Original Author: Vicky Ge Huang & Kari McMahon
Original translator: Tanker
Can you imagine FTX founder Sam Bankman-Fried (SBF) sleeping only 4 hours a day while multitasking with 6 screens? Next, we'll demystify the 29-year-old cryptocurrency billionaire for you, and take you inside his company to see what thorny issues it's currently facing.
The collage above is filled with elements such as MIT, Hong Kong, Berkeley, CA, and Nassau, Bahamas, on a teal background with the logos of FTX, Bitcoin, and Solana, and SBF sits in the middle of the image Right in the middle - these elements are actually closely related to his personal background.
About three years ago, in 2018, SBF was just a young Wall Street trader. Who would have thought that he would become an encryption company founder in the future? According to his recollection, when he went to Asia to attend a conference, he found that there was a bitcoin price difference between Asian trading platforms and Western trading platforms. This difference is called "kimchi premium". SBF's sense of smell is extremely sensitive. During the few days of his business trip, he rented a WeWork office and asked the rest of his team in Alameda to take the next plane (Alameda is an encrypted transaction founded by SBF) start-up company, which was just getting off the ground at the time).
Some people may think that such a toss will make the company's employees dissatisfied, but SBF has actually done it. This is his personal charm.
When referring to SBF’s seemingly reckless decision for the first time, Andrew Croghan, the former chief operating officer of Alameda, said that SBF told them at the time: “We need to send people over now. I think if we stay in California Working in Berkeley instead of Hong Kong is losing $50,000 a day.”
According to Andrew Croghan’s recollection, as soon as their plane landed, the newly moved employees immediately went to work, setting up their computers, going to shopping malls and street stalls near the WeWork office to collect monitors and data cables, and they were very busy. Almost.
Andrew Croghan said: "Maybe some people worry about moving to a new location in such a hurry and missing a lot of things at once? SBF didn't. Instead, we made subtractions to improve efficiency. It turned out to be very effective .”
Moving an office to Hong Kong isn’t just for work, it’s all thanks to the crypto arbitrage game where SBF and Alameda earn 10% daily on million-dollar deals. According to Forbes statistics, as of December 13, SBF has transformed from an unknown trader four years ago to the leader of an encryption empire with a personal wealth of US$26.5 billion. The decision to relocate to Hong Kong was undoubtedly a key milestone in his success.
In 2019, SBF founded the cryptocurrency trading platform FTX, and the market value of the trading platform has exceeded the market value of many listed companies in the S&P 500 index. It is worth mentioning that FTX has also won the trust and financial support of global top investors (of course, these investors are also very smart), including Tiger Global Investment Fund (Tiger Global), Sequoia Capital (Sequoia Capital) Investment giants such as BlackRock have participated in FTX's recent funding rounds. Not only that, but SBF has partnered with some of the biggest names in sports, business and entertainment, from NBA star Steph Curry to famed NFL quarterback Tom Brady. Today, SBF has become a hot topic in the encryption community, often appearing in financial media such as Bloomberg and CNBC to analyze market dynamics. In addition, he has another identity-a philanthropist. Since the beginning of 2021, FTX has donated more than US$16 million to charitable causes.
Of course, SBF is doing all this while the cryptocurrency industry is facing some of the most intense regulatory scrutiny in history. Just after mainland Chinese regulators cracked down on all forms of cryptocurrency mining and trading, SBF made the decision to divest (his second change in two years) and relocate FTX to the Bahamas, which has A landmark cryptocurrency support bill was passed in late 2020. By doing this, FTX avoided a lot of headaches, while its competitors (some other cryptocurrency trading platforms) either received huge fines or faced regulatory investigations.
However, SBF's struggle has not always been smooth sailing. Compared with other competitors, FTX's biggest "weakness" is: SBF's company employees are a group of developers. This organizational member structure is inseparable from the "high efficiency" that SBF believes in, but as FTX begins The relocation, while also running two fast-growing companies, has put pressure on SBF, with some of his staff saying they are overwhelmed and will resign.
Of course, all this is not surprising to SBF's Silicon Valley supporters, because they think that SBF is a once-in-a-century talent, and everything he does is correct. For example, Edith Yeung, a venture capitalist at Race Capital and one of the investors in the FTX seed round, once said: "For me, SBF is like Mark Zuckerberg in the cryptocurrency field." According to Forbes, SBF is the only other person besides Mark Zuckerberg to get rich quickly in a very short time.
