It should have been a red flag that FTX’s organizational chart was created behind Sam Bankman-Fried’s back by his personal psychiatrist. Or that Bankman-Fried didn’t even want an org chart in the first place. 

Those were among the anecdotes that financial journalist Michael Lewis shared from his new book in his Dean’s Speaker Series talk, co-sponsored by the Berkeley Center for Workplace Culture and Innovation, with Acting Dean Jennifer Chatman. 

Lewis’ new book, Going Infinite: The Rise and Fall of a New Tycoon, was published Oct. 3, one month before Bankman-Fried was convicted on seven counts of fraud and conspiracy.  

Lewis is one of the most acclaimed authors in the investigative business world, with his nonfiction books having earned two Los Angeles Times Book Prizes and countless No. 1 spots on The New York Times Best Seller list throughout his career. But before he was known for acclaimed investigative works such as Moneyball, The Big Short, and The Blind Side, Lewis was once a businessman himself. 

Inspired to write his first book, Liar’s Poker, after starting his career on Wall Street as a bond salesman at Salomon Brothers, Lewis has continued to cover financial crises and behavioral finance, including in positions at The Spectator, The New York Times Magazine, Bloomberg, Vanity Fair, and more. 

Yet, when Lewis first met with Bankman-Fried in the process of writing Going Infinite, he wasn’t sure what to make of the situation. “It can often take me a year to figure out if there’s a book in something,” he said. 

It was after spending more time with Bankman-Fried that Lewis realized there was a story to be told. Bankman-Fried considered himself to be an “effective altruist,” Lewis said, and aimed to become the “the most important person” in this cult-like movement. Originating around the same time as BitCoin, effective altruism emphasizes one’s duty to serve others and “earning to give.” The problem with this utilitarian-like movement that “aims for good,” according to Lewis, is that it strips out human sympathy and justifies incivility toward colleagues. 

As a result of expecting everyone to “manage themselves,” Lewis explained, Bankman-Fried became more of a “figure” than a leader. In fact, despite having 140 venture capitalists investing, FTX neither had a CFO nor a board of directors. 

“The reason that he was able to just run through the world without having the ordinary checks imposed upon him is that the thing was actually so successful,” Lewis said. “The venture capitalists looked at it and said, ‘Alright, this is different. And yes, something bad might happen, but the bad thing happening is not nearly as bad as us missing out on the next Google.’” 

It was in this context that FTX came crashing down. As a reaction to the financial crisis, the cryptocurrency movement aimed to organize a financial system without the intermediaries and regulators of traditional financial institutions. Coupled with Bankman-Fried’s distrust in org charts—believing they created issues of status—FTX lacked any sort of oversight, instead thriving off of its monetary success with a peak valuation of $32 billion. 

According to Lewis, one of the main takeaways from the story is that “you can’t have financial markets without regulators.” Ultimately, Lewis said he hopes that those who read the book, if anything, take away pleasure from the incredible story of what he describes as a “comedy with a tragic ending.” 

Watch the full Dean’s Speaker’s Series talk.

Read the full transcript:

Professor Jennifer Chatman: Welcome to the Dean’s Speaker Series.  Yay. Go Bears. This is an event that’s actually co-sponsored by the center that I co-direct with my colleague, Sameer Srivastava, the Center for Workplace Culture and Innovation. And I’m Jenny Chatman. I am the acting dean at the Haas School of Business, and I am absolutely thrilled to welcome today Michael Lewis, the renowned author. We know him well. He almost needs no introduction. This morning I was thinking about my favorite book of yours, “Flash Boys.” Is that a weird choice?

It’s a weird choice. I remember I bought it, I was coming back from a large eastern school, and at Logan Airport, I picked it up, and I had all this work to do on the plane, and instead, I opened the cover, and I read it from coast to coast and did zero of my work; so it was, as usual, a gripping book. So Michael’s style, as you know, is to use real-life characters to kind of open up a world of mystery and intrigue. His books are stranger than fiction, and they are so gripping that many of them have been made into Hollywood films, including, pick your favorites, “The Blind Side,” “Moneyball,” which I use in my classes, and “The Big Short.” So Michael, thank you so much for spending some time with us and visiting us here at Haas. It’s great to have you.

Michael Lewis: I’m surprised you didn’t explain how far back we go. I mean, our kids were in school together starting, what was it, preschool? Or was it kindergarten?

Chatman: Well, so we were actually, if truth be told, we were the host parents, and actually, my husband Russell and I, we were host parents to your family coming into the school that our kids went to in kindergarten. And I had no idea who Tabitha was or Michael Lewis. Coincidentally, I had the book “Liar’s Poker” on my nightstand, and they came over for dinner, and I’m asking like, what do you do for a living? And he’s like, “Oh, I write books.” I’m like, “Oh, have you written anything I would know?” “Yeah, “Liar’s Poker,” “Moneyball.” And I’m like, “Oh, you’re that guy.” And I didn’t bring my book down because for some reason my Amazon order came back, sorry, it was Amazon. It came back as the easy-read version. And I’m like, look like I’m 900 years old with this easy read. It was a mistake. But, so we do go way back. And I think you and Russell have cooked pancakes together in—

Lewis: Many times.

Chatman: Various camping sites. So let me just offer some logistics here. We have cards on your seats. If questions occur to you, please pass them to the side. I think, Audrey, if you want to raise your hand, and Sarah. They will be picking up those cards and later we will have time to read those. Be sure to write your name and what program you’re in or what kind of member of our Haas community you are so that we can acknowledge you. And then, finally, before we dive in, I just want to thank a few people for putting these events together. Ooh. One is Sarah Bottger, who does a fantastic job in putting our whole dean’s series together. Thank you, Sarah. Carrie Hults and Audrey Jones have been instrumental in putting this together. So thank you guys so much. OK, so let’s talk about “Going Infinite,” and I—

Lewis: We can talk about anything.

Chatman: Yeah, I know—

Lewis: But, yes. This book is—

Chatman: Because I’m obsessed.

Lewis: Yeah.

