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Comment by throwaway21earn | Hacker News Reader

The article doesn't take sides but I will. They're better off without Balaji Srinivasan. His startup Earn.com was a pivot of an earlier startup 21.co which was transparently stupid. Earn.com was also bad and didn't deserve an exit. I suspect shenanigans orchestrated by Andreesen Horowitz there.

Coinbase's expansion into regulatory gray areas threatens their main competitive advantage as the safest and most stable large regulated crypto business. If they keep chasing that sweet ICO scam money instead of focusing on compliance and institutional investment it will destroy them in the end.

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> His startup Earn.com was a pivot of an earlier startup 21.co which was transparently stupid. Earn.com was also bad and didn't deserve an exit.

Would you mind elaborating? Genuinely asking, I can't find much about this from Googling, most of the coverage is around the acquisition.

Might be regional differences in Google results. Quick googling from North America yields the following results about 21.co's initial bitcoin chip design & mining operations[1], and then the pivot to Earn.com "social network tokens"[2][3]; also in Balaji Srinivasan's own words[4].

[1] https://techcrunch.com/2015/05/18/what-is-21-co-really-doing...

[2] https://techcrunch.com/2017/09/20/21-co-announces-a-token-sy...

[3] https://www.coindesk.com/meet-earn-com-21-rebrands-social-ne...

[4] https://medium.com/@balajis/the-turnaround-2d145589d814

I found articles about _what_ the companies were, but didn't see much on why they were so bad that they don't deserve an exit and that their badness is enough to declare that Coinbase is better without the founder. Plenty of companies fail, but do something interesting enough to justify an acquisition solely focused on ensuring the founder works for you.

21 spent years talking about their secret revolutionary new mining chips, which ended up being a lot worse than the chips made by smaller scrappier companies. They raised over 100 million dollars, and probably lost most of it mining unprofitably.

There's nothing wrong with a failed startup, but this was a poor copy of miners and mining chip producers with much less funding and in some cases bootstrapped to profitability. The only thing that set 21 apart was an amazing ability to razzle-dazzle VCs.

After failing to mine Bitcoin profitably themselves, 21 came out of stealth mode with a staggeringly stupid product: mining chips for toasters. The idea was that you would buy a toaster (or lightbulb or something) with one of 21's mining chips and it would waste energy while mining miniscule amounts of Bitcoin. This was ridiculous on its face, since the amount of Bitcoin that could be mined on these chips was far less than you could simply buy for the cost of the electricity (not to mention the chip itself). Also, this amount was too small to even be transferred, given Bitcoin's transaction fees!

I'm not exaggerating, this product was never, and could never be viable. Still Balaji was able to razzle-dazzle the tech press into trumpeting it as some sort of innovation.

Once this failed, they re-branded as Earn.com and started making a grab-bag of Bitcoin hackathon projects, such as paying you Bitcoins for reading spam, or answering quizzes. This was always an extremely uninspiring and ultimately non-viable product, but at least it wasn't complete vaporware.

Then Coinbase, a very successful and competent company, threw away $100 million to help 21's VCs recoup their failed investment. The only explanation that seems rational is that Balaji had some very compromising footage of Brian Armstrong at the a16z holiday party.

I'm not sure about his past career (some biotech thing), but Balaji's legacy in crypto is to waste enormous amounts of money on blatantly ridiculous boondoggles. It's unfortunate that Coinbase wasted so much time and money perpetuating this.

I followed these guys pretty closely back then and this is close to my recollection as well.

One addition I had to check on, which confused me at the tilt was how Balaji was so closely involved in 21 yet also a partner at Andreesen Horowitz, which I had read about their daily and weekly routine and was clearly a full time job.

Balaji went from founder to "advisor" of 21 pretty quickly, becoming a partner of a16z in the interim. After things went to shit at 21 he went back as full time CEO. Reasons for how that went down are speculative. The results are not though. The exit is real but wow is it questionable. Conflicts of interest seemingly all over the place. I don't know who else is on Coinbase's cap table but I'd love to hear their takes on the acquisition.

You can read Balaji's congratulatory take in his own words on what he did here. [0]

I also recall Balaji positioning himself for a position in the Trump administration which saw him scrub his entire twitter history. If anyone recalls more details from that episode feel free to add them.

[0] https://medium.com/@balajis/the-turnaround-2d145589d814

Great thing that Balaji cashed out nicely also before he left coinbase. It is great that we can see so clearly in action that stupidity is sometimes rewarded with nice paycheck.

People, keep being stupid and confident. Sometimes it pays tremendously off.

Also, this amount was too small to even be transferred, given Bitcoin's transaction fees!

Wouldn't the device simply mine as part of a mining pool? The pool can then manage custody of the funds, similar to what NiceHash and other mining pools do. Granted, if the amount is small then it would never be withdrawn on the main chain.

> If they keep chasing that sweet ICO scam money instead of focusing on compliance and institutional investment it will destroy them in the end.

On the other hand, the size of their business shrinks (relative to the crypto market and Binance in particular) once you depend on regulators and the regulation landscape is unclear. You can argue that financial institutions should follow the Coinbase way to be complain but if in the future there is a huge crypto market (with less scams), financial institutions will find a way to connect to the crazy crypto world. This is an hypothesis based on what some VCs are doing: using crypto hedge funds as a vehicle to invest in crypto projects.

Surprised you're saying that. Coinbase Earn has become a very valuable customer acquisition channel for Coinbase, and seems to have already paid for itself. Some references:

- Stellar anounced a 1B XLM deal with Coinbase Earn, worth >$120M, which is more than the reported acquisition price of $100M [1]

- The founders of Zcash, Stellar, Brave, and 0x have all given positive reviews of Earn [2]

- Coinbase Earn appears to be getting a lot of organic positive attention on Reddit [3] and Twitter [4]

- It appears that Coinbase Earn has dramatically improved MakerDao adoption, with a huge surge in new CDPs created [5]

- The COO of Coinbase stated that the company and the board seem to think of Earn as a very valuable acquisition [6]

  Emilie Choi: With the Earn acquisition, I think we can 
  very confidently say and I think the board and the 
  management team would agree with us 100 percent is that 
  the Earn acquisition more than paid for itself multifold 
  in the course of this year. We’re going to continue to see 
  massive amounts of value from it.

Even if Coinbase Earn had only been used for the Stellar campaign, that in itself was worth more than $100M, as acknowledged by independent reporters [5]:

  Frank Chaparro: You guys as part of the stellar airdrop which 
  was something like one hundred and twenty five million dollars 
  going, my understanding of the strategy was let’s drop this on 
  on two different customer sets. One that is super hyper engaged 
  and one with the folks that maybe haven’t engaged in the 
  platform for a while, the sort of A-B test like how those sort 
  of influences can change behavior. I don’t know if that’s 
  exactly precise but I’d like to know what the strategy was and 
  how it played out?

And by Stellar itself [6]:

  Stellar: As an educational incentive, we’ve committed 1 billion XLM to 
  Earn, 100% of which will go to users. We’ll start by rolling 
  out to qualifying users in the US, and we will keep you posted 
  as we expand this to more areas.

Here are citations.

[1] https://www.stellar.org/blog/stellar-coinbase-earn/

[2] https://twitter.com/coinbase/status/1129432654653222913

[3] https://www.reddit.com/r/ethereum/comments/bz0xva/coinbase_e...

[4] https://twitter.com/search?q=%22coinbase%20earn%22&src=typd

[5] https://twitter.com/RyanSAdams/status/1155842008071770112

[6] https://www.theblockcrypto.com/2019/05/29/emilie-choi-coinba...

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