New Times,
New Thinking.

How Michael Lewis fell for Sam Bankman-Fried

In Going Infinite, the author fails to see the limits of his subject’s intelligence.

By Ed Smith

Michael Lewis has an uncanny instinct for a big story, and is now right in the thick of the action again. The publication of Going Infinite, Lewis’s study of Sam Bankman-Fried (SBF) and the collapse of FTX, the crypto-trading exchange that he founded, is being published to coincide with the New York trial of Bankman-Fried, who stands accused of fraud on an enormous scale.

Lewis, however, was on the story long before the SBF cult collapsed. The author was introduced to him by a mutual friend who was contemplating becoming deeply entangled with SBF’s business. At that stage, Bankman-Fried was riding high and Lewis was impressed. “Go for it!” Lewis admits saying to his friend, right at the book’s outset, before becoming a witness to events that quickly took a dramatic and catastrophic turn.

Was Lewis – the savvy author of Moneyball and The Big Short – simply duped? Or is the SBF story not only multi-layered but also far from finished? Lewis’s book is framed as an insider’s exploration of those questions. The timing is moot. Would publishing after the verdict have undermined the book? And will other authors follow the same method – potentially prejudicing the outcome of other trials?

One reading of Going Infinite, which is gaining traction, is that Lewis has been too generous about the world’s youngest billionaire, given the charges against SBF and the testimony of former colleagues. But there is a second reading, which raises a different kind of objection: that SBF is unworthy of being the hero of a Lewis book not because he’s so shady but because he isn’t interesting enough. The first question centres on the legal and regulatory intricacies of crypto-currencies. The second question demands only that a reader attends to their instincts and judgements about the character of the book’s protagonist. Let’s start there.

One by one, we are introduced to the flawed concepts that a young Sam sees straight through with his unblinking intelligence. First, aged eight, he demolishes Santa Claus. “Ninety-five percent of the people your age in the world believe in him,” SBF reflects. “This guy lives in the North Pole and has these elves… You’re like, ‘What the f***?’” Done with Father Christmas, God was next in the firing line; SBF recalled, “God came up. But I didn’t think anyone actually believed in God.”

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That left human genius to be shot down, and where better to start than Shakespeare? By college, Bankman-Fried has exposed him as a fraud – indeed a conspiracy. “I could go on about the failings of Shakespeare… but really I shouldn’t need to: the Bayesian priors [a measure of probability] are pretty damning… There are now upwards of a billion literate people in the Western sphere. What are the odds that the greatest writer was born in 1564?”

Unless, that is, people are actually getting more stupid in some ways rather than getting smarter? What are the odds of that? Hold the thought.

[see also: Why Sam Bankman-Fried’s deluded world-view matters]

As SBF “develops” among Silicon Valley’s princelings, any question that does not yield a verifiable and quantifiable answer is deemed stupid – especially literary criticism, English, the arts full stop. If it’s not maths, it’s not real.

Society and its expectations about behaviour are lumped together with literature and Santa Claus. Humanities are dumb because you can’t have a “proof”. Art itself? Blank. Religion? Duh. Listening to other people? Yawn. Sleep? Whatever dude. An ironed shirt? Lol! SBF had been told he was “different” and “interesting” for so long that he swallowed the “contrarian” Silicon Valley values that surrounded him.

With his lethally mathematical mind, SBF approached opportunities and “commitments” through a reductive probabilistic lens: what mattered was “Expected Value” – a way of predicting the value of any kind of variable. Later on, as an extremely well-paid and famous CEO, he viewed appointments as a question of whether something more valuable would come up. There’s a 60 per cent chance I’ll turn up, he’d tell himself. Lewis insists this wasn’t a matter of “thoughtlessness”. No, he was just weighing up value. SBF thought nothing of playing video games while being interviewed or making vital decisions – for him, life had long since been gamified.

Bank-Friedman emerges as a parody of life as imagined by the economist Milton Friedman at the height of the Chicago school of economics. “Just as we can suppose that an individual acts as if he attached a definite utility to every possible event if it were to occur,” Friedman wrote, “so we can suppose that he acts as if he attached a definite probability to each such event.”

His life became a perpetual quest to optimise Expected Value (EV). That’s how he and his cohort were trained to think by the firms that shaped them. EV was the only god in town. Clever people, in this analysis of human nature, are probability machines. And the rational thing to do is to seek the “optimal” position.

[see also: “The biggest Ponzi of all time”: why Ben McKenzie became a crypto critic]

SBF’s journey to that destination provides the book’s backstory. With Going Infinite, more so than with Lewis’s other books, you can see the story’s deliberate and careful structure – first the childhood blankness, then formative influences, and so on. SBF is constructed as much as revealed.

A charitable reading of Going Infinite casts SBF as the stooge and directs blame at the venture capitalists throwing money at the next new thing while failing to perform due diligence; depicting a fast-growing business urgently in need of a proper board; an executive desperately short of a good chair; and a gang of unsupervised children, basically, drunk on the legend of their own geekiness and messing around with billions of dollars of other people’s money.

Eventually, however, SBF starts to look less like something new and interesting, and more like a West Coast makeover of a generic figure: the entitled overgrown-teenager intellectual. Because beneath his “anti-style” approach SBF clearly had a certain very modern style that he learned early, and never moved beyond. Style was the beginning, but style was also the end.