Chatman: With this book, so, you may notice that it’s like not even really been opened, but that doesn’t mean I haven’t read it. I actually listened to it for the last two weeks. Michael is the narrator of the audiobook, which is unusual. And they keep saying, when they do the credits, they say, “performed by Michael Lewis,” which is so fun. So you’ve been in my ear for my long runs for the last two weeks, and it’s really a fascinating book; and, of course, has coincided with the events of Sam Bankman-Fried’s fate—emerging fate. And so, why don’t we start with that?

Lewis: Sure.

Chatman: I have some other questions.

Lewis: Yep.

Chatman: OK. So, if you’ve read the book and if you’ve gone to business school, you have thought a lot about expected value calculations. And so my first question is, why did Sam let you write a book about him? What do you think his expected value calculation was for that?

Lewis:  So, I think it was complicated. Is everybody, I mean, I don’t know how much background we need to give people. Does everybody know who Sam Bankman-Fried is in here?

You know, it’s funny, I was in Portland this weekend at a literary festival. It was people who read novels and even poetry. And there were 1,200 people in the auditorium. And I thought, and the person started with this a question that just presumed that the audience knew what FTX was and crypto trading. And I said, “Well, just stop a second.”

Chatman: Yeah.

Lewis: “Does anybody here not know who Sam Bankman-Fried is?” And they go, they all go, “No, we all know.” And it’s just amazing.

Chatman Yeah.

Lewis: The reach of this story.

Chatman: And so if they know, these guys definitely know—

Lewis: These people definitely.

Chatman: OK.

Lewis: These people are ready. So, I’ll tell you how I came about. Came about right here in Berkeley. And he came over to my office because a friend, the Brad Katsuyama, the hero of “Flash Boys,” the main character of “Flash Boys,” called me and said, “I’m about to swap shares with FTX.” And I said, “What’s FTX?” He said, “It’s the fastest growing financial business I’ve ever seen, and we’re going to exchange $300 million of shares in IEX.” Our stock trading, stock exchange with this guy. And he says, “My problem is, I don’t know this guy. I mean, I met him, but he’s odd, and I can’t, I don’t, I’m having a hard time getting a kind of read on him, and nobody knows who he is.” Eighteen months ago, he had no money, and now, he’s worth $22 billion, and he’s in Hong Kong. He says, “Could you sit down with him and just give me a view?” And I took him on a walk up til then for two hours, almost killed him. I mean, this whole scandal could have been avoided if I just took him on a three-hour walk. But he, I mean, he shows up, he showed up, but he comes out in his hiking shorts and his T-shirt. I thought, “He wants to go for a hike. He’s never been on one.” You know, he’s always dressed for one and never taken one. And, he, we go on this walk, and by the end of the walk I was already, I already thought character and situation is as good as it gets. He was—the situation was so bizarre. So I, we can get into why I got interested, but why he was interested is a different question. Because at the end of it, I said to him, “I didn’t know there was a book, I didn’t know what there was.” It often takes me, it can take me a year to figure out if there’s a book in something. But I said, “I just want to come, can I just come along and watch?” I don’t know why I said, “I don’t know what’s going to happen to you, but I want to watch, ’cause what’s happened already is incredible.” And he said, “Fine.” Now, he never once explained to me why he said “fine.” He never once asked me what I was doing or why I was interested. He never once asked, when I’d ask a question, “Why do you want to know that?” He never once asked to see—he didn’t see the book until he got it smuggled into him in jail a week after it came out. So he had no idea what I was up to. But I think what he thought, what he would’ve told his colleagues who were saying, a few of whom were saying, “Why are you letting him in?” was we are on a quest to be the legitimate crypto exchange. The big, the holy grail is to be regulated in the United States to get the approval of the SEC or the CFTC to open a crypto futures trading platform, and those people read Michael Lewis’ books. Now, this was, so that’s the official answer. I think the answer is, he read “Moneyball” when he was a little kid. He was a completely isolated nerd among nerds. He was a person who could read “Moneyball” and think, “Oh, there’s a place for me in the world.” And for some months in his childhood, he wanted to be a baseball general manager, and he got obsessed with baseball statistics. I know this not from him; I know this from his parents. And I think that because I reached him when he was a little kid, he felt some odd connection, and so that he was interested for that reason. But then, of course, what happens is that I become a nuisance in his life. I mean, I spent, I don’t know, I commuted to the Bahamas. I was commuting from here to the Bahamas. I spent 60 nights there over the course of, and I insisted on traveling with him around the country here, and so on and so forth. And I think then, what happened was, what happens with all the subjects, they’re three months in, and they realize it’s too late to turn around. Like they, I’ve seen too much and know too much and like I may be a pain in the neck to have around, but we’re too—it’s too late.

Chatman: Yeah.

Lewis: I had a number of subjects give me that look, like, “How did you do this?” Like, “How did you get this far in?” And we can’t just chuck you out now. I remember Billy Bean actually saying that to me, and, but I think, so I think it just got to the point where it had its own momentum and he let—and som I was there. I mean, where it gets particularly odd is last November, exactly a year ago, almost today, when FTX is imploding, the only people, all the employees have fled the Bahamas. And it’s me, his psychiatrist, him and his parents, and one employee with the COO who’d stuck around to kind of investigate him. But, and that was kind of, I was that kind of in, so it was a privileged ring. It was a privileged view of a bizarre story.

Chatman: Yeah. Yeah, I mean, you write about this effective altruism movement that Sam kind of identified with.

Lewis: Yeah.

Chatman: Right?

Lewis: More than identified with. I mean to appreciate the weird, the media sort of flattens the story.

Chatman: Yeah.

Lewis: And the trial certainly flattens the story. Like, I don’t think the phrase effective altruism was uttered in the courtroom. The jury never would’ve learned that all these people they were hearing from were united by a cult-like belief in this thing. And, so they never got them, the motive. But if you want to understand Sam Bankman-Fried, you’ve got to understand the movement.

Chatman: Yeah.

Lewis: And the movement starts basically when Bitcoin is created. Same kind of year period. And it’s a movement that grows out of work that was done. I mean, it grows out of utilitarianism, but papers that were written by an Australian philosopher named Peter Singer, who was at Princeton when I was actually at Princeton.

Chatman: Yeah.

