Brian breathed a sigh of satisfaction as he clicked on “publish” and his blog post went live. It was September of 2016, a month after the Bitfinex hack, and he was wearing a plain black T-shirt. Like other Silicon Valley CEOs, he had taken on a distinct sartorial style as a type of self-branding. Brian’s style wasn’t as conspicuous as Mark Zuckerberg’s hoodie or Steve Jobs’s turtleneck—an affect later copied by Twitter CEO Jack Dorsey and disgraced Theranos founder Elizabeth Holmes. Instead, Brian took to donning a simple T-shirt—usually black, sometimes white—for speeches and public appearances. It was a nod to simplicity and focus.
Since founding Coinbase, Brian had kept his blog as a chronicle of product announcements, hiring milestones, and other signs of progress. This blog post was different. It was broader and more ambitious. Unsubtly titled “The Coinbase Secret Master Plan,” it set out Brian’s sweeping vision for the future of cryptocurrency.
Crypto was like the internet, he explained and, like the internet, it would have a four-step development. The initial two steps, which would bring crypto to one million and then to ten million people, were well under way. The first had been the creation of new blockchain protocols like bitcoin and Ethereum to create and distribute money. Next came services to trade and store crypto. The third phase in crypto’s development, Brian said, would be software allowing people to interact more directly with blockchain technology—the equivalent of how the arrival of browsers like Netscape and Explorer let anybody discover the internet. The fourth and final step, Brian predicted, would come in the form of blockchain apps that let people do things like borrow, lend, and invest without relying on a bank. Step four, he wrote, would mark the inauguration of Finance 2.0 and bring one billion people into the emerging crypto universe. If this was the future, then Coinbase’s master plan was to lay stepping-stones to Finance 2.0 while investing in other companies doing the same.
The prose in the blog reflected Brian—both technocratic and visionary. “At Coinbase we are passionate about creating an open financial system for the world. By open we mean not controlled by any one country or company (just like the internet). We think this is the highest leverage way to bring about more economic freedom, innovation, efficiency, and equality of opportunity in the world,” he wrote.
The master plan made perfect sense to Brian, even if it didn’t make any sense to most people, including many in the traditional financial world. Crypto had made inroads into a few corners of Wall Street and could be traded along with other commodities, but the idea of a billion people using crypto seemed far-fetched to everyone who hadn’t been steeped in bitcoin for years. But in true Silicon Valley fashion, Brian thought it best to think big, and he had Coinbase’s board behind him. However, first he would have to inspire Coinbase’s own employees.
Giant and far-flung business visions are usually associated with Valley and tech CEOs who have outsize personalities. Steve Jobs is the archetype. Even as the late Apple CEO introduced some of the most profoundly disruptive technology the world has ever seen, he nourished a cult of personality with his distinct appearance and a stage presence worthy of P. T. Barnum. Elon Musk, who runs both the electric car company Tesla and the rocket maker SpaceX, likes to share extravagant plans for living on Mars and building high-speed tunnels between US cities. In person and online, Musk is combative and outrageous—picking fights with the SEC on Twitter and smoking weed during live radio interviews. At least part of this is a calculated attempt to build up the Musk mystique. Amazon’s Jeff Bezos envisions people living in space colonies.
Being of the Valley, it would not be unusual for Brian to think big and think big publicly. But Brian was nothing like Jobs or Musk or Bezos. He was a self-described introvert CEO. Every early Coinbase employee describes Brian as “awkward.” Several point, in particular, to his first attempt at delivering an inspirational speech during a company retreat in Napa Valley—summing it up as “painful” and “oh my God.” One employee said, “The joke was always that he’s on the [autism] spectrum somewhere,” before adding thoughtfully, “but with Silicon Valley, fuck, I think 80 percent of the founders here are a little bit odd when it comes to social skills.”
Brian had enough self-awareness to try and learn. That wasn’t difficult. Since he was a teenager, he had been possessed by a pathological desire for self-improvement. If there was something he didn’t understand, he read about it until he did. If he met someone who knew more than he did, he asked them questions. One time, upon receiving a performance evaluation from an outside consultant, he emailed it to everyone at Coinbase, asking them to weigh in, too. For Brian, leading was just another skill he would have to learn.
At the urging of Coinbase’s board, Brian and Fred had invested heavily in Silicon Valley’s best coaches, and these efforts began to show results, albeit with early hiccups like the infatuation with Conscious Leadership. The coaches sanded off some of the rough edges that had led Bloomberg Businessweek to describe the pair as humorless “Vulcan bankers.” The work of office manager Nathalie McGrath to build a more human office culture, with costume events and karaoke nights, had also helped make Brian more approachable.
Nevertheless, Brian not only acknowledged he was an introvert, but came to embrace it. Like Jobs or Musk or Bezos, Brian had a sweeping vision—bring crypto to one billion people and disrupt the multi-trillion-dollar finance industry. Unlike them, he couldn’t try to carry out that vision through sheer force of personality. “I didn’t really know exactly what a CEO was,” he says. “I thought maybe you had to be a military general, like barking orders to people. You shouldn’t try to be something you’re not. Being fake is the worst kind of leadership.”
