Coinbase

Uniswap: $10B/week in trading volume with under 35 employees

Shaan's pitch for Uniswap: it does roughly $10 billion a week in trading volume with fewer than 35 employees, was only 2.5 years old, and was on pace for over $1B in revenue. By contrast Coinbase took 8 years and 1,000 employees to hit $1B revenue.

“What if I told you that this company is doing $10 billion a week in trading volume? And what if I told you it was doing that with less than 35 employees? What if I told you that it took Coinbase 8 years and 1,000 employees to get to $1 billion in revenue? I told you that Uniswap is only 2.5 years old, has less than 50 employees, and is on pace to do over $1 billion in revenue this year.”

Tech companies buy media arms as cheap user acquisition

Shaan's thesis on why crypto media commands a premium: exchanges like Coinbase and Binance are worth $80-100B and want owned media as a cheap customer-acquisition channel, so they overpay for sites like CoinMarketCap. He'd put a 2.5x crypto premium on a normal media valuation.

“And so they've been buying up media companies in order to own their own media arm, which is basically cheap user acquisition for them. And so whether it's them or it's a traditional media company that will buy, I don't know. But I do think that a crypto news site is going to get whatever, whatever a normal media site would sell for. I'd put a 2.5x on it for crypto right now”

Getting a dollar loan against Ether with no banker, application, or credit check

Shaan walks through a simple DeFi loan: he staked Ether on Compound, could earn 5-7% lending it out versus ~0.001% at Wells Fargo, then borrowed USDC against it and cashed out to dollars on Coinbase, all without a banker, application, or credit check.

“And I got a US dollar loan that I could go use to go buy, you know, a pizza right now if I want to. And I was like, well, that's pretty sweet. I never had to talk to a banker, fill out an application, do a credit check. I didn't have to do anything and I was able to get a loan.”

Be the nerd now: the classmate who joined Coinbase early

Sam recalls dismissing an over-eager classmate in his college 'Internet' course as a loser, only to realize that guy was Dan Romero, an early Coinbase employee who helped break it into Europe and likely made tens of millions when Coinbase went public at a $100B valuation.

“And at the time, my head labeled this guy as a loser. I was like, wow, this guy's like this overeager student dork who's like kind of a know-it-all and kind of sucking up to the teacher. And why is he so into this? Wow, what a loser. He spends his nights researching the pros and cons of net neutrality. Okay, now fast forward. Now that's me. I'm that loser. I was just late to the game. And that guy Dan ended up joining Coinbase as one of the early employees.”

Steal thisBe the obsessive nerd now; early genuine interest in an emerging space compounds into outsized outcomes later.

In a gold rush, sell the picks and shovels

Shaan frames Coinbase as the classic picks-and-shovels play on crypto: rather than guess which coin wins, you sell the exchange every miner needs. He notes a16z initially just bought Bitcoin itself rather than betting on any one crypto startup.

“So the foolproof strategy in any gold rush is what they call the picks and shovel strategy, meaning you sell the shovels to people who are going to go mine the gold. And so Coinbase is kind of a classic picks and shovels thing in the crypto market.”

Steal thisWhen a new gold-rush sector emerges and the winner is unclear, build the infrastructure every participant needs.

Coinbase seed at 15 cents/share returned ~2,200x at listing

A seed investor told Shaan Coinbase priced at 15 cents a share (the A round only 20 cents); at the direct listing it traded around $330, a ~2,200x markup turning $100K into $220M.

“He said it was 15 cents a share. So 15 cents a share there. And he said the A round was only 20 cents a share. So it wasn't even that much more., something like that. So, so 15 cents a share. And, um, now it trades, it's trading right now, like right before this podcast at $330 a share or whatever. And so you got this, uh, you know, 2000x markup, I think 2200x markup.”

Illiquidity was a feature, not a bug

A Coinbase seed investor told Shaan that not being able to sell their position for years was the best money-making strategy they had: forced holding through Bitcoin's run-up beat the instinct to liquidate gains along the way.

“And he goes, the illiquidity was a feature, not a bug. Like the fact that we couldn't sell this whole time for Coinbase, it was the best money-making strategy for us to like not be able to be liquid until now.”

Steal thisStructure long-term bets so you can't easily sell; forced holding beats the temptation to take gains early.

Zeroing in on your launch coordinates

Looking at Brian Armstrong's Hacker News history before Coinbase, Daniel Gross described a hacker taking swing after swing on small projects, slowly converging on the right idea. Shaan generalizes that everyone's first projects look unremarkable in hindsight.

“what Daniel tweeted out was, I, you know, I look back at Brian's Hacker News submissions before he started Coinbase. You could see what you see is a story of a hacker working on different projects, slowly zeroing in on his launch coordinates”

Steal thisShip many small projects publicly; the volume of swings is how you find the one that's yours.