Lewis: And had a mesmerizing effect on students because he was sort of asking young people, “What’s your obligation to the world? And he would, he started, I think the first paper he wrote the story that kind of hovers in the background of the effect of altruism movement. It’s an anecdote that Singer has in this first paper, where he says, “I’m going to put you in a moral quandary. You’re walking by a pond and you see a small child drowning. You’re wearing your brand-new, $300 shoes. Do you hesitate to take off your shoes before you jump into the pond to pull the child out, who’s drowning out of the pond? Of course, you don’t, you just, you go in and you, the shoes are ruined. So why do you hesitate to, instead of buying those shoes, take the $300 and send it to some poor country in Africa where it would save a child’s life?” And he, so he creates, he created a lot of moral discomfort in a lot of young people, but it never led to any action. I can remember hearing about this guy and people kind of coming out of his class thinking, “I’m rethinking my responsibility to like total strangers.” This, these Oxford philosophers in 2009, a particular one named Toby Ord start to write papers where they say, “We’re going to make, we’re going to take action on the back of Peter Singer’s work,” and Ord writes this paper where he says that, he shows that if he just took half his salary, which he said he intended to do, his academic salary over the course of his lifetime.

Chatman: It’s huge, absolutely huge.

Lewis: Huge, giant Oxford salary, right? I mean, look at you. You’re I mean, you put it into clothing. He was putting into, he—

Chatman: But I would actually take my shoes off because, right? You could swim better if you didn’t have your shoes on. So you could kind of do both.

Lewis: Oh that’s very funny. And you’d be so much faster that the time, yeah.

Chatman: Spoken like a Claremont member swim club.

Lewis: Yeah. Right. Right. Yeah. But they make this argument that they make this, they start essentially proselytizing the idea to young people that it’s a combination of your duty to the world, to other people. And also the twist that really gets inside of the heads of the mathy, sciencey kids that they attract, is that: “We are going to be rigorous about the altruism.” We’re going to actually start to measure the effects—

Chatman: Right.

Lewis: Of the various things you might do with this money. And we’re going to measure it in terms of, I mean, they developed some pretty kind of obstruent units of measurement, but quality life years saved or whatever it is. So you can start to do analysis about, you can measure your performance as an altruist. And Sam Bankman-Fried hears one of these philosophers give a talk when he’s a junior at MIT. And he just thinks that’s right. And they’d done it by, this is 2012, but they, what the philosophers had done at that point, was started to make an argument to especially young American college students—college students in the typical was like math or science at MIT or Harvard or Stanford or here. And the argument was: “If you’re thinking about what you’re going to do with your life, and we’re going to be rigorous and analytical about this, stop thinking about the direct good you would do.” Like, don’t think about, oh, I don’t know, going to be a doctor in Africa. Think about earn to give.

Chatman: Right.

Lewis: Think about this idea that you, hey, “You’re appealing to high frequency trading firms. You can make millions of dollars in the course of your career. Go do that to give it away.” And what I remember when I first heard about this, I was at some Wall Street Conference, and someone came up to me and said, “You’ve got to know about this. You know, we’ve hired a couple of kids, and they’re here because they say they want to make money to give it away.” And this was so perplexing to this Wall Street guy. It was like, no one, I, and it was like the first time in the history of Wall Street.

Chatman: Yeah.

Lewis: That people go to Wall Street to give it away. And actually quite seditious in a way, the point where it actually makes the firm that Sam Bankman-Fried goes to work for.

Chatman: Right.

Lewis: And a bunch of other effective altruists go to work for.

Chatman: Right.

Lewis: Uncomfortable.

Chatman: Right.

Lewis: ‘Cause they sort of, the lever they usually have on the employees is not there anymore. They’re doing it for a different kind of purpose. But, the high frequency trading firms who are recruiting people like Sam Bankman-Fried are sort of fishing in the same pond as the effective altruists philosophers. That they’re looking for mathy, sciencey—

Chatman: Yeah.

Lewis:  You know, analytical young people. And so a lot of these people end up doing what Sam does, going to high frequency trading firm, and with it to earn, to give.

Chatman: Yeah.

Lewis: Now, there’s a whole, we don’t probably want to go off on this too much longer, but there’s a whole turn that that movement—the effective altruism movement—takes, which amplifies the ambition of the people in effective altruism, amplifies it beyond, it’s, they stop thinking about, it’s, so, there’s this cult-like quality, the people—

Chatman: Right.

Lewis: Who become effective altruists. But it’s a kind of anti-cult cult because it’s a cult that’s based on reason and argument. And if you, and unlike a lot of cults, if you win the argument, you can change the cult. And at some point someone wins the argument and the, an argument, and the argument is, “OK, you, we’ve been talking about maximizing the number of lives you’re going to save with the money you make, doing whatever you do. But we’ve been talking about saving the lives of people who are here, now.” There is this problem with existential risks to humanity.

Chatman: Right. Right, right.

Lewis: And it takes many forms. There’s all these risks, this climate change and artificial intelligence and some really horrible pandemic. Something that would wipe out the species, asteroid strikes. If you could do anything to, the argument goes, “If you could do anything to reduce the risks of any of one of these things, you will have saved many, many more lives in the future. Then you could by just focusing on the here and now.”

Chatman: Right.

Lewis: And this decouples even further.

Chatman: Right.

Lewis: The actions that people are taking to do good from the recipients of the goodness.

Chatman: Yeah.

Lewis: It sort of completely strips the action of human sympathy.

Chatman: Yeah.

Lewis: And this is perfect for Sam Bankman-Fried, ’cause he has no human sympathy.

Chatman: Yeah, yeah, yeah.

Lewis: And it’s, but you can’t understand why he’s doing what he’s doing, unless you understand he’s completely, this isn’t phony. He’s complete, he eats, sleeps, and breathes this movement. And his ambition is to be the most important person in this movement. But it’s not like he’s just faking it.

Chatman: Well, I mean, in some ways, I wonder if that was a way that he felt invulnerable. Right, because these grandiose means just, ends justified the means. And in a sense, you could justify—

Lewis: Anything. Yep.

Chatman: Almost anything, including buying most of the luxury housing in the Bahamas and being uncivil to your immediate colleagues who are in front of you. If you imagine you have the greater good in mind and you have the, I’ll call it con—

Lewis: It does let you off hooks.