Brian had learned another lesson: being introverted wasn’t the same as being weak. Since the beginning, he had fought time and again to exert total control over Coinbase, whether this meant nudging out his Y Combinator partner or dictating terms to the startup’s angel investors. And as Coinbase grew bigger, he turned to a new tactic to ensure he would keep that control.
In Silicon Valley, executives like Mark Zuckerberg have discovered a way to ensure they are not just chief executives, but kings of the companies they found. Google’s founders, Larry Page and Sergey Brin, used the same trick to stay in control, even as they distributed more and more of the company’s stock. The secret for staying in power involved creating a new class of shares with super voting rights. Ordinarily, one share of a company’s stock comes with an equivalent degree of voting power. If the company in question has created one hundred shares, the owner holding 1 percent of the firm’s assets gets one vote out of a hundred. Super voting shares bust the math: an individual who owns such stock might get ten votes for every share, ensuring that he or she can outvote ordinary investors who own a much bigger proportion of the company. In a variation of the scheme, a company might issue new shares with no voting power at all, thus increasing the power of extant voting shares. This lets some investors partake in the company’s fortune but with no say in how it’s run. No matter the specifics, the outcome is the same: founders obtain a hammerlock on critical issues such as board composition, product strategy, or anything else that affects the direction of the company.
This is what Brian did as Coinbase grew. As the company raised a $75 million Series C and then a $100 million Series D investment round—key milestones on the path to taking a company public—it handed out millions of new shares, but also created a new class of shares for Brian that would guarantee he could outvote those investors and anyone else. Like Zuckerberg and the Google founders, Brian had an iron grip on Coinbase for now and for the foreseeable future. By the time he posted his visionary blog post, Brian had the power he needed and was learning to lead a company that was growing faster than he anticipated.
• • •
A key test of Brian’s leadership came as competition to lure professional traders heated up. While Coinbase’s bread and butter had always been retail investors and hobbyists, its professional exchange, GDAX, had set out to capture the market for wealthy traders—called “whales”—and the growing number of hedge funds and other Wall Street players dipping their toes into the crypto world.
An early version of GDAX launched in 2015 and, after it added Ethereum, the exchange took off. To track its progress, Coinbase placed giant monitors around the office showing GDAX’s market share compared with other exchanges. The company was not number one. That distinction belonged to Bitfinex, the Hong Kong–based exchange that had endured a series of hacking scandals—including the one in 2016 that saw it lose $72 million in bitcoin to thieves and then impose a 36 percent haircut on of all its customers’ holdings to make up for the loss. Despite its general sketchiness—no one was quite sure who controlled it—Bitfinex still enjoyed a global base of customers who liked its fast-and-loose approach to financial regulation, which allowed them to get richer quicker. Coinbase couldn’t—wouldn’t—compete with that. Since the beginning, the company had tried to do right by regulators and, on GDAX, it catered to customers who cared about compliance. Targeting compliance-conscious Americans and traders in other countries with tight banking laws, GDAX began to build market share and soon pushed past a San Francisco rival, Kraken. But then the graphs on the giant office monitors started to move in the wrong direction—down.
GDAX’s growth stagnated in mid-2016, surrendering some of its market share to rivals like Bitfinex and other renegade exchanges, which had wooed customers with low prices and more types of crypto to trade.
More crucially, Coinbase and GDAX had a new and serious competitor: the Winklevoss twins.
Cameron and Tyler Winklevoss first gained fame via Aaron Sorkin’s acclaimed 2010 film The Social Network, which focuses on betrayal and intrigue surrounding the founding of Facebook. The movie depicts the twins, played by Armie Hammer, as jocks outwitted by a scheming Mark Zuckerberg, who dubs them “the Winklevii.” While the film painted Zuckerberg as unsympathetic, it also left a lasting impression of the Winklevoss twins as lummoxes—an impression they did little to dispel by trading on their movie fame to appear in a moronic pistachio commercial that took a shot at Zuckerberg.
In reality, the twins are little like their popular caricatures. While their physical stature is striking—as Cameron’s character snarls in the movie, “I’m six-foot-five, 220, and there’s two of me”—their accomplishments go beyond their rowing careers at Harvard and the Beijing Olympics. Far from being silver-spoon brats, the twins were hardworking students who, while still in high school, translated Latin works of St. Augustine and other early scholars with their father. In person, they are different from each other—Cameron is more serious and hard-charging while Tyler is more jovial—but both are thoughtful and well-spoken. One thing The Social Network did get right, though, is their driving ambition.
In the battle over Facebook, the twins won a settlement after their lawyers obtained a series of damning messages from Zuckerberg—including one where he gloated how he would “fuck them . . . probably in the ear.” Notwithstanding the ear-fucking, Cameron and Tyler made out very well, obtaining a $65 million payout in 2008, the bulk of which they took in Facebook stock. That ballooned to over $500 million a few years later. Around this time, they struck gold again. As their biographer Ben Mezrich writes of their decision to take the Zuckerberg payout in stock, “For the [allegedly] foolish, batshit-crazy twins, this proved to be one of the greatest business decisions of all time—topped only, perhaps, by their choice to invest $11 million of that settlement in bitcoin in 2013.”
