On Sam Bankman-Fried, Michael Lewis Gets It Dangerously Wrong
FTX's victims now seem to include our greatest finance writer.
Yesterday, Sunday, was the media coming-out party for Michael Lewis’ “Going Infinite,” the forthcoming book about Sam Bankman-Fried. Based on the rollout, the book is poised to be a disaster for the public’s understanding of FTX, and for Lewis’ reputation among actually informed finance watchers.
The worst of this came during a 60 Minutes interview with Lewis that aired last night.
“They actually had a great real business. If noone had ever cast aspersions on the business, if there hadn’t been a run on customer deposits, they’d still be sitting there making tons of money.”
This is embarrassing because it’s clearly based on nothing but Lewis’ feelings. It is close to impossible to know whether FTX was in any way a successful business.
That’s because of the total lack of financial controls within FTX. There is absolutely no way of knowing how it really looked financially. That’s especially true given that much of the exchanges revenue was directly and indirectly derived from trading by Alameda Research, which was conducted with misappropriated customer funds.
Lewis gave a few other regrettable sound bites. Asked “Do you think he knowingly stole customers money?” Lewis replies: “Put that way, no … so, there’s another side of this.”
Lewis broadly characterizes the leakage of $8 billion dollars from FTX to Alameda Research (via the infamous “poorly labeled internal account”) as merely an oversight by a doofus. This is obviously a tempting frame – but it doesn’t withstand scrutiny, and it badly muddies the waters.
Lewis also still seems, in a word, simply infatuated with SBF, and perhaps a bit dazzled by how close he got to the illusion of massive sudden wealth. Lewis was “embedded” with FTX for months before the exchange’s collapse, and he had seemed fawning and credulous in his treatment of Bankman-Fried, for instance at an event detailed by Zeke Faux at Bloomberg. In the new interview, Lewis reveals that Bankman-Fried began consulting him for advice, which is ethically dicey and certainly seems to have clinched yet another of the seductions at which Bankman-Fried, in his odd way, excelled.
Now we’re seeing the result of a journalist getting too close to his subject.
A Sam-Shaped Hole
Lewis appears nearly obsessed with Effective Altruism, emphasizing SBF’s stated intent rather than his actual actions at every turn. “There is still a Sam Bankman-Fried- shaped hole in the world that now needs filling,” Lewis says. “That character would be very useful, what he wanted to do with the resources.”
60 Minutes also highlights a related problem, saying in one of its ad breaks that Lewis’ new book “leaves it up to readers whether Bankman-Fried was a crook, or just a guy singularly ill-equipped to run a business.” In some abstract sense that’s defensible journalistically, since SBF hasn’t been convicted yet.
But taken together, the whole distracts from Sam Bankman-Fried’s alleged massive crime. Lewis seems to go beyond balance, and the 60 Minutes interview suggests why he might be not just neutral, but emotionally compromised.
Sam Bankman-Fried “started using me as a sounding board for decisions he was making,” Lewis says.
Almost as disappointing as the 60 Minutes interview is this preview chapter of Going Infinite being offered at the Washington Post. Long and short, it’s not very good. It’s not interesting. I get that an excerpt like this is intended for the broadest possible audience, but the chapter has basically no new information for anyone who has been following the story, and amounts to a replay of well-known stuff about Sam Bankman-Fried’s extremely weird personality.
It’s also, unfortunately, another example of major omissions that color events. Specifically, Lewis fixates (in an entirely uninteresting way) on Sam’s habit of playing the game Storybook Brawl during interviews – in this case, a February 2022 conversation with Anna Wintour of Vogue. But Michael Lewis – a financial journalist, mind you – omits the fact that in March of 2022, FTX bought the company that made Storybook Brawl.
This is relevant because gaming appeared again and again after that in SBF’s media treatment, right up to the moment everything went bad. Notoriously, a hagiographic, now-scrubbed Sequoia Capital profile used SBF’s playing League of Legends during funding calls as evidence of his brilliance. When Storybook Brawl surfaced in later coverage, there were suspicions that it was a marketing move. Andthe game shut down not long after FTX’s collapse.
All of that seems relevant, but Lewis omits it in favor of the “color” of a megafounder addicted to gaming, and he too winds up making it seem like brilliance rather than a total lack of discipline.
The same gist suffuses the chapter. It details a man who seems completely disorganized, but frames it in terms of SBF’s own mythology. The chapter is entered around Natalie Tien, Sam’s scheduler and PR head, and describes how often he would simply skip meetings if he decided at the last minute that they weren’t worth it.
“More often than not, it was Sam who had suggested some meeting or public appearance. And yet Sam treated everything on his schedule as optional. The schedule was less a plan than a theory.”
The idea that there was a “theory” behind this sort of behavior speaks to the apparent issues here. Like Effective Altruism and most other forms of consequentialist decision-making, what’s really happening is a post-facto rationalization of behavior that’s not actually being guided rationally.
Lewis goes on:
“’He’ll never tell you what he’s going to do,’ explained Natalie. ‘You have to always be prepared it’s going to change every second.’ Every decision Sam made involved an expected value calculation. The numbers in Sam’s mind were always shifting. ‘There’s a 60 percent chance I’ll go to Texas tomorrow.’ ‘What does that mean, a 60 percent chance?’ asked Natalie.”
I love this moment, because it encapsulates how the stupid, shallow performativity of consequentialist philosophies, like Effective Altruism, play out in real life. Lewis here is regurgitating mythology about how Bankman-Fried was calculating “expected value,” rather than just being a lazy, flaky guy with mental problems. But it’s equally obvious that Bankman-Fried himself was fully bought in to the mythology himself. He thought he was actually calculating these percentages, somehow, but in fact he was just winging it at every moment.
A reasonable person would immediately intuit this is a terrible, untrustworthy leader and business partner. But by indulging the idea that SBF is constantly, madly calculating percentages in his head, Lewis seems to cosign SBF’s own entirely fraudulent self-conception.
That’s the deepest part of the con, worked by the self against what William Burroughs called “the mark inside.” And in SBF and his parent’s continued commitment to his innocence, we see just how effectively they worked their own internal marks, with plenty of help from surrounding yes-men.
But in reality, SBF was just a bumbling asshole, whose mistreatment of customers could have easily been foreseen by his mistreatment of literally everyone else.
“The cost this implied for others simply never entered his calculations. With him it was never personal. If he stood you up, it was never on a whim, or the result of thoughtlessness. It was because he’d done some math in his head that proved that you weren’t worth the time,” Tien tells Lewis.
The moral universe is far less complicated than many people – particularly Bankman-Fried’s parents – would like us all to believe. A calculation that someone is dismissable or disposable because they’re not tactically useful is not a moral judgment, but in fact the exact opposite.