Chatman: I’ll call it confidence for the moment. But it could border on arrogance to be the one who decides what those existential problems are and how you’re going to prioritize them. I mean, that’s a pretty—

Lewis: You know, he reminded me of somewhere in the middle of kind of figuring out what the story was before I’d start writing it. So I didn’t start writing this ‘til January. So I—

Chatman: Wow.

Lewis: I didn’t really, and I didn’t commit to do it until after it all collapsed. But somewhere in the middle of it, I thought, “I’m watching some odd prelude to the dystopic, some odd foreshadowing of the dystopic artificial intelligence story,” where you, one dystopic artificial intelligence story is, you tell artificial intelligence to do something that you think is good, but you don’t tell it how to do it.

Chatman: Yeah.

Lewis: And so there are no guardrails. So you say, “Could you get me a reservation for dinner tomorrow night at Chez Panisse?” And you don’t say anything else, and it goes and finds that all the tables that Chez Panisse tomorrow night are booked and starts murdering the people who have tables.

Chatman: Right. Yeah.

Lewis: To get you a reservation.

Chatman: I’ve done that.

Lewis: This is Sam, but I thought this is Sam Bankman-Fried. This is just like—

Chatman: Right.

Lewis: You told him what to do—

Chatman: Yeah.

Lewis: But you didn’t tell him how to do it.

Chatman: Yeah.

Lewis: And there’s a, there was a whiff of that about him that was—

Chatman: So—

Lewis: Fun to watch.

Chatman: So, let me try this out on you. So, we have four defining leader principles at Haas that we hold one another accountable for. I don’t know if you saw those when you walked in on our building. We etched them in stone to show that we’re quite serious about them. And I tried to kind of analyze Sam using our four defining leader principles.

Lewis: I knew this was going to happen. This is good. I’m glad this is going to happen, but I knew that eventually my book was going to be a business school how not to book.

Chatman: Well, I know I’m not even sure that’s not actually where I’m going.

Lewis: OK. OK. Go ahead, I’ll listen.

Chatman: But—

Lewis: I’ll try to listen. I’ll listen. Alright.

Chatman: And I am using “Moneyball,” I’m not using—

Lewis: OK.

Chatman: “The Big Short” or any of those in my classes. So yeah. So, OK, so let’s try this out. You all keep me honest, ’cause you know about these four defining leader principles. So he was a student always, right? That’s one of ours. He was a puzzle solver and clearly learning over time as he was going through this journey in the cryptocurrency world. He was thinking beyond himself, we could say as an effective altruist. He was questioning the status quo. He was trying to bypass traditional institutions and regulation, which he had no—

Lewis: Completely true.

Chatman: No interest in.

Lewis: Right.

Chatman: But alas, the last one, which is—

Audience: Confidence without attitude.

Lewis: Wait, what is it?

Audience: Confidence without attitude.

Chatman: Confidence without attitude.

Lewis: Oh.

Chatman: So we like to think of ourselves as a contrast. There’s institutions that have confidence with attitude, right? We have confidence without attitude. And we think that that combination is important. And that’s the one I think you could observe Bankman-Fried as falling short on. And I have to admit I do research on narcissistic leaders, and I have to admit that I could see a narrative in which Bankman-Fried is a narcissist. He’s also sort of an unassuming cult leader, right? That he didn’t intend, but we’ll hold that aside. So narcissistic leaders often prioritize their own success over the success of others. They forego collaboration for their own grandiose ideas. Like, I noticed his advisors would give him advice, and he wouldn’t necessarily take it. And sometimes they would engage in even ethically questionable behavior. They believe that pedestrian rules that apply to other people don’t apply to them. And I think his intellect caused him to think he kind of rose above that. So, do you think there’s anything to the idea that Sam Bankman-Fried is a narcissist?

Lewis: You know, yes. But it, there’s something to the idea. It’s, so, let’s a little, here’s a, is a fun exercise that I engaged in, he and I were talking about. He was obsessed with Donald Trump. I used a, he on the list, to the list of existential risks to humanity that he was handed by the Oxford philosophers. He adds Donald Trump because he thinks that if Trump is president, American democracy is at risk. And without democracy, you’re not going to solve all these other problems. They are much less likely to solve all these other problems. And so he was constantly kind of trying to get inside Trump’s camp. Trump’s mind. He’s trying to pay Donald Trump not to run for president.

Chatman: I heard the number was $5 billion.

Lewis: $5 billion is where they were. But you know, when Trump was—

Chatman: For Trump not to run.

Lewis: And I’m almost certain that they were negotiating, I don’t know this, but I’m almost certain with Donald Trump Jr., because Sam’s, one of the senior executives at FTX, was friends with Donald Trump Jr., and I think that was their path into the Trump world. I’m not sure if the numbers ever actually got to Trump, but I, when he’s, when he was telling me about that, my first thought was, “You don’t really think Donald Trump’s going to take your $5 billion and then not run for president.”

Chatman: Yeah.

Lewis: You know what he’s going to do? He’s going to take your $5 billion and run for president. And so, but—

Chatman: Call it a witch hunt.

Lewis: But that, but yes, whatever. But that part, but it was interesting to watch Sam talk about Trump, ’cause he got Trump, and he got Trump because he rhymed with Trump.

Chatman: Yeah.

Lewis: But he was a little different from Trump. So, Sam’s behavior can read from a distance as narcissism, because in the narcissist, he looks like he’s thinking because he’s not thinking about other people. Sam Bankman-Fried is born without the natural complement of human feeling and is completely aware of this fact. He replaces the, I mean the normal mechanisms that you or I use to get moved through the world. A lot of emotion, a lot of intuition, a lot of feeling. He replaces it with a kind of mathematical calculation.

Chatman: Right.

Lewis: Does it very consciously. Because he’s sort of like, it’s almost like being colorblind. He’s lacks empathy. He lacks—he doesn’t feel pleasure. It’s like there’s something he’s born without some equipment. I’d say the difference between, so that reads as like he doesn’t care about you.

Chatman: Yeah.

Lewis: And that feels like a narcissist. You default to, “Oh, he cares just about himself.” But he actually doesn’t spend a lot of time thinking about himself either.

