Payments people: Coinbase’s Katleho Makgobe

Payments people is our interview series celebrating payments and product leaders. We discuss the experiences that have shaped them and tips for navigating a career in payments.

This week, we’re chatting with Katleho Makgobe, Business Operations and Strategy Manager for Coinbase, one of the world’s most prominent crypto exchanges. Katleho tells us how crypto payments can reach their full potential, how she stays ahead in an industry that’s constantly breaking new ground, and so much more.

Tell us a little bit about yourself and your role at Coinbase. 

I’ve been at Coinbase for just over a year now and I focus mostly on the retail side of the business, partnering very closely with our EMEA Product and Marketing team, as well as senior leadership on top of mind issues for the business. I like to think of my role as being the connective tissue between different parts of the organization, making sure our product and marketing teams are all pulling in the same direction.

I joined Coinbase after four and half years in management consulting, where I spent a lot of my time working with traditional financial services companies. Before that, I did a brief stint in banking whilst I was living in South Africa. 

I believe crypto is the next frontier in financial services, which is a big reason why I joined Coinbase and what got me most excited about the space more generally.

What made you want to jump from consulting over to Coinbase?

The mission! Financial services are integral to everyone's everyday lives, but there are still many areas where as an industry, we can get significantly better. Financial inclusion, for example, is a major issue and there are still many people around the world that are unbanked or underbanked.

With crypto, anyone with a smartphone and an internet connection can gain access to financial services. One example of a Coinbase product that leverages this is Coinbase Wallet, which lets you trade, send or receive cryptocurrencies including stablecoins and do much more. The product is also self-custodial, so users are in total control of their funds. 

Ultimately, what we’re trying to do in the long term at Coinbase is make good on our mission and ensure more people can access financial services.

Finish this sentence: crypto payments are done right when…

When they're better than what we have today — in other words, better than traditional payment methods. We're still a way away from crypto reaching its full potential from a payments point of view.

With the Bitcoin whitepaper, the original thinking was a payments use case, but for crypto payments to really work at scale, transactions need to be private, cheap and easy to use. We saw in the 2021 bull run that gas fees on Ethereum were way too high to make financial sense for everyday consumer payments. The payment infrastructure we have today in Europe, for example, is fairly mature and easy to use. Even in emerging markets, there’s payments infrastructure like the Unified Payments Interface (UPI) in India or Pix in Brazil.

Ultimately, the only way for crypto payments to take off is for it to be better than what we have today, meaning privacy, cost-efficiency and ease of use will be critical.

How far away are we from that vision?

I actually think we're pretty close from an infrastructure perspective. From a privacy point of view, we have technology like zero-knowledge proofs, that are already making private payments possible. 

There are also projects that make it possible to grant view access of certain private transactions to a select set of third parties. I think we take for granted today that this is largely how our current banking system works — your bank knows what you're spending, but not all your friends know exactly who you're paying and when.

With fees, we're seeing scalability technology emerge. Zero-knowledge proofs are a good example here, with several Layer 2 protocols leveraging this technology. Companies like Polygon and zkSync, amongst others, are looking at this as a way to make these transactions more affordable. 

Beyond Ethereum, we’re also seeing other blockchains come online and it will be interesting to see how that plays out. Ultimately, the fees will come down — I think it’s a matter of when, not if. 

Finally, on ease of use, I think the industry has lagged behind largely because the infrastructure hasn't been ready. As it matures, I expect relatively soon, it’ll become a lot easier to send from one chain to another in a way that’s seamless from the user’s perspective. We just need to find a way to abstract away some of that complexity.

Exciting stuff. What's your favourite thing about working at Coinbase?

Firstly, the people. I get to work with a bunch of really smart people trying to solve really hard and interesting problems. 

The second thing is that Coinbase is in a really exciting industry. I was reading an article the other day that said, if you compare crypto to the internet’s adoption curve, we’re at the equivalent of where the internet was in 1998. 

So it’s still very, very early days. Nobody knows exactly how it’s going to turn out. We only have certain ideas and convictions. So having those debates and trying to shape the future as much as we can as a business has been great to do.

It sounds like cutting-edge work. What practices do you use to stay ahead in space like crypto that’s constantly breaking new ground?

