On Michael Lewis's portrait of Sam Bankman-Fried in “Going Infinite.”
On April 9, 2018, the entire management team of Alameda Research, along with half of its employees, quit their jobs. They left because they couldn’t get rid of the company’s reckless CEO—a man whom they considered so careless and disorganized that they would rather leave than have to answer for his mistakes to their investors—or worse. “There was no smoking gun,” said one of the departed managers. It was “one hundred small things,” said another. This was over four years before the infamous collapse of FTX.
The portrait that Michael Lewis paints of Sam Bankman-Fried in Going Infinite is that of an ADHD genius on the spectrum in whom an extraordinary talent for rapidly estimating risk is marred by an extraordinary lack of organization. “[H]e would not show up for meetings, not shower for weeks, have a mess all around him with old food everywhere, and fall asleep at his desk,” recalled Tara Mac Aulay, who was part of the 2018 exodus. “He did zero management and thought that if people had any questions, they should just ask him. Then in one-on-ones with people, he’d play video games.” He would repeatedly cancel appointments, treating his schedule, as Lewis puts it, more as “a plan than a theory.” “You’re always going to be apologizing to different people, and you’ll do that every day,” explained his PR manager, who would begin thinking up excuses even as she was confirming his appointments.1
Not only was there no real management, there wasn’t even an org chart. “Sam didn’t like people to have job descriptions,” his psychiatrist revealed. “Everyone knew that he hated org charts.” When architects working on the new headquarters for FTX asked for a list of employees, an executive confessed that they didn’t have one. Even when Bankman-Fried’s companies were worth billions, there was no proper board of directors. “It’s unclear if we even have to have an actual board of directors,” he said, “but we get suspicious glances if we don’t have one, so we have something with three people on it.” Lewis notes that “he couldn’t recall the names of the other two people.” There was no chief financial officer either, because Bankman-Fried didn’t see any point in having one. “You think I don’t know how much money we have?” he asked. John J. Ray III, the man brought in to manage the liquidation of FTX and Alameda Research, wrote that never in his life has he seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.” Conversations with investors were awkward. “They wanted samples of what our internal controls are,” said one of the executives. “We didn’t have any.”
And yet… they did invest! At the end of 2020 and beginning of 2021, 150 venture capital firms invested $2.3 billion in FTX for a 6 percent share while being denied a peek at the nonexistent controls or a seat on the nonexistent board. What could go wrong? Two years later, billions of customer deposits had gone missing from FTX. As it turned out, Alameda was using the money for their own investments. As it also turned out, those investments weren’t doing very well. In November 2022, FTX and Alameda filed for bankruptcy. For Caroline Ellison, then CEO of Alameda, and one of the few who chose to stay during the 2018 exodus, the collapse didn’t come as a surprise. In the final hours before bankruptcy, when the rival exchange Binance refused to bail them out, she wrote: “Feel weirdly good to get it over with. I’ve been dreading this for a long time so feels like a big weight off my shoulders.” A year later, Bankman-Fried was found guilty of seven counts of fraud and conspiracy.
There’s been a lot of focus on Bankman-Fried’s guilt in this whole affair, but I have a different question. How is it that a myriad of seemingly savvy institutional investors poured billions of dollars into such a disorganized and mismanaged—or even unmanaged—enterprise? What convinced them that this was a good idea? Granted, the crypto market was exploding, but a market opportunity alone isn’t enough, you have to also believe that the people running the business are competent enough to succeed.
Bankman-Fried didn’t really hide his flaws. Instead, he dispelled doubt by presenting those flaws as quirks of a genius wholly focused on the pursuit of a higher altruistic mission.
“In a lot of ways I don’t really have a soul,” Bankman-Fried confessed in a private memo. “This is a lot more obvious in some contexts than others. But in the end there’s a pretty decent argument that my empathy is fake, my feelings are fake, my facial reactions are fake. I don’t feel happiness.” “Somehow my reward system never clicked,” he wrote in another note. He described his constant depression as “not out-of-control negative,” but as a “lack of positive.” There was a time when he didn’t even know how to smile. “There were some things I had to teach myself to do … Like making sure I smile when I’m supposed to smile. Smiling was the biggest thing that I weirdly couldn’t do.” But he did learn, and he became good at it. “It became easier. Like my muscles started to loosen up. And it made people like me more. It made me able to fit in better.”
Bankman-Fried “thought of himself as a thinking machine rather than a feeling one. He thought of himself as a person who thought his way to action.” Raised in a home of academics, he knew of the existence of God, but “didn’t think anyone actually believed in” him. When he learned that, in fact, many people did, he concluded that “[m]ass delusions are a property of the world.” Art held no appeal for him, literary criticism was “subjectivity framed as objectivity.” Instead, he much preferred the concreteness of math. In a blog post he wrote during his time at MIT, he used statistics to prove that Shakespeare was overrated. “About half the people born since 1600 have been born in the past 100 years,” he wrote. “By contrast there are now upwards of a billion literate people in the Western sphere. What are the odds that the greatest writer would have been born in 1564? The Bayesian priors aren’t very favorable.”
While at MIT, he met a group of people who were part of a movement called effective altruism. It was composed mostly of “young men with a background in math and science.” “The demographics of who this appeals to are the demographics of a physics PhD program,” said William MacAskill, one of the movement’s originators. “The levels of autism ten times the average. Lots of people on the spectrum.” Effective altruism didn’t waste time debating subjective notions like the meaning of life. It was all about optimizing numbers. The worth of a pursuit could be measured by its effectiveness, that is, by the number of lives saved. A doctor could save a certain number of lives in his lifetime, but an altruistic banker could sponsor many doctors, thereby multiplying the number of lives saved. Ergo, a banker could be a more effective altruist. Bankman-Fried found his philosophy.
It would be wrong to say that Bankman-Fried was a fake altruist. His interest and participation in effective altruism began at college, before he even knew what career he was going to pursue (he thought he might follow his parents into academia). He did, however, use his participation to his advantage, framing his aggressive speculation as part of a higher mission to save lives.
At school, Bankman-Fried disliked English because of its subjectivity, yet he still managed to get good grades. “I convinced the teachers that I was a good student, and thus I got good grades,” said Bankman-Fried. “It was self-fulfilling to a decent extent.” Years later, he would convince investors not only that he was a genius, but that he was an altruist as well. And an altruist would never steal your money, would he?
In an interview for Vox, immediately after the collapse of FTX, Bankman-Fried was frank about the way he portrayed himself. If he was going to try to make billions in a dubious market, it was better to position himself as an ambitious altruist than a greedy opportunist, so that even if he failed, it wouldn’t be so bad. To this end, he said “all the right shibboleths” to make people like him. It worked so well that when Michael Lewis first met him—about a year before the collapse—he immediately recommended him to a friend who was on the fence about investing in FTX. “Go for it!” Lewis told him. “Swap shares with Sam Bankman-Fried! Do whatever he wants to do!” And so they did.
Interestingly, nobody seemed to mind that much when Bankman-Fried failed to show up to their appointments. Even Time magazine weren’t upset when he failed to give a keynote presentation at their 100 Most Influential People event (he was, of course, on the list). That is, all except for Anna Wintour, the editor-in-chief of Vogue. According to Bankman-Fried’s PR manager, when Bankman-Fried changed his mind about attending the Met Gala, Wintour’s people “called and shouted and said Sam will never set foot in fashion again!” The people who cared about a public snub were the ones whose business wholly revolves around appearances.