Time to Reject the 'Savior' Class
In the aftermath of the spectacular implosion of startup cryptocurrency exchange FTX, a quick Google search brings up articles asking questions like "Where Did It All Go Wrong?" and "How Did Everyone Miss The Red Flags?"
For insight into the answers, one need only read an article about FTX's founder, Sam Bankman-Fried (who goes by "SBF"). Titled "Sam Bankman-Fried Has a Savior Complex -- And Maybe You Should Too," it was -- until a few days ago -- featured prominently on Sequoia Capital's website. Sequoia is the fourth-largest venture capital firm in the U.S., and pumped nearly a quarter of a billion dollars into FTX -- an investment it has now written off as a complete loss.
Sequoia quietly pulled the article down. But the internet is forever, so diligent folks found it on the Wayback Machine and splattered it all over Twitter.
No wonder Sequoia didn't want anyone to read it. The article's author, Adam Fisher, managed to pen 20 pages of pedantic, sycophantic drivel. But many of the answers to the "red flag" questions are there.
Fisher starts by explaining the "Effective Altruism" movement, or "EA," which we're told is SBF's guiding philosophy. A derivation of utilitarianism -- "the greatest good for the greatest number" -- EA's young founder Will MacAskill theorizes that one can do the most good by making large sums of money and donating most of it. As MacAskill puts it, "earn to give."
Bankman-Fried met MacAskill in Cambridge, Massachusetts, in 2013 and was immediately taken with EA. After that meeting, Fisher writes, "SBF's purpose in life was set: He was going to get filthy rich, for charity's sake."
There's Red Flag No. 1: If you believe someone is only getting "filthy rich" for others' benefit, you're easily fooled. Indeed, Fisher acknowledges that SBF left his lucrative trading job because he wanted to be part of something that would enable him to join the "global elite."
And join he did. Fisher is in awe of the elites who congregate in SBF's aura, including former British Prime Minister Tony Blair, Bill Clinton, Tom Brady and Gisele Bundchen, Katy Perry and Orlando Bloom. I'm calling these people the "savior class."
Red Flag No. 2: SBF made his initial money trading cryptocurrency between countries, activities that both implicated a lot of protective rules (citizenship requirements, withdrawal limits, national monetary policies) and "raised every red flag in the book," including dealing with "fly-by-night Bitcoin exchanges" that moved "from country to country in an attempt to evade all jurisdictional authority." These are described blithely as mere "operational challenges" and "rickety" structures. "The line between rickety and shady is a little unclear at times," one of FTX's employees admitted to Fisher.
It shouldn't surprise anyone that someone with a cavalier attitude about some regulations will break others -- like creating a "back door" within the organization so that you can move billions of dollars of other people's money over to a trading company run by your girlfriend, as Reuters reported late last week that Bankman-Fried is alleged to have done.