How a memo made Coinbase into exactly what its CEO wanted to avoid

  • Business Insider spoke to three former Coinbase employees who said the $8 billion startup was not a highly-politicized place to work.
  • In September, chief executive Brian Armstrong publicly posted a note describing how the company should take an apolitical approach to politics and social issues, and instead stay focused on their work.
  • “Coinbase has never been a company where there are constant distractions, activism, and people trying to politicize everything,” said a former employee who was one of the 60 people who accepted the severance package offered to employees by the startup following Armstrong’s public post.
  • To be sure, the company was embroiled in controversy in June over Armstrong declining to say “Black Lives Matter” during a company-wide meeting, leading to a virtual walkout by some employees.
  • However, one former employee said internal debate and disagreement over the event had largely died down by September and it was Armstrong’s memo itself that stirred controversy leading to the exodus of about 5% of the company’s workforce.
  • Visit Business Insider’s homepage for more stories.

Shortly after George Floyd was killed in June, Coinbase CEO Brain Armstrong sent a memo to his 1,200 employees. He said he knew they were hurting.

“Essentially the message was, ‘Hey, there’s going to be a number of protests around the US, keep yourself safe,'” recalled one former employee who received it.

The memo felt well intentioned.

But employees wanted more than leadership’s concern, a former employee explained. They waited for the company to issue a public statement in support of the Black Lives Matter movement, like Netflix, Apple, and Google had done, or to throw up a plain-black square in place of its logo, as Amazon and Twitter did.

Instead, there was silence.

Tensions came to a head in a company-wide meeting when employees asked Armstrong to say the words “Black lives matter,” said the former employee, who attended the virtual meeting.

The CEO again acknowledged the challenges that Black employees were facing, but said making a statement would be “divisive.”

The attendee said as the meeting happened, an internal Slack channel flooded with hundreds of “Black Lives Matter” messages from employees. Later that day, workers from across customer success and engineering staged a virtual walkout, closing their laptops and refusing to work.

George Floyd’s killing set off thousands of protests in all 50 states.

David Ryder/Getty Images

In response, Armstrong wrote a Twitter thread saying “Black Lives Matter” to settle the matter.

Another memo

There was some additional fallout from the incident in the immediate aftermath, too, with some employees choosing to leave Coinbase as a result, former employees told Business Insider.

However, internal debate and disagreement had largely died down in the wake of the incident, sources said, and most people had returned to focusing on their work.

Then on September 27, Armstrong circulated another memo.

With less than two months before the presidential election, Armstrong declared that Coinbase would be a mission-focused company. That meant it would pay little attention to issues that did not support its mission, including societal issues, non-profit work, and political causes, he wrote.

trump biden

Vice President Joe BIden and President Donald Trump face off in a debate.

Olivier Douliery/AP

Two days later, Armstrong doubled down: Any employee who disagreed with the company’s priorities could leave and take a generous severance package.

Employees say they were surprised. Sixty have since resigned, although some of them are leaving for other opportunities and not because they disagreed with the policy.

Armstrong’s memo has been both lauded and criticized by the tech industry, as business leaders grapple with what it means to be a CEO during unprecedented political, cultural, and economic challenges. Employees now expect more from their managers than a steady paycheck, and some managers like Armstrong are opting out of the added responsibility.

Employees felt Coinbase was never a political place, until Armstrong made it one

Business Insider spoke to three former employees about their experience working at the cryptocurrency startup and what role politics played in the company culture.

“Coinbase has never been a company where there are constant distractions, activism, and people trying to politicize everything,” said a former employee who accepted the severance package. They categorized the Black Lives Matter  virtual protest as an outlier.

“There are certainly all kinds of different people with different opinions at Coinbase, but it was never a company, from my perspective, constantly having these political debates. To me, it wasn’t a huge problem,” this person added, who spoke on the condition of anonymity, citing restrictions in the severance agreement.

san francisco skyline city

Coinbase had no history as a highly political place, even with its headquarters in a liberal bastion like San Francisco.

Eric Risberg/AP

Another former employee, who last worked at Coinbase in 2019, said some employees felt disappointed Coinbase did not take a stance on more issues. However, this person didn’t cite larger problems that stemmed from that.

This person also said that while employees were vocal, conversations often centered around crypto, not politics. In general, this person categorized employees who had been with the company for a while as crypto purists as opposed to social activists.

“People had open discussions. [Armstrong] didn’t stop people from having those discussions,” the former employee said.

“I don’t think anyone ever felt censored or like they couldn’t say anything,” they added.

The dust had mostly settled following the explosive all-hands meeting

After the backlash in June, employees felt some progress was being made.

One Coinbase employee resource group called Colorblock issued a list of demands focused on improving the experience of Black employees at Coinbase.

They pressed the company to add a Black director to the board and hire people of color to the executive team. The group asked to spin up a corporate social responsibility program with the goal of investing in organizations that support Black people in technology. And they wanted the people team to refresh the diversity and inclusion policy, which comprised two paragraphs in a corporate policy known internally as the “culture doc.”

The list of demands resulted in small victories. While Coinbase didn’t flat-out agree to install a new board member, it did say it would widen the candidate pool. It pledged to adopt a version of the Rooney Rule, a recruiting strategy borrowed from professional football that brings minorities in to interview for positions, according to sources familiar with the talks.

Colorblock also made a corporate gift to a foundation of its choice, these sources said. In his earlier Twitter thread, Armstrong said the company would match employee donations up to $250,000 to GiveCrypto, an organization that gives cryptocurrency to people living in poverty, and four other foundations that were selected by employees.

The biggest change may still be to come.

Last week, LJ Brock, Coinbase’s chief people officer, went on the “Redefining HR” podcast to tease a new set of commitments around hiring focused on “making sure our talent practices are insanely fair.” The goal is to expand “the top of our funnel in recruiting” and ensure “equitable outcomes from a compensation perspective,” he said.

While the resource group for employees of color didn’t get everything they asked for, employees were “exhausted” by the recent turmoil, and the outcome “felt like a win,” a former employee said.

Has Coinbase become exactly what Armstrong was looking to avoid?

Then came Armstrong’s post in September, explaining how he wanted the startup to be “laser focused on achieving its mission, because I believe that this is the way that we can have the biggest impact on the world.”

He also said that the company won’t “engage” when it comes to “broader societal issues” nor would it advocate for political causes or candidates, and he hammered the point with a list of things the company would and would not do in support of its apolitical stance.

brian armstrong coinbase

Coinbase cofounder and CEO Brian Armstrong.

Steven Ferdman/Getty Images

The post thrust Coinbase in the midst of a heated debate regarding what place politics and activism have in the workplace. What was meant to provide clarity on Coinbase’s approach to political activism instead only confounded things, according to the former employee who took the severance package.

Internally, additional meetings were held to provide more clarity around Armstrong’s post, the source said. Assurances were given to employees that not much would change as a result of the post, leaving people to question why a post was necessary at all, the source said.

As a result, Coinbase has become exactly what Armstrong was looking to avoid, according to the source.

“What he has done has also increased the politicization inside of Coinbase as well by a great degree, at least temporarily,” the recently departed employee said. “We will see what happens in the future. But it has been very contentious inside the company for the past couple of weeks. It wasn’t like that before he did this.”

Are you a Coinbase insider with insight to share? Contact Dan DeFrancesco via email at [email protected] or on encrypted chat app Signal at (646-768-1650). Melia Russell can be reached via email at [email protected] or on Signal at (603) 913-3085. Open DMs on Twitter @dandefrancesco and @meliarobin.