Coinbase, the bitcoin bank valued at $8 billion and expected to go public in 2021, is going through an internal identity crisis.
It started back in June, amid the nationwide protests over the death of George Floyd, when Brian Armstrong, the company’s extremely introverted cofounder and CEO, was asked a question at an employee town hall about why Coinbase had not shown public support for the Black Lives Matter movement. Armstrong declined to give a clear answer, according to crypto news site The Block, and his avoidance resulted in a virtual walkout by “hundreds” of Coinbase’s 1,100 employees on June 3.
The next day, Armstrong tweeted, “I want to unequivocally say that Black Lives Matter.” He added: “I’ve been watching the events of the last few weeks unfold – I really did not know what to say about it for a long time, and I'm still not sure I do. But I’ve been getting educated.”
News of the walkout never came out until this week, when Erica Baker, the director of engineering at GitHub, tweeted, “A large portion of the Coinbase engineering team walked off the job just before that thread went up because Brian *wouldn’t* say ‘black lives matter.’” She added that “even Google, who had been mum on racism for their entire existence, said something” about the Floyd protests.
Indeed, Google, Amazon, Apple, Facebook, Microsoft, and Salesforce are some of the mega-tech names that released public statements of support for the Floyd protests or the Black Lives Matter movement. Coinbase, during that time, made no such statement prior to Armstrong’s tweets.
Last weekend, likely in response to ongoing unrest within the company, Armstrong posted a public memo on the Coinbase blog explicitly stating the company’s commitment to an “apolitical culture.”
“We don’t engage here when issues are unrelated to our core mission”
Coinbase, Armstrong wrote, will focus on its “mission” to build cryptocurrency products. “We are a for-profit business,” he wrote. “We shouldn’t ever shy away from making profit, because with more resources we can have a great impact on the world.”
On political and social issues, Armstrong wrote, “We don’t engage here when issues are unrelated to our core mission, because we believe impact only comes with focus... We don’t advocate for any particular causes or candidates internally that are unrelated to our mission, because it is a distraction from our mission.”
Translation: Coinbase’s mission is to make money via cryptocurrency banking products. It is interested purely in crypto capitalism.
That in itself wouldn’t be so controversial. (Paul Graham, Y Combinator founder and an early investor in Coinbase, applauded: “I predict most successful companies will follow Coinbase's lead... those who don't are less likely to succeed.”) What rankled many inside the company and out was his apparent forbidding of employees from even talking about politics. Armstrong listed specific discussions he doesn’t want happening inside San Francisco-based Coinbase: “We won’t: Debate causes or political candidates internally; Expect the company to represent our personal beliefs externally; Assume negative intent, or not have each others back; Take on activism outside of our core mission at work.”
The Verge aptly called this “an act of wishful thinking.” Fortune wrote, “There is no such thing as apolitical culture.” Former Twitter CEO Dick Costolo replied to Paul Graham: “This isn’t great leadership... It’s the equivalent of telling your employees to ‘shut up and dribble.’” Jill Carlson, who manages blockchain investments at VC firm Slow Ventures, tweeted, “Have you ever thought about what a privilege it is to be able to NARROWLY FOCUS at work?”
Other critics pointed out that by publicly declaring he wants his company to stay away from politics, Armstrong effectively did the opposite.
A survey by the tech site The Information on Thursday found that 51% of its subscribers disagreed with Armstrong’s memo and said companies should engage with social activism, but 56% of subscribers also don’t believe employees should leave a company because they disagree with their CEO’s politics.
Coinbase Founder and CEO Brian Armstrong attends Consensus 2019 at the Hilton Midtown on May 15, 2019 in New York City. (Photo by Steven Ferdman/Getty Images)
Big brands taking political stands
The larger problem with the memo is that Armstrong’s goal of an apolitical tech company looks like a pipe dream in 2020.
Amid the Donald Trump presidency, political divisions have made social media a frequently toxic place, and big consumer-facing brands (in tech and in other industries) have frequently been forced into politics. Under Armour founder Kevin Plank called Trump a “real asset for this country” and his company’s own sponsored athletes expressed outrage on social media. After white nationalists toted Tiki torches at the violent rally in Charlottesville, Tiki had to clarify that, “We do not support their message or the use of our products in this way.” Keurig temporarily pulled its ads from Sean Hannity’s Fox program and quickly became the target of a boycott by Hannity fans who destroyed their Keurig machines. Wayfair employees in Boston staged a dramatic walkout after discovering the company was selling its furniture to a contractor that supplied private prisons.
As a result, many brands have proactively taken steps to make their political views clear—they have chosen to take a side.
Nike signed former NFL quarterback and political lightning rod Colin Kaepernick to an endorsement deal, and Dick’s Sporting Goods stopped selling assault rifles at its shops; both moves enraged conservatives, many of whom threatened to boycott those companies. American companies are “finding their ‘woke’ values,” and in many cases it has worked for them, said NYU marketing professor and tech commentator Scott Galloway. “It’s not principle-led, it’s shareholder-driven.”
In Silicon Valley, employee activism has surged.
Google has had multiple employee walkouts or protests in response to multiple issues at the company, including its handling of sexual harassment accusations and its work with the Chinese government. Apple CEO Tim Cook faced backlash for his 2019 meeting with a Chinese tech regulator and for appearing to kowtow to China by removing apps from the app store at China’s request. Facebook has become the prime symbol of Big Tech’s failure to monitor misinformation and hate speech; it hasn’t hurt the stock one bit.
More recently, the direct listing of Palantir, the shadowy defense security firm cofounded by Trump donor Peter Thiel that has worked with I.C.E., served as a reminder that much of Silicon Valley is conservative, not all liberal idealists. In Palantir’s S-1 filing in August, CEO Alex Karp declared, "The engineering elite of Silicon Valley may know more than most about building software. But they do not know more about how society should be organized or what justice requires.”
The Coinbase cryptocurrency exchange application is seen on the screen of an iPhone on October 05, 2018 in Paris, France. (Photo Illustration by Chesnot/Getty Images)
Brian Armstrong’s memo has strong shades of Mark Zuckerberg’s much-maligned attempts to stay politically neutral. The rise of “stakeholder capitalism” and ESG investing (environmental, social, governance) makes Armstrong’s longing to keep Coinbase apolitical look clumsy.
Armstrong’s retort to that very trend is in his memo: “It has become common for Silicon Valley companies to engage in a wide variety of social activism, even those unrelated to what the company does... while I think these efforts are well intentioned, they have the potential to destroy a lot of value at most companies, both by being a distraction, and by creating internal division.”
His stance created internal division at his own company. And the situation is likely far from resolved.
UPDATE, Oct. 8: In a blog post, Coinbase CEO Brian Armstrong says that 60 employees, or 5% of the workforce, have left after his memo.
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Daniel Roberts is an editor-at-large at Yahoo Finance and closely covers bitcoin and blockchain. Follow him on Twitter at @readDanwrite.