On the other hand, several of SBF's closest friends, colleagues, and investors know the genius founder well. They share what makes him successful, what it's like to work with a leader who is ambitious and passionate, and how SBF "skimmed" regulatory scrutiny and attracted investors.
These colleagues emphasized that the SBF acted like a tightrope walker:Satisfy investors without draining employees while meeting regulatory requirements, while taking every step of the way as the company expands.
People who know SBF say that one of the key reasons why he can achieve his goals is that SBF has an unusually good multitasking ability.
"You'll often see SBF watching football on one screen, YouTube videos like Rihanna on another, responding to messages on a third, responding to messages on a third," says Caroline Ellison, co-CEO of Alameda Research. Dealing on four screens, making calls on the fifth screen, these things are happening almost simultaneously.”
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SBF's growth background
SBF's parents are both Stanford law professors and have a younger brother. It can be said that the experience of playing games since childhood has honed his multi-threading skills. He and his younger brother Gabe Bankman-Fried both liked to play board games such as Magic: The Gathering, Bridge, and Chess when they were young, but they only played one game at a time. It was no longer challenging for SBF at the time.
Gabe Bankman-Fried recalled: "We grew up playing board games, and my brother would use a timer to play two games at the same time."
SBF admits that this is a way to avoid boredom, as playing only one game at a time can be very boring for him: "If I don't think I need to devote myself to thinking, for example, there is no time pressure, or the opponent delays time. , I started to get bored,” adding that he would start playing with his phone, computer, or other things because the other person moved slowly.
As a student at the Massachusetts Institute of Technology, SBF also joined a fraternity organization called "Epsilon Theta" at the school. The organization had about 20 people and often held various parties in the university, such as drinking, Solve puzzles, play board games, and more. During the school, in addition to focusing on learning, SBF also participated in various student groups. He recalls meeting fellow alumnus and future Alameda Research co-CEO Sam Trabucco during a five-week math summer camp at Mount Holyoke College in 2010.
SBF joked that he was definitely a "crap" in college when it came to finishing his studies, saying: "I usually only work about an hour and a half a day, so it's hard to meet deadlines, and I'm sort of a disobedient student. "
But in June 2014, SBF joined Jane Street, the most legendary Wall Street quantitative trading firm, at this time his innate strong time management skills became one of his strengths. According to Ellison, who works in the firm's stock trading department, SBF particularly enjoyed intellectual challenges and quickly learned the knack for making quick decisions under high pressure.
While working in Jane Street's international ETF division, SBF learned how to arbitrage the difference in ETF prices on different exchanges around the world, but it wasn't until he started working in the ever-changing crypto market that his trading talent really started to shine come out.
In October 2017, SBF founded Alameda Research in Berkeley, California, where he began his turning point in Bitcoin arbitrage trading.
Both Ellison and Trabucco said SBF's uncanny ability to spot opportunities one step ahead of most traders and act faster than most traders soon earned him the nickname "Crypto Whale" because of the firm's presence in the crypto market. Made many amazing moves.
With their rapid expansion, Alameda Research could no longer operate quietly, and they quickly caught the attention of Ryan Salame, who was working on the over-the-counter desk of Hong Kong-based cryptocurrency company Circle. According to Ryan Salame, he found that this company called Alameda Research "popped out of nowhere" and often offered "extremely competitive" pricing in the market, which prompted the transaction between them .
It didn't take long for Ryan Salame to decide he wanted to work for SBF, a decision they had met at a conference in Singapore before making the decision. Soon after, Ryan Salame officially joined Alameda as Head of OTC Operations, he received: "I have never talked to or interacted with someone like SBF before, he is not only smart, but also very emotional, and he also communicates in a very real way. Connecting with people and talking to people about things that are of interest to each other, I was very impressed with him."
After earning trading profits through Alameda, SBF had enough money to donate to charity — which was the main reason he turned to the cryptocurrency space in the first place. SBF has bigger ambitions, though.
In a later interview, SBF revealed that he hopes to create a trading platform to replace the "bad trading platforms" he traded in 2017 and 2018.
You know, this is a very difficult task. Operating a cryptocurrency exchange has never been easy, especially in the United States, where banks are wary of the illegal use of cryptocurrencies, often refusing to do business with exchanges. Once established as a legitimate business, large companies like Coinbase and Gemini must comply with various laws and regulations, which can be a burden for exchange operators. As a result, U.S.-based cryptocurrency exchanges often offer limited products and services.
