Inside the Hiring Strategy That Turned Coinbase Into a $75 Billion Company

Coinbase used the divisive, high-risk nature of its industry to its advantage.

Coinbase is one of the most improbable success stories in the tech industry today. Founded in 2012, the company set up a Bitcoin exchange at a time when few people took cryptocurrency seriously.

The public’s unfamiliarity with, or skepticism of, crypto limited Coinbase’s hiring pool in its early years. Startup recruiting relies on candidates seeing the potential for a big payoff, and for many in the early 2010s, it was hard to see how a crypto exchange would be successful enough to go public or get acquired.

But Coinbase didn’t downplay the divisive, high-risk nature of its business. Instead, the company leaned into it, developing a recruiting strategy that screened for people who were passionate about crypto, and weeded out anyone who wasn’t.

The strategy worked. Today, Coinbase is profitable, has a market cap of more than $75 billion, and earns billions in annual revenue.

Over the years, Coinbase executives and managers have described the company’s early hiring strategy in blog posts, a webinar, and interviews for Jeff John Roberts’ 2020 book “Kings of Crypto.” These are the key components of that strategy, and what today’s founders can learn from them.

Coinbase’s Hiring Strategy

1. Sourcing

Coinbase used a variety of methods to find strong candidates and were persistent in pursuing them. In a 2018 blog post, Coinbase CEO Brian Armstrong suggested that the company relied on inbound applications as little as possible.

Instead, Coinbase leaned heavily on referrals, engaged with the crypto community, positioned their executives as thought leaders, and widened their candidate pool by embracing remote work.

Referrals

In a 2015 webinar, former Coinbase recruiting director Aurora Petracca said half of the company’s hires in the prior year had come from employee referrals. In addition to asking employees for the names of people they’d be excited to work with, Coinbase’s recruiters would look through their LinkedIn connections for ideas.

Community Engagement

Finding candidates who were passionate about crypto and Coinbase was a priority for the company’s recruiting team. They reached out to developers who built apps using Coinbase’s API, and even used Reddit to find Bitcoin enthusiasts for its customer operations team.

Thought Leadership

Coinbase got its leaders in front of potential employees by finding conferences and industry events they could speak at. The company also encouraged employees to build their brands by contributing to engineering sites like Stack Overflow and GitHub.

Remote Work

Coinbase widened its talent pool by hiring remotely well before remote work became popular. In 2015, Armstrong wrote a blog post announcing that Coinbase would start hiring remote engineers after testing the arrangement with a few employees and being pleasantly surprised by the results.

2. Interviewing

Candidate Experience

Coinbase placed a lot of emphasis on creating a positive experience for job candidates. The company communicated to employees the importance of showing up to interviews on time and checking in with other interviewers to make sure they didn’t ask a candidate the same question twice. They understood that letting the details slip would make Coinbase look disorganized and unprofessional.

The Work Trial

The work trial was the most distinctive, and divisive, part of Coinbase’s hiring process. In the company’s early years, it would ask candidates to use a week of PTO to work for them, with no guarantee they’d receive an offer at the end. The goal was to avoid costly hiring mistakes by observing how well candidates worked with the Coinbase team, but it was a big ask for a young startup to make.

Not every candidate embraced this requirement, and some pushed back on it. The company would be flexible and shorten the work trial when needed, but it didn’t compromise on asking candidates to demonstrate their ability to do the kind of work they’d be responsible for at Coinbase. Asking for more effort than the average company screened out candidates who weren’t passionate about Coinbase’s mission, and identified those who were.

3. Offers

Bar Raisers

Coinbase’s recruiting philosophy could be summarized as: Keep the bar high.

“Hiring the wrong people is a risk factor for companies of all sizes, but it’s especially significant for companies going through hyper-growth,” Armstrong wrote in a 2018 blog post.

According to Armstrong, every hire needed to be an obvious “yes.” If there was any doubt about whether a candidate would be a good fit, the company wouldn’t give them an offer. Armstrong believed it was better to miss out on a good candidate than hire a bad one.

One way the company ensured that only star candidates got offers was by designating a “bar raiser” on each hiring panel who was an expert on the company’s values. Bar raisers had veto power for every candidate. If the hiring manager wanted to hire someone but the bar raiser didn’t, the candidate didn’t get an offer.

Bar raisers ensured that a manager eager to fill an opening didn’t compromise to make it happen.

Persistence

When Coinbase identified a top-tier candidate, it would spare no expense to land them. Armstrong has said he’ll spend years recruiting potential difference-makers and pay lavishly to close the deal. Armstrong believes truly great employees are so impactful that it’s worth spending a lot of time and money to hire them.

Advice for Founders

Coinbase’s hiring philosophy might not work for every startup, but it holds a number of lessons any founder can apply to their recruiting strategy.

1. Figure out exactly what you want, and screen for it

Like many startups, Coinbase made it a priority to find employees who were excited by its mission. Unlike many startups, Coinbase went to extreme lengths to screen for that passion. While some candidates rejected the company’s requirements, that was part of the plan. Coinbase knew exactly what it was looking for and pursued it with conviction.

2. Keep your standards high

Whether you hire the right people will determine whether your company is successful. While it can be frustrating to leave a role open longer than you’d like, being patient to find the right candidate is worth it.

3. Spend big on stars

Since hiring high performers can be the difference between success and failure, be willing to spend a lot of time and money to land them. It might seem inefficient at times, but your investments will pay off in the long run.

“It’s easier to hire 90th percentile performers who start doing great work right away, than to train average performers into 90th percentile performers,” Armstrong wrote in a 2018 blog post. “Spend at least double what an average company does on hiring.”

4. Get creative

If you’re a small startup that isn’t well known, one way to develop a talent advantage is to look where other companies aren’t. Find communities your competitors aren’t engaging with, or experiment with new work arrangements other founders haven’t considered.

5. Get the details right

Being five minutes late to an interview, or asking a candidate the same question your colleague did, might not seem like a big deal to you, but it can be to a candidate. Top candidates are going to have multiple options and set a high bar for any company they join. Seemingly small mistakes can be the difference between a “yes” and a “no.”