Crypto Exchanges
Enterprise

1

Coinbase
Power Score: 65.80 Momentum Score: 69.00 (2) HQ: Remote CEO: Brian Armstrong

Economics

Valuation: $33.53 billion (-56% YoY)

Amt. Raised: $923 million

Politics

Lobbying Spend: $1.53 million

Industry Orgs: CCI

People

Headcount: 2,223 (+118% YoY)

Engineering Headcount: 1,396 (+60% YoY)

Big Tech Experience: 14.2%

Open Roles: 3,935

Innovation

R&D Spending: $1.29 billion (+375% YoY)

Patents Applied For: 17

Patents Owned: 23

Acquisitions: Agara (November 2021); Unbound Security (November 2021) FairX (January 2022)

Leadership

Exec Team Exits: Brett Redfearn (VP, Capital Markets)

Diversity Data?: No

ESG/CSR Data?: No

On Power

In the last decade, Coinbase has taken crypto mainstream and made a boatload of money doing it. The crypto industry has always grappled with a perception problem, fueled by high-profile skeptics (or begrudging acceptors) like Jamie Dimon and Bill Gates doubting the maturity and viability of alternative currencies at large. So, when Coinbase went public last year, the company was viewed as two kids in an $85 billion trench coat. But the IPO and the coming out party for crypto that ensued have effectively convinced Wall Street of what the DeFi community has long known: Crypto doesn’t belong at the kids’ table, but in the boardroom and in hedge fund portfolios.

In the process, CEO Brian Armstrong has become a de facto mouthpiece for the crypto industry. The company is playing the provocateur in global discussions of regulatory issues, and Armstrong himself speaks directly to those concerned about crypto’s role in world affairs, a cohort that has grown in the wake of the Russian invasion of Ukraine. Coinbase has assumed that role by striking a balance between resembling the archetype of a traditionally powerful company and staying true to its mission of reinventing the financial system.

On Disruption

Corporate innovation is often what a company does to expand the edges of its business; for Coinbase, disruption has come from finding ways to appeal to the mainstream. Its IPO was viewed as “ crypto’s coming out party,” and while the company cut its teeth making it easy for the masses to add digital currencies to their portfolios, Coinbase has turned its attention “beyond asset managers and financial services firms to corporate treasuries and institutional allocators.” That focus on getting more institutions to use its services has paid some dividends already, including some high-profile college endowments and 10 of the top 100 hedge funds with the most assets under management.

Because the company has put so much focus on courting institutional investors by leaning into compliance and doubling down on being considered trustworthy, the analyst firm Autonomous Research said at the end of last year that the company had lost a step on its competitors because it wasn’t servicing alt-coins, derivatives and NFTs nearly as well. Still, companies are now being positioned as “The Coinbase Of” their own crypto sub-sectors, meaning the company’s innovation strategy is at least being recognized by the next wave of companies.

Tea Leaves

Coinbase’s aggressive acquisition and funding strategies coupled with crypto’s fluid regulatory environment have allowed the company to expand into new markets and keep pace with the land grab that’s defining the crypto exchange landscape. Most recently, that’s meant buying 2TM, the largest crypto exchange in Brazil, and the company’s regional hiring strategy suggests it may not be done there. But Coinbase hasn’t ignored the “build” piece of the strategy either. The company has addressed some of the innovation concerns by announcing its plans to launch an NFT marketplace “soon” and making moves to support new ecosystems. The company is also experimenting with diversifying its business model. In 2021, the company’s revenue soared eleven-fold, thanks to its transaction fees and the crypto trading volume boom. In the company’s preparation for a decrease on average transaction revenue per user, it’s exploring beefing up its subscription revenue with fee-free trading on what it calls Coinbase One.

They Said It

“We may not always move the fastest, or offer the lowest prices, but if we accomplish our goal of being the most trusted and easiest to use, customers will continue to choose our products and services now and in the future” — CEO Brian Armstrong in a letter ahead of the company’s IPO

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