Hi, Aaron Weinman here. Before we get into today's matters, just a note that there will be no newsletter on Monday as we observe Juneteenth.
Now, I'd like to kick off the Friday feels with a bit about Coinbase. It's a tale of hubris, much like the Greek mythological story of Icarus who flew too close to the sun. Plus, we'll wrap things up by introducing our Banker of the Week.
Shall we?
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1. Some of the 1,100 Coinbase employees who were let go this week told Insider the writing was on the wall well before the layoffs took place. "Eventually the chickens are going to come home to roost," one former manager at the crypto exchange said.
Coinbase was riding high on the crypto wave that seemingly had no crest. The company paid staff handsomely, it hired en masse, and had one of the most effective ads at this year's Super Bowl.
But employees who were recently let go felt tremors shaking Coinbase's business as the crypto market started to falter, Insider's Bianca Chan, Carter Johnson, Kylie Robison, and Jessica Xing report.
Coinbase CEO Brian Armstrong's mea culpa that he over-hired has turned the company into the poster child of the crypto space. The market grew exponentially in a tiny window of time. Coinbase's trading volumes surged to $1.7 trillion last year from $80 billion in 2019.
Even a week before the mass layoffs, the company's global support team was treated to a four-day offsite in Austin, Texas. Employees from India to England were flown in.
But growth-at-all-costs strategies are dangerous. Tech companies the world over are slashing their workforces after years of excessive spending.
Coinbase — like many of its disruptive peers in tech — are quickly learning, like Icarus, that hubris is not to be trifled with.
Here's what ex-Coinbase staffers are saying.
Plus, don't miss: This essay from Miguel Cuevas, a L&D program manager who was laid off from the crypto exchange.
In other news:
2. Tiger Global outsourced much of its venture-capital strategy to consultants at Bain. Now that strategy is under scrutiny as valuations plunge, and Tiger shows signs of walking away from its investments right when these companies need the investor more than ever.
3. The bubble around the popular index-rebalance trade has popped. This type of trade — when investors bet on stocks being added or subtracted from indices like the S&P 500 — soared at well-known funds like Point72 and Millenium, but their trades have gotten torched this month.
4. Coast Capital has returned 24% this year. Founder James Rasteh — who has amassed about $300 million in assets for the three-year old firm — has corralled much of these returns since taking a fancy to biotech companies.
5. Crypto's very-own sea monster Kraken doesn't want you unless you're a libertarian. Jesse Powell, Kraken's CEO, is offering four months' pay to employees who don't agree with his values to leave the crypto exchange.
6. Ray Dalio's hedge fund is now the biggest short-seller of European stocks. Dalio's Bridgewater Associates is betting at least $5.7 billion that European stocks will fall.
7. Private-equity firms face a "crisis of value," according to Bloomberg. After years of soaring valuations, some deals were mispriced because of low interest rates, especially in health and tech.
8. Thoma Bravo founder Orlando Bravo warned of "more pain" for the beleaguered tech space. Bravo, known for big-ticket tech company buyouts, told CNBC that when growth-oriented companies start addressing profitability, "they're not going to love what they see."
9. Wall Street's largest banks still have their work cut out for them on improving workplace diversity. Senior Black bankers at Goldman Sachs and JPMorgan revealed a "snail's pace" of progress, according to Financial News, citing data from the US Equal Employment Opportunity Commission.
10. And let's not forget our Friday "Banker of the Week." Meet Naveen Nataraj, the 20-year dealmaking veteran, and head of US advisory services at boutique shop Evercore.
Nataraj worked on roughly $60 billion worth of transactions in the last year, a haul of deals that got him on Insider's Rainmakers list this year.
Here's how Nataraj is helping Evercore compete with Goldman and JPMorgan.
If you know of any bankers we should feature in our Banker of the Week series, please email me at [email protected].
Done deals:
- KKR-backed eSSENTIAL Accessibility and JMI-backed Level Access will merge. The formation creates an end-to-end solutions for businesses' digital access needs. KKR made the investment in eSSENTIAL through its tech growth strategy.
- Apollo agreed to acquire grocery chain Cardenas Markets from KKR. Upon completion of the deal, Apollo's existing portfolio company Tony's Fresh Market will combine with Cardenas.
Curated by Aaron Weinman in New York. Tips? Email [email protected] or tweet @aaronw11. Edited by Hallam Bullock (tweet @hallam_bullock) in London.