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Let’s ask “Why are they doing this?” I will start by saying most indications are that the management is very rational. Sometimes companies use downturns to ge

Let’s ask “Why are they doing this?” I will start by saying most indications are that the management is very rational. Sometimes companies use downturns to get rid of people that they haven’t managed properly. It’s lazy, but cutting the bottom 10% in a layoff can be less short term work than performance reviews. They avoid the PR issues by saying “everyone is doing it.” This isn’t what Coinbase did. If companies are cash flow negative and can’t get funding, they may reneg on offers too. This is what the banks did it 2008 and tech did in 2001. People see the burn and get it. The firms survive the reputations damage because they can say “we don’t want you to join if we are about to go under and we need to save cash.” This isn’t what Coinbase is doing. Coinbase is still cash flow positive and has positive earnings. So why are they doing this? My sense is they see what’s coming. It’s either volume will shrink, leaving them unable to cover fixed costs, or some other seismic shift in crypto that will cost them a fortune. They are rational and have tremendous data on the crypto world. To me this is an incredibly bearish sign. But it’s also a very prudent sign on their part. (They feel the current risk is higher than future hiring challenges) Please don’t take this as investment advice on COIN or crypto.

asd88 4y ago
Apparently, folks with offers received an email two weeks ago, when the hiring freeze was announced, saying no offers would be rescinded. Did management change their minds in just two weeks?
- deleted 4y ago
  [deleted]
- renewiltord 4y ago
  Recruiting handles those emails and they're usually not privy to strategic decisions since they're not really strategic operators.
- azemetre 4y ago
  Management is often not privy to these details. I doubt more than two dozen people knew about the news internally before they publicly disclosed it.
  - encryptluks2 4y ago
    Smells like some expensive lawsuits are a comin'
    - Hydraulix989 4y ago
      There's no grounds for a lawsuit for the at-will employment contracts you typically see with West Coast tech companies.
cyanydeez 4y ago
Coinbase is based on a scam market economy. Eventually the snake has no more tail to eat.
- yossarian1408 4y ago
  A flawed ideal maybe, but you can't say it's a scam.
  - gitfan86 4y ago
    The only reason you cannot say Coinbase is isn't a scam is because it is impossible to prove that the people involved were lying in regards to the viability of crypto not being effectively a Ponzi scheme.
    - solveit 4y ago
      It is very difficult to believe Brian Armstrong was cynically cashing in on what he perceived as a Ponzi ten years ago when he founded Coinbase (he posted an ad for a co-founder here on HN).
      - kelnos 4y ago
        Unless you personally know him well and have spoken with him at length about this, I don't think that opinion is based on anything substantial. A post on HN looking for a cofounder tells you only what the person wants you to believe they're thinking and feeling about what they're doing.
        darkteflon 4y ago
        Guilty until proven innocent.
        kelnos 4y ago
        Not really. Just you don't know what you don't know. You're not going to get a reliable feel for someone's motivations unless you actually know them and spend a bit of time talking to them about what they're doing. A "cofounder wanted" post on HN doesn't remotely cut it.
bingohbangoh 4y ago
Jim Chanos, who famously shorted Enron and failed shorting Tesla, has been shorting Coinbase. He noted that Coinbase is making ~4% on AUM while Charles Schwab makes maybe ~0.5%. Surely this must come down.
oceanplexian 4y ago
> So why are they doing this? My sense is they see what’s coming. I think this vastly overestimates how efficiently corporations are actually run. I've been in meetings with executives at several public companies. When the topic of adjusting HC or spending money comes up, usually those conversations happen in a ratio of 50% politics, 40% wild-ass opinion, and 10% data. And almost always, the "data" are completely cherry-picked, highly speculative nonsense that someone asked a BI team to produce to support their own political agenda. Now, I wouldn't say that means Coinbase is healthy, or unhealthy, but IMO there is pretty much zero correlation between their actions and having some kind of crystal ball on the market.
- fatbird 4y ago
  Seconding this. I work as a contractor at a Fortune 100, and have been there long enough, and am now highly enough ranked, that I see most of the decision pipeline from the C suite down to the intern I'm helping. The a-rationality of it is shocking. No one two steps above me really understands what our project does or how it makes money, only how it plays into the spreadsheets; and yet decisions come down from above that layer that have blistering consequences for us, with no apparent relation to our reality, but probably make a cell on a spreadsheet green instead of red. Arguably, that's just how well things can work at this scale. A CEO of a company that large who can see all the way down to me would be a nano-manager who should be fired. But it's still incredibly frustrating to be implementing decisions that affect me (such as a hiring or spending freeze), knowing that it was decided blindly with respect to me. As I near retirement, I'm starting to believe that any organization run substantially by spreadsheets alone is too large, meaning that profit is wasted on organizational overhead, and investors should be dismantling such companies into smaller ones.
  - LaurensBER 4y ago
    Having had the same experience this is why I prefer to invest in small cap companies. The amount of overhead and waste in big companies is insane and overwhelming. One would think that there's an enormous chance for optimization at companies at this scale, especially because everyone at the bottom know what is/isn't working but for various reasons, companies are very bad at doing this.
philjohn 4y ago
Are they cash flow positive? They made a loss in the latest quarterly filing?
nwiswell 4y ago
I'm not sure it's clairvoyance so much as risk management. They see a possible future in which they are unable to survive at current spend, and based on conservative management principles they've decided to make the tough decisions that keep corporate failure out of the set of reasonably foreseeable outcomes. Realistically, if they could actually predict the crypto market, they wouldn't need to worry about money period.
puranjay 4y ago
Word on the grapevine is that there’s a new bill coming up that would classify any crypto that had a presale or ICO as a security. This would include practically 99% of all popular coins, but would still classify BTC as a commodity (since it didn’t have an ICO/presale) If this is true, Coinbase - and crypto - are in for a rough time
krainboltgreene 4y ago
> I will start by saying most indications are that the management is very rational. There is zero evidence of this.

