Running FTX: Sam Bankman-Fried

In FTX Podcast #91, Tristan speaks with Sam Bankman-Fried! They discuss how involved Sam is with the business and how he frames business decisions

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In this edition of the FTX podcast, we sit down with one of our fearless leaders himself, Sam Bankman-Fried. Sam is one of the masterminds who keeps FTX running behind the scenes. Sit down with us for an inside look on Sam’s thought processes for building a team, what to expect in the crypto space, and some FTX globe-trotting. 

Sam Bankman-Fried Interview

Tristan Yver: 

Hello, everyone. Welcome to FTX podcast, I'm really happy to announce that we're doing part two of a three part series today with Sam Bankman-Fried. We got him back on the podcast, as many of you have wanted for a while. Welcome, Sam. 

Sam Bankman-Fried: 

Thank you. 

Tristan Yver: 

Yeah, good to have you on. I'd say you're at this point, probably a man that needs no introduction as far as having you introduce yourself to start. So, if that sounds good with you, I'll just start with the questions?

Sam Bankman-Fried: 

Go for it.

Tristan Yver: 

All right. Cool. So, we know you've been moving around a lot lately. I'd like to start with this transition from the Hong Kong office where you're based to the Bahamas now. And hear a little bit more about how this happened for you, because for a lot of people that I've been talking with, they're quite surprised that it happened so quickly. 

Sam Bankman-Fried: 

Yeah. I mean, we've been looking for a long time for sort of a real global headquarters. And that had been blocked on a few things, I think. One of them was finding a place with a comprehensive regulatory system for crypto. Another one, which is a wacky 2021 factor of the world, was a place that you could fly into and out of without spending weeks quarantining in a hotel room. And there are, in addition to this, just sort of the generic considerations. And we sort of spent a while without finding a place that we felt great about, without finding a place that we felt comfortable being long-term, or even a medium-term home. 

Sam Bankman-Fried: 

And a bunch of things changed over the last three to six months, I think. Getting licensed in the Bahamas was one piece of that. Obviously, open border search is really nice. And just, generally, are really in a great place to be conveniently located. Had a few people move here and check it out, and really liked it. Made some great local hires. And I think putting all that together, it sort of quickly became the place where people wanted to be. 

Tristan Yver: 

Before I ask you about the licensing part of this, I'd be curious to hear a little bit more about the culture that permits sort of the whole team to move from all around the world to the Bahamas. And adapt to it quickly and be happy and productive. What are some of the things you think that have contributed to that? 

Sam Bankman-Fried: 

Yeah, so I think that a lot of this is that, I don't know. I think a lot of people are sort of calling, or think that, one of the big impacts of COVID is a move globally towards work from home. And would you, I don't know, I just disagree or sorry, don't disagree that's what's happened. But I think there's a certain narrative that this is a good thing. And maybe it's the right thing for some companies. But the amount of value that we get from having people in the same place is just really massive. And I mean, it's everything from just like generic ease of communication, how easy it is to communicate.

Sam Bankman-Fried: 

To points that aren't that important individually, but that cumulatively make up a huge amount of context and aren't each worth an [individual] phone call. And being able to see facial expressions and sort of everything else put together. It's just been a pretty massive difference, I think, in how people find working here. And so, I think that when the first group of people moved to the Bahamas, I think a lot of people pretty quickly felt like they wanted to be where other people were. 

Tristan Yver: 

Yeah, that makes a ton of sense. And when I started at FTX, I think FTX had 15-16 people. Alameda had maybe 10-12 people. Now, we're getting, I think, 150, almost 200 on the tech side and 50-60 people on the US side and I'd be really curious to hear what's that meant for you from a managerial capacity? 

Tristan Yver: 

I know initially, you were a very involved manager of different specific people. Is that the case now? Have you created a structure where it's easier for you to just come in and make executive decisions, but not have to follow everything, or what's the status? 

