Today, Coinbase has gone public. We are proud to say that Coinbase is a Y Combinator company and a member of the Summer 2012 batch.
Co-founder and CEO Brian Armstrong applied to Y Combinator on March 29, 2012 and began the batch a few months later. According to the Coinbase YC application, the company was initially named “Bitbank” and had not been launched; however, Brian mentions in his application that he built one of the first Android apps for bitcoin as a side project.
The most interesting professional accomplishment that Brian mentions in his YC application is that he helped build the fraud prevention systems at Airbnb (which at the time was a relatively small and fast-growing Y Combinator company). In retrospect, this work experience around international payments, growth, and security was excellent context for Brian as the CEO of Coinbase.
Brian is a founder who believed in something early and was willing to act on that belief to build a company before most people thought it was a good idea. The Coinbase YC application also states “Right now there are about 100,000 bitcoin users despite the relatively immature tools, which is a good indicator of interest.” 🙂
At the time buying and selling bitcoin was incredibly difficult — as the YC application says: “In the bitcoin world, right now people use the open source desktop client which is scary unless you’re technical (34 digit hashes are your send/receive addresses). People also go through multi-step processes to buy and sell bitcoins through different intermediaries.” The problems at the time were clear, and Coinbase brought a simple and effective solution to the market.
Much of this sentiment can be seen in Brian’s pitch at YC S12 Demo Day, which he shared publicly. Coinbase, as a hosted bitcoin wallet, made it easy for non-technical people to participate in this new digital currency. And the impact was clear throughout the YC batch, as Coinbase signups from August 10 to August 17 in 2012 increased 20 percent daily. Then, less than one year later, Coinbase raised the largest funding round to date for a bitcoin startup.
After YC, Coinbase executed brilliantly. The team Brian brought together, including the addition of Fred Ehrsam as a co-founder, was invaluable — as building security systems around something this valuable and with this little margin for error or mistakes alone is a huge technical and operational challenge. Throughout all of this, I recall Brian’s calm focus and dedication in every one of our conversations, despite operating in a very noisy and excitable market.
Bridging the gap between cryptocurrencies, regulators, and the banking world is not easy but Coinbase figured it out. Additionally, it’s worth celebrating that Coinbase was always a good business, i.e. it always made money. Being on solid financial footing so that the inevitable ups and downs of the market do not affect the viability or longevity of the business was an excellent strategy. I expect Coinbase will keep this strategy going.
Congratulations, Coinbase team, on today’s IPO!