Fintech

Kraken CEO defends his ‘back to dictatorship’ crackdown

Jesse Powell says the crypto exchange’s cultural revolution was necessary.

A photograph of Jesse Powell, CEO of Kraken Bitcoin Exchange

"Some people feel they should be able to be whatever they want to be in the workplace. But there's a line," Powell told Protocol.

Photo: David Paul Morris/Bloomberg via Getty Images

Kraken CEO Jesse Powell found himself under fire last month for provocative remarks he made that kicked off a contentious workplace battle and shined a light on the crypto exchange’s distinctive corporate culture.

A New York Times report based on leaked Slack messages and employee interviews accused Powell of making insensitive comments on gender and race, sparking heated conversations within Kraken. Powell responded forcefully, laying out new ground rules and principles in an attempt to define the way he wanted the company to operate — sharply at odds in some aspects with the tech industry’s standard practices.

“[P]eople get triggered by everything and can't conform to basic rules of honest debate. Back to dictatorship,” Powell said in a tweet.

Kraken invited employees who were uncomfortable with the company’s culture to leave with four months’ pay in a program called “jet ski,” one of many nautical allusions common to a company named after a mythical sea monster.

In an interview with Protocol, Powell defended his workplace crackdown against critics, including DEI advocates, saying it was necessary for a huge global, diverse company grappling with a crypto downturn. He also called for his workers to give him “the benefit of the doubt,” a request whose very framing the less privileged might find troubling.

This interview was edited for clarity and brevity.

How many Kraken employees have taken the “jet skis”?

It's definitely under 5% of the total, and less than 1% took it for stated culture or mission differences. We'd already planned to hire 500-plus roles in the second half of the year.

Why did you call it the “jet ski” program?

We just try to have everything have a nautical theme. It seemed like a fun, exciting thing. It's not dark and depressing. It's like, “You can ride a jet ski off to your next adventure.”

Looking back, are there things that you said or did in connection with the controversy that you wish you hadn’t?

I'm a very transparent person. I can crack a joke from time to time. I don't take myself too seriously. I think I could have said things in a way that was more sterile, much less interesting, much more boring.

When I'm speaking to people, I'm generally not thinking of myself like I'm a politician and I need to say this in a way that's going to be appealing to everybody. Some things you can say plainly.

I just saw this joke on Twitter. Someone said, “Twitter's the only place where you can make a very clear statement about something and still have it [be] misunderstood.” I use the example of writing the sentence “I like pancakes, period.” And someone replies, “Why do you hate waffles? Why would you disparage waffles like this?”

I wouldn't go back and change my attitude about it. I don't want to become completely, fully censored. I want to be able to share what I'm thinking with the company. And I hope that the company can give me the benefit of the doubt when I'm saying something that I'm not trying to attack people. If I say something about one group of people, it doesn't necessarily mean I'm singling them out.

I think there are probably some things that could have been said more politically, but I think that's not really me.

Can you give me an example?

There was something that I said along the lines of “I think pirates look really cool. I think the pirate aesthetic is really cool. Unfortunately, American women have been brainwashed to think that the pirate aesthetic is not cool to my detriment as a guy who likes to look like a pirate.”

That was taken way out of context. I was making a joke about how my own appearance is appreciated by women in America.

Most of the people who took offense to it are no longer at the company. So hopefully we've kind of raised the average sense of humor inside the company in the last few weeks.

The message you tried to convey was “Hey, we need to be united and focused.” But what also stood out was the line “back to dictatorship,” which painted a portrait of an arrogant, intolerant company.

I guess some people interpreted having rules as being arrogant or being authoritarian. I don't know if these people are cut out to be working in any company. Some people don't like rules at all. I think they probably should have asked about the rules before they joined the company.

The culture document goes a long way to making sure that we're aligned with people coming in. We have certain expectations of people, and if they want to work in a place that doesn't have any kind of rules or where they disagree with the policy, they should probably find somewhere else to work.

I don't know what to say to people who feel like they deserve some kind of a workplace where they don't have to adhere to policies. If that comes off as authoritarian or whatever, you know, I guess that's fine.

I think I could have said things in a way that was more sterile, much less interesting, much more boring.

When I said “back to dictatorship,” what I was referring to was that I had given people the chance to discuss a policy decision with me. A lot of people took the opportunity to just present their personal feelings about something, what they would do in a certain situation as an individual.

And I decided that basically having an open conversation was just not possible because the loudest voices basically drowned out everyone else. On top of that, when thinking about policy at the company, it's not about what I would do individually in my personal life or whatever. It's about what I can impose on 3,000 other people to mandate: “Do this or you're going to be fired.” It’s just a very different question.

You can't please everyone. We're certainly not trying to please everyone. We want people working at the company who are a good fit, and that's probably not 100% of the population.

