‘Tokenized’: Inside Black workers’ struggles at the king of crypto startups | Business

SAN FRANCISCO — One by one, they left. Some quit. Others were fired. All were Black.

The 15 people worked at Coinbase, the most valuable U.S. cryptocurrency startup, where they represented roughly three-quarters of the Black employees at the 600-person company. Before leaving in late 2018 and early 2019, at least 11 of them informed the human resources department or their managers about what they said was racist or discriminatory treatment, five people with knowledge of the situation said.

One of the employees was Alysa Butler, 25, who worked in recruiting. During her time at Coinbase, she said, she told her manager several times about how he and others excluded her from meetings and conversations, making her feel invisible. “Most people of color working in tech know that there’s a diversity problem,” said Butler, who resigned in April 2019. “But I’ve never experienced anything like Coinbase.”

In Silicon Valley, where entrepreneurs and investors often preach high-minded missions and style themselves as management gurus, Coinbase has held itself up as a model. Since the startup was founded in 2012, Brian Armstrong, the chief executive, has assembled memos and blog posts about how he built the $8 billion company’s culture with distinct hiring and training practices. That has won him acclaim among influential venture capitalists and executives.

But according to 23 current and former Coinbase employees, five of whom spoke on the record, as well as internal documents and recordings of conversations, the startup has long struggled with its management of Black employees.

One Black employee said her manager suggested in front of colleagues that she was dealing drugs and carrying a gun, trading on racist stereotypes. Another said a co-worker at a recruiting meeting broadly described Black employees as less capable. Still another said that managers spoke down to her and her Black colleagues, adding that they were passed over for promotions in favor of less experienced white employees. The accumulation of incidents, they said, led to the wave of departures.

“It was the first time I realized what racism felt like in the modern world,” said Layllen Sawyerr, a compliance analyst who is Black. “I felt like I was being bullied every day at work.” She said she filed a discrimination complaint with Coinbase’s legal department before quitting in 2018.

Kim Milosevich, a Coinbase spokeswoman, said the company “does not tolerate racial, gender or any other forms of discrimination.” She added, “All claims of discrimination are treated very seriously, investigated by both internal and third parties, and the appropriate action is taken.”

Tech companies have long struggled to hire and support Black employees and entrepreneurs. Just 1% of venture-backed companies were led by Black entrepreneurs from 2013 to 2018, according to a study by RateMyInvestor, which analyzes tech investors. Large tech companies like Intel, Google and Facebook have publicly said that they need to do better on diversity and have committed to improvements, although progress has been uneven.

But even in this environment, Coinbase stands out, said the current and former employees, some of whom requested anonymity because they had signed confidentiality agreements or feared retaliation. Three percent of the company’s employees are Black, which is less than half the average in most of the tech industry, as reported last year by the Equal Employment Opportunity Commission. Coinbase’s percentage has also stayed flat in recent years while companies such as Square, PayPal and Twitter have modestly increased their share of Black employees.

The tensions at Coinbase came to a head in June after the police killing of George Floyd. As many tech leaders publicly voiced support for Black Lives Matter protests, Black employees at Coinbase said on the Slack messaging platform that they were hurt by the silence of Armstrong and other executives about the matter. They organized a meeting where several of them told executives, often through tears, about their difficult experiences at the company, eight people who attended said.

In September, Armstrong published a public blog post telling employees to leave concerns for issues like racial justice at the door. He said that while the company embraced diversity, the staff needed to focus on Coinbase’s mission of profit and advancing cryptocurrencies. They should resign if they disagreed, he said. “We don’t engage here when issues are unrelated to our core mission,” Armstrong wrote.

The post drew immediate blowback from employees. “Why stay and put effort into this work if it’s just tokenized into recruiting points and not actually improving the sense of belonging and psychological safety,” Lauren Lee, who was responsible for diversity and inclusion, wrote in a Slack message.

Lee, who did not respond to requests for comment, resigned last month. So have at least 60 others.

The ‘Right Brain’Coinbase is riding a new wave of interest in cryptocurrencies, with the value of virtual currency Bitcoin approaching a new high as investors increasingly treat it like an alternative to gold.

Much of Coinbase’s culture stems from the one around Bitcoin, current and former employees said. Bitcoin, which embodies a libertarian philosophy that snubs its nose at the pieties of mainstream institutions, has attracted a generation of fans known as “crypto bros.” Many have propagated a brash male-dominated way of life, facing criticism for sowing racism and sexism.

Ruby Bhattacharya, a recruiter at Coinbase in 2017, said the search for employees for this “consistent culture” often meant looking for people who resembled the other staff members. Bhattacharya, who is gay and was born in Britain to Indian parents, said her colleagues made it clear she did not belong.

“I was told I don’t have the right brain for this,” she said. “It was constant condescension.”

As Coinbase grew, several female executives lobbied for more diversity, three former employees said. The company had brought on about a dozen Black employees by the beginning of 2018, when it had a staff of around 300.

Early last year, some workers brought the exodus of Black employees to the attention of Armstrong and asked him to step in, three people briefed on the situation said. He listened and said he would think about it but took no action, they said.

Armstrong rarely spoke or made decisions in meetings, the current and former employees said, leaving them uncertain about his opinions. In a staff meeting this summer, he said he knew his style made many employees uncomfortable and attributed it to being “on the spectrum,” according to a recording of the event.

Sawyerr said she had talked with four other Black employees about bringing a discrimination lawsuit against Coinbase, but the others backed out after being offered hefty severance payments in exchange for confidentiality agreements.

By the end of 2019, 31 of Coinbase’s 1,000 employees were Black. That proportion has remained unchanged.

‘Hasn’t Learned Anything’When Armstrong wrote his blog post in September asking employees to leave their outside interests at the door, he was celebrated and praised by several tech investors.

Fred Wilson, a venture capitalist at Union Square Ventures, and one of the nine members of Coinbase’s board, said that many tech chief executives “would like to have done what Brian did” to reduce the distractions that come from employee activism. David Sacks, a PayPal founder, said Armstrong’s post was “how you build a movement and change the world.”

But internally, Armstrong’s post led to another exodus. Besides Lee, another employee who left in October was John Russ, the head of marketing and the company’s highest-ranking Black employee, who had been hired three months earlier.

Milosevich said Coinbase hired a consultant over the summer who did interviews, looked at the company’s history and found “no evidence of structural bias.”

Managers in the customer support team, where many of the Black employees work, wrote their own report last month. It concluded that Coinbase’s executive team “hasn’t learned anything from the amount of time and labor put into listening sessions or the vulnerability expressed by Black employees,” according to a copy reviewed by The Times.

The report was presented to executives, two people with knowledge of the situation said. The executives, they said, have not acted on its recommendations.