The Hustle

Garry Tan on Coinbase: “We’re still in the early innings”

Garry Tan turned a $300k investment in Coinbase into $2B+. He tells us how it happened, what makes Coinbase a success and what he learned as an investor.

(Photo by Oliver Covrett)


In March 2012, Garry Tan — managing partner at Initialized Capital — received a cold email from the address “”. 

It contained 0.05BTC.

At the time, Tan was a partner at startup incubator Y Combinator and Bitcoin’s total market cap was $1 billion (today, it’s slightly bigger at $1.1 trillion).

That email came from Brian Armstrong and that startup (Bitbank) is now known as Coinbase, which closed its first day of trading with a market cap of ~$86B.

Not long after that cold email, Tan invested $300k into the crypto exchange across Y Combinator and Initialized Capital. 

The combined stake of those investments is now worth $2B+… for a remarkable return of >6000x.

The $2B+ cold email

“It’s the best investment I’ve ever made,” Tan tells The Hustle. “It might be the best investment I ever make.” 

(Tan relays the full back story on his popular YouTube channel; subscribe here)

In a follow up to a previous Q&A, The Hustle chat with Tan to find out:


Garry, it’s a pretty big week. How are you feeling? 

It’s exciting. 

It’s not every day you get a ~$100B startup. 

We talk about $1B companies being great things on their own, but $100B is something else. 

Is this the best investment you ever made? 

For sure. By a factor of 50x or 100x. 

You were very early in Coinbase. What’s a key investing lesson from this experience? 

There are a few:

Keep an eye on the fringe

One reason I invested in Coinbase when many others didn’t is because I was primed for the opportunity. 

I personally used another — much shadier — crypto trading exchange called Mt. Gox [which later imploded in a major scandal]. I knew that if crypto was going to go mainstream, it would have to have a much better interface. 

When I saw Bitbank (later Coinbase), I understood the opportunity. 

Being primed means keeping an eye on the fringe.

What are engineers doing in their free time? On the weekends? 

There are lots of examples of fringe hobbies turning into big things. Think of Steve Jobs and Steve Wozniak building personal PCs for the Homebrew Computer Club

Or Marc Andreessen tooling around on a web browser while studying at the University of Illinois Urbana–Champaign.

Brian himself started building Coinbase while working as an engineer at Airbnb. If he had stayed there, he would have made tens of millions on Airbnb’s recent public listing. He walked away from all that to pursue something bigger for himself. 

Respect the builders 

When Brian cold emailed me, he already built the Bitbank software which transferred Bitcion to me.

[Instacart founder] Apoorva Mehta did something similar when he sent me a 6-pack of beer using his platform as a way to get into Y Combinator.

You want founders that are out there building. 

What do you think contributed to Coinbase’s success? 

One major thing was Brian’s philosophy. 

You have to remember at the time that Bitcoin was very fringe. And the people involved with Bitcoin were very anti-government. 

The project was an “F U” to centralized authority. 

Brian thought about the problem from first principles. If crypto is going to be a part of the real world, where regular people can hold and transact with it … then you have to work with governments and banks. 

The alternatives at the time — like Mt. Gox — were not very clean and not well-lit places. 

In the face of the crypto community, Brian really had to think for himself on this.

Comments on the first Hacker News post for Bitcoin were…skeptical

What about on the product side? 

Having an engineer create a crypto exchange really mattered.

We wrote about it at the time in a memo: “Bitcoin is something you protect not with guns, but with software.” 

Brian worked on the trust and safety team at Airbnb, so he knew the challenges of dealing with fraudsters. 

Airbnb would not be a $100B+ company if that problem wasn’t solved. 

Was there an “ah-ha” moment for you with Coinbase? When you knew it would work? 

I met with Brian every month for the first 6 months of Coinbase. 

At that 6th month, he told me he was selling out of Bitcoin every day and turning over the company’s working capital limits.

In that short span, they were doing 15% of the volume of Mt. Gox, which was the leading exchange at the time. 

I knew then there was product-market fit. 

What’s your outlook for Coinbase (and Bitcoin more broadly)? 

The public listing is a very important moment. 

To have a crypto company that could be worth $100B+ and be seen on par with a Google or a Facebook validates the space. 

We’re still in early innings with crypto. 

We’ve found the first use case: store of value. 

But, we haven’t even touched securities or products like decentralized finance (DeFi).

I believe all things in finance that are centralized will end up being decentralized. It’s better, faster and cheaper. 

If that happens, Coinbase will be the on-ramp for the industry. 

As for Brian, he’s not taking a victory lap. I’m sure he’s still working every weekend. 

Coinbase for him is about the mission, not the money. 

What does this do for Initialized Capital? 

For us, the return is icing on the cake. 

Money is how you keep score and we’ll return $1B to our investors just on Coinbase across four Initialized funds. 

It’s only one thing, though. It’s not the only thing. 

There’s a larger and more important story, which is that there is still so much work to be done. 

Marc Andreessen wrote that “software is eating the world”. If you look at crypto, that’s basically “software eating money”. 

When we talk about tech, it’s about software and how to do things better and faster. It’s just not evenly distributed right now. 

The same applies to other industries. 

Take medicine: there’s development in diagnostics, procedures, sensors and AI. 

The tools are there, but it needs the money in the right places.

Garry’s reply to Brian’s cold email

Right. So, the Coinbase outcome means more resources for Initialized. 

What gets me up in the morning is thinking of how I can help fund the next generation of founders. 

The next Brian Amstrongs and the next Coinbases. 

The entire world is being rewritten by software and everyone has a line of code to contribute. 

That’s why I create YouTube videos and content. I want to help people answer the question “what will your line of code be?” 

I’ve invested in 10 or 11 “billion-dollar companies”. 

In 20 or 30 years time, I want to look back and say I was able to invest in 100 “billion-dollar companies”. 

Companies that solved fundamental problems that impacted 1B+ people and brought about societal change. 

So, Coinbase is definitely the golden ticket for Initialized. But it’s just a ticket and there’s still a dance to go to.

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