29-year-old crypto billionaire Sam Bankman-Fried can manage with 4 hours of sleep and works with 5 computer screens at the same time – this is what the life of the ‘Mark Zuckerberg of crypto’ looks like

About three years ago, a young Wall Street stock trader who had dabbled in the crypto market traveled to a conference in Asia. Sam Bankman-Fried was intrigued by the huge price differences between cryptocurrencies on exchanges in Asia and Western countries, where the same coin could have a much higher or lower price on one exchange than on another exchange.

This exchange rate difference was known in the crypto world for years as the ‘kimchi premium’. It marked the big difference with classic financial markets, where specialized traders continue to make rapid use of small price differences when listing a share or other investment on different exchanges. This is called arbitrage trading.

After working for several days from a hot desk at WeWork in Hong Kong, Bankman-Fried made an urgent appeal to the team at the crypto startup he had set up in the US. “He said, ‘We need people here immediately,’” former Alameda co-director Adrew Croghan recalled Bankman-Fried’s call. “He indicated that we were probably missing $50,000 a day in revenue because we didn’t work from Hong Kong.”

No sooner said than done. A group of Alameda employees flew to Hong Kong, installed the necessary computers and started working in the WeWork flex office. “Someone else might have wondered: how are we going to set up this operation? Sam not. An extremely efficient organization was set up. And it worked,” Croghan told Insider.

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Working out of Hong Kong, Bankman-Fried’s business was able to make profits of 10 percent per day on trades running into millions through arbitrage trading—that is, taking advantage of differences between prices of the same cryptocurrencies on various exchanges. With this blow, Bankman-Fried also rose to the limelight in four years as the head of a crypto empire with a personal wealth of more than $26 billion, according to recent estimates by business magazine Forbes. In 2019, Bankman-Fried launched crypto exchange FTX. He gained the trust of large investment companies such as Tiger Global, Sequoia Capital and BlackRock. He also entered into cooperation agreements in the US with major sports organizations and is now a frequently seen commentator in American media. In the meantime, developments in the crypto world have not stood still. After China banned numerous crypto trading activities this year, Bankman-Fried has relocated FTX’s headquarters to the Bahamas, where legislation was passed at the end of 2020 that leaves a lot of room for crypto trading.His personal aversion to inefficiency has led Bankman Fried to run his business with a minimum staffing of software programmers and traders compared to other crypto firms. In combination with the move of location in recent years, that has been too much for some employees, Insider learned. People have therefore left with burnout complaints. The investors who support Bankman-Fried are not interested in that. They see in him a unique talent. “To me, he’s the Mark Zuckerberg of crypto,” said venture capitalist Edith Yeung of Race Capital, one of the early investors in FTX. According to Forbes, Bankman-Fried is the only other twenty-something who has become so rich so quickly after Zuckerberg. Insider spoke with Bankman-Fried, as well as friends, colleagues and investors who know him well to find out what traits make him successful, what it’s like to work with someone who has a Spartan work ethic, unbridled ambition and attract large investors.

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It became clear from the talks that Bankman-Fried is engaged in a complicated balancing act that involves satisfying regulators, meeting investor expectations, while also ensuring employees don’t burn out.

One trait that plays into his hands is his ability to multitask unusually, say those who know him well. “You often see him doing several things at once: watching sports on one screen and YouTube videos on another screen, replying to email on the next screen, monitoring trade positions on a fourth screen, and making a video call on yet another. screen. And all that more or less at the same time,” said co-CEO Caroline Ellison of Alameda Research.

Doing many things at once is also a way for Bankman-Fried not to get bored, he admits: “When I feel that I don’t have enough things to think about, there is no time pressure and when others take longer to respond to things, then I look for distractions on my phone or computer or something else.”

Bankman-Fried studied at the top American university MIT and was a member of the Epsilon Theta sorority. There he was very busy celebrating and playing games, in addition to his studies. He himself admits that he was not very good at meeting deadlines for his studies. “I was not a disciplined student.”

Still, he easily stumbled upon Jane Street, a Wall Street stock trader who specializes in quantitative strategies. There he proved to be very good at time management.He founded the company Alameda Research in 2017 in the Californian city of Berkeley and quickly discovered the possibilities of arbitrage trading.

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The meteoric rise of Alameda Research also caught the attention of Ryan Salame, who at the time worked for the trading desk of crypto firm Circle in Hong Kong. Salame recalls that Bankman-Fried’s company “seemed to appear out of nowhere” but had “extremely competitive” pricing, which prompted him to start trading with Alameda. It wasn’t long after that until Salame decided to work for Bankman-Fried. The two had met at a conference in Singapore. “I don’t think I’ve ever worked with someone like that,” said Salame, who joined Alameda in a senior position in the trade department. “Being so smart, but also having that emotional side that allows him to communicate very well with people and be very interested, immediately made a huge impression on me.”

