In Crypto Winter, Jesse Powell’s Pirate-King Leadership Style Might Be the New Normal
Less than 1% of employees have taken the CEO’s buyout offer since he laid down the law on culture. Do employees see Kraken as a “based” place to work, or just somewhere to ride out the bear market?
It seemed like the perfect recipe for a major blowback.
Kraken CEO Jesse Powell ruffled feathers in June after a New York Times article detailed a “corporate culture war” raging at the cryptocurrency exchange and his subsequent doubling down, in which he criticized the “woke activist movement” and told unhappy employees to quit.
But then something interesting happened. Most people inside Kraken and many in the broader crypto sphere sided with Powell. Job applications flooded the company. Now, six weeks later, less than 1% of Kraken’s employees have taken the severance package offered to anyone who didn’t want to get with the program.
There are at least two ways to interpret this outcome.
One is that it revealed the true preferences of a majority of workers at the exchange, and perhaps those of people in the broader crypto industry. Kraken, from this perspective, represented a rare refuge from what Powell later described as “this contingent of people who basically [think] if you don’t agree with them you’re evil, you’re a Nazi, and you must be destroyed at all costs.” At least one workplace remained where coders could just code, leaving politics at the door – and such an oasis had proven beneficial for recruitment and retention.
“The pendulum is starting to swing back the other way,” Powell said on the Unherd podcast.
Another interpretation is that the paucity of takers for the four-month severance package Kraken calls the “Jet Ski Program” signals a power shift in the job market, particularly for crypto jobs. In this view, as the economy weakens and the market enters another crypto winter, the leverage to shape workplace cultures has fallen back into employers’ hands.
Perhaps providing some support for this view, although not an apples-to-apples comparison: When crypto markets were booming, a slightly higher percentage – 5% to 6% – of unhappy, politically minded employees at rival exchange Coinbase (COIN) took a similar buyout offer.
As employers take advantage of the new power shift, diversity advocates worry industry leaders could set a precedent that will kneecap the largely male-dominated industry’s future strides toward recruiting and retaining women and people of color for years to come.
Either way, Kraken’s emergence as a bulwark against workplace "wokeness" underscores one of the paradoxes of running a crypto business. Bitcoin and its various clones and competitors are apolitical, value-neutral stores of value and mediums of exchange, indifferent to the ideologies of those using them. Yet for companies building services on top of these protocols, politics – including the uber-polarizing politics of the U.S. culture war – seems all but inescapable.
In a corporate culture manifesto published by the U.S. based exchange in June – the so-called “Tentaclemandments,” aptly named for the nautical-themed company – Kraken’s leadership laid out in detail the behavior it expects from its employees. Being "kind-hearted" and "candid" is encouraged; being "emotional" and easily offended is not. Current and prospective employees are encouraged to get with the program or walk.
Although many social-political discussions are now off the table, the company's leadership has made some exceptions as to which subjects of conversation are fair game. Topics aligned with the “crypto, cypherpunk, libertarian values” of Kraken’s founders, Powell and Thahn Luu, including free speech, bodily autonomy and self defense, for example, might be discussed in company Slack channels. Guns might be an optional part of corporate retreats.
According to the Times article, Powell initiated conversations in the company Slack about such third-rail topics as gender differences, racial slurs and preferred pronouns. These debates offended and angered some of Kraken's staff, distracting the company's larger workforce and ultimately reducing its productivity, according to Powell.
So Powell put down the mutiny at Kraken, closing the most contentious Slack channels and releasing the Tentaclemandments. Ahead of the Times’ article, he doubled down, tweeting that he “entertained debate for a bit” on policy and cultural issues at Kraken, but “people get triggered by everything and can’t conform to basic rules of honest debate. Back to dictatorship.”
Era of the Pirate King
In recent years, corporations in general – and tech companies in particular – have grown increasingly accommodating toward activist employees, to the point of taking corporate stands on political issues and deplatforming voices on the ideological fringe.
Kraken's manifesto is a part of a counter-trend that's slowly gained steam during the coronavirus pandemic and, some say, could pick up pace as the economy struggles. Some employers have begun pushing back against employee activism, and a few are clamping down on what employees can talk about in the workplace.
In June, when the U.S. Supreme Court overturned Roe v. Wade, ending the federal right to abortion and effectively rendering abortion in vast swaths of the country illegal, Meta (the parent company of Facebook) reportedly told employees not to discuss the ruling at work, citing the potential to create a “hostile work environment.”
According to labor economists like Alan Benson, a professor of work and organizations at the University of Minnesota’s Carlson School of Management, this is a trend that could accelerate as market conditions grow more grim.