Sam Bankman-Fried: 

I try and follow as much as I can. I think if I get too out of touch with what's going on, it's really hard to make good executive decisions if you don't know the realities on the ground. You're sort of the least informed of the people there. And you're frequently just making the wrong choice. So, I try and stay pretty in the loop about what's going on. And I think in terms of having management structures to facilitate that, it's really fucking hard. 

Sam Bankman-Fried: 

It's really hard to figure out how to navigate a growing company, and how to keep the culture and coherence that you had while still being able to scale up operations. And part of this is that we are somewhat intentionally not growing as fast as we possibly could. And instead trying to grow, but grow a place which is manageable, and where we can try and keep the structures that we have. And that does put sort of a real cap on it. But it's also something which, I don't know, we're going to have to think hard about going forward how to responsibly grow. 

Tristan Yver: 

Absolutely. And the reason I brought this up is because I personally know, you're still very involved with everything. And probably have by far the most context of the general company. But I wanted to ask you, because I'd love to hear some things that help you stay this involved and this informed, because you can share something that'd be valuable for others. 

Sam Bankman-Fried: 

Yeah, I mean, part of it, obviously, talking with people a lot, a lot of it is just digging in myself. I think one example is when it comes to the onboarding flow for FTX. It's hard for me to have a sense of what to prioritize and whether to prioritize, unless I know the details. And so, what does that mean? It means that I go and I try to go through the process myself of creating product and see what it's like. 

Sam Bankman-Fried: 

Every part of the process of the product, I want to have intimate knowledge of myself. I want to be using it. If there's a thing I don't understand, I want to try and have conversations until I do understand it. Until I do understand what's going on, what the priorities are there, and what the user experience is like. And I think a lot of this is just going through some support tickets on my own and going through the onboarding process. Looking at some KYC process pieces, seeing what breaks them most frequently, talking with developers about what the tech stack is like, etc. 

Sam Bankman-Fried: 

And I think trying to dive as much as I can into each of those, to the point where I feel comfortable, so I can make an informed decision about what's going on there. And that if there's a disagreement between two employees, "How the fuck am I going to resolve that mess?" I can actually dive in and see what's going on. Otherwise, it's just like an endless series of he said, she said. 

Tristan Yver: 

Yep, no, absolutely. And you touched on something there that made me curious, going back to early 2020, when obviously UI/UX was very different. And I remember at that time, your focus wasn't at all around UI/UX, it was around the perspective of creating the best trading experience from the back end side. And so that the traders could have really good conductivity, et cetera, et cetera. Has that shifted now that we have become a more retail-facing company? Or do you still think the performance on the back end is what really matters and then everything else is subjacent to that? 

Sam Bankman-Fried: 

So, I think they both matter. I think that there have been two changes. One of which is generally us paying more attention to the retail experience. But I think another important piece of this is as more people get involved in crypto, the fraction of activity that's happening from the people who sort of ordered the ecosystem, and have been here for a while, drops relative to new entrants. And because of that, it becomes more and more important to have a good onboarding process and a good initial user experience. 

Tristan Yver: 

That makes a lot of sense. And going back to this, as you're saying, speaking with many developers, looking at the tech stack, organizing it, how do you frame your decision-making around what should be prioritized? Just because I know there's so many initiatives constantly going out. What's helpful for you there? 

Sam Bankman-Fried: 

Yeah, it's a mess. I mean, there are so many things to do. And so many more things to do than we can do, but there are always going to be important things to get dropped and that's really sad. But part of this is thinking about what is absolutely crucial to the product? What do we have to get right? And when do we have to get it right by? About how long will it take? And making sure that we start those processes in time. 

Sam Bankman-Fried: 

I think another part is just responding to user feedback. Trying to get a sense of what people's real considerations are. And understanding, yeah, what users are saying are the most important things for us to work on. Talking with developers a lot about realistically how hard various things are, you could go and say, "All right, here's the deal. We're going to focus on X, Y and Z and ignore A, B, and C" because that's what your users are saying. But you also need to know the difficulty of various things [from the development perspective]. 