Chatman: Yeah.

Lewis: I think he cares about himself almost as little as he caress about other people. And so, whereas Trump cares about himself constantly, thinks about himself constantly—

Chatman: Right.

Lewis: Sam didn’t spend any time, when you were with him, he wasn’t talking about himself all the time. In fact, almost never.

Chatman: Yeah.

Lewis: He was always out, he was outer-directed. But it could read as narcissism because—

Chatman: Yeah.

Lewis: Because of the consequences for other people were almost the same.

Chatman: Yeah.

Lewis: But the, it was not as, it wasn’t as un-charming as—

Chatman: Yeah.

Lewis: As what you’re imagining.

Chatman: Yeah.

Lewis: Because he was, it was never about, it never seemed to be about him. It always seemed to be about problems or other things.

Chatman: Yeah. Well, and actually, you’re doing some recording. You know, Michael has a podcast called “Against the Rules.” And this season has been about the trial.

Lewis: Well we did, you know what we did is cheat. So “Against the Rules,” the interesting part to me is, there are these scripted, we do scripted seasons, and that’s work and writing and performing all this. This was just the gabfest about the trial.

Chatman: Yeah.

Lewis: That was more run by, sort of my producer, more than me. And I jumped in a few times.

Chatman: Yeah, but one of the—

Lewis: But I was in the—I was at the trial.

Chatman: Right, but one of the things you said was that you noticed how the judge was even becoming more and more interested in Sam Bankman-Fried. He’s a complicated character. And you—

Lewis: There were a couple of moments where I thought the judge was going to toss everybody out just so Sam could explain Bitcoin to him. Because, Sam among, so almost all my, all my characters have certain traits but one of them is for sure, is they’re all good teachers. They’re— you can learn a lot from them.

Chatman: Yeah.

Lewis: And now, in addition, they’re often also in situations that teach you things inadvertently. They aren’t explicitly teaching you. They’re just kind of, like, the way they move through space is educational. But Sam is both. And when he gets talking, I mean this, that, he’s going to be mesmerizing. And the judge—this is a complicated subject. The judge obviously didn’t know what a computer was and was quite open about it. And I mean, he’s 80 years old, and he does, but he’s smart. And so here he had someone who could actually start to explain in ways he understood—

Chatman: Yeah.

Lewis: What this was and there were just a couple moments where you could, thought you could, see that, “Wow,” the judge thought, “This is interesting. I would like to just learn more here.” And it was a, it was a counterweight to the other thing that was going on pretty clearly in the judge’s head, going all the way back to when Sam was put under house arrest and started to do things that annoyed the judge is that the judge just hated him. Like, just, he was so annoyed by him.

Chatman: Yeah.

Lewis: So you could see the annoyance sort of fade a bit when Sam was allowed to talk at length. And so, he was for, took it to judge just a beat to stop him from doing that. You’re not really supposed to do that in the courtroom.

Chatman: Yeah.

Lewis: Because he was interested.

Chatman: Yeah.

Lewis: Yeah.

Chatman: So, I actually, I want to turn around ’cause I was thinking about the comparison between Bankman-Fried and Trump, but from the other side, which is what we look for in our leaders. And why Trump’s, well, I’ll leave Trump aside, but—

Lewis: Yes, leave Trump aside.

Chatman: Yeah, because Bankman-Fried sort of skyrocketed and was best friends with Tom Brady, and people were flocking to him, but his star dropped quickly and definitively. Right, he was convicted within four and a half hours on seven counts. And we don’t see that happening as quickly with Trump, right? It’s a much, much more complicated situation. But what does that tell us about what we look for in people who we want to influence us?

Lewis: That’s an interesting question. Like, what it is, what was it about Sam? Well, so Sam was a, more of a misleader than a leader, that he was not a, he—the leadership was almost accidental. It was, I mean, he, up until the point, he creates Alameda Research here in Berkeley. You know, this whole thing starts in downtown Berkeley with 20 effective altruists, only two, one of whom Sam has any experience trading anything. Like most of them can’t tell you the difference between a stock and a bond. And they’re starting a high frequency trading firm.

Chatman: So I’ll tell you about that rental. Is Mike Riley here? Mike, are you here? So, our executive education director rented the space to them, but he was so worried about what they were doing that he took it all cash upfront, which he had never done before. I just learned that, so.

Lewis: That’s very funny.

Chatman: Yeah.

Lewis: I wish I’d known that.

Chatman: Yeah.

Lewis: So, it’s very funny.

Chatman: You can footnote that in.

Lewis: Yeah. Footnote. But so—

Chatman: No script.

Lewis: So Sam is leading 20-, 24-year-olds who share his effective altruist. It’s a kind of religion. And he’s the only one who’s really traded successfully and can kind of, seems to know what he’s doing at first. But even then, it only takes four weeks before people are running for the exits. That, like this, that he’s got, I mean, he had the advantage of having fellow cult members and being the only one who knew what he was doing supposedly. And it takes a month before half the firm leaves because they’re terrified of him, of what he might do.

Chatman: Yeah.

Lewis: I mean the whole foreshadowing of what happens, no lab, in the, over, with FTX is right in downtown Berkeley where, he seems to know what he is doing then he’s so unbelievably careless with the money. You know, they’ve raised money from effective, $175 million from rich effective altruist, and they seem to have squandered it. And these other people who were, he’s supposed to be leading, start to wonder what the hell he is doing. And he himself has no ability or to connect with people or interest in managing them. His view is basically: You need to be able to manage yourself. And what happens is, in the Sam Bankman-Fried environment, this is a long way of saying, I don’t think Sam actually was exactly a leader.

Chatman: Yeah.

Lewis: He was a figure, it’s different, and in his environment because, look, he built his house on a gold mine. It was true that becoming a high frequency trading firm in crypto in late 2017 was a really good idea. And if you did it well, you made a lot of money. And they did it well enough, so they made, they did end up making a bunch of money. And it was also true that if you created a crypto exchange that people wanted to trade on, that was just a money machine. So there is, he, and it’s kind of accidental that he even does that, that part of it. So he builds his Beverly hillbillies. He builds his houses on an oil field. So there is a mechanism, there’s conditions for success actually building an organization he had no ability to do. And people around him were forever compensating for his—

Chatman: Right.

