Operating Efficiently at Scale

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Operating efficiently at scale

By Brian Armstrong, CEO and Co-founder

As companies scale, they usually slow down and become less efficient. It takes more dollars, more people and more time to get anything done. Coordination headwinds increase, vetocracies emerge, risk tolerance fades, and teams become inwardly focused instead of staying focused on their customers.
While this trajectory is natural, it is not inevitable. Every great company, from Amazon to Meta to Tesla, found ways to retain their founding energy in conjunction with appropriate controls, even as they scaled to be much larger than Coinbase is today. Great companies maintain their insurgent mindset, for fear of becoming complacent and irrelevant over time.
That’s why we’re focusing on driving more efficiency at Coinbase. After 18 months of ~200% y/y employee growth, many of our internal tools and organizing principles have started to strain or break. So we’ve been digging in to identify the set of changes we need to make to help us succeed at this new scale.
The first step was significantly slowing our growth, and making the difficult decision to reduce the size of our current team, which we announced last month. Moving forward, we’ll keep looking for ways to make Coinbase more efficient, and to get back to the mindset and approach that made us successful. I believe that these steps will carry us forward.

Push decision making down to single-threaded DRIs
We use DRIs (directly responsible individuals) to help us execute faster. DRIs balance input from the team, and make clear decisions in a timely manner.

But now that we’re a larger company with many products instead of one, we need to adjust how we make decisions — pushing most decision making down in the org, removing bottlenecks and empowering our product leaders.

DRIs often have the temptation to push decision making up the chain when they aren’t sure or don’t want to take risks. Sometimes they’re afraid of being fired if the decision doesn’t go well. That’s why, where possible, we are increasingly focused on identifying “single-threaded” DRIs. Single-threaded is tech jargon that simply means solely focused on a single area. The single threaded DRI is the most senior person whose only job is to run a given product or initiative, this will typically be a product management or engineering leader. They can’t be the single-threaded DRI if they are the DRI of multiple areas.
This may mean that not every decision is perfect. But that’s OK if we can scale our impact and empower subject matter experts who are closer to the products and closer to our customers.

Give product leaders visibility into their P&L
Each of our products have well funded competitors that are dedicated companies. We believe the right way to compete is to incentivize our product leaders to also run their product more like a standalone company. Companies must achieve profitable growth on some reasonable time horizon. Over time, we’ll be able to give product leaders direct visibility into their P&L, so they can move their product toward positive margins and make better decisions around where to invest, while at the executive level we will continue to look at consolidated performance.

Leverage shared services to minimize duplication
While product leaders can operate independently, there are often common elements across products. We have shared services around how customers onboard, manage their accounts, store crypto, add payment methods, trade crypto, and more. Done wrong, shared services can slow down and frustrate product teams. But when they work well, they can create amazing synergies between products, and deeper product integration.

Product teams should not be required to use a half baked shared service. But once a shared service is mature, all products may be required to use it. We’ve found that it often helps to start a shared service with one anchor product in mind. When it becomes clear that we are duplicating effort or creating an inconsistent user experience across our products, services need to graduate into clearly decoupled services that any product can leverage.

Organize teams into small pods
Small teams are more efficient. That’s why it’s important to set a maximum size on teams, so they don’t grow too large and slow down.

We’re beginning to deploy a new concept that we call “pods” to create more structure around the appropriate size of a team. Within each product, we will be defining pods of <10 people working on a specific feature or area. If a pod grows to be more than 10 people, it will be time to split it in two and assign each one a more specific goal or focus. Pods also need to have a focus, and a north star metric that ties into the overall company metrics.

Ship products not slide decks
Inside growing companies, there’s a danger that product and engineering teams start shipping great slides decks instead of great products. It can be tempting to “manage up” and feel like a meeting went great with a beautiful deck shown to superiors. But our customers never see the slide decks we create. They only see the product.

So we’re experimenting with banning slide decks in product and engineering reviews. Instead of a slide deck, you can show:
A dashboard with your metrics — hopefully your team is looking at this at least weekly anyway
Figma mockups
But most importantly….show the product itself and use it live!

It’s fine to include a one page agenda to capture action items, or to link to any pre-reads like technical design documents. But the best use of time in product and engineering reviews is to share your screen and walk through the actual product on mobile or web. It could be the production version, or a staging version. The important thing is to get hands-on with the product, see what the customer is seeing (or is about to see), and make it better.

As we do this, we should avoid spending too much time talking about what’s going well in meetings. We can share what’s going well in the pre-read, and take a moment to celebrate it, but the majority of the time in meetings should be focused on what is not going well, so we can improve the product.

It’s hard to overstate this point. Inside companies, there are plenty of things that feel like work, but ultimately don’t improve the customer experience — from market cycles and negative press, to policy efforts, internal politics/drama, titles, and compensation. We have teams that focus on these areas, so that the vast majority of the company (80%+) can remain focused on talking to customers and building better products.

APIs instead of meetings
Larger companies also get slowed down by endless meetings around prioritization and feature requests. We need to move to a model where all product and engineering teams (not just shared services) publish APIs so that other teams can benefit from what they’re building without ever needing to schedule a meeting. In other words, they need to productize their services and allow other teams to use them in a self-service way.

This requires us to adopt an internal API catalog where any engineer at Coinbase can browse to find an appropriate service. Without this, it’s difficult for any engineer to even know if an API exists, leading to duplicate work. All services need to be architected using “paved roads”, meaning consistent libraries and languages for authentication, logging, instrumentation, etc. Many of these APIs will be surfaced in Coinbase Cloud for external customers as well, making them even more robust.