Sam Bankman-Fried: 

And I think maybe, one example of this is I would really love to have listed, I'd love to have listed a lot more layer one tokens. Our users would love that and we will do that. But at the same point, it's actually a lot of work to do that. It's a lot of work to implement and a lot of work to maintain new blockchains that aren't very similar to existing ones that we've implemented. 

Sam Bankman-Fried: 

And so, I do want to do it and we will do it. But, it's unfortunately not been as high priority as some people would like. And that sort of has to be the case because it's very expensive developer-wise to do. And we only have so much focus as a company. We try and do as much as we can, but it's sort of bouncing together. [Navigating] what users are saying [and] what employers are saying. And I think it's not obvious what the right answer is here in a lot of cases, but you do the best you can. You combine all the information you have together. 

Sam Bankman-Fried: 

So, I think, the last thing I'll say is that a lot of our very recent focus has been on things that, unfortunately, haven't seen the light of day yet. And I mean, that's too bad. They will eventually. I think they're incredibly important, but they're medium-term objectives, not short-term objectives. And we're used to focusing on shorter-term objectives. It's usually the case that things that we're looking for, we're aiming to get out very quickly. One of the things going on here, I think, is that some of these things are interfacing with external parties, as well. Especially on the regulatory side. And so, we have a lot of work that's been going into regulatory-related projects. 

Sam Bankman-Fried: 

One example of this is building out new localized sites for licenses that we're acquiring. And, hopefully, those will be unveiled over the next months. The goal there is to be licensed and regulated in as many places as we can, as much as we can. Be able to give people a great user experience, but be able to do it in a trusted, regulated realm rather than sort of ending up in a position where we're running from regulators. That’s never where we want to be. And so it's a huge amount of work, but it is incredibly important to the future of the company. 

Tristan Yver: 

And before I ask you some more regulatory questions, I think you've touched on something that ties into the FTX philosophy quite deeply. When you were speaking of this integration of layer ones and developer costs around this, what came to mind is that there's a lot of services that one can integrate with that manages these processes for you. And on the other hand, FTX is a very self-driven organization where things in-house are always best, because we can troubleshoot them and repair them within minutes instead of the whole shebang of having to deal with a counterparty. 

Tristan Yver: 

But how have you done that decision-making on the side of building everything in-house versus using existing infrastructure providers for things like this? 

Sam Bankman-Fried: 

Yeah, I mean, we often find that it's just about as much work to successfully integrate a third-party infrastructure provider as it is to actually just build something ourselves. And so, we just sort of lean in that direction. I think that's incredibly important. And we will sometimes use third party services, but we tend to be fairly picky about those and only do it when we really feel like it makes sense in the context of our product, if it’s a really separable piece of it and that, and it's not something that we could easily build ourselves. 

Tristan Yver: 

And does this come down to the fact that integration is sometimes as complex as the job itself? If these were very easy to compose would that be a different story, or does it also come down to that ethos of self-control over what we've built? 

Sam Bankman-Fried: 

It's both and I think that part of this is that we always want to be improving. It's hard to improve in some places if you're using a third-party service, because if they can't improve, then we're just sort of stuck with it. We really like third party services that are willing to grow with us. But I think, to your point, another big piece of this is that it's really, really messy using third-party services. 

Sam Bankman-Fried: 

And there's nothing worse for us than to tell a user of ours who's asking us why something isn't working for them, "We're sorry. This is a third-party service. I don't know if it's giving us an error message. It's sort of a vague error message. We don't really know what it means. I don't know. We'd like you to be able to do this, too.” We like to provide more insight than, “Yeah, I guess it's not working. We've pinged them seven times, they haven't responded yet. We'll get back to you when they get back to us." 

Sam Bankman-Fried: 

We don't want to end up there. And that's always a pretty big worry of ours when we do third-party services. 

Tristan Yver: 

And one last question on this before we move on, what have you found are good ways to manage relationships with third party services when you really rely on them being respondent and responsible? 

