20VC Most Downloaded Founder Episode of 2017 Brian Armstrong, Founder & CEO @ Coinbase



In the final episode of the 20 vc awards week, the host celebrates the most downloaded Founders Friday episode of 2017 featuring Brian Armstrong, CEO of Coinbase, a leading platform for cryptocurrency transactions. Armstrong details his journey from software engineer at Airbnb to embracing the potential of Bitcoin after reading Satoshi Nakamoto's research paper, overcoming skepticism and self-doubt with support from Y Combinator. He discusses the distinctions between Bitcoin and Ethereum, the scalability and governance hurdles facing cryptocurrencies, and the transformative potential of ICOs (Initial Coin Offerings) on traditional venture capital. Armstrong envisions a future where Coinbase expands its portfolio to build the blocks of an open financial system, highlighting the importance of regulatory clarity and the evolution of smart contracts for sustainability. The host also endorses HR platform Namely and Wi-Fi system Eero, thanking listeners for their support.

Summary Notes

Introduction to 20 VC Awards Week

  • Harry Stebbings hosts the third episode of the 20 VC Awards Week.
  • The episode celebrates the most downloaded Founders Friday episode of 2017.
  • Previous episodes featured guests like Peter Fenton at Benchmark and Kirsten Green at Forerunner.

"Welcome back to this third and final episode of this very special 20 vc awards week. For the last two episodes, we celebrated the most downloaded vc shows with guests like Peter Fenton at Benchmark and Kirsten Green at Forerunner."

The quote signifies the success and popularity of the 20 VC Awards Week, highlighting the significance of the guests featured in prior episodes.

Brian Armstrong's Achievements

  • Brian Armstrong, founder and CEO of Coinbase, has the most downloaded founder episode of 2017.
  • Coinbase is a leading platform for buying and selling cryptocurrencies like bitcoin, ethereum, and litecoin.
  • The company has raised over $215 million from notable investors.
  • Armstrong previously worked as a software engineer at Airbnb and founded universitytutor.com.

"Brian Armstrong, founder and CEO at Coinbase, has the most downloaded founder episode of 2017."

This quote announces Brian Armstrong's episode as the most downloaded, emphasizing his influence in the tech and cryptocurrency industry.


  • Thanks given to Jonathan Downey at Airware for introducing Brian Armstrong to the show.
  • Namely and Eero are mentioned as sponsors, providing HR solutions and Wi-Fi systems, respectively.

"And I want to say again, a huge thank you to Jonathan Downey at Airware for the intro to Brian today, without which this episode would not have been possible."

The quote acknowledges the contribution of Jonathan Downey in making the interview with Brian Armstrong possible, emphasizing the importance of networking and introductions in the venture community.

Brian Armstrong's Journey into Cryptocurrency

  • Brian discovered bitcoin in 2010 while working at Airbnb.
  • The Satoshi Nakamoto research paper on bitcoin had a profound impact on him.
  • Armstrong faced self-doubt due to skepticism from friends and the perceived riskiness of bitcoin.

"And I remember having this feeling come over me at that time that this was the most important thing I'd read in the past five years."

This quote captures the moment of realization for Armstrong when he understood the potential impact of bitcoin, which was a pivotal point in his career.

Y Combinator's Role in Boosting Confidence

  • Applying to Y Combinator was a turning point for Armstrong.
  • The investment from Y Combinator provided validation and confidence to pursue Coinbase.
  • Y Combinator's support is valued not just for the investment but for the confidence it instills in entrepreneurs.

"But the thing that actually gave me the confidence to go start a company was actually applying to Y Combinator."

The quote highlights the crucial role Y Combinator played in validating Armstrong's idea and giving him the confidence to start Coinbase, underscoring the importance of external validation for entrepreneurs.

Bitcoin vs. Ethereum

  • Ethereum has gained attention for its scalability and potential.
  • Brian Armstrong outlines three key differences between bitcoin and ethereum: scalability, a Turing complete language, and different teams behind each.
  • Coinbase aims to support a variety of digital currencies, not favoring one over another.

"So there's really three things to know about ethereum versus bitcoin. The first is there's a difference in scalability, so ethereum is more scalable."

This quote introduces the first key difference between bitcoin and ethereum, which is scalability, setting the stage for a detailed comparison of the two cryptocurrencies.

Scalability of Ethereum

  • Ethereum plans to scale beyond bitcoin's transaction capabilities.
  • Options for scaling include sharding, bigger blocks, and code compilation improvements.
  • The bitcoin community has been divided on how to scale, impacting its potential as a global payment network.

"Yeah, so scalable. I mean, ethereum seems to be on a path to scale better."

The quote underscores Ethereum's focus on scalability and its potential advantages over bitcoin in terms of transaction capacity, which is critical for the future of cryptocurrencies as a payment system.

