Ex-Goldman Sachs, JPMorgan staff may regret Coinbase move
If you're one of the many (many) people who gave up a job with an investment bank to join Coinbase in the past six months, you might be having a few regrets today.
Coinbase stock is down 77% year-to-date. Investors' touchiness is reflected in yesterday's Tweet from founder Brian Armstrong to the effect that Coinbase was not signalling a danger of bankruptcy when it referenced a new SEC-mandated risk factor in its latest 10-Q. Coinbase is still a safe place for investor funds, said Armstrong.
Yesterday alone, the stock fell 17% after Coinbase reported a disappointing set of first quarter results. Today it fell another 25% on the open.
Bank stocks also haven't had a great start to the year, but it hasn't been that bad. Goldman stock is down nearly 25% since November. JPMorgan stock is down nearly 30%; Morgan Stanley is off 25% from a February peak.
All of this means that if you left a bank for Coinbase in recent months, hoping to avail yourself of Coinbase stock and exposure to crypto, you will probably be feeling very disappointed. It's not clear whether banks consider people quitting for Coinbase good leavers and therefore allow them to cash out of their bank stock when they go (in which case it might all be ok), or whether all your historic deferred bank bonuses are converted into Coinbase stock when you join (in which case, it really won't be). Either way, the shiny job in crypto is looking a bit matte.
This matters, because Coinbase is still engaged in some big recruitment and investment banks are still a key hiring ground. In the past few months alone it's stocked up on compliance staff like Bryce Mesa, the former head of model risk at Morgan Stanley in New York and Rupesh Patel, a former director in legal at Deutsche Bank. It's also added: Shane Batt, a former executive director in prime clearing operations at JPMorgan; Katie Harries from Goldman Sachs in international policy, and Kharanshu Soni who spent the past nine years working on low latency systems at BlackRock.
When people haven't joined Coinbase from banks like Goldman Sachs directly, they've come circuitously. Vits Voronkov, Coinbase's new head of EMEA market expansion, worked in Goldman's private equity EM group for three years. Murali Selvan, the new director of engineering in San Francisco was head of engineering for Apple card at Goldman before leaving for Uber. Even Citadel has suffered a Coinbase defection: Jijun Zhou, a junior trader from Citadel's repo team, turned up at Coinbase in NY in April.
Coinbase said yesterday that it hired 1,200 people in the first quarter, a 33% increase on its Q4 '21 total, as it invested in "product innovation and platform infrastructure." Despite its travails, Coinbase plans to continue expanding: it also said yesterday that it's still engaged in the "ambitious hiring plan" that's supposed to see it adding 6,000 people in 2022, of whom 2,000 will be in product, engineering and design. However, CFO Alesia Haas did suggest on the investor call that 'slowing the hiring ramp' might be one way of curtailing rising costs.
In fact, the hiring ramp might slow on its own. Working for Coinbase isn't easy: the company has a reputation for long hours. With the stock plummeting, there are already signs that potential new joiners are having second thoughts, with one Amazon employee suggesting on Blind that he was worried about job stability and his offer being rescinded. There are rumors about that the company has over-hired and might need to make job cuts.
Coinbase true believers would disagree with this verdict. "We've lived through many different cycles in crypto, including major drawdowns, which I think make us well suited to operate through these environments," said CEO Brian Armstrong yesterday. Down periods are an opportunity for a rest, said Armstrong. They're also an opportunity for picking up talent from rival crypto players (possibly instead of banks): "We tend to be able to acquire great talent during those periods and others pivot, they get distracted, they get discouraged."
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