It sounds like this is a very myopic view. My favorite quote is quite apt here "Assigning single factor causation to the output of complex adaptive system is a triumph of hope over experience."
Here's my theory - Coinbase had explosive growth largely due to tailwind effects of the BTC craze several years ago. Since crypto trading has basically flattened coupled with competitors entering the market, then Coinbase is likely no longer growing and may in fact be doing less revenue than it was previously. Company's start to scramble when they cease to grow. Stakeholders double down. Employees start looking elsewhere. Executives make brash decisions based on emotions. etc etc.
However also similar stuff is happening in growing companies because of other factors. Also companies often survive quite well even if they don't grow that much.
To me it seems like coinbase is still in a very sweet spot. Crypto markets are not going away, and coinbase helds massive first-mover advantage. No matter how much they will fuck up on exec level, they will probably still make good revenues if they just can keep their current service running.
That is true but in the crypto scene there were many [extreme] layoffs and closings connected to the last "crypto winter". We can mention big names like ConsenSys, Bitmain, Steemit, SpankChain, and ShapeShift so it is not difficult to think that Coinbase was also impacted.
Anyway, I don't think crypto winter should be a problem for most exchanges. Unless you predicted future way off and hired too much on 2017 rally. Before 2017 volumes were minisculous compared to 2018 still - business should be good unless the company spent money like crazy.
Otherwise known as "magical thinking."
So, is Armstrong a bad CEO or not? That is very difficult to know. Maybe someone else could deliver even more profit and more products and keep them running. But I would guess the investors are quite happy with coinbase compared to their other investment.
If the CEO has a single general job, it’s maintaining strategic cohesion. If there’s a debate, that’s fine. But it should be controlled.
While being blindsided by the man you’ve handed company strategy to is bad, it’s not under the umbrella of control. Letting the situation get to the point that your deputies are engaging in shouting matches and everyone in the company has to pick sides is where control was lost.
I'm sympathetic to the argument that cryptocurrencies represent a revolution in the financial system, that peer-to-peer digital money represents a fundamental shift in power away from traditional institutions. (I think it'll eventually be proved wrong, but I'm sympathetic to it.)
But Coinbase is VC funded, which is not unlike taking a loan from a mafia boss: It comes with very clear repayment terms that you are expected to meet, and they are not choosy about how you do it. In particular, the specific fund you get money from lives about 8-10 years, and you are expected to IPO or get acquired during that period. [1]
To do that, Coinbase, whatever revolution it might be part of, needs to pay back in fiat, because that's what investors put in and plan spend. They took their seed round in 2012 and their A round in 2013. At this point they've taken $547 million. [2] If they're going to give that beloved 10x exit approximately on schedule, then now's the time for them to be ramping up revenue hard and preparing to be vigorously profitable, because that's what it takes for a high IPO or acquisition value.
That means their desire to court the traditional finance world makes a lot of sense. As Wille Sutton says, that's where the money is. But that world comes with the need to be, in a regulatory sense, pretty safe. That's in direct conflict with the cryptocurrency world both in the long term (because it aims to be a revolution) and in the short (because it is ever mutating).
Another big source of conflict between the two worlds is that the cryptocurrency world doesn't yet really do anything useful from the perspective of normal finance. If you're a financial trader at a company with many millions in funds, you have better ways to transfer money, store value, etc. From that perspective, cryptocurrency's mainly interesting for its high volatility, which can make for lucrative gambling. But the highest-volatility parts of it are those that are the least regulated, and from the perspective of a trader, the most opaquely run.
So maybe Armstrong is also a terrible manager. But it's perfectly possible he's a decent manager trying to run a business that is desperately trying to reconcile two fundamentally irreconcilable things: an old financial order and something that aims to kill that order off.
[1] https://pitchbook.com/news/articles/the-venture-capital-life...
How is the cryptocurrency world mutating? Bitcoin works pretty much in the similar way as it worked almost 10 years ago. Also coinbases services when it comes to the basic brokerage services are pretty much unchanged in the end.
I wouldn't attach something like "revolution" to cryptocurrency any more. The blending with traditional finance industry has been happening for many years already and I think that trend will continue. In the end it is just another way of moving and storing value.
If you are offering cryptocurrency services you need to take more regulation risk than with traditional finance business. However you can still invest in regulatory compliance and try to migitate those risks as much as you can (and you probably should). However you don't need to engage to any kind of "revolution" unless you want to - you can cooperate with regulators and they are nowadays also more interested to work with you.
Sure, and I'm not sure that's a good thing. But the moment I bring up some sort of Bitcoin flaw, 20 people pop up to say, "Oh, but that's fixed in coin X with extension Y!" The X and the Y change regularly, but when the shiny wears off the old thing, there's always a new thing. And this article makes that clear; if Bitcoin were all that were necessary, Srinivasan wouldn't have had a case for expansion.
> I wouldn't attach something like "revolution" to cryptocurrency any more. [...] In the end it is just another way of moving and storing value.
In which case it has failed, in that they are apparently not better than existing solutions for traditional use cases like "buy a cheeseburger" or "pay Bob back for the cheeseburger he bought me". Let alone something like "get paid by my job every Friday" or "pay my mortgage". As far as I can tell, Bitcoin's relative value prop is only in speculation, light financial crime, and other things that most people are better off avoiding.
IMHO, most critiques could and should be pointed at the crypto sector in general, not specifically to Coinbase.