Forbes exposes Kraken's management issues: almost all senior positions are vacant

Original: Steven Ehrlich, “Cracks At Kraken: Crypto's Near Empty C-Suite”

Compiled by: Guo Qianwen, ChainCatcher

Kraken CEO Jesse Powell— the company's competitive yet introverted founder— previously announced he would step down as CEO on September 21, transitioning to the role of chairman. This was not unexpected. Powell's arrogance and blindness on issues such as gun rights and parental leave (in an internal memo, Powell described children as "harmful byproducts" of private companies) drew the attention of The New York Times to the cryptocurrency exchange with 3,000 employees, exposing the cultural wars playing out internally.

Kraken has become one of the leading cryptocurrency exchanges, supported by Digital Currency Group and Tribe Capital, with a reported valuation of $10.8 billion. It hopes to compete with Coinbase and go public. Unlike SBF, who positioned himself as a media darling, the 42-year-old Powell has always had a dismissive attitude towards public opinion, which has burdened the company's development.

However, Powell's recent title change may not compensate for the damage he has done to Kraken's executive team. Over the past two years, the company has seen a mass exodus of executives, and Powell's whimsical management style and unconventional personal views have come under fire.

Kraken CEO Jesse Powell turned the exchange into a $10 billion company, but his ideology and management style have become potential obstacles to future growth. Photographer/David Paul Morris/Bloomberg

The company is looking for a Chief Operating Officer (current COO Dave Ripley will replace Powell as CEO), a Chief Product Officer, a Chief Technology Officer, and a Chief Compliance Officer. Since June 2021, its Chief Business Officer position has been vacant. More importantly, its Chief Financial Officer Carrie Dolan, Chief Marketing Officer Mayur Gupta, and Chief People Officer Pranesh Anthapur have only held their respective positions for 6 to 9 months.

A recently departed executive stated that this management shakeup "will be a significant change for a company that has grown rapidly in a short time."

A spokesperson for Kraken denied the recent high-level vacancies or executive departures, explaining that finding executives can take over a year. "Kraken has high standards and will only choose the best candidates, especially for senior positions."

One recently departed executive is Steve Christie, who was the Global Compliance Officer and joined Binance as its Senior Vice President of Compliance after leaving in September. Additionally, Kraken had a Chief Compliance Officer, Howard Bernstein, who now runs a management consulting firm. Bernstein only held the position for eight months, from August 2015 to February 2016.

The Chief Product Officer position was ultimately held by Jeremy Welch, who left the company in June 2022. In the same month, The New York Times also exposed its company culture. He joined Kraken in May 2020 as Vice President of Product and was promoted to Chief Product Officer in April 2021. Insiders say Welch did not perform as expected in this role. Compared to peers, Kraken's product development speed is notoriously slow. For example, unlike other cryptocurrency exchanges like Coinbase, which has had an app since 2013, Kraken did not launch its consumer-facing app until 2020.

A company spokesperson defended, "Kraken has always focused on delivering quality products. Unfortunately, companies in this field often rush to launch products before they are ready or fully developed."

However, Powell's micromanagement and overly detailed management may also be reasons why Welch struggled to accelerate product development. Powell sometimes intervened in ongoing projects, completely altering their roadmaps. One example was last winter when Kraken hastily intervened in its upcoming NFT marketplace. An insider said, "Jesse changed the entire roadmap of the NFT project without telling anyone. We spent a month or two agreeing on the roadmap, and then one day he pulled all the engineers off. It's his prerogative, but it's disastrous for scaling a large company."

Welch replaced Craig Stoe, who left in October 2020, becoming yet another departed product leader. Kraken is now searching for its third product leader in four years.

CFO Kaiser Ng, a long-time employee, left the company in January 2022 to become Senior Vice President of Finance at Binance, making way for Carrie Dolan, who joined as a senior CFO in March 2022. Dolan was CFO at Lending Club when it went public in 2014. In September 2016, the SEC charged her and CEO Renaud Laplanche with improperly adjusting the fund returns they reported to investors. Although she neither admitted nor denied the charges, she agreed to pay a hefty fine of $65,000 as part of a settlement.

Since 2021, Kraken has been without a Chief Business Officer, although it seems it is not actively seeking a replacement. The company's former Chief Business Officer Robert Zagotta served from June 2018 to June 2021 before choosing to leave to become the CEO of Bitstamp's U.S. branch and the Global CCO of the company.

Multiple internal sources at Kraken told Forbes that Powell is struggling with how to balance his core liberal values with the competing options of business awareness and cooperation with regulators. This was particularly evident in August 2015 when he decided to withdraw Kraken from the New York market. Previously, local regulators had issued the "BitLicense," a cryptocurrency-specific licensing regime required to operate in the state, which many insiders believed was biased or hostile towards companies involved in cryptocurrency and blockchain.

While crypto idealists following Powell on Twitter cheered these decisions, multiple sources reported that they frustrated executives responsible for the company's development. After all, can one grow a business while abandoning the world's largest financial market?

Former Chief Marketing Officer Matt Mason left abruptly in February 2020, just 12 months after joining the company. His position has remained vacant. Current CMO Mayur Gupta was hired in April from Gannett-USA Today Network.

"Even minor marketing decisions have to go through Powell; he has an opinion on everything," said a former insider. "We could never have a leader willing to maintain a marketing style because they would never be able to satisfy Powell's peculiar ideas about marketing."

In fact, Chief Technology Officer Thanh Luu is even planning to step down from this role. He co-founded the exchange with Powell in 2011 and has served on its board.

Despite the leadership vacancies, Kraken is evolving from a startup into a more professional organization. There is a hierarchy within the organization, with salary structures corresponding to titles. About a year and a half ago, it also conducted its first regular performance evaluations. Additionally, the company has a dedicated "Culture and Life" communication team and a fitness channel on Slack, showing concern for employee well-being.

Once the new Chief Operating Officer is appointed, daily leadership responsibilities will shift to current COO Dave Ripley, who joined Kraken in 2016. Although Ripley keeps his hair short and prefers business casual attire, quite different from his long-haired, stylish boss, he shares many of Powell's views. In fact, Ripley is one of the authors of the "culture" document exposed by The New York Times, which includes chapters like "Life, Liberty, and the Pursuit of Sound Money" and "Sometimes Someone Has to Be Offended."

Ripley was previously a leader at the Boston Consulting Group, and he is described as "capable" and "analytical." An insider stated that the transition from Powell to Ripley is "trading charm for professionalism."

Powell acknowledged this, saying, "Dave is not as ridiculous as I am and may not be willing to say crazy things like I do all the time. Dave may feel he has to be more professional and conservative. Nevertheless, we are 200% aligned on culture, mission, regulatory approach, and everything I have been doing."

As for whether Powell's transition from CEO to chairman will have any practical impact on the company's operations and its problematic culture, it remains uncertain. Powell will still be involved in new product development and cryptocurrency advocacy, so his legendary influence within Kraken may remain unmatched.

When discussing Kraken's executive turnover and cultural dilemmas, Powell stated, "I think people really respect the 'willingness to stand up for one's beliefs' and want to find that in the workplace. This is something that is currently missing in Silicon Valley and the entire tech space. We have weathered this storm, letting problematic people leave and attracting new talent that aligns better with our culture."

Disclosure of interests: The author worked in Kraken's marketing department from August 2019 to August 2020.