A recession appears likely, and crypto winter is already here: The power dynamic, which was tilted in favor of employees while the economy was doing well, is now shifting back to employers, according to this analysis.
“Over the pandemic, the lowest unemployment in 50 years, and now rising interest rates and the possibility of a recession, we’ve seen big shifts in the bargaining power of workers over their employers,” Benson told CoinDesk. “As we see the labor market slacken, I would expect employers to hold workers to a higher standard and take fewer risks when it comes to taking a stand on social issues.”
“Employers can also demand more of their workers and set higher bars for ‘acceptable’ work,” Benson added. “Instead of dangling the carrot of more attractive pay or perks, they know they can let a bad job market serve as a stick.”
If Benson is right, Powell’s pirate captain leadership style might become the norm as the bleak horizon of crypto winter stretches before us.
First came Coinbase’s Armstrong
Powell is not the first crypto CEO to clamp down on politics at work.
In 2020, Coinbase CEO Brian Armstrong banned discussions of political and social issues in public Slack channels (though employees were allowed to speak freely one on one), and introduced a corporate policy of “political neutrality,” telling unhappy employees to leave and take a severance package. (The offer was undoubtedly made less attractive by the company’s impending public offering, during which each employee was gifted 100 shares of the company’s stock – worth over $40,000 at the stock’s highest price).
Armstrong’s controversial decision came four months after a group of employees staged a virtual walkout to protest Armstrong’s reluctance to issue a public statement on behalf of Coinbase in support of the Black Lives Matter movement as demonstrations sprang up across the country to protest the murder of George Floyd by police.
The decision also came in the wake of internal controversies over the alleged mistreatment and salary disparities of women and Black employees, also chronicled by the New York Times.
Powell and Armstrong appear to have arrived at the same place from different directions. Armstrong aimed from the start for a politics-free, “mission focused company.” Powell, at least initially, wanted to have spicy conversations with employees, free of HR concerns. Both ended up telling employees what they can discuss at work, employees’ wishes (and feelings) be damned.
What kind of diversity?
In the Tentaclemandments, Kraken’s leadership states that the company strives for diversity of thought, rejecting the “myopic view that ‘diversity’ can be captured by a short checklist of obvious physical features.”
One could argue, however, that weeding out employees who aren’t in “alignment” with the company’s culture and mission puts Kraken at risk of swapping one form of supposed groupthink for another, more crypto bro-friendly, flavor of the same Kool-Aid. Further, Powell’s pursuit of litigation against former employees for posting negative reviews on Glassdoor is hard to square with his free-speech rhetoric. (Kraken claimed those reviews violated the non-disparagement and confidentiality clauses in the employees' severance agreements.)
Sitting at the intersection of two historically male-dominated industries – tech and finance – crypto is, perhaps unsurprisingly, homogenous. According to a Pew Research study in 2021, 22% of all men surveyed said they’d invested in, traded, or otherwise used crypto, compared to only 10% of women (though some surveys suggest that percentage is higher). Google Analytics data collected by Coin Dance indicates that the online bitcoin community is currently nearly 86% male.
Demographic data for crypto companies is difficult to obtain, but the little data that does exist suggests a similar pattern. LinkedIn data collected by GoBankingRates indicates that, from 2018 to 2021, only 30% of new crypto hires were women (a number that roughly correlates to the broader tech industry). As of 2018, 92% of all venture-backed crypto and blockchain companies around the world had a founding team that was entirely male.
Diversity advocates in the crypto industry voiced concern that Powell’s stance on social and political issues, if it gains traction at other companies, could further discourage women and people of color from working in crypto – and create a worse working environment for those already employed in the industry.
Olayinka Odeniran, a cybersecurity expert and founder of the nonprofit group Black Women in Blockchain Council (BWBC), said Kraken’s policy discounts the varying life experiences of its employees.
“You have staff from various demographics, various walks of life. Some regulations may impact some more than others, but corporations are looking at them as if they’re all the same,” Odeniran said.
“I’ve been in situations where there’s a lot of things that were happening across the globe that were impactful to me as a woman, as a Black woman, and I’m expected to go to work and act like a robot, like it’s not impacting me. And I don’t know what’s going to happen to me when I leave work,” she added.
Odeniran also argues clamping down on political discussions in the workplace is antithetical to the ethos of crypto.
“It goes against the whole idea of decentralization,” Odeniran told CoinDesk. “In this Web3 world we’re trying to create, we’re all trying to bring our experiences to improve on it. We’re involved in this space simply because of policies that weren’t aligned with who we are as people, and we want to create a whole new space to solve that. For corporations to say that now we’ve got to be apolitical – I think it’s contradictory to how this space was created.”
