BRIAN KENNY: Welcome to Cold Call, the podcast where we dive deep into the stories behind groundbreaking Harvard Business School case studies.
Today’s case examines how one cryptocurrency exchange navigated two major resets in a single year. The first was moving to a fully remote workforce, and the second was adopting a policy that explicitly banned political and social activism at work, sparking an intense debate about leadership, culture, and the boundaries of corporate engagement in social issues.
Oh, and if that weren’t enough, these decisions came at a pivotal moment just as the company was preparing for its historic IPO. This case explores what it means to build a mission-focused culture in a hyper-growth, high-volatility industry. Today on Cold Call, I’m joined by Professor Charles Wang and guest, LJ Brock, to discuss the case, “Mission First at Coinbase.”
I’m your host, Brian Kenny, and you’re listening to Cold Call on the HBR podcast network.
Professor Charlie Wang’s research and teaching focus on corporate governance and valuation, he is a repeat guest on Cold Call. Welcome back, Charlie.
CHARLES WANG: Thanks for having me. Great to be back.
BRIAN KENNY: It’s been a while. I looked back in the archives, it was 2022 the last time we had you on the show, so you got to come by more often.
CHARLES WANG: Thank you. Great to be back.
BRIAN KENNY: LJ Brock is the Chief People Officer at Coinbase and a protagonist in today’s case. Welcome, LJ.
LJ BROCK: Oh, great to be here. Thanks for having me.
BRIAN KENNY: We love having the protagonist in the room. You lived it so you can give us a great perspective. I found this case really interesting. I admit I don’t know a lot about the cryptocurrency industry, so for me it was great to take a deep dive on that, and I don’t think we’ve done enough episodes on that particular industry since it’s so important, but this was about much more than just the industry itself. It was about some big announcements that you made and decisions that the company made. Why don’t we just get started with you, Charlie. I’m going to ask you what inspired you to write the case and what questions were you hoping students would wrestle with when they were studying about Coinbase’s mission-first transformation?
CHARLES WANG: In my role as the course head for FRC, our required MBA course on “Financial Reporting and Control,” I was really trying to look for a new case that would examine how companies build trust in capital markets, which is our bread-and-butter topic for us. Coinbase stood out to me because its entire strategy centered around being the trustworthy player in an industry that’s often associated with hacks, scandals, and just general volatility. And that tension between the attributes of the industry and what the company would need to do to earn credibility with its stakeholders was quite fascinating to me.
My initial interest, Brian, in tackling this case was around how Coinbase would have to manage this, let’s call it somewhat complicated relationship with the SEC and the broader regulatory environment. But once I interviewed LJ and Emilie Choi, the company COO, it became clear to me that the real story here wasn’t just about compliance, it was about how the company curated its culture, how it designed its control systems to drive its differentiated strategy, and the mission-first and remote-first reset stood out to me as a rich context to explore some of these very classic management control design questions while also touching on two of the most pressing challenges for modern day companies: political speech at work and remote work.
BRIAN KENNY: Yeah. What’s your cold call, to start the discussion?
CHARLES WANG: I ask students, “Do you think that the company’s leadership is brilliant in making the call in these two resets, or do you think they’ve made catastrophic mistakes?”
BRIAN KENNY: Interesting. LJ, you’re going to be in a class today, right?
LJ BROCK: I am.
BRIAN KENNY: He’s going to ask that question, so you’re going to find out if they think you’re brilliant or not. That will be an interesting moment, I’m sure.
LJ BROCK: I think that would be the first group of people that I would encounter that would suggest that I was brilliant, so that if I even get one in there, it’ll be great.
BRIAN KENNY: That’s great. Well, let me turn to you for a second here. If you look back at 2020, I teased in the intro that Coinbase had sort of two seismic shifts going on. The first was going mission-first and apolitical stance across the company, and this is 2020. This is when there were a lot of things happening where leaders and organizations were expected to take a position. So that’s one issue. And then the second having to do with just going fully remote, even at a time when people were returning to work and companies were trying to encourage people to come back into the office. So, two big decisions that you made. The 2020 blog post by Brian Armstrong was considered highly controversial at the time. I’m wondering if you can take us back to that and talk about how the changes felt internally and how employees reacted in those early days after these announcements were made.