Sam Bankman-Fried: 

I mean, we'll often create a shared Slack channel with them or something to make it easier to communicate. But a big piece of this is also being very explicit with them about what our demands are going to be. And I think, one piece of this is to look at fiat providers, right? When we're looking at people to help us integrate fiat “on ramps” and “off ramps,” a big thing that we have to tell them is, "Look, our user base is not the same as most user bases that you work with or the services you're sort of used to dealing with.” 

Sam Bankman-Fried: 

You're used to dealing with places where credit card on ramps are most of what matter, where the average deposit is $28. And for us, we have a lot of power users. We have users looking to move $100,000 to a million dollars every day. And we really highly prioritize on ramps that are going to be robust and scalable. 

Tristan Yver: 

Okay. Another question actually just came to mind and it's that us crypto users are pretty spoiled, right? Because we can send a transaction across from one person to another, one wallet to another and in seconds, if not minutes, it lands, right? 

Sam Bankman-Fried: 

Yep. 

Tristan Yver: 

We're expectant of this. Do you think if the Web 3 community continues to grow in the cryptocurrency users, we're actually going to impulse outside companies to get their game on or else they're going to be sort of falling in the backline? Or how do you feel about that? 

Sam Bankman-Fried: 

I hope so. But to be honest, most companies don't really change, is sort of the honest answer. Most companies, they are how they are. And if they're not sort of dynamic, they sort of won't be. And that is how it is. 

Tristan Yver: 

Right. No matter how many McKinsey's or consultants come in. 

Sam Bankman-Fried: 

Yeah. 

Tristan Yver: 

And try and reorder the processes. 

Sam Bankman-Fried: 

Yeah. And that's not going to make you sleek and efficient. 

Tristan Yver: 

Right. Absolutely. All right. Onto the regulatory stuff. I know you've spoken about this a lot, but I'd love to start on Bahamas again because obviously, that's where home base is now. We're building up an amazing campus there. What does it mean to be licensed in the Bahamas? What does that change in the outlook FTX had before that, for example? 

Sam Bankman-Fried: 

Yeah, I mean, one really nice thing is just having a home globally for our operations and having a regulatory framework that we can use as our default. And there are a lot of other jurisdictions that we're getting licensed in, as well. Most of those are local licensing as in licensing for users of that jurisdiction rather than for global users. And so, it's more piecemeal. 

Sam Bankman-Fried: 

Whereas this is, something that can help us out all over the world, which is really, really nice. And then just having a country that we're excited to work with and is excited to work with us is super valuable. And it means that it's valuable from everything from hiring here, immigration, quarantine, regulation, licensing, banking, and just a lot of other things. So, it's a really nice place to be in and we are working on getting licensed in lots of other jurisdictions as well and are excited about what that will bring. But often, those are mostly specific to themselves. 

Tristan Yver: 

One thing I wanted to share that I don't know if I've mentioned it before. But I was really excited that you chose Bahamas because of the marginal impact we're going to be able to have there as a company compared to any other jurisdiction. It's really, really cool. 

Sam Bankman-Fried: 

Yeah, I mean, we started doing a bunch. There's a bunch more that we will be doing. In terms of supporting the country herein. It's everything from giving to schools to COVID relief to a bunch of other things. Obviously, hiring a lot here. But it's been really nice being here. And also really nice having a lot of partners here who are excited to work with us. 

Tristan Yver: 

And on that note of partners willing to work with us, I know we're setting up an environment in which we want companies to join us down in the Bahamas and really create an ecosystem of cryptocurrency blockchain, growth companies, I guess, probably growth companies, right? What's the message there, the invitation to people to come and join us? 

Sam Bankman-Fried: 

I think that they think it's like, "Look, this is a place that, I mean, it's a great place to be. And it's easy to operate out of, it's conveniently located. It's really nice. We've made great hires here. And it's a place that is going to be happy to have you.” And given the global regulatory churn and uncertainty and developments in crypto, having that as a home base is really, really nice.

