San Antonio Express-News (Sunday)
This billionaire philosopher flexible, too
Typically, a billionaire philosopher king begins by making his billions, and pursues politics and philosophy afterward.
But crypto billionaire Sam Bankman-Fried — known as SBF to the cool kids — seems to have started his career as a philosopher and then made his billions. Also atypically, his net worth — estimated at $24 billion in April by Forbes — was amassed by the time he turned 30 this year.
By most accounts, SBF came by his philosophical approach to life honestly, first via his family. His mother is a prominent legal scholar and moral philosopher at Stanford University.
Effective altruism, or EA, is a post-2000s philosophy that emphasizes the importance of doing good in the world via philanthropy through strategic giving. It also includes the idea of making lots of money so that one can give to good causes to improve lives.
Before working at a hedge fund and before founding cryptocurrency exchange FTX, from which he made the majority of his fortune, SBF worked for an EA think tank. SBF has linked his interest in entrepreneurship to building and then giving away a fortune, recently pledging to live on $100,000 a year and give away 99 percent of his wealth
One policy that EA proponents emphasize is prevention of harm. For example, an EA philosopher would say society should spend tremendous resources now to prevent the next pandemic rather than tremendous resources later reacting after it occurs. An emphasis on preventive actions around health care and inequality would lead to a reorganization of societal policies and spending. EA would also push us to think about big risks to human extinction — climate, asteroids, artificially intelligent killer robots — and to invest in preventing them. In today’s simplified left-right dynamic, EA thinking would likely lead to progressive legislation, although not always.
Most noncrypto bros probably first heard of FTX during the Super Bowl when the company ran a goofy commercial featuring Larry David as a skeptic who repeatedly and mistakenly dismisses technological and cultural advances throughout history — such as
the wheel, toilets, democracy and crypto.
SBF, EA here to stay?
Let’s talk about the staying power of SBF, his political philosophy and his status as a billionaire philosopher king. As I write this, cryptocurrency is in a bit of a free fall.
In April, his ownership of cryptocurrency exchange FTX made SBF the second-richest crypto billionaire in the world. By mid-June, after crypto started to crater, SBF’s fortune was re-estimated at $6.2 billion, down more than 70 percent from April.
The wealthiest crypto fortunes in the world today all
belong to founders of crypto exchanges, not crypto investors. In other words, wealth was built by the people who service the speculators — the ones selling the picks and axes to the 49ers, rather than the ones digging and panning for gold.
I remain deeply skeptical about the real value of cryptocurrencies. Last year, Stephen Diehl, a software engineer and crypto skeptic, was quoted in the Financial Times: “Crypto is an economic cult that taps into base human instincts of fear, greed and tribalism, combined with economic illiteracy as a means to recruit more greater fools to pile money into what looks like a weird, novel digital
variant of a pyramid scheme.” That seems exactly right. Now, the cryptocurrency market has started to look like the bust that the California
Gold Rush was for 95 percent of miners. But admittedly I have a bad track record of predicting the demise of clearly awful speculative financial ideas
SBF’s fortune, built in less than two years, now seems shaky. But SBF is not content for FTX to remain solely a cryptocurrency exchange platform.
Business moves by SBF in the past two months suggest he is looking to diversify from crypto into traditional trading. FTX bought a significant stake
in Robinhood, the mobile securities trading platform. It also bought a piece of securities exchange IEX, made famous as the underdog startup featured in Michael Lewis’ “Flash Boys: A Wall Street Revolt” about high-frequency traders.
This all suggests SBF may also have a healthy skepticism about the sustainability of crypto — or at least a prudent sense to diversify his exposure to it.
SBF made his first foray into directly supporting an EA political candidate this past spring — Carrick Flynn in Oregon’s 6th Congressional District. Flynn, who lost in the Democratic primary, was attacked as “crypto-backed” because of the
$10 million-plus in campaign support from SBF. A better way to understand that political move is probably as a first overt attempt by EA adherents as a political movement.
Even with a fortune built on something as shaky as crypto, I would not count out a billionaire philosopher king like SBF. I predict he will be with us for a long time.
Michael Taylor is a columnist for the San Antonio Express-News, author of “The Financial Rules for New College Graduates” and host of the podcast “No Hill For A Climber.” michael@michaelthesmartmoney. com | twitter.com/michael_taylor