Lewis: I mean, look, you have the book, right?

Chatman: Yeah.

Lewis: Can you, if you didn’t read the book, it’s funny, you missed something that’s fun. You want to pull the jacket off. If you pull the jacket off—

Chatman: You mean versus your, versus the audiobook.

Lewis: Versus the audiobook, ’cause you don’t see this, pull the jacket off the hardback. So, and show—

Chatman: Oh, there’s the org chart.

Lewis: There’s the org, so—

Chatman: I was looking all over for that.

Lewis: So this is the world, this is the world that Sam Bankman-Fried creates.

Chatman: OK, this we would not teach in our classes.

Lewis: No, this, but this is so when the whole, so to backtrack this is an anecdote, but it’s an anecdote that there are 40 versions of this anecdote in Sam Bankman-Fried land. When the firm collapses and the bankruptcy people move in, one of the things they say is, “Oh my God, there’s not even a list of employees. There’s no org chart. We don’t know who’s here or who did what.” And it doesn’t exist. And the prosecutors even said, they’re like, “We can’t figure out how this place,” they’re trying to figure out how this place worked. And Sam, so Sam had this principled objection to job titles and organization charts.

Chatman: Yeah.

Lewis: He thought that job titles became excuses not to do whatever your job title was, as opposed to fix a problem. And he thought that org charts created status problems between people. And so he just, he forbid there being an organization chart. However, people in organizations need to know where they are. They need to know who reports to them. They need to know who they report to. They need to know where this, the level of seniority, all that stuff makes people, not having that makes people uncomfortable, especially makes Chinese people uncomfortable. And half the employees were Chinese, or a whole bunch of ’em were. I mean they’re like, in the Chinese companies, the org charts are a really important thing. He, so Sam, as a result of not having any of this organization and not managing anybody, not conventionally leading anybody, Sam has all these psychological emotional issues in his company. Like, everybody’s kind of unhappy.

Chatman: Yeah.

Lewis: And so, to solve them, he solves the problem in a very Sam Bankman-Fried way. He moves his personal psychiatrist, his shrink from here to the Bahamas to be the shrink to everybody. And so sort of like George, his name is George. You deal with all these problems that are caused because of the way I run my company. George, who in the Bay Area had become shrink to the effective altruists. So he was the world’s authority on the inner life of effective altruists. George moved to the Bahamas, and within about six weeks, 100 employees of FTX are on his couch.

Chatman: Yeah.

Lewis: Like, that many people, all wanting to share their problems and the problems all kind of went back to like, there’s no—

Chatman: And he drew the chart, right?

Lewis: So George in therapy starts to ask people where they are.

Chatman: Right, where they are. And what you can see here is that there’s just one box at the top, one box. And all the other boxes are below that one box, which is Sam Bankman-Fried.

Lewis: And he’s got 24 direct reports, none of whom he talks to. And he’s got a CTO who’s over here, Gary Wang, who has no one underneath him because Gary doesn’t speak. And it’s like, and George is figuring out like a psychiatrist, trying to think about t. is thing. And George does this completely in secret because he’s worried Sam’s going to be angry if he finds out that he’s created an organization chart. So before George fled, he’s now hiding in the jungles of Vietnam, I think. But before he fled, he gave this to me on a thumb drive, and my publisher said, let’s stick it on the inside of the jacket cover.

Chatman: Oh my God, that’s so funny.

Lewis: But that’s like, the best picture of the organization. And it’s a little warped because it was done by the shrink based on therapy sessions. But it was, this is like, I don’t know, I what do you do in a business school with this story? You like, hand it to somebody or say read it and never do any of this.

Chatman: Yes, that’s what you do.

Lewis: It’s kind of like—

Chatman: Yeah.

Lewis: I think it is the way you think about it.

Chatman: There are lessons. I mean, I have so many more questions, but I want to get to some of the audience’s questions. So let me finish with this question, which is sort of unresolvable. But you know, on the one hand, we’re a school that embraces entrepreneurship and pushing the boundaries and questioning the status quo and doing what hasn’t been done before. And there’s a way in which you want the Sam Bankman-Frieds of the world to succeed and to push new frontiers and try new things. And the promise of blockchain—there’s something idealistic there. On the other hand, there was essentially zero regulation, which seems to be, at least in part, responsible for all of the negative things that ensued. And so, what have you learned about that balance, right? Should the investors have been much more wary? Is it their own fault that they invested in this operation? Should the government regulators have been on top of it sooner? Should we have clamped down on Sam Bankman-Fried and FTX sooner? I mean, where does that happen in the world of evolution and progress?

Lewis: Well, crypto, I mean, all crypto is created in an opposition to regulation.

Chatman: Right.

Lewis: It’s created an opposition to institutions, to governments, to banks. It’s a reaction to the financial crisis, right, in the beginning. So, it was explicitly anti-regulatory. It had this libertarian streak, and it was in theory, a different way to organize a financial system without all these trusted intermediaries and without the need for regulators, right? But then, what it did very oddly and tellingly, is it recreated the financial system.

Chatman: Yeah.

Lewis: The traditional financial system inside of crypto but without the regulators.

Chatman: Yeah.

Lewis: And so what has resulted is scandal after scandal after scandal. And presumably a lot of things, bad things going on that nobody’s caught because there’s nobody there watching and policing.

Chatman: Well, and it looks kind of like, when you boil it down, it looks like old-fashioned fraud, like commingling funds and investing with your clients.

Lewis: What’s amazing, I mean, this story is so amazing. I regard, I didn’t know quite what to do with the structure of the story because, so Fitzgerald once said, “What Americans really want is a tragedy with a happy ending.” What this was was a comedy with a tragic ending.

Chatman: Yeah.

Lewis: It’s like the opposite of what, the whole thing felt so comic until it, until what happened, you know—

Chatman: Right.

Lewis:  The last year, but, when they start they start, it doesn’t even, I don’t think it even occurs to them that the fact that there’s no distinction between Alameda Research and FTX is that big a deal. They’re an Asian Crypto Exchange. I don’t think any of the Asian crypto exchange has instituted these kind of controls that you would have—

Chatman: Yeah.

