Exclusive: Coinbase set to acquire SF startup Koding

Coinbase, the San Francisco-based digital currency exchange, is firming up an offer to acquire Koding, the cloud-based developer platform that allows coders to collaborate remotely in real time, Modern Consensus has learned.

Koding’s technology is well-regarded among the San Francisco VC community, though it’s unclear how rosy its business prospects would be as a stand-alone enterprise. The company claims to have more than 1 million users worldwide. Its premise of real-time matching a person with an idea in, say, Germany with a Python coder in Sri Lanka has attracted early funding from RTP Ventures, Greycroft, Matrix and Khosla.

Now, according to sources interviewed by Modern Consensus, Coinbase is in the process of finalizing an acquisition of Koding, possibly not so much to build out Koding’s current strategy of code collaboration but more to land some of the smarter and creative coding minds in a city where acquiring talent has become a serious challenge. Acquihiring has even become a running storyline on HBO’s comedy series, “Silicon Valley”.

This sort of talent acquihire is becoming a “thing” for Coinbase. Just a week ago, Coinbase paid $100 million for Earn.com, and made that company’s highly regarded CEO, Balaji Srinivasan, Coinbase’s first CTO.

According to a Valley insider, the appetite for acquisition reflects the priorities of a key hire Coinbase made early last month. On March 5, the exchange announced that it had poached Emilie Choi from LinkedIn. Coinbase named her president of corporate and business development, and her history of empire building at LinkedIn became the first bullet point in Coinbase’s announcement. The press release credited Choi with “overseeing more than 40 transactions at LinkedIn, including the acquisitions of Lynda, Bright, Newsle, Connectifier, Slideshare and Fliptop, as well as LinkedIn’s JV in China and strategic investments in Cornerstone On Demand and G2 Crowd.”

Coinbase is sometimes referred to as the “AOL of Crypto.” This is a compliment-slash-insult that refers both to the company’s clean and easy-to-use interface, which has attracted millions of users to digital currency, but also knocks the company’s somewhat narrow view of the crypto space, since it allows trading in only four of the many hundreds of digital currencies.

The recent moves to acquire well-regarded and innovative pure tech companies can surely be seen as an effort to broaden the company’s appeal beyond the “new to crypto” market. Those efforts started off slowly. According to Recode, in January Coinbase tried but eventually failed to buy a company that would take custody of account holders’ digital assets. The hiring of Choi, with her history of closing deals at LinkedIn, was surely aimed at achieving growth through acquisition. The addition of Koding will further that narrative.

Meanwhile, the exchange is growing just fine on its own. After the entire crypto market surged in December and January, Coinbase surpassed 13 million accounts, more than its old-world San Francisco based neighbor Charles Schwab and about half as many as market leader Fidelity’s 26.1 million accounts. While Fidelity and Schwab have far more assets under management — $5.4 trillion and $2.7 trillion respectively, compared to the total value of all digital currencies being about $400 billion — Coinbase’s impressive growth in opening accounts cannot be denied.

Culturally, the two companies would seem at first blush to be an odd fit. Having built a site that’s easier to use and more attractive than just about any “real” bank, Coinbase is all about the consumer-facing interface. Koding, on the other hand, has virtually no consumer juice – its entire website consists of two odd videos, one of which has no narration and looks like an 8^th grader assembled it on the first version of iMovie. The best way to learn about Koding is from a fascinating conversation CEO and co-founder Devrim Yasar had for the “Meet the Pitcher” series at SF New Tech. He describes how Koding began from a simple premise: “Why is it so difficult to start something?” His answer to his own question neatly elucidates some of the hurdles faced in matching people with ideas to people who can execute. Yasar is so articulate that it’s easy to see why an acquihire makes sense for Coinbase, but even this video looks like Yasar shot it inside Koding’s cleaning supply closet.

Emails sent to Choi, Coinbase CEO Brian Armstrong and Koding CEO Devrim Yasar seeking comment were not returned as of press time. This breaking story will be updated to include their comments should they decide to respond.