In contrast, trading platforms that are not based in the U.S. have few restrictions, and they can offer traders regionally-specific derivative products, such as leveraged tokens and tokenized stocks. On top of that, traders can trade with 100x leverage on margin — meaning anyone with $1,000 can instantly trade $100,000. This flexibility has also fueled the meteoric growth of offshore exchanges.
In July 2017, Changpeng Zhao launched the initial pass offering product, raising $15 million for Binance - opened the cryptocurrency trading platform based on Ethereum's BNB ERC-20 token as support, and established within 180 days Binance, valued at $1 billion. SBF did not launch FTX until 2019, but in just two years, his derivatives exchange has grown from obscurity to the current spot trading ranking sixth and derivatives trading ranking second—behind Binance. (In July, both FTX and Binance lowered their leverage caps to 20x from 100x and 125x, respectively, though some offshore trading platforms such as Bybit still offer traders up to 100x leverage.)
So far, professional traders are flocking to FTX because of its cost-effective advantages, such as low transaction fees, support for lending products, trading tokenized stocks and futures, and multiple sub-accounts with different risk levels Trading.
To create a competitive platform in such a short amount of time, SBF worked like hell and is best known for sleeping four hours a night on a beanbag at his desk while still answering calls at 3 a.m. Customer and investor calls.
One of the things that worries me most about FTX is slow progress and confusion - SBF
Ryan Salame recalls an incident at the time: SBF had been working 30 hours straight, and just as he was going to bed, a client called. Seeing SBF lying down, Ryan Salame couldn't bear to wake him up, so he rescheduled the time with the client - this made SBF so annoyed that he said flatly: "You have to wake me up next time, this kind of thing There is no doubt about it."
Ryan Salame said another major reason he worked for SBF was to be overwhelmed by his charisma - so much so that he gave up his position as head of OTC at Alameda Research in Hong Kong to follow his boss to the Bahamas to become chief executive of FTX Digital Markets executive officer.
Says Ryan Salame: "This company is everything to SBF."
Since moving its headquarters to the Bahamas, FTX has paid off handsomely. Not only is the Bahamas attractive to cryptocurrency traders with its beautiful beaches and high-speed internet, but since the island is only an hour’s flight away from crypto hubs like Miami, the FTX team doesn’t need to Plagued by the 12-hour jet lag and strict quarantine requirements.
However, SBF is not lounging on the beach enjoying the sun, and since relocating to the Bahamas, his work and schedule have become more packed. As a result, problems started to arise as not all employees could keep up with SBF, and three former employees of the company, as well as an insider who spoke on the condition of anonymity, said they felt burnt out and had to resign in the end. They were exhausted by the time they got to the Bahamas.
Noah Dummett, former trader at FTX and Alameda Research, said: "While working with SBF was very inspiring, it was also exhausting. The company expects everyone to work towards a common goal, so everyone needs to plan well own time and direction, and always work towards this goal. So if you choose to work in Alameda and FTX, it means that you have almost no time for yourself, and it is normal to have burnout.”
An anonymous software engineer who worked at both FTX and Alameda complained: "It's the same thing every day: walk into the office, read, eat breakfast, write code, order food while working, work while working. Eat, go home, seven days a week.”
FTX has a very small number of employees compared to its competitors. According to SBF itself, in the first six months, FTX had only two software developers on staff. Two and a half years later, its trading platform and all its subsidiaries have a total of 10 to 25 staff members. By comparison, Binance currently has around 180 unfilled engineering positions, and Coinbase has around 120 unfilled engineering positions.
"One of the things that worries me the most about FTX is slow progress and confusion. This has happened to a lot of companies, but I hope we don't," SBF said.
At this stage, SBF is facing a dilemma:
First, fear of inefficiency if too many employees are employed;
Second, if too few employees are hired, it will lead to high turnover rate.
However, the low number of FTX developers really surprised some experienced trading platform executives such as Jerald David. Jerald David has worked at the New York Mercantile Exchange, Dubai Mercantile Exchange, and Chicago Mercantile Exchange, and is currently the president of Arca Capital Management, an encrypted asset management company. “I was part of the founding team of a cryptocurrency exchange where the business model was really simple — the more developers there were, the faster it would scale,” he said.
