I also think this fits the FTX situation quite well. My current best model of what happened at an individual psychological level was many people being attracted to FTX/Alameda because of the potential resources, then many rounds of evaporative cooling as anyone who was not extremely hardcore according to the group standard was kicked out, with there being a constant sense of insecurity for everyone involved that came from the frequent purges of people who seemed to not be on board with the group standard.
While a lot of this post fits with my model of the world (the threat of exile is something I can viscerally feel change what my beliefs are), the FTX part as-written is sufficiently non-concrete to me that I can’t tell if it fits or doesn’t fit with reality.
Things I currently believe about FTX/Alameda (including from off-the-internet information):
There was a fair amount of lying to investors from the start.
From the start it was very chaotic, with terrible security practices and most employees not knowing the net balance of the company within like a factor of 4x, or whether net worth was increasing or decreasing from week to week.
Massive amounts of legal risk constantly being taken intentionally without much sense of the costs.
Most of the time making money by being crypto-long, or engaging in other deceptive practices, not by being clever.
There were lots of bits of unrelated unethical behavior from SBF.
Do you have examples of the evaporative cooling / purges and an explanation for how they fit into your model?
I know at Alameda many of the people I think of as “sensible about risk” or at least “people who are pretty unlikely to do crazy sh*t” left either early or in a massive staff-quit at one point, but I don’t have much insight into why they left, and people leave for all sorts of conflicts that aren’t about ‘fitting in’, but due disagreements about strategy or because their boss is unfair/incompetent or for reasons better explained by lots of other models.
Yeah, FTX seems like a totally ordinary financial crime. You don’t need utilitarianism or risk neutrality to steal customer money or take massive risks.
LaSota and Leverage said that they had high standards and were doing difficult things, whereas SBF said that he was doing the obvious things a little faster, a little more devoted to EV.
I think SBF rarely ever fired anyone, so “kicked out” seems wrong, but I heard that people who weren’t behaving in the way SBF liked (e.g., recklessly risk-taking) got sidelined and often left on their own because their jobs became unpleasant or they had ethical qualms, which would be consistent with evaporative cooling.
Huh, this doesn’t match with stories that I heard. Maybe there wasn’t much formal firing, but my sense is many people definitely felt like they were fired, or pushed out of the group.
Separately from the firing, the consistent thing that I have heard is that at FTX there was a small inner circle consisting of between 5-15 people. It was usually pretty clear who was in there, though there were always 2-3 people who were kind of ambiguously entering it or being pushed out, and being out of the inner circle would mean you lost most of the power over the associated organization and ecosystem.
While a lot of this post fits with my model of the world (the threat of exile is something I can viscerally feel change what my beliefs are), the FTX part as-written is sufficiently non-concrete to me that I can’t tell if it fits or doesn’t fit with reality.
Things I currently believe about FTX/Alameda (including from off-the-internet information):
There was a fair amount of lying to investors from the start.
From the start it was very chaotic, with terrible security practices and most employees not knowing the net balance of the company within like a factor of 4x, or whether net worth was increasing or decreasing from week to week.
Massive amounts of legal risk constantly being taken intentionally without much sense of the costs.
Most of the time making money by being crypto-long, or engaging in other deceptive practices, not by being clever.
There were lots of bits of unrelated unethical behavior from SBF.
Do you have examples of the evaporative cooling / purges and an explanation for how they fit into your model?
I know at Alameda many of the people I think of as “sensible about risk” or at least “people who are pretty unlikely to do crazy sh*t” left either early or in a massive staff-quit at one point, but I don’t have much insight into why they left, and people leave for all sorts of conflicts that aren’t about ‘fitting in’, but due disagreements about strategy or because their boss is unfair/incompetent or for reasons better explained by lots of other models.
Yeah, FTX seems like a totally ordinary financial crime. You don’t need utilitarianism or risk neutrality to steal customer money or take massive risks.
LaSota and Leverage said that they had high standards and were doing difficult things, whereas SBF said that he was doing the obvious things a little faster, a little more devoted to EV.
I think SBF rarely ever fired anyone, so “kicked out” seems wrong, but I heard that people who weren’t behaving in the way SBF liked (e.g., recklessly risk-taking) got sidelined and often left on their own because their jobs became unpleasant or they had ethical qualms, which would be consistent with evaporative cooling.
Huh, this doesn’t match with stories that I heard. Maybe there wasn’t much formal firing, but my sense is many people definitely felt like they were fired, or pushed out of the group.
Separately from the firing, the consistent thing that I have heard is that at FTX there was a small inner circle consisting of between 5-15 people. It was usually pretty clear who was in there, though there were always 2-3 people who were kind of ambiguously entering it or being pushed out, and being out of the inner circle would mean you lost most of the power over the associated organization and ecosystem.