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Red and Blue Customer Growth Part III: Crypto Exchanges

Red and Blue Customer Growth Part III: Crypto Exchanges

Now let’s examine three specific companies to understand how to use a conservative and liberal worldview framework to create stronger alignment between a business and its customers. Coinbase, FTX, and are three companies competing for market share as crypto exchanges - places where you can buy and sell cryptocurrency. Let’s look at their market, the businesses, and how they express themselves through a worldview lens and an eye on how conservatives and liberals think about the future (see Part II for how conservatives and liberals view the future and technology companies in general).

First, the market. It’s big. According to Morning Consult, 24% of all households in the United States own cryptocurrency - and it’s growing. From a demographic perspective, one group jumps out as indexing very high for cryptocurrency trading: Millennials. They represent 30% of U.S. adults and 57% of cryptocurrency owners. Gen Z indexes slightly high, and you know they will grow as they acquire more wealth. We also know from this report that men account for 70% of crypto ownership, so this is a very male, Millennial audience. It’s not always good to declare your market as just one group because it’s the biggest. But for this illustration, let’s focus on Millennial men.

Given their age, it would be easy to assume this group to be pretty liberal, but not so fast. According to Pew Research, Millennial men are only a bit more liberal than conservative - 49% liberal vs. 41% conservative. On the other hand, millennial women are very liberal - 70% liberal vs. 23% conservative. So when you add all of this up, there is a skew to liberal, but it’s not dramatic. That’s a good thing for crypto exchanges because it makes the market bigger.

The next step in this analysis is to examine the customer databases of these three companies to see how different the makeup is from the market. This can reveal growth opportunities. Unfortunately, I can’t access these company databases, so I can’t tell you what their customer compositions are. But, when it comes to your own business, it’s not hard to measure what you have.

Today’s databases for housing customers sometimes offer built-in reporting on conservative vs. liberal splits. That’s because political campaigns will purchase database products and political analysis of databases is good business for the database companies. If you can’t access this type of reporting for your customers, you can also look at urbanicity - the predisposition of your customers to live in cities vs. suburbs vs. exurbs vs. rural areas. Urbanicity is a good proxy for worldview as liberals tend to live in more dense areas. Just be sure to compare your findings to the national census. 

Using urbanicity isn’t perfect, but it may be good enough. The potential challenge with this approach is when customers are concentrated in the suburbs. Drawing the line between liberal and conservative enclaves within the suburbs may require more precise analysis. The average population density where your customers live vs. the national average can help. 

We can’t get the customer databases for these three companies, so let’s move on to the crypto exchange businesses themselves. These are young businesses, so we’ll look at the founders. Founders can often - but not always - have a significant influence on the worldview of the business and how it presents itself to the market, influencing what customers they acquire. Culture starts from the top, and once company culture forms, it’s tough to change. With newer businesses, the founders have an outsize influence on the company’s worldview. As a business grows and matures with turnover at the top, this original worldview predisposition diminishes but remains in some shape or form for a long time.

Brian Armstrong and Fred Ehrsam founded Coinbase in 2012. Ehrsam left the company, so we’ll focus on Brian Armstrong. Armstrong grew up near San Jose, California, and his parents are engineers. He attended Rice University in Houston, Texas. If he were a far-left liberal from California, I doubt he would have gone to Rice, but that’s just a guess.

Armstrong has demonstrated a predisposition to build a primarily worldview-neutral business throughout his career, even if without intention. From the start, Coinbase was a virtual-first business with no offices. This will result in a more distributed workforce and, therefore, more likely to be diverse from a worldview perspective. Coinbase will have more of a mix of liberal and conservative employees than a business with a centralized urban headquarters. Companies with highly centralized urban headquarters will draw far more from more densely populated liberal surroundings.

Armstrong made one political donation to HODLPAC, a non-partisan group whose mission is to back political candidates who support cryptocurrency growth. This group supports an even number of conservative and liberal candidates. So even with this very limited data on political donations, a neutral worldview emerges. 

In a Forbes interview, he stated, “I wanted the world to have a global, open financial system that drives innovation and freedom.” What’s interesting about this statement is that it has a bit of a libertarian streak in it. Wikipedia defines libertarianism as those who “seek to maximize autonomy and political freedom, and minimize the state; emphasizing free association, freedom of choice, individualism and voluntary association.” Libertarians tend to be conservative on economic issues and more liberal on matters related to personal freedom. 

