Coinbase Global Inc. (NASDAQ:COIN) faced setbacks in its early days, so Brian Armstrong did what most startup founders are advised to do— talk to customers to improve their product.

Coinbase Stumbled Early On

Appearing on “The Tim Ferriss Show” podcast from Oct. 11, 2022, Armstrong recalled the time when Coinbase lost traction and went “flat” after the initial launch hype in 2012.

Armstrong was enrolled in the Y Combinator startup incubator program at the time, where he learned the value of regularly collecting user feedback to refine the product.

Starup founders have regularly emphasized that by launching, talking to customers, and iterating, one can actually find a product that reaches product-market fit.

When Armstrong Dialed Up Users For Feedback

He launched an early version of Coinbase on Reddit but noticed that the retention rate was very poor. Following Y Combinator’s advice, he emailed a few users who’d signed up for the app and sought feedback over a phone call.

“So I talked to five of these people, and I think it was like the third or fourth person I was talking to, and the guy was like, ‘Yeah, I mean, the app seems cool and everything, but I don’t really have any Bitcoin. So I just signed up, and then I didn’t have any Bitcoin, and I didn’t come back,'” Armstrong quoted the person as saying.

The ‘Light Bulb’

The Coinbaser founder said a “light bulb” went off in his head, and he immediately asked the person if they’d come back if there were a “Buy Bitcoin” option. “Yes, probably,” the individual replied.

Armstrong said they eventually introduced the option for users to connect a payment method and buy Bitcoin with ease.

“And that’s the moment we had product-market fit. It started to grow organically every week after that,” he said.

A former Airbnb software engineer, Armstrong cofounded Coinbase in San Francisco in 2012 with former currency trader Fred Ehrsam. As of today, it's the largest cryptocurrency exchange in the U.S., facilitating nearly $2 billion worth of trades daily, per CoinGecko.

Armstrong's net worth is estimated at $9.7 billion, according to Forbes.

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