Being yourself: The four strategic lessons from the Coinbase story

Faced with the challenge in legitimacy they are currently facing, companies are often tempted to react defensively, conceding to the zeitgeist, and hoping to get by. Often, the only solution is to build a mask to protect themselves. The problem is that it creates a gulf between who they really are and who they pretend to be, which only accentuates the suspicion. The story of Coinbase, a U.S. startup that found itself in the spotlight last year, shows that a radically opposite approach of asserting one’s uniqueness is not only possible, but pays off.

In September 2020, Brian Armstrong, the high-profile CEO and founder of Coinbase, a bitcoin exchange platform founded in 2012, published a blog post in which he defined Coinbase as a mission-focused company, discouraging employee activism, and internal discussions about political and social issues. In a key sentence, he wrote, “We don’t engage here when issues are not related to our core mission, because we believe that impact only comes with focus.”

The post went over very badly. Sixty employees left the company in protest, and Armstrong was attacked by the press and social networks for his lack of interest in political and social issues, in the midst of the George Floyd case, a black man killed by the Police a few months earlier. With corporate social responsibility (CSR) considered an imperative for businesses, Armstrong’s decision was scandalous, and many analysts and experts predicted he would go bust. He didn’t. The storm didn’t last, and the company continued to grow. A year later, in a series of tweets, Armstrong looked back on what had happened, and concluded that banning politics from his company was the best decision he had made in his career.

A reversal

The decision, however, was not an obvious one. It was even a reversal. Armstrong had long believed that an entrepreneur should be involved in societal issues. After Floyd’s death, he publicly supported the Black Lives Matter movement, and encouraged political and social discussions within the company. But the consequences quickly became apparent: dissension, tension, and above all the distraction for employees who spend more energy discussing politics than doing their jobs. And for what impact? None, Armstrong concluded. Realizing the peril and the futility of the exercise, he completely changed his mind. Concluding his blog post, he wrote: “In short, I want Coinbase to focus on achieving its mission, because I believe that’s how we can have the greatest impact on the world. We will do this by playing like a championship team, focusing on building, and being transparent about what our mission is and isn’t.” 

We can draw four strategic lessons from this story.

1. Focus – Concentrate on what really matters to the business. Armstrong made it clear that Coinbase would focus on what it can make a real impact on, and ignore the rest. It wouldn’t pretend. “Focus on building,” he insisted. Coinbase is a startup, a small, fragile company, and what really matters to it is establishing its solution in a sustainable way, and building the best company it can. That’s what strategy is all about: identifying the core challenge of your organization, focusing on it, coming up with a uniquely creative answer to that challenge, and ignoring everything else, no matter how important it seems to be. Steve Jobs underlined this in a famous speech just after saving Apple from bankruptcy in 1997: “Focus means saying no. And you have to say no, no, no, no.”

2. Discipline – Stay focused on your response to the core challenge. Responding to the core challenge takes time and requires an iron discipline not to get distracted. Don’t jump at everything that moves, resist to the sirens of the media to give your opinion on issues where no one probably cares what you think. Focus on what you can have an impact on, and admit that the rest is just verbiage.

3. Determination – Don’t give in to attacks, especially public ones. By banning politics from the workplace, Armstrong went against the current doxa, the false evidence that a company must be politically and socially engaged. Ignoring the outraged reactions, he focused on his mission, drawing energy from the many messages of support, including from his own employees, that he received, mostly in private, for fear of retribution from their activist colleagues. Indeed, in the speech quoted above, Jobs crudely observed that “When you say no, you piss off people, and they’re going to write s*** articles about you.” Armstrong offered generous severance packages to employees who were uncomfortable with his decision, but he stood firm. Interestingly, while some employees have left, he was able to recruit many others who were tired of the politics, the infighting, and the distractions of other companies, and were looking for a place to work in peace. Determination, then, means not confusing what is visible and noisy – a few activist employees relayed by journalists and social networks – with what is not – all those who, on the contrary, don’t want to mix the two, but who keep a low profile because, by definition, they are not activists.

4. Authenticity – Be fully yourself. To work, focus must be based on a clear awareness of the organization’s identity. This identity was determined by the uniquely creative responses to the successive challenges faced by the organization in its early life. Awareness is not enough, however. Identity must also be clearly stated and assumed, so that each of the stakeholders (founders, employees, but also partners) know where to stand. Implicitly, Armstrong’s message thus was “There’s no politics in the Coinbase workplace, because it’s not who we are; Get over it!” Everyone wins: activist employees can go elsewhere and be more effective, and non-activists can get on with their work. By asserting and assuming its identity, the organization drops the mask; it becomes fully itself and can thus, through its success, have a real impact on the world, in Coinbase’s case by building a bitcoin payment platform. 

Being yourself: the key to competitive advantage

One of the essential precepts of strategy is that you don’t develop a competitive advantage by conforming to dominant models. You develop it by asserting a singular position through the challenge of these models, no matter the cost. This is what Armstrong observes: “The biggest lesson I learned from this ordeal is that if you think something is the right way to go, it’s worth talking about, even if it’s controversial.”

A strategy is a creative act; and a creative act requires an assumed awareness of its identity and what makes it unique. This will provide the anchor to let go those who need to go, to encourage those who carry the flame, and to maintain the discipline of relentlessly focusing on the answer to the fundamental challenge of the organization.

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