How has this controversy affected your business, especially at a time when crypto is in a deep slump?

We've been through many crypto bear markets in the past. This is, like, No. 4 or 5. The company is 11 years old. We've done this several times. It doesn't really faze us. We're running a marathon here. We're not living month to month or quarter to quarter. We are looking at several years out.

Bear markets are great because you can take your eye off of what's happening by the minute. Usually in a bull market, you're stress-testing everything. You don't have enough customer support agents. You don't have enough servers in the data center or whatever. Things are just catching on fire all over the place.

So you can go from kind of firefighting back to building things according to your road map, which hopefully prepares you for the next bull market.

From our perspective, the bear markets are great. You get people coming into the industry who are really passionate about it. They're not just chasing the next rocket ship or looking to get into a company right before they go public. You get people who are gonna be there throughout the next downturn.

We saw last year that the space was so hot. We had so many people coming in from everywhere who weren't necessarily passionate about crypto at all. And when things went south, the first time they ever saw a crypto bear market, people were a little bit scared by it. Some of those people have left, but it's fine.

Jesse Powell, CEO of Kraken Bitcoin Exchange, working on his computer. Photo: David Paul Morris/Bloomberg via Getty Images

Your rival Coinbase went through a similar situation a couple of years ago. Brian Armstrong put out a memo saying the company had an “apolitical culture.” Were there lessons from the Coinbase experience that helped you navigate this crisis?

We learned from that that there weren't actually that many people that ended up leaving Coinbase. Usually it turns out that it's a very small minority of people who are responsible for the most distractions in the company.

While we haven't taken that approach of going just completely apolitical, that would sort of be the next stop.

We're going to try now to have a cohesive culture where people who are still here hopefully are resilient, are able to tolerate a debate about politics or something and not get completely distracted from work.

But yeah, the next stop would be something more severe, like what Coinbase has done and just ban a bunch of topics from being discussed.

You’re not there yet.

Now, we're not there yet. And I hope we don't get there, because a lot of people — especially in a fully remote company — they're just in company chat rooms 16 hours of the day.

It's not just like you clock in and clock out. They might be there during their work shift, and then they're there for another eight hours just hanging out because their friends are all in the company chat room.

I think people get a lot of enjoyment from being able to socialize and talk about current political issues and things like that with their coworkers.

We have people in 70-plus countries. It's a great opportunity to learn from people what's happening in their part of the world and how they see things differently. It's great to get all these different perspectives.

We would lose out on a huge amount of value if we were not allowed to talk about our culture, cultural differences — things like that. It's also helpful to be able to understand that from a marketing perspective, from a user research perspective, for product development, to understand how people are different around the world, especially as it relates to money.

I hope we don't have to go totally extreme like that.

We're probably one of the largest fully remote companies in the world. And probably one of the most diverse companies in the world in terms of the distribution of people across countries, different ethnicities, different upbringings. I've also traveled a lot, and that has also greatly and kind of informed my perspective on this.

I think sometimes people forget that America's problems are not the world's problems. We need to consider what are the cultural norms all over the world. If we want to be exclusive and we want to say the American way of doing things, or the Silicon Valley way of doing things, is just how everyone has to do it, I think we're going to lose out on a lot of people that maybe have different standards or would do things differently.

So we try to be more flexible. Anytime you interfere in a system by introducing a law and just saying, like, “OK, everyone just has to do this now. No exceptions. This is the law,” you risk a lot of unintended consequences with that.

One example that came up in the New York Times piece was the debate about pronouns. We had gotten some complaints about recruiters who were asking job candidates for their pronouns.

It's not something that the company ever asked for. This wasn't coming down from HR; it wasn't an official policy. It was just some individual’s thought that it would be inclusive to ask candidates for their pronouns. And they just started doing it without thinking about whether or not it would be appreciated by people of other cultures or people who don't necessarily speak English so well.

The policy that I landed on was when you're interfacing with someone outside of the company, especially someone who is in another country entirely, from a different cultural background who maybe doesn't speak English at the same level of proficiency, we're just not going to ask for that information.

If they offer it to you then fine, we can use it. But we're not going to ask for it because some people may feel uncomfortable by it. Some people may feel, “Oh, is there a right or wrong answer to this? Do I have to ask you about your pronouns back? And if I get your pronouns wrong, am I not going to get this job?”

The law that I chose was something that I think is the most fair and maintainable across a global operation across 3,000 people, interviewing thousands of people all the time. Don't ask and don't tell if you're talking to someone outside the company, because you just never know.

We want to have a good user experience for people. Just like when you check into a hotel, you don't expect the concierge or the receptionist to ask you for your pronouns. You might feel it’s kind of an invasion of privacy. It's like, I just want to get checked into my hotel room.

