Cryptocurrency Exchange Coinbase will go public on Wednesday via a direct listing that is expected to value the start-up at more than $ 90 billion when it trades under the ticker “COIN” this afternoon.
When Coinbase first launched nine years ago, the company hired its first employee after receiving an enthusiastic but “annoyingly long” cold email.
And the company paid him with bitcoin.
This email was from Olaf Carlson-Wee, who had just graduated from Vassar College with a degree in sociology in 2012. He had written his thesis on Bitcoin “and the wider implications of open source finance”.
He was also one of the earliest users of Coinbase, he said in an interview with the Y Combinator blog in 2016, and he wanted to work there.
“I literally emailed Jobs @ coinbase coldly and said, ‘I love Bitcoin. Here is my thesis. I will do any job,'” Carlson-Wee told Y Combinator.
After Carlson-Wee became the No. 1 employee for his three years there with a job in customer service at the then young company, he was paid entirely in Bitcoin with an initial salary of $ 50,000, according to the Wall Street Journal.
Although it is unclear how much Bitcoin Carlson-Wee currently owns, the price of Bitcoin fluctuated dramatically during this time – from 2013 to 2016. In early 2013, the price was a little over $ 13 per bitcoin before rising to over $ 1,100 later that year. The cryptocurrency ended at around $ 1,000 in 2016 and was trading at more than $ 62,000 on Wednesday.
(As recently as 2018, around 40% of Coinbase employees received at least part of their salary in Bitcoin.)
When Carson-Wee sent this cold email, five minutes later he heard an email five minutes later from one of Coinbase’s two co-founders, former Goldman Sachs dealer Fred Ehrsam, asking if Carlson-Wee could do this “Get on a Skype.”
After Carlson-Wee talked to Ehrsam for about 20 minutes on Skype, the Coinbase co-founder invited him to a face-to-face interview in San Francisco (Ehrsam was staying with a friend in nearby Oakland). Carlson-Wee honestly said to prepare two 15-minute presentations: “The first should explain something complicated that you know very well. The second should outline your vision for Coinbase,” said Carlson-Wee.
Carlson-Wee said his first presentation was on “the pharmacological induction of lucid dreams” and noted in 2016 that he had “been writing my dreams for 11 years”.
Regarding its strategy for Coinbase, Carlson-Wee said the company should be “100% focused on security,” particularly ensuring that users’ cryptocurrency funds are protected from hackers.
“Bad customer experiences will eventually be forgotten, but a security incident will not be forgotten,” Carlson-Wee told Y Combinator. “I said yes [co-founder Brian Armstrong] We can’t hack anything together that creates a security incident. Even when everything is on fire, we do it very carefully. ‘And I think that resonated with them. “
After his presentations, Carlson-Wee said Ehrsam gave him “a really brutal math problem” to solve.
Here was the math problem, according to Carlson-Wee: “So there are 100 lockers in a row. They’re all closed, okay? A child walks by. He opens every single locker. A second child walks by. Now he closes every second locker, every second locker. The third child comes over, every third locker. When it’s open, he closes it. When it’s closed, he opens it. Then the fourth child passes by. Every fourth locker changes state. And now 100 go Children over. What is the state of the lockers after 100 children have passed by? “
Carlson-Wee did his best to focus on the problem, believing that by the time Ehrsam brought his co-founder Brian Armstrong to Carlson-Wee, the correct answer would really “seal the deal” and give him one Would provide a job. Fortunately, he landed on the answer in just three minutes and found that only the lockers that were numbered with “perfect squares” (numbers made by multiplying two equal numbers, i.e. the 16th locker, the 25th) were open . Locker, etc.).
“The number of factors determines whether a locker is open or closed, as that is the number of children who have interacted with it,” he said. “And so the odd number of factors means that it is open and [an] An even number of factors means it is closed. And the only numbers that have an odd number of factors are perfect squares like 16, 25, 36. ”
Afterward, Carlson-Wee said Armstrong “broiled me for another hour.”
“Brian’s questions were very intense: ‘What do you want to do with your life?’ “What drives you as a person?” “What is a belief you have that is extremely unpopular?“ He really wanted to know me, ”Carlson-Wee told Y Combinator.
Four days after the interview, Carlson-Wee said Armstrong and Ehrsam asked him to complete a two-week paid job trial.
“I worked really hard knowing this was the last test. At the end of those two weeks they said, ‘Okay. You have a formal job offer,'” said Carlson-Wee, Coinbase’s first employee in the Company stepped in worked on customer support (“Like I said, I came in and was ready to do anything,” he added.)
Carlson-Wee was Coinbase’s only customer support agent until the company had 250,000 users, he said. He worked for the company for three years and eventually became Coinbase’s risk director.
Coinbase entering the public market is expected to bring a godsend to people like the company’s billionaire co-founders, CEO Brian Armstrong and Fred Ehrsam, as well as Coinbase’s investors and some past and present employees.
Carlson-Wee left Coinbase in 2016 to set up one of the first crypto hedge funds in his San Francisco apartment. The fund is called Polychain Capital and manages more than $ 300 million in assets, according to Forbes. He has basic investments from Ehrsam as well as venture capital firms such as Sequoia Capital and Peter Thiels Gründerfonds. Carlson-Wee’s fund has invested in crypto startups like the blockchain-based social network BitClout and the blockchain payments startup Celo.
While it’s not clear whether Carlson-Wee received shares in Coinbase as a former employee, he did tell Forbes that he invested in the company in 2017, but did not disclose the size of that investment.
Despite the excitement in the markets over Coinbase’s direct listing, the company and its founders have been controversial in recent years. The New York Times reported last year that Coinbase had underpaid women and black employees (the company said at the time that Coinbase had “introduced a new compensation program that has brought Coinbase in line with some of the world’s most respected technology companies”). In 2020, Armstrong received criticism for actively preventing Coinbase employees from expressing political opinions or getting involved in political or social issues in the workplace.
Armstrong, who even offered severance packages for four to six months to employees who did not feel comfortable in such conditions, said in a blog post in September that he believed that companies that publicly participate in political discussions and issues, ” Be well-intentioned “He also believes that such corporate activism” has the potential to destroy a great deal of value in most businesses, both by distracting and creating internal divisions “.
Polychain and Coinbase did not immediately respond to CNBC Make It requests for comment.
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