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.