But does that send a message to people for whom issues around gender identity are important that their concerns are not important?

I think outside of work there are all kinds of social issues that people should be concerned with. But inside the workplace — just to take an extreme example, imagine you're working at Disneyland and your job is to be Mickey Mouse. You're putting on the costume and you're going around the theme park, interacting with people.

Should it be allowable for you to take off your Mickey Mouse head and say, “Hi, I'm really Jesse. I want you to know about my identity. I'm 41 years old. I'm a male. These are my sexual preferences. These are my pronouns.” Then you put your hat back on and you go about your business.

You have a job to do. Your job is to be Mickey Mouse and make everyone believe that you're Mickey Mouse and to put your own identity in the back seat while you're in the theme park. And you can be whoever you want when you leave.

Some people feel they should be able to be whatever they want to be in the workplace. But there's a line. We all put on some kind of act in the workplace. We have our work persona. We're much more professional. We're not nearly as casual as we are with our friends or family.

I think the more you’re external-facing, the more you're talking to the customer, the more inhibited you have to be. There's a brand behind this whole thing. We're all trying to be representatives of the brand.

When we talk to people externally, we want them to come away feeling like I understand what the Kraken brand is. I feel like I'm gonna get a consistent experience no matter which customer service agent I talk to. I feel like I'm not going to be offered unnecessary information. I'm not going to be made to feel uncomfortable. I'm not going to be asked for personal information about sexual preferences or things like that.

It's not appropriate in a meeting to just jump on the table and dance around. Someone might say, “Well, I identify as a professional dancer. Sometimes I feel the need to dance, and I need to dance right now in the middle of this meeting.”

Some people feel they should be able to be whatever they want to be in the workplace. But there's a line.

I would say, “Well, this is probably not the workplace for you. And let's find a way for you to be happy. Maybe you want to go get a job on Broadway or something.”

But if you feel the need to burst out dancing in the middle of meetings, it's maybe not a fit. I hate to tell you who you can't be at work, but we’ve got to have rules for the sake of moving things forward. People have varying ranges of expectations about what they should be allowed to do at work. It doesn't always match up.

Have there been people you wanted to hire, like a star engineer, who said no, because of the declarations you've made recently?

I don't know of anyone new coming in that at the last minute said that they're out. But we have had some great people who were really skilled leave recently for stated culture/mission reasons.

In the wake of the controversy.

Yeah. Taking the jet ski. It's a bummer. It's a bummer.

It's happened in the past as well where you get these quote-unquote genius [a--holes]. The typical example is some 10x engineer who is amazing. He gets done 10 times what any other software developer does. But no one can work with him. He's a complete maniac. He constantly insults people. It sucks to lose somebody like that. But ultimately, you know, what matters more is team cohesion.

We also don't want a single individual who, if they get hit by a bus, we blow up the whole company.

On the other end of the spectrum is maybe the genius eggshell or genius snowflake. The person who basically has a resiliency level of zero. Anytime the wind blows, they are just completely distracted. They lose a week of productivity. They can't focus on their work because of a conversation that's happening in the far corner of a company chat room. They can't help themselves from engaging in it.

I think both of those [kinds of] people would have a hard time working here at Kraken.

Of course, you want very talented people. I hate to use the dating analogy, but it's not just the attractiveness score that matters, right? It's how compatible you are with this person, with your religious beliefs or your work schedules or whether or not you want to have children. A lot of other things matter than just someone's basic kind of ability to perform.

On one side, we're not going to tolerate someone who's an asshole. On the other end of the spectrum, we've got people in 70-plus countries speaking 50-plus languages. People are just bound to share perspectives, and to misspeak because they're not native English speakers, that other people might find controversial or that people might be offended by.

If you're traveling a lot all over the world, you have to accept that when you go into a new country with a completely different culture, that you have to be willing to just accept. I wouldn't spit on the ground. I think that's rude. But, you know, in this country, everyone does it. It's commonly accepted. Chewing gum is illegal in Singapore. There's different norms all over the world. Showing the bottom of your foot to someone in the Arab world is an insult. But we do that all the time, you know, in the United States when we cross our legs.

Given that the company is this huge melting pot of people, there's no one culture defining the company. I think people have to be a bit thick-skinned and be able to acknowledge that “I'm going to encounter things that I might be a little bit uncomfortable with,” but that's actually one of the benefits of being exposed to all of this. I get all these different perspectives from the world. I get to learn things and you get to appreciate the way you do things back at home, or maybe you realize, “Oh, these guys do it better than the way that I always thought we should do it.”

So, yeah, we definitely lost some people who, if they could have been more resilient or if they were better aligned with the culture, they would have been great. Very talented people. No hard feelings or anything. I'm sure they'll find another great place to work that's just a better fit.

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