Sam Bankman-Fried - Crypto, Altruism, and Leadership

I flew to the Bahamas to interview Sam Bankman-Fried, the CEO of FTX! He talks about FTX’s plan to infiltrate traditional finance, giving $100m this year to AI + pandemic risk, scaling slowly + hiring A-players, and much more.

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Timestamps

(00:18) - How inefficient is the world?

(01:11) - Choosing a career

(04:15) - The difficulty of being a founder

(06:21) - Is effective altruism too narrowminded?

(09:57) - Political giving

(12:55) - FTX Future Fund

(16:41) - Adverse selection in philanthropy

(18:06) - Correlation between different causes

(22:15) - Great founders do difficult things

(25:51) - Pitcher fatigue and the importance of focus

(28:30) - How SBF identifies talent

(31:09) - Why scaling too fast kills companies

(33:51) - The future of crypto

(35:46) - Risk, efficiency, and human discretion in derivatives

(41:00) - Jane Street vs FTX

(41:56) - Conflict of interest between broker and exchange

(42:59) - Bahamas and Charter Cities

(43:47) - SBF’s RAM-skewed mind

Unfortunately, audio quality abruptly drops from 17:50-19:15

Transcript

Dwarkesh Patel 0:09

Today on The Lunar Science Society Podcast, I have the pleasure of interviewing Sam Bankman-Fried, CEO of FTX. Thanks for coming on The Lunar Society.

Sam Bankman-Fried 0:17

Thanks for having me.

How inefficient is the world?

Dwarkesh Patel 0:18

Alright, first question. Does the consecutive success of FTX and Alameda suggest to you that the world has all kinds of low-hanging opportunities? Or was that a property of the inefficiencies of crypto markets at one particular point in history?

Sam Bankman-Fried 0:31

I think it's more of the former, there are just a lot of inefficiencies.

Dwarkesh Patel 0:35

So then another part of the question is: if you had to restart earning to give again, what are the odds you become a billionaire, but you can't do it in crypto?

Sam Bankman-Fried 0:42

I think they're pretty decent. A lot of it depends on what I ended up choosing and how aggressive I end up deciding to be. There were a lot of safe and secure career paths before me that definitely would not have ended there. But if I dedicated myself to starting up some businesses, there would have been a pretty decent chance of it.

Choosing a career

Dwarkesh Patel 1:11

So that leads to the next question—which is that you've cited Will MacAskill's lunch with you while you were at MIT as being very important in deciding your career. He suggested you earn-to-give by going to a quant firm like Jane Street. In retrospect, given the success you've had as a founder, was that maybe bad advice? And maybe you should’ve been advised to start a startup or nonprofit?

Sam Bankman-Fried 1:31

I don't think it was literally the best possible advice because this was in 2012. Starting a crypto exchange then would have been…. I think it was definitely helpful advice. Relative to not having gotten advice at all, I think it helps quite a bit.

Dwarkesh Patel 1:50

Right. But then there's a broader question: are people like you who could become founders advised to take lower variance, lower risk careers that in, expected value, are less valuable?

Sam Bankman-Fried 2:02

Yeah, I think that's probably true. I think people are advised too strongly to go down safe career paths. But I think it's worth noting that there's a big difference between what makes sense altruistically and personally for this. To the extent you're just thinking of personal criteria, that's going to argue heavily in favor of a safer career path because you have much more quickly declining marginal utility of money than the world does. So, this kind of path is specifically for altruistically-minded people.

The other thing is that when you think about advising people, I think people will often try and reference career advice that others got. “What were some of these outward-facing factors of success that you can see?” But often the answer has something to do with them and their family, friends, or something much more personal. When we talk with people about their careers, personal considerations and the advice of people close to them weigh very heavily on the decisions they end up making.

Dwarkesh Patel 3:17

I didn't realize that the personal considerations were as important in your case as the advice you got.

Sam Bankman-Fried 3:24

Oh, I don’t think in my case. But, it is true with many people that I talked to.

Dwarkesh Patel 3:29

Speaking of declining marginal consumption, I'm wondering if you think the implication of this is that over the long term, all the richest people in the world will be utilitarian philanthropists because they don't have diminishing returns of consumption. They’re risk-neutral.

Sam Bankman-Fried 3:40

I wouldn't say all will, but I think there probably is something in that direction. People who are looking at how they can help the world are going to end up being disproportionately represented amongst the most and maybe least successful.

The difficulty of being a founder

Dwarkesh Patel 3:54

Alright, let’s talk about Effective Altruism. So in your interview with Tyler Cowen, you were asked, “What constrains the number of altruistically minded projects?” And you answered, “Probably someone who can start something.”

Now, is this a property of the world in general? Or is this a property of EAs? And if it's about EAs, then is there something about the movement that drives away people who took could take leadership roles?

Sam Bankman-Fried 4:15

Oh, I think it's just the world in general. Even if you ignore altruistic projects and just look at profit-minded ones, we have lots of ideas for businesses that we think would probably do well, if they were run well, that we'd be excited to fund. And the missing ingredient quite frequently for them is the right person or team to take the lead on it. In general, starting something is brutal. It's brutal being a founder, and it requires a somewhat specific but extensive list of skills. Those things end up making it high in demand.

Dwarkesh Patel 4:56

What would it take to get more of those kinds of people to go into EA?

Sam Bankman-Fried 4:59

Part of it is probably just talking with them about, “Have you thought about what you can do for the world? Have you thought about how you can have an impact on the world? Have you thought about how you can maximize your impact on the world?” Many people would be excited about thinking critically and ambitiously about how they can help the world. So I think honestly, just engagement is one piece of this. And then even within people who are altruistically minded and thinking about what it would take for them to be founders, there are still things that you can do.

Some of this is about empowering people and some of this is about normalizing the fact that when you start something, it might fail—and that's okay. Most startups and especially very early-stage startups should not be trying to maximize the chances of having at least a little bit of success. But that means you have to be okay with the personal fallout of failing and that we have to build a community that is okay with that. I don't think we have that right now, I think very few communities do.

Is effective altruism too narrowminded?

Dwarkesh Patel 6:21

Now, there are many good objections to utilitarianism, as you know. You said yourself that we don't have a good account of infinite ethics—should we attribute substantial weight to the probability that utilitarianism is wrong? And how do you hedge for this moral uncertainty in your giving?

Sam Bankman-Fried 6:35

So I don't think it has a super large impact on