Tristan Yver: 

Absolutely. And as an invitation, anyone listening to this that has a crypto company, feel free to reach out to us. We'll see if we can get you sorted there. So, on the legislation side, Sam, you're talking about this global license, which we have in Bahamas, which we're applying in other places. Is the Singapore license a global one as well? 

Sam Bankman-Fried: 

We'll see. And I think that it is for some products, but I think there's probably still going to be further developments there over time on how it treats different proxy. I know that as of now, most crypto derivatives are unregulated in Singapore. And so, I think that that's something which we're going to be looking to what the future of that is. Because that's obviously an important part. That's two-thirds of global volume in crypto and in most asset classes. 

Tristan Yver: 

Yep, absolutely. And what's the distinction there between say having a few of these global licenses versus having the local jurisdictional ones, like the one we're opening in Turkey and other places that were in progress? 

Sam Bankman-Fried: 

Yeah. Often the nice thing of a sort of more global coverage is that it can cover a lot of places. I think that the localized ones often give you great support in a particular jurisdiction. And often that means not just the ability to operate there, but also, it can mean, great fiat on ramps and off ramps. It can mean, the ability to have an office there to market there. And I think those are a lot of things that we find really seeing a lot of jurisdictions, but that tends to be a piece-by-piece sort of process. 

Tristan Yver: 

And from the perspective that we're a company that's internet-based who can service most of the world quite easily. And we've always done it that way and not necessarily been in other jurisdictions, do you see us moving towards a model in which we choose these select jurisdictions? And actually have physical presences in a lot of them, and perhaps be more of a physical company? 

Sam Bankman-Fried: 

I think we're going to do that, at least to some extent. I'm not sure exactly how much we'll do it, but it's going to happen at least a bit and it already has started happening. We already do have more offices than we did six months ago. But I think that number is going to continue to increase then most of us won't be sort of headquarters. Most of us will just be sort of local branches. But I do think that that number is going to probably keep going up over time. 

Tristan Yver: 

And pivoting over to the US side now, I know, we've been talking about FTX.com and then moving over to FTX US and I'd love to hear a bit of the work that you've been doing with regulators around FTX derivatives and what's in the pipeline there. 

Sam Bankman-Fried: 

Totally. And all of this is speculative. No promises here. All this is pending conversations with the CFTC. But we're really excited about the potential to really build out a crypto derivatives suite in the United States. And it's something that the ledger X folks have been working on for years with the CFTC. And is now continuing through FTX US derivatives. And I'm really, really excited about it. 

Sam Bankman-Fried: 

I think it could be a game changer. Right now, if you look at volume profile and yesterday is going to be a low volume day. It's a weekend, but I'll just pull up some stats from today anyway here. And you probably want to add 50 percent over these to get the average day. It's been $162 billion of global trading volume today. If you look at where's that come from, I'm seeing something like less than 10% that's coming from the United States. 

Sam Bankman-Fried: 

Now, on the spot volume, it said there's been $68 billion of spot volume today. And, on that side, there's actually, I think we're more than 10%. States is more than 10% of the global crypto volume. I think some days it gets close to 20. When you look on the derivative side, I mean, it's almost none of it. I think there have been zero volume today. Literally zero in the United States. And derivatives, assuming it's the only platform and it's Saturday. 

Tristan Yver: 

Closed. 

Sam Bankman-Fried: 

But that's two-thirds of global volume in crypto. And this is true in most asset classes that futures and derivatives are the bulk of volume and it just doesn't really exist in the United States right now. So that, that could be $30, $50 $60 billion a day volume, which doesn't exist right now. And to the extent it does exist, it's all happening offshore. It's mostly happening on unregulated venues. 

Sam Bankman-Fried: 

And I think it would be really exciting to see that built out to see that come on shore. To see that come under the auspice of the CFTC. And we're really excited about that. We're excited to try and play a role in that. And again, all of this depends on what happens in conversations and discussions and reports for the CFTC. But we're pretty excited about that. 

Tristan Yver: 

And are you able to speak on some of these hopeful products, if things go well? 