LJ BROCK: Yeah, happy to. And I think you began by highlighting the context that’s important to shape this, which is if you think about what was happening in 2020 in the world, the country was in sort of throes of upheaval. There was everything that had happened around George Floyd, there was the sense of how was social justice going to play out in the workplace? And so, when Brian did the mission-first blog, I think the first thing internally that people really struggled with was contextually explaining what it meant to them, because it was so different from the sense of the moment. We weren’t asking them, Brian wasn’t asking them to in any way, not have interests, feelings, passions about what was happening in the country. We were just saying that within the workplace, you could not expect the company as an entity to share your values and your beliefs. And we had to find a common sense of what we all could be certain we shared. And so, the first thing I think, what were the employees experiencing? It was a little bit of like, explain this to me. It feels very different. It’s not the general ethos of the time. Take us through this. And so, we had to spend a fair amount of time articulating to people, what did we mean by mission-first, what was it really going to play out like? And then what did it not mean? I think in taking people through that, certainly there was some angst, there was some confusion, there was some people very excited about it. We had all that broad set of spectrums, but we had an opportunity, I think, to really drive clarity of purpose as a company going forward and to be really authentic about who we were going to be. And I think that’s a common theme that we’ll probably talk about as we go through this.
BRIAN KENNY: Yeah. Charlie, I’m going to come back to you because from a teaching perspective, we’ve seen a lot has changed. In fact, now this decision almost looks prescient, if you fast-forward to where we are today, but a lot has changed. And I’m wondering, what this moment in your mind reveals about the tradeoffs that leaders face between focus and inclusion.
CHARLES WANG: Absolutely is. And I think the first thing that it reveals is just how difficult this tradeoff is for managers who are in the position to make it. And there are many ways you can conceptualize how one should go about making these very difficult trade-offs. And in our course, one lens we’ll offer to students is through strategy, how companies compete in their industry context. Coinbase is operating in a very young, volatile, and you might even say intensely competitive environment with dozens of players. And its strategy is to be the trusted user-friendly on-ramp to the world of crypto. Now, to earn that position, it had to differentiate itself by being transparent, by being compliant. It has to be the trustworthy player. But what that means is that there are going to be limits with respect to what Coinbase can or can’t do in competing in this environment. It means Coinbase can’t move as fast or offer the same kinds of, let’s say, higher risk, higher leverage products that its competitors based on offshore jurisdictions might be able to offer to meet trader demand, to attract volume, which of course is one of the main sources of crypto exchange revenue. So, a way to think about that is, this is a company competing in a hyper dynamic market in some sense with one hand tied behind its back. And so, you can see how under these kinds of conditions, focus and flawless execution almost becomes somewhat existential. And so, this is one way you can think about how to make that tradeoff. Now I think it’s useful to just remember that even if you think strategy can help us conceptualize or rationalize that tradeoff, the act of implementing such a trade-off in real life, especially in that environment back in 2020, really requires an enormous amount of conviction from the company’s leadership.
BRIAN KENNY: Yeah. And we’ve talked about LJ, how it’s playing out internally for you, but this is also spilling out externally, and probably by design to some extent. This is also at a time when the industry itself was, yes, I think they were under scrutiny, but a lot of the big players hadn’t had their moment, right?
CHARLES WANG: That’s right.
BRIAN KENNY: So FTX hadn’t happened yet, some of these things hadn’t happened. So here you are really putting yourselves out there and trying to differentiate yourself based on being the trusted player. And your employees might be saying things online, on social media and other places about how unhappy they are about the position you’ve taken. How did you deal with the criticism that you were hearing maybe in the media and from some other places outside the firm?