Cameron and Tyler’s next business decision—to back the dissolute Charlie Shrem and his BitInstant project—was less auspicious. BitInstant, which offered bitcoin buying and merchant services, got crushed by Coinbase, and Shrem went to jail for breaking money-laundering laws. The twins, though, rebounded. They sought a rematch with Coinbase with the launch of Gemini, their squeaky-clean exchange aimed at professional traders. And in the early rounds of this fight, they won decisively.
“Gemini came out of stealth [in late 2015] and we watched them on the office monitors creep up every week and then surpass us,” recalls Adam White, who led Coinbase’s pro trading exchange GDAX. This was a double blow. Not only was Coinbase’s new cash machine faltering but it was losing to a competitor that likewise styled itself as a “white knight of crypto”—a place for compliance-minded investors who needed an exchange that stayed on the right side of regulators. The flagging exchange situation was a crisis that needed leadership. Brian stepped in.
In an urgent email, he summoned Adam White, other GDAX executives, and other key people from across Coinbase—from legal, from marketing, and from design. “Fix this,” he told them at a tense lunch, “and fix it now.” The Brian who appeared at the lunch was unlike the leader his staff had seen before—direct and authoritative. Barking orders like a general may not have been his style but, on this occasion, Brian mustered a military-style persona, directing the different silos of Coinbase to work together like never before.
“Winning the exchange space is fundamental; it’s foundational,” he said. What he meant was that if Coinbase couldn’t hold its own against the likes of Gemini, they could forget about the rest of Brian’s master plan.
The all-hands intervention worked. Services like GDAX are, at the end of the day, products, and products don’t succeed if they don’t have support from the nonproduct people in a company. By shoving the exchange to the top of everyone’s agenda at Coinbase, Brian brought the exchange back from disaster. The graphs on the office monitors took on their old appearance as GDAX regained market share, while Gemini shriveled. For the second time in three years, the Winklevoss twins lost to Coinbase.
• • •
By 2017, Coinbase had grown to hundreds of employees, and Brian was learning to lead them all. He was still an introvert but no longer one who retreated into the private world of his headphones for twelve hours at a time. But even with dozens of direct reports, and less self-imposed seclusion, Brian grew lonelier in the role.
The departure of Olaf, Brian’s good friend, was followed by others. Charlie Lee, the company’s fifth employee, had a new home and a family who had grown tired of his long hours at Coinbase. Charlie also owned a hoard of Litecoin. He had created the lighter version of bitcoin while at Google in 2011, and the digital currency had since become worth billions, its value trailing only bitcoin and Ethereum. Litecoin’s value would soar still further, Charlie suspected, if more people could buy it. And the best way to make that happen would be to sell it on Coinbase.
A popular story in crypto circles tells of Charlie secretly building Litecoin capacity into Coinbase’s code and, late one night, pushing the code live with no warning, only to be fired the next day. It’s a good story, but it’s not true. A programming feat like adding Litecoin support to Coinbase would take a much longer time to build and numerous hours to launch. It can’t be done overnight. Also, Coinbase uses what employees call an “eye of Sauron” to ensure no one can unilaterally mess with its code without tripping alarms.
Coinbase did launch Litecoin in the spring of 2017—with Brian’s full approval—and the price shot up 25 percent. The press pronounced the bounce was due to the “Coinbase effect,” a term that would create publicity, and trouble, for the company in the future. Two months later, Charlie announced he was leaving Coinbase.
• • •
Charlie’s departure meant the loss of another longtime and trusted employee, but a much bigger blow for Brian had come months earlier. Fred had left.
Since his epic rant that pushed Coinbase to adopt Ethereum, Fred had grown restless. He was cofounder of the company, but Brian was in charge. While the pair had found an equilibrium early on—Brian ran product, and Fred took care of the business side—Coinbase could no longer contain both their ambitions. Fred wanted to call all the shots, but that wasn’t going to happen at Coinbase. Sensing the beginnings of an unprecedented bull run for crypto, he decided to strike out on his own to build apps and launch a hedge fund. “I enjoyed being a spirit leader at Coinbase,” he recalls, adding that since leaving, he and Brian have become better friends than ever.
The formal goodbye came during a Friday morning meeting in front of all the employees, many of whom were shaken by the news. Fred spoke reverently of his time at Coinbase and his optimism about the future of cryptocurrency. “What I wanted most was for the company to do well. I had hired everyone who was there. It’s like leaving your family in a way,” he recalls.
And then the tough and unsentimental money man—the one who had exhorted the company to charge through brick walls—did something he hadn’t done in many years. He started to cry.
Brian had published his “Secret Master Plan” in September of 2016. But as his ambitions swelled, the following months placed more on his shoulders than ever before, and he now had few trusted friends to help. And as the beginnings of an impending crypto mania began to swirl, Coinbase began to face a new set of problems. Not least of which was the US government.