Today, Brian Armstrong has to make the hard decision to cut the team size by about 18% to protect their health during this economic crisis. He’d like to explain to the team why he’s making this choice below, but first he’d like to take responsibility for how they got here.
In the last month, he has talked with their executive team and board a lot about what’s going on in the market and how their company is doing. Several things have become clear to me because of these talks:
The economy is changing quickly. After a 10-year boom, it looks like Coinbase will be in a recession. Another crypto winter could be caused by a recession, and it could last for a long time. During previous crypto winters, our trading income, which is our main source of income, dropped by a lot. Even though it’s hard to know what the economy or markets will do, they always plan for the worst so they can run the business no matter what.
In weak markets, it’s important to keep costs down: Coinbase has made it through four major crypto winters, and they’ve set themselves up for long-term success by carefully limiting their spending during each one. Down markets are hard to deal with and call for a different strategy.
company grew too fast. At the start of 2021, there were 1,250 people working there. At the time, the bull run had just started, and the use of crypto goods was going through the roof. Almost every week, new use cases made possible by crypto were gaining traction. They saw the chance, but they had to hire a lot more people to be able to compete in a wide range of bets. Since the beginning of 2021, our growth has been 200 percent per year, so it’s hard to find the right balance. Even though they tried hard to get everything right, Brian now realizes that they hired too many people.
How did things turn out?
The need to keep costs low: Since Coinbase works in such an unpredictable environment, they want to make sure they can make it through a long slump. The team has grown quickly (by more than fourfold in the last 18 months), and the cost of their staff is too high for them to handle this fast-paced industry well. Even if this phase lasts a long time, they will be able to handle it better because of the work they are doing now.
Need to be more productive: They have reached the limit of how many new employees they can add while still making us more productive. In the past few months, adding more people has made us less effective, not more. They have seen a big slowdown because of problems with coordination and making sure that new team members are fully integrated. They think that the focused improvements they are making to their resources right now will help their company become more efficient.
Both of these are related to Brian’s decision to make the team much bigger over the last two years, so this is all his fault.
Who gets hurt?
Based on what Coinbase has said its goals are, its top executives have worked hard to figure out what changes each of their teams needs.
“In the next hour, HR will send an email to every worker telling them if they are being laid off or not. Every employee who will be affected will get an invitation to talk directly with your HRBP and your company’s top leader “Brian made a remark.
Brian, Coinbase’s CEO, told the team: “We decided to limit access to Coinbase systems for affected workers, so if you are one of them, you will get this message in your personal email. I know that taking away access will seem sudden and out of the blue, which is not what I meant. Given how many employees had access to sensitive client information, this was unfortunately the only way to make sure that even one person didn’t make a bad decision that hurt the firm or themselves.”
He also wants to make sure that all of the workers who will be affected are taken care of and helped as they look for new jobs. People who leave their jobs today will get: A minimum of 14 weeks of severance pay, plus an extra two weeks for each year of work after the first.
4 months of COBRA health insurance in the US and 4 months of mental health help anywhere in the world Access to the Coinbase Talent Hub, where members of the Coinbase team will try to find jobs for you at other companies (including portfolio companies from Coinbase Ventures and other top crypto VC funds).