LJ BROCK: Well, look, I think one of the big lessons to me in this, and then how we dealt with it was around authenticity of leadership. And what I think happened in the moment when Brian did the mission-first blog is that he had always believed in mission-first. I think it was central to the way that he thought we would run a successful company. And then at that moment, I think he found his voice and we really hit this strong sense of authenticity. And so, when you’re being authentic to who you are as a company, dealing with dissent or questions around it externally is, frankly, I don’t want to say easy. I mean it’s obviously a challenge, but you are being true to who you are. You’re being transparent about it, and it’s easy to articulate that to people in a way that I think at least they can understand, they may not agree with, but they can understand the principles behind your decision. And so, what I think we found is that it was important to drive that authenticity and understanding to everybody in the company so that as we were dealing with external questions or candidate questions or employee questions, we were all on the same page.
BRIAN KENNY: Charlie, I’m wondering how, if you look at it from your perspective, how do you interpret that decision in the context of organizational alignment, long-term performance and the strategy of differentiation?
CHARLES WANG: I guess I view both the short-term and the long-term consequences of this. In the short-term, this kind of a decision, anytime you have 5% of your employees deciding to leave, you’re going to experience some short-term pains. The real question here is what are you gaining in the long run? I see at least two items. The first is, this kind of a decision can help to clarify what the company’s actually about, what its core beliefs are and what the boundaries are that define acceptable conduct. I think of these as the yin and the yang of a company’s soul. And once you have clarified what the company’s really about, the fact that you have 5% of employees leave can be a benefit to an organization in the long run in that it can sharpen employee selection, meaning people who are joining or staying at Coinbase after that moment, presumably were doing so with a much clearer idea about what this company stands for and what its values are. And I believe that that kind of alignment can be incredibly powerful in the long run to help strengthen cohesion to reduce internal friction over time. So, in that sense, this short-term pain can produce hopefully a more resilient and self-reinforcing culture that can help drive long-term performance.
BRIAN KENNY: LJ, did it feel that way at the time I’m wondering? Or how did the people who stayed react, did they feel like they were part of a stronger organization or were they still unsure about what was going to happen?
LJ BROCK: I think Charlie’s discussion of short-term versus long-term is interesting because I think the short-term was a lesson for me in change management, and I think it helped us in what you’re asking, which is, in giving people this option, I think we moved through the change curve much more quickly than probably I would’ve anticipated or I’d ever experienced previously in my career, which is to say we sort of had literally a, I don’t know, two-week period where we’re like, “This is who we’re going to be, here are the questions. Let’s talk about it as a company, you decide what you want to do.” And then people made their choice in around, I don’t want to diminish that having people leave was both personally painful and challenging for the business. But what I do think it did is it allowed everybody who stayed to move to the other side very quickly and realize that we were going to focus on what bound us together on our mission. And so, in some ways that minimized the challenges in the sense that we didn’t linger in a period of cloudiness or discomfort for a long period of time. We moved to a period of action, which has always been what makes Coinbase great. We execute well. And so, we moved into efficient execution, which is one of our values, and we started executing on advancing the company’s delivery in this world, our products going to market, advancing our culture, advancing our hiring. We just got back to business and through the rhythm of business, we found ourselves healing.
BRIAN KENNY: Yeah, and you hear so often about organizations that don’t take the kind of step that you did, offering people an exit ramp, and they end up with this sort of lingering discontent that can almost be toxic from within. So, it sounds like it worked out well in this case.
Charlie, I’ll come back to you for a second. We haven’t talked at all about the second part of the reset, which was the fully remote. And again, we go back to 2020, we’re coming out of COVID, people are starting to be adventuresome and go back to the office. You’ve discussed this with, in particular executive participants, and I’m wondering what their reaction is to that second part of the shift?