Jerald David believes that FTX has only two developers in the first six months. It is "quite surprising." Normally, a team of less than 30 developers operates a trading platform with such a large transaction volume. normal". He compared the size of the FTX development team to CME, which has more than 500 developers. CME recently acquired crypto derivatives exchange ErisX, while FTX’s U.S. branch acquired crypto derivatives exchange LedgerX in August, and the two trading platforms suddenly became competitors.
SBF believes that having a smaller team allows him to make quick decisions and drive new releases. "There's a price to pay, but I think it's well worth the price," he said. "The most important thing we can do as a company when the situation is looming is to be efficient and consistent." To ensure this, SBF sometimes He even provides technical support for the team himself.
Rayn Salame admits: "To this day, SBF joins our team and provides technical support."
SBF says that the company's employee turnover rate is actually quite low—perhaps 5% or less a year—but he acknowledges that burnout is one of the biggest problems with employee turnover, and that his employees sometimes There is not much demand for vacation. SBF responded: "I think it's important for people to know where their limits are and to do what they can to reach their goals, but not to push themselves beyond their means and burn out. I think that's what we have to constantly Hard things, and going the right way.”
Still, SBF sees the limit of fatigue higher than most, saying: "When I feel burnt out, it usually means I need a night's rest or 10 hours of sleep to recover. And when I don't go for four days When I was working, I would start to feel restless, wondering how things were going and eager to get back.”
I think many of us know that what we do is not sustainable - Andrew Croghan
Ellison, co-CEO of Alameda Research, said that the reason why SBF can work harder than most people is because he has a real drive to donate his cryptocurrency wealth to make a positive impact on the world. Ellison explained: "I think if you really believe in something, it can last. You can do a lot more than a lot of people, and I think that's what SBF wants to do."
But as FTX grows into a crypto empire, even those most loyal employees may not be able to handle the enormous pressure. Andrew Croghan said: "I think less than 50% of the 10 veterans I've fought with will end up sticking around because a lot of us know what we're doing is not sustainable .”
To be honest, compared with veteran employees and company founders, new employees are unable to share the fate of the company, especially when they have to work under high pressure for a long time and adapt to the direct communication method of SBF.
SBF readily admits that giving feedback directly to employees is his biggest weakness, explaining: “I sometimes give hard, practical feedback, which can sound negative or even unacceptable. And I think it can be momentarily overwhelming and demoralizing for people who don’t know themselves, and sometimes even for people who do.”
Shark Tank investor Kevin O'Leary, also known for his outspoken style, says it's not uncommon to find energetic young founders with big ideas, but it's hard to find those with the skills to make them happen. is another matter. Kevin O'Leary said: "Vision is actually easy to overestimate. What we need most is execution. Both of these things are essential."
Kevin O'Leary believes that he saw both "vision" and "execution" in SBF.
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Above: SBF sits at a long white table for dinner with Anthony Scaramucci and Shark Tank investor Kevin O'Leary. From left: Steve Cohen, Anthony Scaramucci, SBF and Kevin O'Leary.
Venture capitalists like Kevin O'Leary have always regarded regulation as the biggest potential risk of investing in the encryption field. Over the past year, the U.S. Securities and Exchange Commission has blocked Coinbase from launching a lending product, while financial regulators in the U.S., European Union and Asia have stepped up their crackdown on Binance.
It is reported that Lightspeed venture capitalist Amy Wu participated in FTX's latest round of financing. She said that as far as she knows, FTX is the only exchange that has no negative regulatory news. Amy Wu analyzed that after evaluating the types of licenses held by FTX in various markets, as well as the communication and regulatory methods with regulatory agencies, her team found that FTX should be regarded as the most compliant and most compliant with the requirements of regulatory agencies in the world One of the best cryptocurrency exchanges. "
It is worth mentioning that SBF has not slowed down the pace of rapid expansion of FTX at all. According to two anonymous sources, after closing the latest funding round, the company has reached a valuation of 25 billion U.S. dollars, and he began to raise the next round of financing of 1.5 billion U.S. dollars in 6 months (FTX one A spokesman declined to comment on the report).
FTX’s valuation in the latest round of financing will be US$32 billion, while its US subsidiary’s valuation will be US$8 billion, which is inseparable from the fact that SBF and the entire encryption industry are standing in the limelight.
