There Is An Odd Whiff Of WeWork About The Coinbase Offering Documents

note: not necessarily the company but definitely the docs.

One of the stranger chapters in cryptocurrency history was a company called 21.co that Andreessen Horowitz and others backed to the tune of $116 million, fiat.

The pitch was they had a Raspberry Pi powered $400 Bitcoin mining rig (Raspberry Pi !?) that would mine away in the background as you went about your daily internet routine.

$116 million.

When that turned out to be not much of an idea the company pivoted to offering the opportunity to earn micro-micro-payments in Bitcoin for doing tasks, sort of a AMZN Mechanical Turk meets the crypto-bros.

When that didn't really take off the company pivoted once again, this time to:

"21 also announced bitcoin email platform that enables users to send surveys, tasks and requests to specific categories of people or professionals, incentivizing those actions with small bitcoin payments"

That wasn't successful so 21.co, which by now had become Earn.com, left the earning-crypto  completely by mining model and became a platform you could use to email questions to various people at a price set by the questionee.

For example, you could ask Marc Andreesen a question for twenty bucks.

Or for $600 in bitcoin, you can spam all the partners at Andreessen Horowitz

Here are a selection of 21’s prices per list:

• Andreessen Horowitz partners: $600 for 32 partners and top execs, like its head of marketing
• CEOs: $1,000 for 77 CEOs, mainly at biotech, bitcoin, and blockchain companies
• VCs: $1,100 for 39 VCs, including man of the moment Jeremy Liew, who invested in Snapchat early

Even Nigeria Today put scare quotes into their headline. 

Here's Reddit's "RIP 21.co (End Of Life Notification: Bitcoin Computer, CLI and Marketplace)"

When it became apparent that idea was not going to return the $116 mil. within the lifetimes of any of the GP or limited partners' grandchildren, Andreessen Horowitz did what any venture capitalist would do to bail-out the investors: 

Andreessen Horowitz Investee Coinbase May Buy Andreessen Horowitz Investee Earn.com (né 21.co)

Ha!
That's one way to exit.
Earn.com was not mentioned in April 4's "Crypto M&A: "Three Startups Coinbase May Have Its Eye On"" because it's such a Tesla/SolarCity-cousins-shouldn't-marry type of deal.

Yet here we are....

So, the deed was done which brings patient reader and I to the CoinBase direct listing documents which, in their 208 pages of verbiage and 50 pages of financials includes:

...Other Transactions

In March 2018, we entered into a series of agreements to acquire Earn Holdings, LLC. In connection with such acquisition, as prior equity holders of Earn, entities affiliated with Andreessen Horowitz, a holder

180

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of more than 5% of our capital stock and where Mr. Andreessen and Ms. Haun, members of our board of directors, are general partners, were entitled to receive up to $6.7 million in cash.

And

Other Issuances

In April 2018, the registrant issued an aggregate of 240,000 shares of its Class B common stock to an accredited investor in connection with its acquisition of two wholly-owned subsidiaries of Earn Holdings, LLC.

That's it. Not a lot of disclosure for a company that had raised $116 million, one of the advantages for Coinbase of a direct listing.

When you combine that with this from the Coinbase blog:

Coinbase is a decentralized company, with no headquarters

which reminded me of a Mafia brokerage firm back in the '90's that had no head office and two branch offices. This confused the state and NASD regulators and bought the mobsters enough time to vanish.

And finally, The Coinbase CEO's letter via Business Insider:

...You can expect volatility in our financials, given the price cycles of the cryptocurrency industry. This doesn't faze us, because we've always taken a long-term perspective on crypto adoption. We may earn a profit when revenues are high, and we may Lose money when revenues are Low, but our goal is to roughly operate the company at break even, smoothed out over time, for the time being....

While not quite as Cloud-Cukoo-Land as Adam Neumann, breakeven as the corporate goal is not what you want to hear from the CEO. Compare/contrast WeWork, November 2017:

WeWork:“Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue."

Roger that, energy and spirituality. Over.

We have no interest in new issues but love checking the docs for insight into businesses, industries and zeitgeist.