CHARLES WANG: When students think through the industry and the competitive context, they quickly grasp why execution excellence is so critical to the success of Coinbase. But given that, many of them are quite surprised about why the company decided to remain remote-first even after COVID, because to many of them, it feels somewhat inconsistent with this idea that you need lots of focus and execution excellence. And I think many of them are thinking about their own experiences working remote. And they’ll say something like, “I know I’m not fully focused when I’m at home,” you’re surrounded by your comforts, many distractions—
BRIAN KENNY: Doing the laundry. I mean, come on, we’re all doing the laundry at home.
CHARLES WANG: Doing laundry breaks. “Love is Blind” breaks. Some have kids, roommates to distract them. And plenty of leaders, like Jamie Dimon are deeply skeptical about whether or not, in particular full remote as a modality of work, can really work. So, they really wrestle this question, how can a company whose success depends on having doers, builders executing with world-class discipline, how can a company like this choose a work design that seems to invite all sorts of moral hazard and disengagement? And that tension, I think, drives a lot of classroom debate.
BRIAN KENNY: Yeah. Even without the first part of the reset, the apolitical part, it’s hard to go fully remote and maintain a culture and feel like you’re building a culture, but when you add the other piece onto it, you’re leaving a bunch of people in isolation where they can think whatever thoughts they have, they don’t have the water cooler conversations. I’m wondering how that played out for you and how you were able to sort of, as the chief people officer, your job is to keep that culture growing and coherent. How did that work for you?
LJ BROCK: Yeah, probably on a couple of dimensions. I think one vector was, we’ve always been a company that we find purpose in doing the work and getting it done and being very execution-oriented, as I mentioned. So, we even went into being remote, our natural cadence of rhythm of our business was every 90 days having a regular checkpoint on our goals, advancing those. We, as a matter of as a chief people officer, we rolled out 90-day performance checkpoints. So, we were checking in very lightweight with every employee every 90 days on how they were performing. We were really amping up the focus on execution in a way that I think being remote demanded at the beginning of it. One thing was just more hyper-focus on execution. The other piece was, how do we nurture the culture? Well, we had monthly town halls. We had Brian talking about each of our culture tenants every month, one of them. We’ve continued that now in practice and that carries on. So, we were making sure that even as people were remote, they were still experiencing the CEO speaking to them on a regular cadence about what is the culture and how do they live it? And then frankly, we’ve over a period of time continued to iterate on what does it mean to be remote-first. The distinction, I would call is remote-first is not remote-only. That’s what we always say at Coinbase. And so, we’ve had various degrees of where we’ve brought people together at different events or team meetings or exercises, either in what remained of our offices at the time or in other sites, to make sure that we were nurturing some of our culture in the moment as well, live in person.
BRIAN KENNY: And I figured, if the case mentions this, it probably does, has the company grown significantly since this timeframe? And if so, have you figured out how to onboard new people in a way that makes them feel like they’re part of the community without actually being with their colleagues all the time?
LJ BROCK: Yeah, so the interesting dynamic of Coinbase is that remote propelled us, I think through unbelievable people growth. I joined the company in 2019, it was 700 people, at our peak we reached 7,000 people.
BRIAN KENNY: Oh, wow.
LJ BROCK: We would not have achieved that in my estimation, without being remote. We unfortunately went through a downturn and got back to about 3,500 people. Today we’re closer to 5,000. So, we’re back into a growth mode. And yeah, I do think that we have a lot of mechanisms for how we onboard people. One thing that is just central to the way we operate is we have a written culture. I say that I think we made remote work. I don’t think remote’s for everybody. We made remote work in part because I think Brian had tuned the company, in my estimation, it’s personally my view, of leveling the playing field for introverts. And that meant putting everything down in a written format, and that meant onboarding remotely was a lot easier because it’s not something off in the ethos. It’s not, “Oh, I have to be at a water cooler.” You can read about it, you can see how it plays out in the work through our documentation. I think that has helped us really maintain our culture as we’ve scaled.
BRIAN KENNY: Yeah. Charlie, you’ve looked at a lot of organizations in your research. I’m wondering what lessons people can take away from being able to scale while still not always being together.