The investing Ikigai: curiosity, network, fundamentals

Ryan Begelman says his best returns over ~60 angel/real estate deals came at the intersection of what he's genuinely curious about, where he's well networked, and where fundamentals are strong. His healthcare bets (good fundamentals, no curiosity or network) underperformed his Coinbase, Warby Parker, and Uber bets.

“the ones that generally perform well are the ones that are at the intersection of what I'm naturally curious about, where I'm well networked, and where there's good fundamentals. So it's a similar like Ikigai concept where— and so my main, my main filter for, for making investments now is is this something I'm actually sincerely fascinated by? I'm regularly reading about and I'm well networked in.”

Steal thisOnly make investments that sit at the intersection of genuine curiosity, an unfair network advantage, and strong fundamentals.

Shaan goes all-in: $25K/day into Bitcoin to hit 25% of net worth

Rather than dollar-cost averaging, Shaan bought the daily maximums on Coinbase ($25K) and Robinhood ($50K) every day until Bitcoin was 25% of his net worth, buying near the all-time high at ~$18K a coin.

“I started buying $25,000 a day, which was the max on Coinbase, and then $50,000 a day on Robinhood, which is the max I could do there, every single day until I accumulated a position that was 25% of my total net worth was moved into Bitcoin. I was doing that at $18,000 a coin, which was almost the all-time high.”

Sell pickaxes to gold miners: own Coinbase, not Bitcoin

Andrew's investing principle: instead of betting on a single asset, own the infrastructure that profits from the whole trend — Coinbase for crypto, Stripe for internet commerce — to capture upside while taking less risk.

“My approach to all this stuff is to sell pickaxes to gold miners. Instead of owning Bitcoin, I'd way rather own Coinbase. I'd rather own Coinbase. It's a way to bet on crypto as a trend versus an individual currency.”

Steal thisBet on a trend by owning the toll-taking infrastructure everyone in the trend must use, not a single speculative asset.

Semil Shah's breakout-company-of-the-year track record

Investor Semil Shah picks one breakout company each year. His list: Stripe (2012), Snapchat (2013), Slack (2014), Coinbase (2017), Airtable (2018), Superhuman (2019), and Hopin (2020) — a near-perfect hit rate of generational companies.

“So 2012, he picked Stripe. 2013, he picked Snapchat. 2014, he picked Slack. Um, didn't do 2015, didn't do 2016. 2017, he did Coinbase. Um, 2018, Airtable. 2019 was Superhuman. And for 2020, he picked Hoppin.”

Steal thisTrack who the best investors publicly call as breakout each year, and study what those companies have in common.

Robinhood, Coinbase and Chime will be massive fintech outcomes

Asked which companies still fit his 10x/100x sweet spot in 2020, Elman predicts Robinhood, Coinbase, and Chime as the three US fintech companies that come out of the wave as massive outcomes, plus Revolut and TransferWise internationally.

“In fintech, Robinhood, Coinbase, and Chime are the 3 companies that I think are going to come out of this wave and just be massive outcomes. And then internationally, I'm quite bullish on Revolut and TransferWise as two companies I think that will still be very significant.”

The DeFi trade: borrow against your Ethereum to fund startups

Shaan explains his Compound Finance play: post Ethereum as collateral, borrow up to 75% in a stablecoin (USDC) at a very low rate, sell it for dollars, and invest those dollars into startups, keeping his cash free for things like buying a house.

“you go to Compound Finance and what you can do is you can put up Ethereum as collateral. So I put in, let's say $10,000 of Ethereum or $100,000 of Ethereum. And, um, then I can borrow up to 75% of that in another currency. Like for example, DAI or USDC, which is Coinbase's stablecoin. Basically, you put in, let's call it $100, you can borrow $75 of that on there at a very low rate.”

Shaan's investor talked him out of a Bitcoin exchange in 2013

At Monkey Inferno, Sam's team started building a Coinbase competitor in 2013 after an engineer mined Bitcoin on company servers. Billionaire investor Michael Birch came to lunch and shut it down over legal risk; Sam admits he lacked the conviction to push back and missed it.

“I didn't have enough knowledge or conviction at that time to stand up and be like, no, we need to be in this game. This is real.”

Steal thisIf you believe in a contrarian bet, build the conviction and knowledge to defend it before the room talks you out of it.

Sam panic-sold Bitcoin at $3K before it hit $20K

Spooked at a wedding when his non-technical aunt was hyping Ethereum as a sign of a bubble, Sam tried to dump everything at $3,000, throttled by Coinbase's weekly sell limits. The lesson: even knowing something is overhyped, you can't time the burst.

“even when you know it's overhyped, you don't know when it's going to burst.”