create in the
world with this company, how we’re actually gonna get there, what are all the steps
through these three sections. Okay, so I wanna
introduce you to this term economic freedom. Economic freedom is something that a bunch of organizations out there, they try to measure about all
the countries in the world. And they kind of rank
them and they score them. And economic freedom measures
a whole bunch of things. One of them is property rights, which is this idea that
if you own something, can it be taken away from
you without your permission? It also looks at how
easy it is to send money and goods and services internationally. It checks, you know, if
you wanna start a business, is there a lot of
bureaucracy, a paperwork, or do you have to bribe
somebody to get a license or something like that or can
you just do it in a few days? It also looks at the
inflation rate in countries. Some of you might have seen
countries like Venezuela going through hyper inflation
and people’s wealth, especially the poorest people, tends to be eroded by inflation. It checks, if you wanna start a business or work at a business, how
able to do that are you? And it even looks at
things like corruption, you know, are people having to pay bribes to get things done? And so economic freedom
is this really broad term. People tend to think of it
as it’s sort of a measure of can you make money or what’s
the growth rate of the economy? And that’s part of it
but it actually affects all sorts of things in these countries. And it’s positively
correlated with some things that you maybe wouldn’t think of, like the income of the poorest people, or how well the environment is treated. Even self reported happiness, right? And it’s negatively
correlated with these things that we don’t want less of
like corruption and even war. So you can see economic
freedom in these countries. You know, again, here’s Cuba. This was 60 years ago, and
here it is in modern day. And it looks relatively the same. But by contrast, if you look
at a country like Singapore, one of the highest
economic freedom countries, 60 years ago it was this swamp land, and now it’s this bustling metropolis. And you can even see economic
freedom from out of space. So this is North and South Korea. You know, these two places
have roughly the same natural resources and
geography and everything, but it’s just their difference
in economic policies have created these dramatically
different outcomes. And so economic freedom is getting better in the world, very slowly. So over the last 25 years or so, it’s gone up about three
percentage points by this metric. But the vision for Coinbase
is that we can actually bend this curve and materially
change the economic freedom of the entire world by
what we’re gonna build. And that’s what we’re
gonna talk about next. So that’s really the vision for Coinbase, is creating more economic
freedom for every person in business in the world
over the next 10 years. All right, so what are we gonna do to actually make that happen? Well what we’re gonna do
is create what we call the open financial system. Which just means that we’re
gonna use cryptocurrency and the smartphone
revolution, things like that, to actually inject economic freedom into these countries all over the world. And it might not be
immediately obvious to people, I know it wasn’t for me. Why does cryptocurrency actually enable more economic freedom in the world? And if you go back to those things I mentioned in the beginning, some of the things that
economic freedom measures, you know, if you look at property rights, well cryptocurrency
actually is a great way to give people wealth that
can’t be taken away from them. There’s user controlled wallets, even these things called brain wallets, and even if you use the
hosted wallets on Coinbase, oftentimes people still have
much better property rights than they do in their home countries. In terms of free trade, well cryptocurrency is inherently global, it works everywhere in the world. In terms of easier ways
to start a business, cryptocurrency is democratizing the way that companies raise money and you can accept payments
globally from day one. Cryptocurrency is now even
helping fight inflation. So Stablecoins are being sent
into places like Venezuela. And people are able to start the companies that they wanna start and work
at them with Smart contracts. Even corruption is being
affected by cryptocurrency because there’s also organizations where you wanna have
the entire thing be done out in the open, on public ledger. So that anybody can audit it, see where every payment is going. So cryptocurrency is a huge
enabler of economic freedom and it’s also this other
trend that’s happening, which is the growth of smartphones. So increasingly, even the
poorest people in the world have access to the
internet and smartphones and they can now have
a bank in their pocket. That’s really the opportunity. That’s the secret that