This presents problems for his story. Was the young SBF’s contempt for things he didn’t understand really an augur of great insights ahead? Or was it just the garden-variety arrogance found in lots of intellectual children? The problem was that SBF never grew out of what became a conveniently unreflective mindset for his new role as the boy king of billionaire bullshit. In the same vein, Bankman-Fried and his crypto-crowd’s devotion to “effective altruism” – a utilitarian form of philanthropy that seeks to benefit the greatest possible number of people – displays a level of moral thinking that could have been acquired from a John Lennon song.

While the crypto movement saw itself as bracingly new (and crypto-currency is unavoidably complex), SBF’s weird career reaffirms why people living in the real world feel progressively alienated by modern finance. True, SBF mastered an artlessness that didn’t seem “salesy”. But despite his nervous ticks and lack of conventional charm, underpinning it all was his own brand of cynicism. Consequences, throughout his extraordinary rise, applied only to other people.

This is a tragedy of sorts, but not for SBF, who lacks tragic range. (Which he’d doubtless consider an unquantifiable and therefore meaningless idea – typical of the humanities.) The tragedy is the culture that created him – credulous greed, wilful blindness, numbers, numbers and more numbers – and the hold it exerts over systems and institutions that were designed to do better.

Which brings us to the expectations that now accompany any publication by Michael Lewis, who’s been described as a writer who could make paperclips interesting. Reading Lewis can feel like being a passenger in an expertly piloted bobsleigh. You’re moving so fast down the mountain, but you know you’re going to be delivered safe and sound – hot chocolate waiting at the bottom. There is no need to stress, only to thrill to the scenery as it hurtles past.

In previous Lewis bestsellers, part of the energy derived from the interaction of two forms of high intelligence: the narrative intelligence of the author circling and drawing out the financial, analytical or academic intelligence of the protagonist. Lewis, you feel, can not only describe what they do better than they could – he may even understand it better than them. The tension and respect between these rival types of intelligence powers the momentum of his books.

This time, less so. SBF is an intriguing subject for him. “Different but right” is shorthand for a typical Lewis hero. Moneyball’s baseball manager Billy Beane was different and, significantly, proved correct: data did offer sports strategists an edge in the 2000s. Daniel Kahneman and Amos Tversky, in The Undoing Project, took on the conventions of their subject and shaped the direction of behavioural economics.

But SBF? Is he really a leftfield case study in exhilarating contrarian thinking, or the apotheosis of a culture that values out-of-context maths, “big ideas” (ie futuristic slogans) and childish arrogance – and not much else? Here he is as the manager of people: “He would not show up for meetings, not shower for weeks, have a mess all around him with old food everywhere, and fall asleep at his desk,” according to one colleague.

At the heart of SBF’s world-view lies a narrow type of intelligence taken to its extreme – so narrow that you begin to wonder if he’s intelligent at all. Despite being captivated by his own brilliance, SBF seems to have completely missed a concept which is central to most corners of life, including financial enterprise: uncertainty. SBF is so busy assigning probabilities to everything that he never asks whether the situation yields to probabilistic reasoning in the first place. He doesn’t know what he doesn’t know – which is a lot. Lewis admits this in one sentence in the middle of the book – “life’s uncertainties often made a mockery of a probabilistic approach” – but scarcely dwells long enough on the point to draw breath. The fatal flaw is at once conceded and glossed over.

Eighty pages later, we observe how thinking only in probabilities – never allowing for uncertainty – intersected with SBF’s contempt for grown-ups. “We tried having some grown-ups,” he confesses to Lewis, “but they didn’t do anything… All they did was worry.” Lewis then summarises SBF’s thought process about the “inefficiency” of even pondering unquantifiable risks: “The odds of the bad thing happening were low, and any time spent thinking about it was wasted.” In that light, SBF’s impending blow-up starts to look close to inevitable.

For this reader, 20 years ago now, it was a blurb recommendation by Tom Wolfe – saying that no one could make baseball interesting to him except Michael Lewis – that led me to the bookshop till with my first Lewis book. He has delivered time after time since then, as the acknowledged master of the muscular non-fiction thriller.

Reading about SBF, I found myself remembering a Wolfe essay (published in 2000) called “Hooking Up”. Wolfe satirised the dressed-down casualness of the new generation of Silicon Valley billionaires – “ordinary cotton shirt… unbuttoned to the navel” – who were too cool to put on a jacket, too hip to carry a briefcase. “The most widespread age-related disease was not senility but juvenility,” Wolfe concluded. Rereading it today, Wolfe’s depiction – while prescient about the direction of travel – gains a bizarre nostalgic glow. Back in 1999, a start-up billionaire might at least have been educated enough to shower occasionally without asking where the “Expected Value” lies in keeping clean. An ordinary cotton shirt unbuttoned to the navel would have been beyond SBF at the top of his sartorial game. Because “progress” has turned the trading floor into a dorm room, the boardroom into a gaming console, and replaced restaurants with mouldering takeaways and discarded chopsticks.

You may be tempted to follow the trial of Sam Bankman-Fried and find out more. On one level, we already know enough: if he is the evolution of the Master of the Universe, we should be very, very afraid.

Ed Smith is director of the Institute of Sports Humanities

Going Infinite: The Rise and Fall of a New Tycoon
Michael Lewis
Allen Lane, 272pp, £25

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[See also: Sam Bankman-Fried and the effective altruism delusion]

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This article appears in the 11 Oct 2023 issue of the New Statesman, War Without Limits