According to a survey by the Pew Research Center, 16% of Americans have been exposed to cryptocurrencies, and we see-
1. The total market value of global cryptocurrencies has soared from 800 billion US dollars at the beginning of the year to 2.3 trillion US dollars now;
2. Traditional Wall Street companies have also begun to test the encryption industry, increasing the weight of emerging markets;
3. Retail investors are promoting meme coins like Dogecoin and Shiba Inucoin;
4. Celebrities and star athletes help crypto companies expand through advertising.
At the same time, we cannot ignore the fact that scams, fraud, extortion, hacking, and cryptocurrency-related money laundering are also on the rise, and these issues have also kept regulators on their guard for a long time. But some in the industry say the expansion of SBF’s company and the crypto ecosystem it operates has outpaced regulators.
Anthony Lee Zhang, assistant professor of finance at the University of Chicago Booth School of Business, explained: “Part of the reason Web 3.0 has been able to develop so fast is that regulation has not kept up. deal with regulators."
Although FTX has been in regular contact with regulators during this time, it has to be said that regulatory scrutiny continues to heat up.
Earlier this month, SBF attended a U.S. congressional hearing on digital assets and the future of finance. While most of the policymakers at the hearing said they were willing to develop sound regulations for the crypto industry, some felt Rapid growth poses a threat to financial stability and has voiced concerns, such as the use of digital currencies to fund criminal activity.
SBF retorted at the hearing: “The crypto industry has the potential to improve people’s lives.”
Looking ahead to the future of FTX, several industry insiders compared SBF to the Facebook founder — who also faces thorny questions about regulation.
Mark Zuckerberg founded Facebook when he was 19, and the social media giant is now worth more than $900 billion. The startup took place during the Web 2.0 era, where the market for user-generated content, as well as social networking, was booming. Facebook has arguably changed the world in that time, though the company has drawn increasing regulatory attention in recent years over data privacy concerns and a failure to tighten controls on disinformation posted on the platform.
Now, an era of encryption, decentralization, and virtualization seems to be emerging, which we call Web 3.0, and companies like FTX are on the cusp of this era. It is worth mentioning that Mark Zuckerberg also recently took the express train of "Metaverse", renaming Facebook to Meta, and promising to spend billions of dollars and hire thousands of employees to create a more Digital ecosystem.
But even so, Facebook may still trigger more regulatory scrutiny, which in turn hinders the implementation of Mark Zuckerberg's vision for the metaverse. Likewise, the crypto space will face the same double-edged sword: increased regulation and widespread use means slower growth for companies operating in the crypto ecosystem.
Therefore, both regulators and the crypto space need to give each other some time to learn to cooperate. Everything they're doing right now is crazy, and it's going to affect the pace of progress. The ultimate synergy is what is necessary to make crypto mainstream and ultimately make the world a better and more economically efficient place.
As for SBF, he doesn't like people comparing him to Mark Zuckerberg, he doesn't think the two are similar. Those who know SBF know that his entrepreneurial motivations are more altruistic, as his younger brother Gabe Bankman-Fried said: "It's really a moral obligation to make a difference as much as possible, and I think it's something we grew up taking very seriously. The brothers are supporters of effective altruism, a philosophy that emphasizes using one's own resources to achieve the greatest good for others.
Zuckerberg, who has been at loggerheads with regulators as the company expands its reach, is trying to set a new precedent. According to multiple insiders, SBF has become involved in the political field, becoming one of the biggest supporters of President Biden in the 2020 campaign, and he also seems to be able to deal with Congressional attention in the field of encryption by working with regulators.
Noah Dummett, a former trader at FTX and Alameda Research, said: "I predict that in 10 years time SBF will be one of the richest men in the world and solve some of the most critical problems for mankind, and his participation in the political field is very important to me. It's not really that surprising to say the least - he's in a really good position and has the right motivations behind him to make it happen."
Whatever the future holds for SBF, the drive, vision and efficiency he has shown in building a crypto empire has been phenomenal, and at the same time, the comparisons to Mark Zuckerberg won't stop. As you can see, Mark Zuckerberg is as driven as ever and is still aggressively acquiring new active users to this day. And many people think the same is true for SBF, after all, he is only 29 years old and has been maintaining a high-intensity work so far.
Finally, let us end with a sentence from our colleagues at SBF——
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