Armstrong also made headlines in 2020 when he banned all political discussions within the company. According to the New York Post, He said, “It has become common for Silicon Valley companies to engage in a wide variety of social activism, even those unrelated to what the company does. While I think these efforts are well-intentioned, they have the potential to destroy a lot of value at most companies, both by being a distraction, and by creating internal division.”

In 2022, Coinbase ran one of the more distinct Superbowl ads because it was so straightforward. The ad featured nothing more than a QR code floating around the screen for sixty seconds. When you took a picture of the QR code, it led you to Coinbase’s website, where you could win three million dollars in Bitcoin. The ad could be characterized as the most “neutral” ad that ran with regard to worldview - it was utterly unemotional and mechanical.

From what I can tell, all of this information about Coinbase adds up to a company that wants to be worldview-neutral with perhaps a slight conservative skew at the top. This is important because so many companies can unwittingly project a worldview based on their own culture that may or may not be a fit that of their market. In this case, the market skews a bit liberal, but overall, the Coinbase fit is pretty close. When you consider a key message from their website - “The future of money is here” - you can detect a bit of a liberal skew in the communications. This is not a bold proclamation about revolution. It’s about the evolution of money, which makes it lean slightly liberal, if not neutral. The present has been engineered for a better future - and the future is now here. This feels like an acceptable, incremental change for more moderate conservatives.

Now let’s look at FTX. They are an interesting example because there appears to be a pretty big worldview disconnect in how they present themselves to their market. If you watched the NBA playoffs, you might have noticed all the ads FTX ran featuring Golden State Warriors star Steph Curry. The basic message is “not an expert” - you don’t have to be an expert to use FTX. Steph Curry insists he is not an expert, but it’s easy for him to use FTX to buy and sell crypto.

While Steph Curry is a bit of a liberal presence in the advertising, he is also an athlete. Athletic celebrities have far more potential to attract customers from both worldviews than actors and singers. That’s because both conservative and liberal worldviews see sports in a positive way, but for different reasons (more on this in a future issue). So Steph Curry himself is mostly a worldview-neutral presence. On the other hand, the message that FTX is for everyone, not just experts, has a slight liberal worldview ring to it. It’s egalitarian.

The worldview disconnect occurs with the first impression of the website - “Built by Traders for Traders.” This statement immediately invokes hierarchy and position after the television advertising declares FTX to be for everyone. A hierarchical message like this will lean conservative in terms of worldview even though this one is not very conservative. The implication is that unless you are good enough, you don’t belong. Maybe this statement will change by the time you read this - it would take them about a minute to fix this. 

Sam Bankman-Fried and Gary Wang founded FTX in 2019. Bankman-Fried grew up on the Stanford University campus, where his parents were law professors. His family believed strongly in utilitarianism. As his mother states in a Yahoo!finance interview, “The ethical goal of utilitarians is to maximize the total well-being of the world’s people (and for some animals as well) . . . That goal leads utilitarians to focus their efforts on helping people in the direst straits . . . and on policy interventions that will lower the risk of existential threats to present and future generations.”

Blankman-Fried provided early financial support for the Protect Our Future PAC. Note the name of this PAC - it could be a tagline for a liberal worldview related to the future (see Part II of this series). He was also one of the largest CEO donors to Joe Biden in the 2020 presidential election. All to say that it’s a safe bet that Blankman-Fried runs a company with a very liberal worldview. How much he projects this worldview throughout the business is hard to say. I can see him liking the Steph Curry ads. What’s confusing is the website, which is not carrying through the potential liberal skew of the advertising, which would align with the market far better. In this case, it would be a simple matter to align his significant investment in advertising to the destination where transactions occur to help fuel growth and efficiency. 

The third company - - is also an intriguing case for worldview alignment. has a decidedly conservative worldview with strong conservative themes. In the case of, there appears to be a misalignment with the market worldview. 

The current theme in communications is “Fortune Favors the Brave.” This is a very different statement from what Coinbase and FTX are using. This statement addresses the future in a manner that brings in another cognitive concept - that of individualism. In the United States, individualism is a foundational social concept strongly present in conservative and liberal worldviews, but each group interprets and expresses it differently. While individualism is more often associated with a conservative worldview, it is also strongly present in American liberalism. It’s a driving force behind the American Dream. 

In the case of “Fortune Favors the Brave,” there is an individualist tone that leans conservative. There is an implicit assumption that everyone has the same chances in life, and you just need to be brave to succeed. Within a conservative worldview, everyone has equal opportunities, and it’s up to you to make the most of yourself. In a more liberal worldview, people don’t have an equal chance. A more pointed conservative interpretation of individualism is “you get what you deserve.” 