Maintain an insurgent mindset
Ultimately, a lot of this comes down to retaining the founder mentality inside the company and acting like owners. Most companies start off by being anti-establishment, seeking to right some wrong in the world. But as they grow bigger and more successful, they start to become the new establishment. They get complacent, feeling that they’ve won, and bureaucracy sets in.

At Coinbase, one of our values is repeatable innovation, meaning we always want to be pushing the frontier. We use a 70/20/10 resource allocation model where we invest 70% of our resources in our core business, and 20% in strategic efforts, we also ensure 10% of our resources are always going toward ambitious new bets. And we always try to make products that are the most trusted and easiest to use, so we can bring a billion people into crypto. This is the best way to accomplish our mission of increasing economic freedom in the world.

Conclusion
Coinbase’s success has always been rooted in an ability to operate efficiently with a startup mindset. Now, as we adjust to our new scale, we need to get back to the things that made us successful — to drive more efficiency and shake off the complacency that can creep into a bigger company. We need to empower our leaders to make decisions, and our teams to deliver great products to customers. It won’t be easy, and we’ll need to keep adjusting. But we got this far, and I’m confident that if we make smart decisions now, it will only be the beginning.

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Why is Risk/Reward is Important to Think About When Making Business Decisions

Risk/reward analysis is absolutely critical when making business decisions. Every choice involves potential gains and losses. Without carefully weighing them, you're flying blind. A few key points to consider:

Upside potential vs downside risk. What is the best case scenario if things go well? How much could you gain? And what is the worst case if it doesn't pan out? How much time, money and reputation could you lose? The rewards need to justify the risks.

Opportunity costs. Pursuing one path means not pursuing others. Is this truly the best use of limited resources? What else could you be doing instead? Always consider alternatives.

Reversibility and damage control. Can you test ideas in a limited way before going all in? How hard would it be to unwind a decision if it proves wrong? The more irreversible a choice, the higher the bar needs to be.

Ultimately, great companies take bold risks, but they do it intelligently, with eyes wide open to the tradeoffs. They don't blindly gamble. Nor do they timidly avoid all danger. They are calculated and strategic.

So always do the hard work of quantifying risks and rewards. Model out scenarios. Know your walk-away points. Have contingencies. Be willing to take the big swings, but never risk what you can't afford to lose. Operate like a bold yet rational insurgent, not a reckless gambler. That's how you change the game.

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Why is it important to say no to requests from others in your organization?

Saying no to requests is critical to maintaining focus and velocity. Every request, no matter how small, is a potential distraction from your core priorities. You must ruthlessly guard your time and attention.

Ask yourself: Does this request align with my key metrics and goals? Does it improve the product or customer experience in a measurable way? If the answer is no, then you must have the discipline to decline, even if it disappoints others.

Remember, you are not running a charity or a popularity contest. You are running a business with limited resources and intense competition. Trying to please everyone is a recipe for mediocrity and stagnation. The most successful leaders are those who have the courage to say no to the noise and focus relentlessly on what matters most.

Isn't it better to make a tough call that upholds your standards than to compromise your vision and execution by getting pulled in countless directions? In the end, results are what matter, not politics or optics. Protect your insurgent mindset by being selective about what you take on.

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Why is it important to ask for things from others in your organization?

Asking for things from others in your organization is crucial for several reasons:

1. It empowers individuals to take ownership and initiative. By requesting resources, information, or assistance, you demonstrate a proactive mindset focused on driving results. Waiting passively for what you need is a recipe for stagnation.

2. Asking surfaces hidden opportunities and inefficiencies. Others may have insights, skills or assets you weren't aware of that could accelerate your work. Requesting input helps uncover these.

3. It fosters collaboration and breaks down silos. Reaching out to other teams builds relationships and aligns efforts. Trying to go it alone leads to duplication and missed synergies.

4. Requesting support tests your ideas and approach. If you can't articulate a compelling case for what you need, perhaps you should rethink your plan. Asking others sharpens your thinking.

5. It speeds decision making and action. Escalating issues or needs prevents you from getting bogged down or blocked. Raising your hand keeps things moving.

In a fast-moving, insurgent organization, asking is a sign of strength, not weakness. It shows you are relentlessly focused on outcomes, not ego. How else will you get the resources to seize the opportunities in front of you? What's the alternative - suffering in silence as competitors pass you by? Fortune favors the bold requesters.

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Why is it important to align intentions with others in your organization?

Aligning intentions with others in your organization is important, but it should not come at the expense of speed, autonomy and the ability to make decisions close to the customer.

Here's the key thing to remember: in a fast-moving, competitive landscape, perfect alignment is often the enemy of progress. If you wait until everyone is on exactly the same page before taking action, you'll miss opportunities.

Instead, the focus should be on empowering small teams to move quickly based on the information and context they have. Give them clear metrics to shoot for and the ability to ship product rapidly. Trust that if they are operating with the right principles and incentives, their efforts will align toward the overall goal, even if the route is not perfectly straight.

Now, this doesn't mean intentions should be completely ignored. It's valuable for leaders to articulate a high-level vision and strategy. But the real alignment happens through the work itself - teams see how their piece fits into the larger puzzle. Trying to perfectly synchronize everyone's intentions upfront just leads to endless meetings and slow decision-making.

So in short, prioritize speed and autonomy over perfect intention alignment. Enable teams to absorb the strategic context but make decisions fast. Embrace some messiness in the process, knowing it will get you to the right outcomes faster than over-indexing on intentions ever could. Intentions matter, but shipping matters more. How does that align with how you currently operate? Is there an opportunity to optimize for more speed?

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