Jul 5, 2022, 2:55 AM ETInterview

Sam Bankman-Fried - Crypto, FTX, Altruism, & Leadership

Sam Bankman-Fried (SBF) acknowledges that starting a company involves fighting through "dumb, annoying, broken, or unfair" realities that contradict how the world "should" work.
SBF estimates he had "decent" odds of becoming a billionaire even without crypto, though he concedes that a significant portion of his success relied on the specific inefficiencies of the crypto market at that historical moment.
He rejects the notion that advice to take low-variance, low-risk careers (like joining Jane Street for effective altruism) is universally optimal, noting that personal marginal utility of money declines faster for individuals than for the world at large.
SBF identifies the willingness to perform "grunt work" (e.g., manual wire transfers, opening bank accounts) and maintain excitement for the mission as the two most critical traits for early-stage founders.
He observes that rapid company growth often leads to internal chaos, with diffusion of responsibility causing negative marginal utility for adding more employees.

SBF argues that the constraint on altruistic projects is the scarcity of capable founders, not a lack of ideas or EA-specific cultural barriers.
He advocates for the "Future Fund" to complement existing organizations like OpenPhil, specifically through a "re-granting program" that allows experts to manage smaller grants ($25k range) to increase reach and reduce bias toward familiar names.
Future Fund plans to distribute grants to cover approximately $100 million annually in the short term to scale systems, though internal debates continue on balancing immediate distribution against hoarding liquid wealth for potential existential crises.
SBF updated his beliefs regarding political giving after donating $12 million to the unsuccessful Carrick Flynn campaign in the 2022 Oregon election, though he maintains the high-level efficacy of policy work remains largely unchanged.
He warns of "diminishing marginal returns" or negative PR effects when a single donor concentrates too much capital on one political candidate.
SBF suggests EA has become "too narrow-minded" regarding specific ethical models, recommending a pivot toward "robust" impact strategies that hold up even if current ethical or physical theories (e.g., infinite ethics, simulation hypothesis) are partially incorrect.
He proposes that the most likely future billionaires will be utilitarian philanthropists, as their diminishing marginal utility of consumption makes them more inclined to donate for maximum global impact.

SBF predicts "decently likely" outcomes for stablecoins and blockchains becoming primary settlement and collateral clearing mechanisms in traditional finance (TradFi).
He outlines a proposal to the CFTC to replace Futures Commissioned Merchants (FCMs) with algorithmic, real-time risk management at the clearinghouse level to prevent contagion between intermediaries.
While advocating for automated risk management, SBF concedes a potential role for human discretion at the FCM level, provided the clearinghouse retains control over collateral and initial margin.
He rejects the "single exchange winner" thesis, citing the need for specialized risk models (e.g., for physical commodities like corn) and varying customer preferences that will sustain a multi-venue ecosystem.
SBF believes the combination of exchange and broker functions is viable if harmonized to improve customer experience, arguing that separate entities force a "least common denominator" on system functionality.
He critiques the inertia of large, legacy exchanges, noting that their rapid growth led to internal messiness, unclear mission ownership, and the inability to implement known market structure improvements he previously proposed.

SBF applies a "pitcher fatigue" metaphor to hiring, arguing that for cognitive work, concentrated full-time employment is superior to fragmented part-time roles due to the critical need for context retention.
He prioritizes a candidate's ability to think and adapt over their specific resume experience, using novel scenarios in interviews to test how they handle "messy" real-world constraints.
FTX's culture is described as highly adaptable ("morphing") to take on new tasks quickly, contrasting with Jane Street's long-term, decade-scale specialization.
SBF admits his "RAM-skewed" mind requires a team that reminds him of long-term priorities amidst daily operational fires, necessitating periodic strategic stepping back.
His experience living in the Bahamas has positively updated his views on the feasibility of charter cities, though he acknowledges the immense practical difficulty of building infrastructure from scratch.

SBF identifies the primary risk for Future Fund as becoming "lame" by defaulting to established, safe investments rather than innovating new causes.
He cautions that while crypto is stress-testing ideas for TradFi, the path to a "decentralized utopia" is uncertain, and regulatory intersections remain "TBD."
SBF suggests that the next major wave of financial innovation will involve programs written on blockchains that can "compose" with each other, increasing the importance of modularity.
He notes that the "effective altruism" community currently lacks sufficient normalization of failure, which is necessary to encourage high-risk, high-reward entrepreneurial ventures.