The choice of Matt Damon as a celebrity spokesperson to deliver this message is interesting because, as I’ve mentioned,  in general (there are exceptions), actors and singers resonate more with liberals than conservatives. Certainly, Matt Damon has played roles that lend themselves to being used to represent a conservative idea. He tends to (but not always) play characters with a strong individualist streak that bridges the conservative-liberal worldview divide. Surprisingly, didn’t select an athlete given their substantial investment in sports sponsorships - Formula One, soccer, MMA, UFC, Philadelphia’s NBA team, and Canadian NHL. 

As I pointed out above, athletes have greater potential for attracting customers with both worldviews, and it wouldn’t be hard to put a slight liberal twist on it. used Lebron James for their Super Bowl ad earlier in the year with the same theme. Comparing the two spokespeople, one plays an individualist on the screen, and the other is living proof of rising from very little to achieve the American Dream, which is more authentic. 

There’s no doubt in my mind that’s messaging - played out in advertising and most of their communications - skews conservative. But it’s not super conservative. It doesn’t mean liberals won’t transact on, but they will have to work harder to get there, especially those with a worldview that is left of moderate. 

Misalignment with a liberal worldview creates an efficiency issue. When your market has to work a little harder to become a customer, your acquisition costs go up, and your customer value goes down as themes are repeated over and over to customers who are not aligned with how the business sees the world. I guarantee you that will have fewer female Millennial customers than the other two companies because of this conservative skew. 

There’s not a lot of public information about the founder and head of - Bobby Bao. What we know is that he has a lot of experience in finance. He previously held roles in corporate development, investment banking, and consulting. His company is private and located in Singapore. It’s a guess, but it looks like he leans conservative given what we know, and it’s a safe bet that’s conservative image in the market results from his leadership. That’s not to say that he dictated the theme in the advertising. Instead, he created a more conservative culture within that simply yields the theme. There’s nothing wrong with this - unless it doesn’t line up with how the market thinks. 

So here are three companies competing for the same customers, one with initial impressions skewing toward a somewhat neutral worldview, one with some confusion over worldview, and a third skewing conservative, against the market. While my analysis here would need to be confirmed in testing, it shows how a market can be approached with different worldviews - most likely unwittingly. Which one is right? Which one will help grow market share the most? There may not be one correct answer. It may also be impossible for some businesses to overcome how their culture projects itself onto its market, for better or worse. Business culture is a powerful thing.

The market appears to skew liberal, so Coinbase seems best aligned. FTX has the potential for maximizing market share if they can align their communications better - their internal culture would support it. could be successful by going all-in on a more conservative market segment to own it, but that’s pretty risky. A stronger move for would be to go all-in with their sports sponsorships, highlight athletes, and develop and test new messaging against “Fortune Favors the Brave” that maintains an individualist spirit but is more neutral or even slightly liberal from a worldview perspective. They can still leverage the concept of individualism - they just need a more neutral interpretation. 

You can similarly triangulate worldview for your business. First, try to determine your market's predominant worldview. Then compare it to your customers and how your company potentially projects worldview onto the market. For example, you may find that your customers reflect the worldview of your business but not the market. Or you may discover that your customers reflect the market, but your business is working against the market. Doing this will uncover opportunities for substantial alignment, growth, and efficiency. Simple fixes can go a long way. 

The framework for evaluating this topic can certainly take some twists and turns, but the overall approach is simple. You look at your business and market to understand if you are maximizing market worldview alignment. It’s not about politics - it’s about how your business and your market think, focusing on improving growth and efficiency. If you find this topic half interesting, I hope you join me on this exploration of customer worldview. The more I learn about it, the more I want to know. 

Thank you for making it to the end of this somewhat lengthy series of essays. I feel that I have only scratched the surface, but hopefully, you have a sense of how this all might work. Now that you’re here - at the end - with presumably few other people, I want to ask you a couple of questions.

When you look at customers through a liberal and conservative worldview lens using research,  does it change your perspective of the two groups even a little? Does it make the other side, whichever side that is, a little more familiar? Do you think this can possibly help tone things down a bit - by making the other side less mysterious, at least among business people who need to know a lot about customers? No? Ok, I’ll keep trying in future issues.

Originally published in the newsletter Red and Blue Customers

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"Super interesting - a new and predictive way to understand customers."
Mark Staples, Editorial Director
McKinsey & Company