CHARLES WANG: There are a few lessons I’ve been learning. I think when people rarely meet in person, there’s at least two things that become much more important. The first is explicit codification that LJ referred to. And then the second to me is more careful selection of who works in your company. In this type of work, culture can’t solely rely on osmosis anymore. So, we have to write things down, document things to make the culture more teachable. So, I think Coinbase’s playbooks, the internal memos, the retros, they all serve to make some of these implicit norms of preparedness, execution excellence, quite explicit. At the same time, because a lot of the interactions between colleagues in remote-first world is going to be somewhat asynchronous, it’s going to be hard to reshape people’s behaviors by interacting with them live. So, I think selection becomes much more important in this world than just, say, pure socialization. It’s useful to know that you’re selecting folks who already fit your culture, your values well, and can thrive autonomously within our organization. A second lesson for me is about how to manage risk in this remote-first environment. When proximity is no longer a friend to help you enforce accountability, so to speak, you have to build that kind of management discipline through thoughtful management control, system design, metrics, dashboards, feedback loops. I think they become much more important as part of your accountability infrastructure. And put simply, say, in a remote-first world, you can’t manage by walking around. So, you need control systems that do that observational work for you. But at the same time, you want to design these systems to help you amplify the upsides of being remote. If remote work helps you tap into great talent from around the world, to get these exceptional self-starters, builders, the doers, then your system, your incentive system in particular should really reward these qualities that are necessary for success.
BRIAN KENNY: Yeah, I can totally see how remote-first would be attractive from a recruiting standpoint. A lot of people want the flexibility. I have, my own kids work in jobs where they can work wherever they want, it sounds awesome. Sounds too good to be true, actually. But I also wonder if the apolitical stance has been a detractor in some ways, and I bring that up in the context of the millennial generation, we know they want to be involved with an organization that stands for something, right? They want to be part of a movement. We know that that attracts them, and that firms who have taken a strong stand on certain issues can be a draw. I’m wondering if you’ve seen any pushback with regard to that or if there are candidates who you would like to get who you can’t.
LJ BROCK: I don’t think it’s been a detractor at all. In fact, I piggyback on what Charlie said. I think that the essence to me of what I have learned in this is that it’s about making sure that the brand experience matches the brand promise from an employment perspective. What’s going to be expected of you, and probably the single greatest stat I take pride in is that when we do our annual engagement survey, somewhere in the 90 to 95% of the people in the company say, “What I thought I was getting into is exactly what I got into coming to Coinbase.” And so why I say to you it’s not a detractor is it serves as a filter to bring the people who are going to be right for us. And we’re okay with the ones who look at the filter and say, “That’s not right for us.” And so, I think it has helped us scale, and it’s helped us scale in a manner where we’re not just adding people to get larger, we’re adding people to execute because they’ve chosen to come to a place where they know what they’re getting into and they want to be a part of it. And so I think at the end result is actually a lot better than it would be if we were just worried about, oh, can we be everything to everyone?
BRIAN KENNY: And there is a mission focus at the firm too. We haven’t discussed it explicitly, but part of the original vision was to make cryptocurrency, the economic system available to everybody wherever they are, which is a pretty powerful focus.
LJ BROCK: The people who are, I think, at their core, the happiest and the most engaged at Coinbase come for the mission of economic freedom and what we’re trying to achieve as a company. Absolutely.
BRIAN KENNY: Yeah. Awesome. Charlie, back to you for a second. We’ve got time for just a couple more questions. I’ve got two for you and one for LJ. I’ll give you the last word because you’re the faculty member, and that’s—
CHARLES WANG: I appreciate that.
BRIAN KENNY: That’s how we like to do that. But before we get there, when our faculty write cases, they’re always trying to extrapolate from this one example, what are the larger lessons that can be learned? And I’m wondering, as you wrote the Coinbase case, what were the broader insights you were hoping people might take away from that?