Ethereum's Potential to Scale and Facilitate Development

  • Ethereum is on a path to scale significantly, aiming to reach visa scale.
  • Ethereum's underlying language allows more complex operations than Bitcoin's simpler system.
  • Ethereum enables developers to write and publish smart contracts to its blockchain, likening it to a decentralized global computer.
  • Concerns exist about the safety of these programs, especially in the presence of bugs that could be exploited.

"Ethereum seems to be on a path to do that, and that's exciting because it'll open up some new opportunities there."

This quote highlights the potential for Ethereum to scale and create new opportunities within the digital currency space by handling a larger volume of transactions.

"You could essentially write any type of software you can imagine."

This quote underscores the flexibility and power of Ethereum's programming language, which allows for a wide range of software to be written and executed on the blockchain.

Quality Assurance and Regulation in Ethereum Development

  • Quality assurance in smart contract writing is an evolving field without a clear answer.
  • The development of a body of knowledge and professionalism is expected to emerge over time.
  • Analogous to the evolution of legal contracts, smart contract writing will likely mature as more edge cases are discovered and addressed.

"You're going to build a body of knowledge around it and the professionalism will develop around it."

The quote suggests that the quality assurance of smart contracts will improve as the industry matures and develops a more standardized body of knowledge.

Cultural Differences Between Bitcoin and Ethereum Communities

  • Bitcoin and Ethereum have different cultures among their respective communities.
  • The Bitcoin community has individuals motivated by ideology and can be seen as pedantic.
  • The Ethereum community is described as more focused on technology and scalability.

"There's definitely a different culture between the groups and the Ethereum community."

This quote points to the distinct cultural divide between the Bitcoin and Ethereum communities, which influences their respective approaches and priorities.

Definition and Sustainability of ICOs

  • ICOs (Initial Coin Offerings) are a method of raising funds by creating and selling tokens on the Ethereum blockchain.
  • The term ICO is controversial and similar to IPO, which can be misleading.
  • Token sales is a preferred term as it avoids legal implications before regulatory clarity is established.
  • ICOs are expected to face a correction but have a positive long-term outlook following the Gartner hype cycle pattern.
  • Regulatory clarity and improved smart contract security are needed for ICO sustainability.

"I think the long term trend for icos is very positive, or token sales."

The quote indicates a belief in the positive future of ICOs or token sales, despite anticipating short-term corrections.

"One is regulatory clarity... The second area I'd probably bring up is this idea about the smart contracts and how rigorous people are about looking for bugs."

This quote identifies two critical areas for the sustainability of ICOs: regulatory clarity and the rigorous examination of smart contracts for bugs.

ICO Funding and the Role of Investor Sophistication

  • Cash flow from ICOs may be cyclical, with digital currency gains being reinvested.
  • The need for regulation might be less pressing if investors are considered sophisticated due to their previous success in digital currencies.

"A lot of these people are... people who have recently become millionaires by investing in digital currency."

The quote suggests that many ICO investors are not unsophisticated, given their success in digital currency investments, which may impact the urgency of regulatory measures.

Disruption of Traditional Fundraising

  • ICOs (Initial Coin Offerings) have shown a stark contrast to traditional fundraising methods.
  • Traditional fundraising typically involves pitching venture capitalists (VCs) on Sandhill Road in Silicon Valley.
  • ICOs can gather significant funds rapidly from a global audience.

"Like, I've been shocked just to see you might have 17,000 people all over the world in 1 minute will invest 30 or $50 million into one of these icos."

The quote highlights the speaker's surprise at the rapid and vast fundraising capability of ICOs compared to traditional methods.

Impact of Blockchain on Venture Capital

  • Blockchain and ICOs could be disruptive for the venture capital industry.
  • Venture capital currently bundles money with advice, connections, and value-add services.
  • Entrepreneurs could separate funding from advisory roles in the future.
  • Entrepreneurs could raise funds from early supporters and separately engage advisors or board members.

"I do think that is pretty disruptive for venture capital."

This quote summarizes the speaker's belief that blockchain and ICOs have the potential to significantly change the venture capital industry.

Future of Entrepreneurship and Advisory Roles

  • Entrepreneurs might choose to raise money from the crowd rather than VCs.
  • They could offer advisor shares to industry experts for guidance instead of traditional funding.
  • The future model of entrepreneurship could evolve, but it is hard to predict with certainty.

"So I'm going to raise money from people who are my early fans, but I also want to bring in a team of advisors or board members to help me surround myself with people who fill in the skill sets that I don't have."

The quote explains a potential future scenario where entrepreneurs raise funds from supporters and separately engage advisors for their expertise.

Scaling Challenges in Digital Currencies

  • The biggest challenge in scaling digital currencies is political or governance-related rather than technical.
  • Bitcoin faces a stalemate among groups with differing opinions on how to scale.
  • Technical solutions exist for scaling, but reaching consensus is difficult.
  • Examples of technical scaling solutions include increasing block size and sharding.
  • Decentralized systems have unique scaling challenges, but they are not insurmountable.
  • Digital currencies can potentially reach and surpass visa-level transaction volumes.