More and more professional traders started trading via FTX because of the low transaction costs, borrowing options and the ability to trade in a wide range of crypto investments.

To build such a competitive platform in such a short time, Bankman-Fried has worked almost maniacally. He is known for sleeping only four hours a night in a beanbag chair next to his desk and taking calls from clients and investors at 3 a.m.

Salame recalls a situation where Bankman-Fried was awake for 30 hours straight and had just gone to bed when a customer called. Seeing Bankman-Fried lie down, Salame couldn’t bring himself to wake him up and scheduled another moment with the customer. But that led to great chagrin at Bankman-Fried. “He said, ‘No, you really need to wake me up next time. There is no discussion about that.’”

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Salame says working for Bankman-Fried gave him so much energy that he followed his boss to the Bahamas to become CEO of FTX Digital Markets. “The company is everything to him,” Salame says.

FTX has a remarkably small headcount compared to the competition. In its first six months, FTX was built by just two software developers, according to Bankman-Fried.

Two-and-a-half years later, he still has only 10 to 25 people working for the platform and all its subsidiaries. In comparison, crypto exchange Binance currently has 180 vacancies and Coinbase about 120.

“My main concern is that FTX will become sluggish and dysfunctional,” says Bankman-Fried.“I was part of a team that built a crypto platform from scratch, and the model is simple: the more programmers, the faster you can scale,” said David, who is currently director of crypto manager Arca Capital Management. David says the fact that FTX was built by just two developers in its first six months is “impressive,” but managing such a widely used platform with fewer than 30 developers “isn’t the norm.”

But with a smaller team, Bankman-Fried says it can quickly make decisions and release new applications. “There’s a price to that, but I think it’s worth paying that price,” says Bankman-Fried. “When it really comes down to it, it is very important that we remain efficient and coherent as a company.”

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According to Bankman-Fried, the departure rate is relatively low at about 5 percent per year, but he recognizes that burnouts can be a problem and that his staff do not always take enough holidays. “I think it’s important that people do their best to achieve what’s within their capabilities, but they shouldn’t go further than that to avoid burnout,” he says. “Guarding that border is something we constantly struggle with.”

For Bankman-Fried personally, the limit for a burnout is quite high. “If I’m severely fatigued, I just go to sleep for 10 hours to recover,” he says. “If I take four days off, I get bored. I then get impatient, want to know what is happening at work and want to go back.”

Alameda Research co-CEO Ellison says Bankman-Fried can work harder than others because he is highly motivated to give away his crypto wealth and have a positive impact on the world. “I think you can keep it going if that’s your main goal,” she says. “I think you are capable of a lot more than many people realize and that, in my opinion, is exactly what Sam is trying to do.”

Shark Tank investor Kevin O’Leary says it’s not unusual to meet energetic young entrepreneurs with big ideas, but it is to meet people who can make them happen. “Vision is overrated, execution is much more important,” says O’Leary. According to him, Bankman-Fried is very strong on both counts.

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Venture investors like O’Leary see regulation as the biggest potential risk when investing in crypto. In the past year, the US regulator SEC has put a stop to Coinbase lending products and US, European and Asian regulators have restricted crypto exchange Binance.Wu says she and her team have taken a close look at FTX’s licenses for various markets. She also looked at communication with regulators and the general position on regulation. “FTX is the most compliant and closest to regulatory requirements of all crypto platforms,” she says. Several experts make the comparison between Bankman-Fried and Facebook founder Mark Zuckerberg when it comes to the future of FTX, because Zuckerberg also receives difficult questions from regulators. Zuckerberg has built a social media empire with a market value of more than $900 billion from the company he founded when he was 19. He did so in a tech era often referred to as Web 2.0, where user-generated content and social networks thrived. Facebook changed the world at the time, but has come under increasing scrutiny from regulators in recent years. This is partly due to privacy problems and inadequate control over the spread of fake news. Now a new era of crypto, decentralization and the virtual world is upon us, often referred to as Web 3.0, with companies like FTX at the forefront. Bankman-Fried isn’t exactly happy to be compared to Zuckerberg. Those who know him say his motives are much more selfless. “Making as much difference as possible is a real moral obligation for us,” says his brother Gabe. “I think that was very important to us from an early age.” The brothers are examples of effective altruism, a philosophy that emphasizes that people should focus on the well-being of others.

But whatever the future holds for him, the drive, vision and effectiveness Bankman-Fried is showing in building his crypto empire will certainly not diminish the comparisons with Zuckerberg. Zuckerberg is still going for it and continues to try to attract new users. “I think Sam will be the same and he’s only 29 years old,” Yeung says. “As long as he gets enough sleep and doesn’t drop dead, I think he will continue to go for it as an entrepreneur in the long term.”

Author: Jobly