Coinbase is founded on, the belief that right now
at this moment in history, because cryptocurrency got invented and everybody in the world can
have access to a smartphone, we can inject economic freedom really into all these countries around the world. So that’s what we’re actually building, to make this vision a reality. We’re gonna help create that open financial system for the world. And I just wanna go
through the strategy now. Let’s break that down, that’s a pretty high level goal. There’s really a few ways that
we’re gonna make that happen. So if you wanna create a new economy, an alternative economy that is more fair, is more free, is more efficient,
it’s open to everybody, the first thing you
need to do is just help millions and millions
of people in the world get access to cryptocurrency
and just store it securely. And then we need to start to be able to enable people to use it and also to earn it. Because not everybody
has disposable income to actually invest in cryptocurrency. They might need to earn it by doing a job or completing a task. And lastly, we need a thousand
companies to get built, that start to accept
cryptocurrency and use it, for a true economy to be built. Because an economy is made
up of thousands and millions of participants, not just
one company like Coinbase. And so this ties into the
three pillars of our strategy, which we call Enable Crypto Investing, Connect to Cryptoeconomy, and
then Grow the Cryptoeconomy. So I’m gonna touch on each
of these just briefly. All right, so Enable Crypto Investing. Still today, the primary way that people get into cryptocurrency, and many of you nodding, this
is probably true for you, is someone told you about it and you decide to buy a
little bit as an investment. And so most of the money in the world is tied up in fiat currencies and one of our major roles at Coinbase is we’re providing this very
reliable trusted safe bridge between this original financial
system and the cryptoeconomy so that a lot of the wealth
that’s tied up in the world can move into cryptocurrency. So that means we’re a brokerage, we’re an exchange, we’re a custodian; those are three of the business’ products that we’ve built that
have done really well. Those are kind of like the
foundation for this economy, necessary infrastructure, if you will. And to make those
successful over the coming three, five and 10 years,
we have a lot of work to do. I mean we need to keep
adding more and more assets to the platforms that our
customers wanna trade, there’s gonna be millions
of these tokens out there, as companies start to issue them to raise money and all kinds of things. We need to keep launching our products in more and more countries. So we’re in about 100 countries today but not with full functionality; and every country in the world needs reliable bridge
between fiat and crypto. We also just need to keep making cryptocurrency apps easier to use. It’s still way too complicated
if we’re gonna get to be a billion people using cryptocurrency. These little concepts
like, you know, private key or you’re sending to an address. We need to keep making
these easier and easier. So this is the first step,
enabling crypto investing. You know, investing is
really a solo activity. People buy and they come back
and they check their balance a couple of times a month or they might trade a little bit more. But an economy is not
just about one person or each of these people in a silo. You need to start to
connect them together. And that’s what we mean
by this second phase. It’s actually taking a variety
of products and services that Coinbase offers and
beginning to connect them into that primary account, where so many people today are
holding their cryptocurrency. So we call this kind of an economic graph, sort of like a social graph, but instead of there being people, who are sending messages and
likes and things like that, there’s people in companies
and the edges between them are you know, things like Send
and Receive, Buy and Sell. And we’re adding new
economic actions all the time like Borrow and Lend, or Spend and Pay. So we’ve launched some products that helped this start to happen. One of them is called Coinbase Earn, it allows people to
actually earn cryptocurrency by completing small tasks. Maybe in the future, even getting a job that
pays in cryptocurrency. And we also launched
something called Staking which is a way for people to earn more cryptocurrency on their assets. With Coinbase Commerce, we’ve started to enable
spending of crypto, whether it’s at a point of
sale here or it’s online. We even launched a Coinbase
debit card in the UK. So we’re using that to kind of help people spend the crypto in their primary account. And you know, in Coinbase Pro, we’ve enabled people to
start to borrow and lend, or we will in the near future, which is another important
action in any economy, you want people to be able to
borrow and invest that way. So connecting a cryptoeconomy is really about taking