"Actually, the biggest challenge in scaling digital currencies right now is not a technical one. I think it's a political one or a governance one, if you want to call it that."

This quote identifies governance issues as the primary obstacle to scaling digital currencies, rather than technical limitations.

Future of Payments and Microtransactions

  • The speaker believes that digital currencies could significantly reduce the friction in payments.
  • Payments could become more numerous and frequent due to ease of use.
  • The number of transactions could increase beyond current levels seen with traditional payment systems like Visa.

"I think there's nothing preventing digital currency from getting to visa level."

The quote expresses confidence that digital currencies can scale to handle a transaction volume comparable to or greater than that of traditional payment systems.

Personal Recommendations and Advice

  • The speaker recommends the book "Surely You're Joking, Mr. Feynman" for its portrayal of a curious and happy life.
  • For single founders, the advice is to prioritize a good partnership over going solo, but to avoid bad partnerships.

"Which is better to be in a great marriage than to be single, but it's better to be single than to be in a bad marriage."

This quote relays advice given to the speaker about the importance of choosing the right co-founder or partner in business, drawing an analogy to marriage.

Importance of Choosing the Right Co-founder

  • Finding a compatible co-founder is crucial for building a successful company.
  • Fred Ehrsam was identified as an ideal co-founder after Y Combinator.
  • A strong co-founder relationship is likened to a great marriage; it's better to remain single than to partner with the wrong person.

"Find the right person to build the company with. And I did find someone great to build a company with Fred Ursum after Y Combinator. But if you're not finding someone that you're going to create a great marriage with, then it's better to be single."

This quote emphasizes the significance of selecting a co-founder with whom one can have a strong, synergistic relationship, akin to a successful marriage, highlighting the choice made by the speaker to partner with Fred Ehrsam post-Y Combinator.

Role of Mentors and Continuous Learning

  • Paul Graham, through his writings, had a significant impact on Brian Armstrong.
  • Armstrong considers himself a student who greatly values reading and learning.
  • Mentors like Fred Wilson from Union Square Ventures and various executive coaches have been influential.
  • Regular discussions with mentors and reading are both considered valuable for personal growth.

"I'm definitely a student of a lot of. I do a lot of reading in that area and I'm not sure. I mean, I do have some mentors, like, for example, Fred Wilson at Union Square Ventures. I talk with him every month and I've had a couple different executive coaches that have had a really big impact on my life."

Brian Armstrong indicates his commitment to learning and growth, mentioning that he is a lifelong student who reads extensively and has mentors, such as Fred Wilson, with whom he communicates regularly, as well as executive coaches who have significantly influenced his life.

Resources for Learning About Cryptocurrency

  • Dan Romero's Medium post is recommended for a comprehensive reading list on digital currency.
  • "Week in Ethereum" is a newsletter summarizing weekly events in the Ethereum space.
  • These resources are used for educating potential recruits at Coinbase or GDAX.

"Actually, Dan Romero put out a medium post just in the last few weeks with a bunch of digital currency reading. I thought that was a very good list."

Brian Armstrong suggests Dan Romero's Medium post as a starting point for those interested in learning about digital currencies, indicating that it is a well-curated list of readings.

Lessons from Airbnb and Their Application at Coinbase

  • Airbnb's hiring process taught the importance of raising the bar with each new hire.
  • Hiring based on company values is crucial.
  • A mission-driven company culture and consistent communication of the mission are key to success.
  • The energy and hustle seen at Airbnb, especially in international expansion, were inspiring.
  • Meeting Airbnb's founders provided a relatable model for success and boosted confidence.

"A few of the ones that come to mind are, number one, their hiring process. I learned a lot from that. Just having a really high know. They always used to say, raise the bar with every hire."

This quote reflects the hiring philosophy that Brian Armstrong admired and learned from during his time at Airbnb, which he then applied to Coinbase, focusing on continuously improving the quality of hires.

Coinbase's Mission and Future Roadmap

  • Coinbase's mission is to create an open financial system for the world.
  • The goal is to increase economic freedom and efficiency globally.
  • Coinbase started by simplifying the process of buying and selling digital currency.
  • GDAX serves as the institutional exchange to increase trading volume.
  • Toshi aims to provide an easy interface for using digital currency, similar to a browser for the Ethereum network.
  • Future plans include developing the building blocks of an open financial system, such as merchant processing, remittance services, and loans.
  • Coinbase envisions expanding its portfolio of products to support the mission.

"Coinbase, our mission is to create an open financial system for the world. And we're excited about that because it'll create more, know there'll be more good ideas tried."

Brian Armstrong outlines Coinbase's mission statement and expresses enthusiasm for the potential impact of creating an open financial system, which aligns with the company's long-term vision and the initiatives they are pursuing.

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