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naraburns  nihil supernum  1yr ago (text post)   35035 thread views

Culture War Roundup for the week of November 28, 2022

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VCs and other investors trusted him too. Nobody demanded a board seat? Nobody wanted independently audited financial statements? Everyone was smitten.

That is the part I don't understand. Whatever about the EA community, where it seems his brother was part of it and brought him in that way (and hence people did trust him as "he's Gabe's brother"), these were allegedly hard-headed business people and he bowled them over with charm, though what charm he has I have no idea. He must be one hell of a persuader. Again, I have to quote the Sequoia article, because these were the people who after one flippin' Zoom call just threw money at him, and the writer of this article seemed to have contracted a massive man-crush as well:

As Covid-19 descended, Michelle Bailhe, a young gun at Sequoia Capital, and veteran partner Alfred Lin were starting to closely examine the crypto space. Lin, a no-nonsense workaholic if there ever was one, had little patience for the kind of utopianism that motivated the first wave of cryptopians. Lin’s intellect was tempered in graduate school at Stanford, where he studied statistics and price options, swaps, and derivatives. And when he thought about crypto, the question he asked himself was: What is it good for?

…Bailhe spent months researching the space full time, focusing her energies on the exchanges. She met with every founder and every company that would have her. And she built a map—a landscape, as such a document is called at Sequoia—of the entire market.

…FTX did need money, after all. And it needed that money from credible sources so it could continue to distinguish itself from the bottom-feeders who came to crypto to fleece the suckers. So, in the summer of 2021, when FTX started to raise its Series B from a who’s who of Silicon Valley VCs, Bailhe and Lin hit the “Don’t Panic” button. “Embarrassingly, we had never tried to reach out to Sam, because we figured he didn’t need us,” Bailhe admits. “I thought they were just minting money and had absolutely no need for investors.” Learning otherwise, they quickly contacted SBF and organized a last-minute Zoom call between him and the partners at Sequoia—at four California time on a hot July Friday afternoon. Bailhe was adamant, putting her reputation with the other partners on the line: “I’m like, ‘No, it’s worth it. Cancel your afternoon.’”

The Zoom went well for all concerned. SBF looked relaxed as he answered questions, talking, as he usually does, in complete paragraphs about topics of extreme complexity. Ramnik Arora, FTX’s head of product and another ex-Facebook engineer, remembers the meeting clearly: “We’re getting all these questions from Sequoia toward the end. He’s absolutely fantastic.” Arora locks eyes with me, and I am mesmerized. Arora is intense—calling to mind a Bollywood version of Adrian Brody. “Unbelievably fantastic,” he says, shaking his head.

Bailhe remembers it the same way: “We had a great meeting with Sam, but the last question, which I remember Alfred asking, was, ‘So, everything you’re building is great, but what is your long-term vision for FTX?’”

That’s when SBF told Sequoia about the so-called super-app: “I want FTX to be a place where you can do anything you want with your next dollar. You can buy bitcoin. You can send money in whatever currency to any friend anywhere in the world. You can buy a banana. You can do anything you want with your money from inside FTX.”

Suddenly, the chat window on Sequoia’s side of the Zoom lights up with partners freaking out.

“I LOVE THIS FOUNDER,” typed one partner.

“I am a 10 out of 10,” pinged another.

“YES!!!” exclaimed a third.

…“We were incredibly impressed,” Bailhe says. “It was one of those your-hair-is-blown-back type of meetings.”

…The B round raised a billion dollars. Soon afterward came the “meme round”: $420.69 million from 69 investors.

After my interview with SBF, I was convinced: I was talking to a future trillionaire. Whatever mojo he worked on the partners at Sequoia—who fell for him after one Zoom—had worked on me, too. For me, it was simply a gut feeling. I’ve been talking to founders and doing deep dives into technology companies for decades. It’s been my entire professional life as a writer. And because of that experience, there must be a pattern-matching algorithm churning away somewhere in my subconscious. I don’t know how I know, I just do. SBF is a winner.

But that wasn’t even the main thing. There was something else I felt: something in my heart, not just my gut. After sitting ten feet from him for most of the week, studying him in the human musk of the startup grind and chatting in between beanbag naps, I couldn’t shake the feeling that this guy is actually as selfless as he claims to be.

So I find myself convinced that, if SBF can keep his wits about him in the years ahead, he’s going to slay—that, just as Alameda was a stepping stone to FTX, FTX will be to the super-app. Banking will be disrupted and transformed by crypto, just as media was transformed and disrupted by the web. Something of the sort must happen eventually, as the current system, with its layers upon layers of intermediaries, is antiquated and prone to crashing—the global financial crisis of 2008 was just the latest in a long line of failures that occurred because banks didn’t actually know what was on their balance sheets. Crypto is money that can audit itself, no accountant or bookkeeper needed, and thus a financial system with the blockchain built in can, in theory, cut out most of the financial middlemen, to the advantage of all. Of course, that’s the pitch of every crypto company out there. The FTX competitive advantage? Ethical behavior. SBF is a Peter Singer–inspired utilitarian in a sea of Robert Nozick–inspired libertarians. He’s an ethical maximalist in an industry that’s overwhelmingly populated with ethical minimalists. I’m a Nozick man myself, but I know who I’d rather trust my money with: SBF, hands-down. And if he does end up saving the world as a side effect of being my banker, all the better.

Forget crypto, if someone can just figure out what Bankman-Fried has to reduce people like this to squeeing fanboys and then bottle it, that's a sure-fire fortune!

Also, I have to wonder what Michelle Bailhe is doing now; she's the one 'staked her reputation' and persuaded them to give Bankman-Fried a hearing, ouch!

Forget crypto, if someone can just figure out what Bankman-Fried has to reduce people like this to squeeing fanboys and then bottle it, that's a sure-fire fortune!

These insane asset bubbles are torture for professional asset managers obligated to deploy capital in related spaces. Sure, they can try to sit it out, but the crypto clown-car has been rolling for years now, with idiot 23-year-olds popping out as billionaires left and right. Andreessen launched a crypto fund and returned something like 5x in just a couple of years. Where's your return, investors and colleagues ask? What's your crypto strategy? How many years can you spend shifting uncomfortably in your seat and muttering "well, but, in the fullness of time..." before you make a move?

Yeah, but if your 20-something whiz kid replies, in answer to "so what can your shiny new bauble do?" that "you can buy bananas with it", then you should be smiling and closing down the Zoom window and muttering under your breath "waste of a frickin' afternoon", not going ALL CAPS I LOVE THIS GUY.

I suppose this is why I'll never be a millionaire!

Jane Street, the esteemed quant trading firm SBF and Ellison came from, have had their reputation tarnished a bit as a result. But on the other hand...

Forget crypto, if someone can just figure out what Bankman-Fried has to reduce people like this to squeeing fanboys and then bottle it, that's a sure-fire fortune!

SBF and Ellison apparently were not successful in convincing them to help build their rocket ship to the moon, so maybe they're much smarter than we thought.

Also, I have to wonder what Michelle Bailhe is doing now;

Still at Sequoia as a Partner in their Growth section. Privated Twitter around when things started falling apart. @Sequoia has been rather quiet for the last couple of weeks. They did post an update regarding their exposure to the whole mess.

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