Others in crypto have lauded Armstrong and Powell for trying to shield their companies from the tide of partisan politics, arguing that doing so will help maintain focus and productivity.
“Work is a place to do work. It’s not a place to bring your politics. It’s a place to get things done,” Jeremy Kauffman, CEO at blockchain-based file sharing company LBRY, told CoinDesk. “It’s a danger to allow a workplace to be ideologically captured. This is what’s happened to some of the big tech companies and it’s hurting their competitiveness.”
While companies are free to take whatever stands they want, Kauffman said, “I think the best choice is to be apolitical. If you want to go work in a company that supports a sort of progressive ideology, there's plenty of them out there. But I think it's crazy to say that every company should be that way when these are world views that are realistically [held by] a minority of the population, or maybe half the population, depending on how you want to count it.”
Politics for me, not for thee
Odeniran also noted that while companies like Coinbase and Kraken are telling employees to keep quiet about politics in the workplace, they’re also putting a lot of money toward lobbying (and, at least in Coinbase’s case, doing million-dollar deals with government agencies).
“Some of these corporations are funding political figures that are going to bring about politics that are going to, one way or another, impact their people, their workers,” Odeniran said. “There’s no way we can separate [ourselves from politics], we’ve gotten to the point where every aspect of our lives is tied to some kind of policy.”
Powell addressed this criticism in his appearance on the “Unherd” podcast. “Some of those politicians may have positions that I personally don’t like,” he said. “But maybe they’re really pro-crypto and we really need them. Crypto is the bigger mission.”
Crypto is far from the only industry to support politicians that back its interests, regardless of their stances on other issues. Two years after CEO Jamie Dimon kneeled to show his support for Black Lives Matter, JPMorgan has donated more to Republican congressional committees than Democratic ones in the 2022 election cycle.
Flood of applications
The crypto community’s positive view of Powell and the Tentaclemandments has directly translated to an increase in people wanting to work at Kraken.
Kraken Chief People Officer Pranesh Anthapur told CoinDesk that after the New York Times’ article and Kraken’s cultural memo came out, the company witnessed a “healthy” increase in visits to Kraken’s Careers page and completed job applications.
“Application volume, LinkedIn Kraken followers, and LinkedIn page visitors all saw significant increases,” Anthapur said.
Kraken’s employees, too, seem to be largely content with their jobs.
Anthapur told CoinDesk less than 1% of employees (31 of the company’s approximately 3,200 total employees) have so far taken the Jet Ski offer due to cultural reasons. (Other employees quit but gave different reasons for doing so.)
But, of course, not everyone who wants to leave Kraken will likely do so – hiring freezes and layoffs are roiling the industry, making it a potentially bad time to jump ship – and unhappy employees who remain aboard could find themselves in an uncomfortable position.
When asked by Fox Business what Kraken would do if problem employees didn’t take the Jet Ski offer, Powell ominously promised that “people will be managed out the hard way if that’s what it takes.”
While many online have speculated that Powell’s comments and the Tentaclemandments amount to a basket of labor law violations, New York-based employment attorney Alex Berke told CoinDesk Powell can fire employees if he wants to (kind of).
“Obviously, there’s at-will employment, so employees can be fired for any reason or no reason, as long as it’s not discriminatory,” Berke said. “So if somebody were to contact me, who was a New York based employee who worked [at Kraken], I don't think they would have a claim based solely on [the Tentaclemandments].”
Though Kraken’s manifesto attempts to be up-front about the company culture and employee relationships – for example, discouraging employees from calling their co-workers’ words “toxic, hateful, racist, x-phobic” – Berke said that doesn’t forestall accusations that Kraken is a discriminatory or hostile work environment.
“Certainly, this would be great evidence to demonstrate that there’s a hostile work environment,” Berke said of the Tentaclemandments. “I would anticipate that there will be claims about this.”
“What if your manager is saying something racist to you? You aren’t allowed to tell them that? That’s not fair. That’s not right, or legal,” Berke added.
Rough seas ahead
The controversy seems to have had no significant impact on Kraken, which appeared to be handling both the media firestorm and the sudden arrival of crypto winter successfully (at least until reports of potential sanctions violations surfaced).
While other crypto companies are announcing mass layoffs and declaring bankruptcy due to the market downturn, Kraken is still hiring.
“Kraken has been around since 2011, so this is not our first crypto winter,” Anthapur told CoinDesk. “We’ve prepared ourselves for hard times to come and our company’s balance sheet is strong.”
UPDATE (Aug. 13, 01:20 UTC): Adds detail to passage about company's suits over Glassdoor reviews.
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