CHARLES WANG: Yeah, I think it’s that as the world becomes ever more complex, managers have to make many of these difficult choices about strategy, about workplace policies, about organizational design. One lesson I hope our readers, our students will take away is that these choices need not be treated as separate decisions. They are part of one single integrated activity that’s, in Coinbase’s case, anchored in the company’s mission that we just talked about. This mission to create an open financial system for the world through crypto, served as the North Star that shaped everything else how the company shaped a strategy to compete on trust, the culture of transparency, preparedness, the design of control systems that will sustain that focus and high performance culture in a remote-first world. And when done well, these design choices can reinforce each other, shaping the way people work, how they’re measured, how they’re incentivized, how the organization learns to all start to pull in the same direction. And that alignment is ultimately what can allow a company to turn its mission into actual performance.
BRIAN KENNY: Yeah. So LJ, I’ve got one final question for you. Hindsight is 2020, well, we have the benefit now of looking back over the last few years and seeing how things unfolded. As you look back at it now, is there anything you would do differently in 2020 with those original announcements and how you communicated this, both internally and externally?
LJ BROCK: If I take that in a little bit of a different direction, the thing that I reflect on the most looking back is less about any specific thing we would’ve done differently in that moment. But to me, part of what I read in this case and what I think about looking back is the authenticity point I brought up. So if there’s anything, I think the sooner you can be authentic about who you are, the better a leader you’re going to be for your company. And so if I could have done anything in time, I probably would’ve backed up and done the mission-first move earlier. And so my lesson is you can’t get to authenticity soon enough.
BRIAN KENNY: Yeah. That’s great. That’s a great insight. Charlie, I’m going to give you the final word in this. We always, I think many of the firms that we work with and the listeners to our show are grappling with some of these very same questions that Coinbase has been dealing with and sort of playing out. I’m wondering what this case does in terms of helping leaders navigate the mission-driven organizations in polarizing times, if you have any insights as to how we might think about that.
CHARLES WANG: I am a corporate governance researcher, and there’s been this secular debate about stakeholder governance that I really take away from the Coinbase study. And I think the case surfaces some very uncomfortable truths about what it means to manage stakeholders when they disagree. In the secular corporate governance conversation over the last 10, 15 years, there’s this sentiment out there, which I’m sure both of you are well aware, that companies should be managed to serve the interest of all stakeholders, employees, customers, investors, and the communities we operate in. I think that sounds great. It’s a very seductive idea, but in my view, a horribly impractical one, because frankly, stakeholders rarely have aligned incentives. In the Coinbase case, even within a single stakeholder group of employees, there can be deep disagreements about what the organization should stand for and what decisions it should make. And so the real leadership question becomes, how do you make trade-offs among stakeholders who are important to the business, critical to the business, but they’re not aligned with each other? Coinbase, to me, offers at least one potential roadmap for other leaders out there: let the mission and the strategy be the guide to help you make these hard choices. To realize its mission, this company had to compete on trust and execution, not just innovation. And so it meant that they had to prioritize stakeholders that can help the company build fast, securely, and in compliance. So they needed the doers, the builders, the executors who could turn that strategy, that mission into reality. And so in that sense, I think the mission didn’t eliminate the trade-offs that exist. It just clarified them.
BRIAN KENNY: Yeah. And like any great HBS case, there is no one right or wrong answer.
BRIAN KENNY: LJ, Charlie, thanks for joining me.
LJ BROCK: Thank you very much for having me.
CHARLES WANG: Thanks for having us.
BRIAN KENNY: If you enjoy Cold Call, you might like our other podcasts: Climate Rising, Coaching Real Leaders, IdeaCast, Managing the Future of Work, Skydeck, and Think Big, Buy Small. Find them wherever you get your podcasts.
If you have any suggestions or just want to say hello, we want to hear from you. Email us at [email protected]. Thanks again for joining us. I’m your host Brian Kenny, and you’ve been listening to Cold Call, an official podcast of Harvard Business School and part of the HBR Podcast Network.