Lewis:  In a U.S. exchange. I mean, just the idea that the exchange custodies the traders’ funds, that’s something that’s alien to the U.S. markets, right? You just wouldn’t be allowed here. It’s much less, you can own the biggest trader on the exchange at the same time that you’re custoding the funds on the exchange. All the whole structure’s nuts. And nobody even really questions it. What, if you want to, I’m trying to think of the best way to answer your actual question though is like, “What does it tell us about the, like what should have happened?” And probably what should have happened is the minute serious grownups started to turn up on the scene, venture capitalists, for example, 140 venture capitalists invested in this business, valued it at the end at $40 billion without insisting on there being a board of directors.

Chatman: Yeah.

Lewis: There was no board of directors.

Chatman: I mean, there was no CFO, right?

Lewis: There was no CFO.

Chatman: No CFO, OK.

Lewis: In fact, there’s a line in the book I asked, I was asking Sam about all this right away. And it was, he was, it was comic. He says, what, he says, “They tell me I need a CFO.” I asked him, “What does a CFO do?” And they said, “The CFO keeps track of the money.” He says, “I keep track of the money. Why do I need a CFO?” Well, we saw how well he kept track of the money.

Chatman: Yeah. Right.

Lewis: Right. And, but, no, but the reason that he was able to just run through the world without having the ordinary checks imposed upon him, is that the thing was so actually successful.

Chatman: Yes.

Lewis: That the revenues generated—

Chatman: That’s right.

Lewis: By the exchange were so crazy that the venture capitalist looked at it and said, “Alright, this is different,” but if, and yes, “something bad might happen, but the bad thing happening is not nearly as bad as us missing out on the next Google.”

Chatman: Yeah.

Lewis: And I had, I don’t know how many venture capitalists tell me this might be the next trillion-dollar company.

Chatman: Yeah.

Lewis: And Sam may be the first trillionaire.

Chatman: Yeah.

Lewis: That they thought it had that kind of scope. And so, it tells you about like how loosely the, our conventional world holds its principles.

Chatman: Right.

Lewis: That if when they’re faced with an incredible—

Chatman: Right.

Lewis: Temptation—

Chatman: Yep.

Lewis: That you drop the principles. And it wasn’t just the institutions that did this. Everybody, the celebrities did this, politicians did this.

Chatman: Yeah.

Lewis: There was a kind of a fear of missing out on a thing. And the thing was fun, and it was going, moving fast. And Sam was kind of delightful to be with every time—

Chatman: Yeah.

Lewis: He walked into a room. Everybody wanted to listen to no one but him. And—

Chatman: And the numbers were enormous. I mean, so they were thinking the money in Alameda was like—

Lewis: They were thinking—

Chatman: Rounding error.

Lewis: Yes.

Chatman: $8 billion. What? That’s nothing. We could cover that in 10 minutes.

Lewis: So, but the, so the, it does, I guess one of the takeaways, it’s one of the boring takeaways, but it is a takeaway from the story is, “Yeah, you can’t have financial markets without regulators.” I mean, they’re not going to work. They, you’re going to have violation of trust after violation of trust.

Chatman: Yeah.

Lewis: And funny, if you look at our financial market, at the traditional financial markets, we’ve done a pretty good job at minimizing the amount you have to actually trust somebody, right. Because the regulators—

Chatman: Right.

Lewis: They’re watching them for you, because you’ve got things like deposit insurance and crypto, oddly born out of complete mistrust of—

Chatman: Right.

Lewis: Of the existing financial system. Born out of a kind of mistrust of other people, created to sort of end the need for trust, creates these institutions that require us to trust them even more.

Chatman: Yeah.

Lewis: It’s a strange event.

Chatman: It’s ironic.

Lewis: It is ironic.

Chatman: Yeah.

Lewis: Anyway, I, the, if I wanted to convey to an audience, like, who hadn’t read the book, the main thing I wanted them to take away from the book, is just pleasure. The story is so incredible.

Chatman: Yeah.

Lewis: I don’t know what lessons there are in here.

Chatman: Yeah.

Lewis: But it’s just like an amazing story.

Chatman: Yeah. Well as a psychologist, he’s such an interesting character.

Lewis: Yeah.

Chatman: Yeah. Is this Austin here? Austin.

Audience 1: He’s over here.

Chatman: Oh, Austin. Hey. Austin’s going to ask some questions from the audience.

Lewis: Are these curated?

Audience 1: Maybe.

Chatman: By Austin in real time.

Lewis: Right. Good.

Chatman: He looks trustworthy.

Austin: I would not say the same. So, we’ll change that just a little bit. We’ll switch over to “Moneyball” for a bit. You mentioned that Sam was part of the “Moneyball” generation—also included in that is me. I was 8 when the book came out and then ended up spending some time working for the Milwaukee Brewers. And one of the things I noticed, and granted I had never worked in a front office before, but compared to what you described in Oakland to what I experienced in Milwaukee, the front office was very white. It was very male. Didn’t have, instead of it being all ex-players, it was a mix of some ex-players and people like me, who had maybe played in college, but were, there’s totally to do analytics. Over the past few years, and from some of my buddies who’ve worked at the Dodgers, we’ve seen this change into becoming almost the Ivy League Boys; Club, instead of it being the Baseball Boys’ Club, it’s the Ivy League Boys’ Club. That’s still problematic in my view. So, what would you recommend baseball do to try and fix it to be more representative of maybe just the fan base of the game?

