Building Base: Coinbase Engineer Jesse Pollak on Ecosystem Growth
During this Variant Network event for leaders within our portfolio, we talked about everything from Jesse’s start as a Coinbase engineer to the technical considerations behind using the OP stack, the open-source framework Base is built on. But the conversation kept coming back to how to grow.
Below is video of our conversation, plus my take on some of Jesse’s most salient points about building engineering teams, scaling crypto companies, and making the web3 pie bigger.
Scaling is a job in and of itself.
When Jesse joined Coinbase as an engineer in 2017, he managed a four-person crew. Over the next half-decade, the team ballooned to 200, while Coinbase grew to a size commensurate with its Fortune 500 status.
But more hands on deck doesn’t necessarily make a manager’s job easier. In fact, it added a lot to his plate. “In those times of very quick growth,” Jesse said, “it was both a people challenge because we needed to figure out how to onboard people and make them successful, and then it was also a technology challenge: how do we onboard more users and keep the website up? And that was a big part of my job.”
Grow methodically, not quickly.
Although Coinbase hit the rapid-growth button, Jesse says that most of the time it’s best to opt for a slower approach: “The temptation is always to grow really quickly people-wise, and it’s almost always that you’re growing too fast people-wise, and it’s a bad idea.”
Instead, he says, “Don’t grow until you have to grow” — and then do it as “methodically as you possibly can from a people perspective.” His rule of thumb is to avoid doubling in size within a year unless you’re starting with a headcount in the single digits.
And don’t just think of growth in terms of numbers. It’s also about roles. Jesse encourages maintaining a “good, healthy ratio of engineers to product and design.” Coinbase, for instance, pushes for a high percentage of the company — 30 to 40% — to be engineers.
Scaling is easier onchain.
So what can you do if you’re avoiding too-fast growth but have a growing to-do list? Go onchain. “The thing that I’ve consistently seen is you can literally have 10x more impact and leverage if you are building with onchain native tooling,” says Jesse.
“If you are writing smart contracts and you’re building applications to finance smart contracts and you are using the infrastructure around smart contracts, you can literally ship things with 10 times fewer engineers and those things can then reach 10 times as many people around the world,” he continues. “People like us in this room have kind of an unfair advantage versus the rest of the world, where if you’re rigorous and you’re thoughtful and you lean into this new technology trend, you can outperform everyone at 10X the size.”
As proof, he cites Base. It’s no surprise that the layer-2 scaling solution was developed within a crypto company with 4,000 employees. What is surprising is that it predominantly came from Jesse and a four-person engineering team.
Onchain v. offchain is the new centralized v. decentralized.
Coinbase is the biggest crypto firm in the US. It’s also a centralized actor promoting a technology that idolizes decentralization. The ideological clash often brings criticism. But Jesse thinks that framing isn’t helpful.
“I’ve actually started to use the word onchain and offchain versus centralized and decentralized because I find it to be a much better descriptor,” he says.
In reality, both crypto and non-crypto products will have onchain and offchain components, with a degree of decentralization within both branches. Or, as Jesse puts it, “You can actually have centralized and decentralized offchain systems and centralized and decentralized onchain systems.”
Focusing on user experience will create more use cases for crypto.
Jesse sees Coinbase’s business model as “basically making it easy for people to use crypto.” The problem, though, is there’s not a compelling reason for most people to do that.
“For the last 10 years, there’s only been one use of crypto, which is speculating. So we’ve only really made it easy for people to use crypto for one thing, which is buying and selling crypto.”
Base aims to take the Coinbase ethos of making things easy and apply it to platforms for developers, who can then “create more innovation, which then downstream creates more use cases, which then downstream creates more things for people to do in Coinbase products.”
In Jesse’s view, “having an onchain native developer platform” built by a company focused on UX will give certainty to internal Coinbase teams and attract third-party developers who can build on it and “know it just works.”
Open-source increases options.
One of Jesse’s theses is that Coinbase working with open-source technology (rather than keeping it proprietary) will expand the options available to developers.
Base uses the OP stack, which is purposely modular so that different parts of the stack can be switched out as technology evolves. After all, Jesse sees a not-too-distant future in which the scaling landscape looks very different: “Over time, we’re going to see more optimistic provers be developed, and we’re going to see zk provers or validity provers mature and more of them be developed. And we’re basically going to have our pick of what we want to secure the chain with.”
There’s more than one way to build onchain.
Jesse’s interest in taking Coinbase onchain intersects with a drive to onboard developers who can make apps users want. As Coinbase began working on how to bring the business onchain, it explored several ideas. But the teams working on them kept “getting stuck” on simple questions: “How do we build onchain — i.e., literally what smart contract language are we using?”
Each decision led to more questions: “Where do we build onchain? Okay, now we have these contracts. Where do we put them? If we put them here, is it going to work with our other products? Is it going to make the Coinbase ecosystem stronger? Is it going to be helpful for our business?”
In 2022, Coinbase decided to put its energy toward incubating an Ethereum L2. “It became a no-brainer where it was, like, of course we want to contribute to scaling Ethereum… Of course we want to be putting our resources into these public goods that are so critical.”
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