Sam Bankman-Fried: 

Yeah, I mean, I can say, again, we'll see what happens. But we're going to be looking at probably Bitcoin and Ethereum futures to start. I think we're going to be looking at products, some of which looked kind of similar to the CME products in terms of their specs. Things that don't look too crazy. There are a number of other things we're looking at as well. We'll see where there's turnout. 

Sam Bankman-Fried: 

But I think this is less going to be about having wacky products no one has ever seen before. And this is more going to be about finding the products that are giving global liquidity to the crypto ecosystem. And figuring out which analogs of them make sense within the US regulatory framework. 

Tristan Yver: 

Right. You've been fully focused on non-US countries for a long time now. FTX has always been non-US. US has never come across the purview at all. But now with FTX US, I know a lot of your bandwidth is thinking about the United States. How has that shift back home been for you? Is it exciting? Is it something you expected? How has the progress been there? 

Sam Bankman-Fried: 

I mean, I think it's super exciting. And I think that it's probably something that I underestimated earlier, the potential for that. For the last five years or so, the United States has been really underserved. And their crypto ecosystem had way less product in access, way less liquidity, less volume. And you look at where the IP is coming from in crypto. The majority of tokens are created by US citizens. But half the exchanges are like this: a lot of this is emanating, sort of from the seats. 

Sam Bankman-Fried: 

But you look at where the volume is going up, 95% of it is offshore and that's a pretty big gap. And I'm really excited to start to move that back towards parity, really excited to be breaking more ground in the United States. And I think more optimistic and hopeful than I used to be about the regulatory prospects or anything prior to that, I was just wrong before. I think that it has been more productive interfacing with regulators than I had expected that it would be. I'm really grateful for that and grateful for them engaging with us constructively to find ways to bring volume and liquidity on shore. 

Tristan Yver: 

And do you think that your time will continue to be divided quite equally between the two? Or how is your time divided and how would you like it to be divided? 

Sam Bankman-Fried: 

Yeah, it's a good question. I think, it changes so quickly, right? A year ago, none of it was spent really thinking about the US. Now, I think it's probably two-thirds and I think that they'll probably go, I mean, look, if you look at global volume in other asset classes, global GDP contributions to liquidity, I think, 15 to 40% is generally the fraction that the US makes up. And so yeah, a third of my time long term, I think it's a pretty decent benchmark to use, but we'll have to see. And it depends a lot on the details of regulatory stuff. 

Tristan Yver: 

I actually just remembered when I was in Hong Kong for my interview process, and we spoke and you gave these different circumstances. And you said, "What would be the best place to focus attention and move to?" And I gave a conservative answer, I think, Singapore. And you said that the outlier here was the United States and it's worth taking risks at times for outsized returns. And so, maybe even back then you already had an inkling that this is something that would develop over time. 

Sam Bankman-Fried: 

I always thought that there's a real chance of it. I think I wouldn't have put it high enough. But I think that there are times when sort of the consensus in crypto was no chance that the United States is where you should be looking. I think my sense has always been, yeah, I don't know. It's at least like a 30% chance that in the long run, pending regulatory, clarifications, licensing, changes, conversations, that things were going to look quite different than people thought. 

Sam Bankman-Fried: 

And that the United States is not currently hospitable to unlicensed crypto activity. But that doesn't mean it's not hospitable to licensed crypto activity and that's a longer term process. But it's, I think, a really important and healthy one. 

Tristan Yver: 

And I know over the last couple years, you've also been very involved or at least informed around what's happening on the Blockchain or in the Web 3 space. And I'd love to hear if your perspective has shifted or what your current perspective is on the growth of this industry, perhaps as a consumer service, or other routes that you could see it going in? 

Sam Bankman-Fried: 

Yeah, I mean, I think that there's a lot of potential and it all comes down to combination of user experience and integrations. I think payments, remittances, NFTs in video games for tickets and other things, social media. I think those are some of the obvious applications. The sky is the limit here. I think a lot of things could end up interfacing with crypto. But what it's going to require is great user experience on the crypto side and more and more portals that people are used to using. 