Lewis: Yeah, I don’t know. I don’t know if it has to be representative of the fan base of the game to be good management, but you’re touching on something that’s really interesting to me. So, it is true. in 2002, when you walked into the front office, it was, the dominant culture was the scouting culture. You, it were kind of people who had played in the Minor Leagues, very seldom actually former Major League players, but people who were college players, people who hadn’t valued their formal education very highly. And the, and it was an old boys’ club as opposed, and it’s become a new boys’ club. The problem with the old boys’ club was that it was impervious to like new ideas. It didn’t have any that, the amazing thing about the “Moneyball” story was that it was available to be written in 2002 when most of the ideas that were going to transform the game had been cooked up in 1977. And that for 20-something years, or little, until the Oakland A’s started to grab these ideas that nobody thought they were worth paying attention to, ’cause they were hatched by people who were outsiders. So there was, the revolution happens outside the game. The inside is arrogant, smug, all kind of the same, monoculturey, and so doesn’t assimilate these new ideas. What’s happened? It’s like, “Yeah, the management’s now smarter. It’s, it is better managed.” It is true that relying on better data and better analytics gets you a better outcome than just relying on the intuition of the old boys. But you do lose something, and you, there is sometimes something to that intuition and you lose, you do create an environment where everybody’s kind of thinking the same way all over again. It’s just a, it’s a different way, but they’re all thinking the same way. And I think introducing, I mean the important thing is a kind of intellectual diversity, and you can get that a lot of different ways. But opening what has become the, I mean the nerds are now running the show in baseball, opening that room to some people who aren’t, it seems really important to me. And I think even Oakland A’s would tell you that right now. Yeah.

Austin: Perfect. So then one final question, we’ll build off of effective altruism. It’s something we’ve kind of seen before throughout the, I guess the Silicon Valley mindset. We’ve seen with Elizabeth Holmes thinking that Theranos was going to be this revolution that would change health care forever. Andreessen Horowitz uses the word techno optimistic manifesto. Does this just seem like a rationalization of Silicon Valley save the world, and maybe Sam kind of fell into that? Or do you see Sam as a different character who fell into something completely unique?

Lewis: So I don’t think Sam is principally a Silicon Valley character. I think of him as a creation of Wall Street. That if Sam, virtually any other period of human history, Sam would either have been someone’s food or would’ve been like a high school physics teacher or a math teacher or maybe a college professor. The—

Chatman: Hey now, come on.

Austin: Continue.

Chatman: It’s OK.

Lewis: Not a good college professor.

Chatman: Yeah, no, he’s super smart.

Lewis: No actually, I think he’d been a great college professor.

Chatman: We currency—

Lewis: No, I think he’d been—

Chatman:  Intelligence.

Lewis: I think, think he was born, his parents were professors, kind of assumed he was going to be a professor. He ends up disdaining professors like he just disdains every other grown-up and everything that’s ever been thought or said, including Shakespeare. I love that Sam Bankman-Fried, when he is in high school, argues that Shakespeare sucks. And you can—

Chatman: Yeah.

Lewis: You can prove this statistically.

Chatman: Yeah.

Lewis: It’s just like, it’s just a different way of thinking about the world. So, why isn’t Sam Bankman-Fried just in that role as opposed, and it’s because Wall Street evolved to, got to a point where, has gotten to a place where the things that Sam Bankman-Fried’s mind can do, are highly valued on Wall Street. And there are these institutions, especially the high frequency trading firms, that have become machines for turning math people into money people. And he, I don’t think Sam Bankman-Fried, would’ve ever have landed in Silicon Valley and started a company. People would’ve left after two days. You know, that I didn’t have the company, he didn’t really have that management creator sort of gene. What he had was the trader in him. And so, yeah, he interacted with Silicon Valley ’cause he was raising venture capital. He didn’t think much of it, but that doesn’t, there’s a long list of things he didn’t think much of. So, but I don’t think, I don’t think that’s where, that’s he doesn’t really, he’s not a creature of the place even though he is born out here. He’s a creature of modern Wall Street, and it’s modern Wall Street that has a bit to answer for in him. Not really Silicon Valley.

Chatman: Yeah. Great. Well with that, before you leave, I wanted to, so Michael is actually a big swimmer, and he’s actually pretty fast.

Lewis: So that’s, neither one of those things is true.

Chatman: You know for, he’s pretty—I see him in the pool—he’s pretty fast. I was going to say for people of our generation—

Lewis: So—

Chatman: And so we’re a public university, and we don’t have a lot of cash, but we do have a ton of talent. So, I brought a great crew here to thank you for visiting with us today. We have three of our world class swimmers. We have, and you guys come up as I call you, we have Bjorn Seeliger. Bjorn is a Haas undergrad student. He’s on the Cal Men’s Swim Team, who, they’re two-time defending national champions. So, and I’m just going to go through this for a second. So Bjorn swims—

Lewis: Hey, good to meet you.

Chatman: Michael, you need to listen to this.

Lewis: I’m listening.

Chatman: Because this is going to humble you. So Bjorn swims, Bjorn is a sprinter. He swims free, fly, back, and was an Olympian for team Sweden in the 2020 game. And I just wanted to give you some time. So his, the fastest, and I may not be right about this, but the fastest 50-meter free. And actually Bjorn helped me with backstroke, not, it’s didn’t really help that much but, his fastest 50-meter free is 18 seconds and 71 10th. Is that right? Is 18.71, is that your fastest?

Seeliger: 18.21.

Chatman: 18.20, Oh, sorry. So much lower. Right. OK. So think about your time compared to that. Then we have Tyler Kopp, who is also a Haas undergrad, also on the men’s team, also part of our NCAA Championship Team. He was a finisher at the U.S. Olympic trials. He’s a long distance swimmer. That’s more of my world. So he swam a 16.50. That’s if you have a, like a regular sized pool. My pool, 75 laps. He swam that in 14 minutes and 58 seconds. OK. Seventy-five laps. Right. Takes me up to three days or so to do that. And finally, we have Will Roberts who transferred to swim at Cal. You were at Michigan before, right? Is that right? So Will transferred for graduate school. He was part of the NCAA team as well. He is also a distance swimmer and I saw a 500-free time, which is 20 laps of 4 minutes, 17 seconds, 20 laps. He’s now working in San Francisco and helps athletes start businesses. So, the three swimmers have some gifts for you to thank you for coming to visit.

Lewis: Thank you, so—

Seeliger:  I liked to mention something. So you’ve mentioned that you almost killed, you almost killed Sam Friedman on a two-hour walk. So, we want to make sure you don’t die on a two-hour swim. And we got a little bit of things for you here today. So thank you for coming with you talking.

Lewis: Thank you. Thank you.

Chatman:  Thank you, Michael.

Lewis: Thank you.

Chatman: It’s so great to see you. Thanks for coming. Bye, great to meet you. Hey, thanks everybody. We’ll see you next semester.