asd88 4y ago

Apparently, folks with offers received an email two weeks ago, when the hiring freeze was announced, saying no offers would be rescinded. Did management change their minds in just two weeks?

deleted 4y ago
[deleted]
renewiltord 4y ago
Recruiting handles those emails and they're usually not privy to strategic decisions since they're not really strategic operators.
azemetre 4y ago
Management is often not privy to these details. I doubt more than two dozen people knew about the news internally before they publicly disclosed it.
- encryptluks2 4y ago
  Smells like some expensive lawsuits are a comin'
  - Hydraulix989 4y ago
    There's no grounds for a lawsuit for the at-will employment contracts you typically see with West Coast tech companies.

cyanydeez 4y ago

Coinbase is based on a scam market economy. Eventually the snake has no more tail to eat.

yossarian1408 4y ago
A flawed ideal maybe, but you can't say it's a scam.
- gitfan86 4y ago
  The only reason you cannot say Coinbase is isn't a scam is because it is impossible to prove that the people involved were lying in regards to the viability of crypto not being effectively a Ponzi scheme.
  - solveit 4y ago
    It is very difficult to believe Brian Armstrong was cynically cashing in on what he perceived as a Ponzi ten years ago when he founded Coinbase (he posted an ad for a co-founder here on HN).
    - kelnos 4y ago
      Unless you personally know him well and have spoken with him at length about this, I don't think that opinion is based on anything substantial. A post on HN looking for a cofounder tells you only what the person wants you to believe they're thinking and feeling about what they're doing.
      - darkteflon 4y ago
        Guilty until proven innocent.
        kelnos 4y ago
        Not really. Just you don't know what you don't know. You're not going to get a reliable feel for someone's motivations unless you actually know them and spend a bit of time talking to them about what they're doing. A "cofounder wanted" post on HN doesn't remotely cut it.

bingohbangoh 4y ago

Jim Chanos, who famously shorted Enron and failed shorting Tesla, has been shorting Coinbase. He noted that Coinbase is making ~4% on AUM while Charles Schwab makes maybe ~0.5%. Surely this must come down.

oceanplexian 4y ago

> So why are they doing this? My sense is they see what’s coming. I think this vastly overestimates how efficiently corporations are actually run. I've been in meetings with executives at several public companies. When the topic of adjusting HC or spending money comes up, usually those conversations happen in a ratio of 50% politics, 40% wild-ass opinion, and 10% data. And almost always, the "data" are completely cherry-picked, highly speculative nonsense that someone asked a BI team to produce to support their own political agenda. Now, I wouldn't say that means Coinbase is healthy, or unhealthy, but IMO there is pretty much zero correlation between their actions and having some kind of crystal ball on the market.

fatbird 4y ago
Seconding this. I work as a contractor at a Fortune 100, and have been there long enough, and am now highly enough ranked, that I see most of the decision pipeline from the C suite down to the intern I'm helping. The a-rationality of it is shocking. No one two steps above me really understands what our project does or how it makes money, only how it plays into the spreadsheets; and yet decisions come down from above that layer that have blistering consequences for us, with no apparent relation to our reality, but probably make a cell on a spreadsheet green instead of red. Arguably, that's just how well things can work at this scale. A CEO of a company that large who can see all the way down to me would be a nano-manager who should be fired. But it's still incredibly frustrating to be implementing decisions that affect me (such as a hiring or spending freeze), knowing that it was decided blindly with respect to me. As I near retirement, I'm starting to believe that any organization run substantially by spreadsheets alone is too large, meaning that profit is wasted on organizational overhead, and investors should be dismantling such companies into smaller ones.
- LaurensBER 4y ago
  Having had the same experience this is why I prefer to invest in small cap companies. The amount of overhead and waste in big companies is insane and overwhelming. One would think that there's an enormous chance for optimization at companies at this scale, especially because everyone at the bottom know what is/isn't working but for various reasons, companies are very bad at doing this.

philjohn 4y ago

Are they cash flow positive? They made a loss in the latest quarterly filing?

nwiswell 4y ago

I'm not sure it's clairvoyance so much as risk management. They see a possible future in which they are unable to survive at current spend, and based on conservative management principles they've decided to make the tough decisions that keep corporate failure out of the set of reasonably foreseeable outcomes. Realistically, if they could actually predict the crypto market, they wouldn't need to worry about money period.

puranjay 4y ago

Word on the grapevine is that there’s a new bill coming up that would classify any crypto that had a presale or ICO as a security. This would include practically 99% of all popular coins, but would still classify BTC as a commodity (since it didn’t have an ICO/presale) If this is true, Coinbase - and crypto - are in for a rough time

krainboltgreene 4y ago

> I will start by saying most indications are that the management is very rational. There is zero evidence of this.