Sam Bankman-Fried: 

Starting to accept crypto is such and you get to a point, if you imagine trying to buy coffee at Starbucks with Bitcoin. In order for that to happen, you need to have Bitcoin that you can spend for it and Starbucks needs to accept Bitcoin. You get this quadratic term. It's the same thing you see with social networks, right? Where in order to get adoption, you have this network, right, this quadratic network. And if 10% of people know how to use crypto, only 1% of transactions can use crypto because only both sides can. 

Sam Bankman-Fried: 

And you need to cross that threshold. You need to get to 30%, before you get any appreciable adoption. What that means is you need to start getting it supported in more and more places, so that the other side can [use it]. Then, [the] more stores support it as one of their many payment methods, the more people can start paying with it. And as that ramps up, then it makes more sense for stores to build up better support for it. But you need to get over that hump. And I think that that sort of is going to be the next big push for crypto. 

Tristan Yver: 

And is that sort of the reasoning behind, for example, accepting deposits and withdrawals of wormhole bridge tokens and just making it so people have more possibilities of using these networks? Is that sort of how you've been positioning FTX or is it just a coincidental thing? 

Sam Bankman-Fried: 

I think that's a piece of it. But I think that's also a piece of our user experience overhaul, right? Our onboarding overhaul. I think is a piece of all the relationships that we're trying to form with companies that are interested in back ending into the Blockchain crypto ecosystem. 

Tristan Yver: 

Sweet. Okay. I have a few more questions for you, Sam. 

Sam Bankman-Fried: 

Yeah. 

Tristan Yver: 

One of them is on this transition. You built out Alameda. You were a trader. You traded a shit ton, as we all know. And now, you've shifted and you obviously still work a ton, but it's been a completely different field and perspective. 

Sam Bankman-Fried: 

Yeah. 

Tristan Yver: 

How do you feel, self-satisfaction wise, from the trading to what you're doing now? Is it still fun? Is it enjoyable? 

Sam Bankman-Fried: 

I really [enjoy] trading, I don't know that I'll find another role, where I enjoy this sort of object level as much as that. I also really enjoy piecing everything together in building a company, in building a product, and then building on crypto. And it's a very different type of thing, instead of diving into understanding of market dynamics, although there is a piece of that.

Sam Bankman-Fried: 

Most of it is understanding a very wide variety of things, trying to understand everything from user experience into licensing, regulation, compliance, KYC to backend technical infrastructure, to partnerships, to marketing and advertising, to hiring and managing. It's a really interesting combination of things. And I really enjoy just the sort of size of the space that you can explore there and the number of types of things that you can do. 

Tristan Yver: 

And so, a way I describe you, Sam, is a master of synthesis. And that's this whole aggregation of a trillion different pieces and making it into a bigger picture. What are some things that have allowed you to get better at that, that you think could help others in that process? 

Sam Bankman-Fried: 

I think that a lot of this is like having reasonable first instincts, updating quickly if people have feedback on it. And it doesn't mean getting everything perfectly, you're never going to do that. It doesn't even mean estimating specific things as accurately as possible. A lot of it is still understanding how accurately you need to understand something, right? 

Sam Bankman-Fried: 

Understand like, "God who gives a shit. This thing, it's just not super important. I got within a factor of three, that's all that matters," versus understanding like "No, we're going to do a deep fucking dive into this, because exactly how this works is going to be really important in the end for what our product is like.” Knowing how much to dive into each thing or at least having a guess at that, I think is really important. And being willing to do those deep dives and get your hands dirty when you need to. And then being willing to keep a bunch of things in your mind. And sort of try to synthesize them all when that's what's important. 

Tristan Yver: 

And a follow-up to that, so let's say you do a deep dive into something, and you realize it's actually unimportant, but you've dedicated a lot of time and resources. How do you learn how to just cut it there, instead of continuing down that path because you've already spent so much time? Is that something that just comes naturally? 