It is important to have the right tools at hand to stay on top of all the information that comes at you. For example, I have a crypto Twitter account to stay on top of the headlines in the industry. I follow a few Substack and Mirror blogs to learn about more complex emerging technology and I also have a few subscriptions to crypto data tools to dig into numbers when I need to. 

With crypto, people often underestimate how much you can learn from just using the products. It’s easy to use an exchange app, but once you start using wallets and trying out the different protocols and things that are out there, you realise there’s a lot more complexity to contend with. I try to spend a bit of time playing around with different products and protocols to understand how it all works. That gives you a unique perspective on the types of problems users are facing. 

Lastly, I try to prioritise quiet time. It’s very easy to get caught up in the news cycles and the new things happening in the industry, but it’s also really important to stay focused. At any one time there are only one or two critical things to get right.

You mentioned that you’re active on Twitter and Substack. Is there anyone you’d recommend following?

Simon Taylor runs a Substack called Fintech Brain Food. He has a very interesting way of framing developments in the crypto industry that may change the trajectory of what finance looks like in the future. Working in crypto, it’s sometimes easy to live in an echo chamber of how things should work, so it’s interesting to get a perspective from someone that straddles both the web2 and web3 world.

I also listen to a few podcasts. I love Guy Raz’s How I Built This and Wisdom From The Top. These podcasts highlighted two things for me: the first is that oftentimes, making progress on something takes a lot of grit. We often overestimate the role of intelligence and talent versus just sheer determination in getting something done. Most of the time that’s what results in success in anything, big or small. 

The second thing I learned is that trying to start a new company or build a great company takes a lot of humility. I think that is true of the crypto industry as well — it can humble you sometimes. It can be very cyclical. It’s important to keep the mindset that what we're trying to do is very long term, and it’s crucial to build conviction behind the long-term thesis rather than the short-term peaks and troughs

Any advice for how people in your industry can keep that sense of humility? 

It’s just about maintaining perspective and having a long-term view of the world. Sometimes people, and not just in crypto but more generally, can get drawn into the speculative side of it all, but really what is exciting and more grounding is the long-term view. What is the art of the possible with this new technology that we have?

I think once you get comfortable being able to answer that question, perspective becomes a little easier and a lot easier than speculation on a random coin.

With that in mind, what would you say is your most valuable skill?

I would say I have a very strong nose for value. There’s often a lot of noise when you’re making a big decision or trying to figure out what’s next in an industry. That’s especially true in crypto where the market can be very volatile. It becomes really important to find the signal in the noise.

At Coinbase, I've really had to hone that skill. In turn, that skill has made it a lot easier to communicate clearly and concisely because you can figure out what the two or three things that matter are versus the hundred things coming at you that don’t.

Going back to crypto, what do merchants need to consider in accepting crypto payments?

They need to figure out how to manage cryptocurrencies alongside fiat currencies, both in accepting payments and the infrastructure required to do so. Also, the backend processes that come with accepting both fiat and crypto currencies. 

For example, merchants might need to ask themselves: what physical point-of-sale infrastructure will I need to accept these different currencies in store? How will I manage and report on cryptocurrencies on the ledger? How often will I convert from crypto to fiat? How will I manage my working capital given the volatility of some crypto currencies? 

There’s also a cost associated with going from crypto to fiat that merchants have to consider. It’s important to be sure that the benefits of accepting crypto outweigh the costs of doing so. 

Beyond these questions, merchants also need to figure out the payment architecture — will another payment provider be required to accept crypto, and what additional complexity will that add?

From a consumer perspective, payments are super fragmented. Today, an online payment page can have up to five or six different ways to pay which offers greater flexibility and choice to consumers but also creates noise. How will crypto payments co-exist on that page — will merchants just add another button? Will they accept all cryptocurrencies or just stablecoins? Those are the types of things that are important to clear up as a merchant.

Wrapping things up, is open banking, a part of Coinbase’s roadmap. And if so, in what way?

It’s critical to our roadmap. The core of our strategy as a business is to reduce friction in all aspects of the consumer experience and optimise costs where we can. 

Open banking allows us to do that. It makes it easier for consumers to pay in a few clicks rather than trying to copy and paste different sort codes and account numbers. Open banking also gives users a lot of comfort knowing there’s less room for error, and just makes for a better experience. This will be especially true as new products like variable recurring payments (VRP) come online. 

Ultimately, open banking plays an important role in terms of balancing the payment options available to users at checkout.