our suite of products, commerce and earn and things like that, and beginning to connect them
into that primary account where 30 million people have signed up to hold their cryptocurrency with us. Okay, so the last pillar in this strategy is about growing the
cryptoeconomy in total. And this idea is really that
Coinbase can’t do it alone. There needs to be thousands
of companies out there and it’s almost like when the
internet first got started, you know, there was some
traditional companies that tried to make their
way into the internet, with varying degrees of success. But there was also this
whole new crop of companies that were internet
native, like the dot coms, or is what they used to be called. Now it’s almost every
company in Silicon Valley is built on the internet. And the same thing is already
happening with cryptocurrency. We’re seeing a whole new wave of startups that are built that are crypto-native. You know, they raised money with crypto, they’re accepting crypto as maybe even the only form of payment that they accept. And so part of growing a cryptoeconomy is investing, like I said. With Coinbase Ventures, we’ve now invested in about
50 or 60 of these companies. But we actually are gonna enable an entirely new ways of fundraising. There’s things like security
tokens are being created, and initial exchange offerings, which is a way for new companies to raise money in cryptocurrency. We’re also surfacing these
3rd party apps and companies. We’re beginning to surface
them into our products. So here’s a screenshot of Coinbase Wallet, and you can browse to the DApp screen. A DApp is a decentralized app. And one of the most popular apps that is this app called Compound. So we’re beginning to
give people the ability to access any sort of application or company out there in the cryptoeconomy. Especially ones that we didn’t create. And lastly, we’re gonna
build this infrastructure, decentralized infrastructure,
in a few ways. One is, this is a screenshot here, sort of a mockup of what decentralized identity might look like. Which is a really interesting topic. It’s a way for people to
control their own data, an identity in the cryptoeconomy. And we may even start to make available some of our internal APIs. Almost like AWS for crypto,
to the external world, to help those companies, those startups, build on the infrastructure that we use to build our own products internally. So these are the three
pillars in our strategy. You can see that each of our products actually fits into one
of these pillars today. We’re doing a lot of things. And even there in the bottom
right, GiveCrypto.org, is a nonprofit that we created which is helping grow the cryptoeconomy. You know there’s going
to be a lot of companies in the cryptoeconomy and
I just wanna touch on what I think we can do different and really contribute to this. So the first thing is that Coinbase has built a brand around trust. We’ve had 30 million people signed up that trust us to store
their cryptocurrency. We’re the largest custodian out there. And by really focusing on
compliance from an early day, that enabled us to get
these bank partnerships and the bridge into the
traditional financial system. And we focused a lot on cybersecurity too. You’ve probably heard about
all the challenges out there with crypto companies facing
cybersecurity incidence. I think we’ve become the
best in the world at that, and so people really trust us. The second one is about a real focus on usability and quality. And so as I mentioned earlier, cryptocurrency can be pretty intimidating and pretty difficult to use. And our goal is to get, you know, the next 100 million or more people to start to use cryptocurrency, it’s gotta be way simpler. And so I think we could go
even much further than that, but we’ve probably built the
best brand for that today. And lastly, people come to Coinbase because there’s a whole bunch of products that they might wanna use and they actually all
work together pretty well. And so we start to
leverage our distribution between our products in a way that I think is really powerful. So this is our vision,
our mission, our strategy, it’s what we’re all about as a company, what we’re trying to create in a world, and how we’re gonna get there. And I guess I just wanna
wrap up by saying that we are just at the very
beginning of this journey. So yes, we’ve got 30
million people who signed up and have gotten a little bit
of cryptocurrency with us, that’s amazing. But our vision is to have a billion people in say five to 10 years accessing
an open financial system through our products every day. And when we’ve done that, we will have materially changed the economic freedom of the world and we’ll have bent the
shape of that curve. So that’s the vision that
we’re trying to create and hopefully you all found it helpful. Thank you. (audience clapping)

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