Sam Bankman-Fried: 

Yeah, I mean, I think a lot of it's like, "I don't want to do the fucking math." Right? 

Tristan Yver: 

Yeah. 

Sam Bankman-Fried: 

Write down how important each thing is. Write down the continued expense of doing it and see which is best? I don't know. There's sort of lots of things that matter. But I think often people just fail to do the base math and see what it says. I'm like, "Oh, that doesn't seem right to me." And sometimes there's something really nagging, that's an important intuition to grab onto. 

Sam Bankman-Fried: 

And other times I feel like I don't know, maybe there's something I'm missing. But maybe this math is just right. And I think that often, they're really high upside things that we've done, that they've just been like, "Look, here's [inaudible 00:36:37] might be really valuable." Yeah, we might be missing something here. But I kind of think we might not be. And if we're not then it's just fantastically worth it. And so, yeah, absolutely, we should fucking do it. 

Tristan Yver: 

Okay, two more questions. The second to last is the space has changed a lot, even in the last couple years. I think I asked you in the first episode, what was some advice for people that were looking to join this industry in a variety of different roles? Has that updated? Do you have a sense of what is useful now for people that want to come in? 

Sam Bankman-Fried: 

I mean, it's a lot of things. I mean, as always, developers, obviously are important. Generalists are really important. People who can take arbitrary things and do well at them. I think regulation is becoming more and more important, but that doesn't mean that you need more and more lawyers. I mean, I think there's some piece of that, but it's easy to just assume that as long as you have enough lawyers, you're compliant. That's not how it works. 

Sam Bankman-Fried: 

You can hire 3,000 lawyers to argue with each other all day about what you should do, about proposed legislation in some jurisdiction and fail to address important parts of your KYC policy. I think that being willing to understand what's important, and dive into it, even if that's not your background is quite important as well. And I think just generally the scope is increasing, the space is increasing, the number of relationships are increasing. And you have to do well at a lot of those things. 

Sam Bankman-Fried: 

You can't sort of just ignore compliance day. You also can't ignore User Experience Day or whatever. And you have to be willing to understand what matters and to do it, or to find a role where you dive deep into some aspect. But work with people who can cover the other parts. So, I think it's less about, which specific things are or are not important. And I think it's more about understanding what responsibilities you have, understanding that someone has to be responsible for a lot of different things. 

Tristan Yver: 

Absolutely. And we've seen that reflected in the FTX culture. So, thanks for hiring in that manner. Last question for you, Sam. Is there a lesson or habit or something that you've had come to you in the last few years or perhaps longer than that, that has really been helpful for you that may be helpful for other people? 

Sam Bankman-Fried: 

It's a good question. I think maybe the biggest thing I'd say is, I know I've said this a number of times, but when you're running something, you have to make sure the right things happen. And that doesn't mean you have to do things you think are good. It means you have to make sure the right things happen one way or another. 

Sam Bankman-Fried: 

Compliance, I think, is one area where you can't just try to say compliance is important and tell your employees that and then check that box. You have to dive in and understand what's happening and do whatever it takes to get yourself in a good place. And I think that story is topical right now, but there are just a number of areas where this is true. And sort of more and more I've leaned towards like, "Make sure you understand what has to happen and can do it and that it gets done. And do it if no one else is doing it." Rather than just set the press, just set sort of the spoken on instruction for your firm like, "This should happen," and then moving on. That's not enough. That is a 30% success rate or something. 

Tristan Yver: 

Great. Thanks for sharing and thanks for coming on the podcast, Sam. 

Sam Bankman-Fried: 

Thanks for having me. 

Wrapping Up with Sam Bankman-Fried

We hope you enjoyed this sneak peek inside the mind of one of FTX’s founding members. The conversation was filled with dozens of nuggets of wisdom for anyone interested in the crypto space. We’re sure Sam will drop even more knowledge on us in the final segment of his 3-part interview series with us. In addition to that, there is always more information available in our other podcast episodes and blogs. 

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