October 10, 2023 • 34 mins
Michael Lewis is like a literary Forrest Gump. He always seems to know where the biggest story of the year is going to be–and he’s usually halfway through a book about it when it breaks. This time he couldn’t have gotten the timing better: his book Going Infinite: The Rise and Fall of a New Tycoon came out the same day as Sam Bankman-Fried, the book’s subject, went on trial in the aftermath of the collapse of his crypto exchange, FTX, and Alameda Research.
So thank goodness Michael is here, because there are enough acronyms in this fascinating story to make your head spin–not to mention getting your head around the blockchain. In this conversation Michael takes us from his first impressions to his hard-won insights into SBF and his motivations, mistakes, and the mayhem he’s been at the center of. He also takes the time to talk us through the Effective Altruism movement that underpinned SBF’s ideology and explains the ins and outs of FTX’s rise–and the details of how it collapsed, taking billions in net worths along with it. He also hints at how that money might not be so gone after all.
If you can’t get enough of this story check out Michael’s podcast Judging Sam, available wherever you get your podcasts.
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Hi everyone. I'm Katie Couric, and I'm very excited to
tell you that the new season of Next Question is
on its way. But to tide you over, I have
the hottest ticket in town, and that's an interview with
the one and only Michael Lewis. You know him, you
love him. You've heard of all of his books, like
The blind Side, Moneyball, The Big Short. Well, now he's
(00:27):
got a new one out and his timing, can I say,
could not be better. It's called Going Infinite, The Rise
and Fall of a New Tycoon. Here is our conversation.
I had so much fun talking to Michael Lewis. Now
I understand crypto a little bit better, and I hope
you all have as much fun listening to our conversation.
(00:49):
Here it is hellos. Oh no, you're good. You're good.
You can relax. So should we go? You guys? Are
we ready? Okay? All right? Wow? Michael Lewis, how many
books have you written?
Speaker 2 (01:06):
By the way, I don't know.
Speaker 1 (01:08):
I looked it up and it kept going and going
and going and going.
Speaker 2 (01:11):
It's just I don't know, and they've a distinction needs
to be made. There's a list there in the front
of the in front of this book. Some of them
are books and some of them are a book like objects.
They I mean, so it's one thing to sit down
like this and plot creates structure old book. It's another
to write four magazine articles and put them together in
a book. And so Boomerang or the Fifth Risk or
(01:35):
the Money Culture, those are all I mean, don't I'll
defend them. But they were booklike objects.
Speaker 1 (01:39):
All right, I have sixteen I counted.
Speaker 2 (01:41):
On the sixteen things.
Speaker 1 (01:42):
Yes, six No, well sixteen. I think most of these
were books.
Speaker 2 (01:46):
Yeah, sixteen items, and I bet six of them were
book like objects.
Speaker 1 (01:49):
Really, yes, Well, talk about the stars aligning. Your book
is coming out at the same time, Sam Bankman Freed
is on trial. I mean, did you all plan this?
Was this serendipitous? How did this happen?
Speaker 2 (02:04):
We kind of planned it. I started writing this thing
at the end of January, and I know it usually
takes me six months once I've got all my stuff,
and so I knew when i'd have it finished. So
they knew when they arranged then it was coming on
the fall, and they announced the trial date, and it
seemed made sense. Oddly, the trial was supposed to start Monday,
(02:25):
but the judge has some personal reason he wanted to
start at Tuesday, so we actually start. The book was
launched on the day of the trial, so as part
of me kills me that I'm not there, because I've
seen the list of the prosecutors' witnesses who were there
likely to call, and it maps very closely on the
characters in the book. So it'd be like watching, you know,
(02:45):
characters from a novel come to life or something like that.
It feels like that.
Speaker 1 (02:49):
We're going to get into the intricacies a little bit
simplified of the trial and the crimes, et cetera. But
I want to go back to the beginning, Michael, because
you're almost a little anthropologist. I find your book so
interesting because I think, in fairness, I saw this on
sixty minutes. But you take a character and that character
(03:09):
becomes emblematic of another big issue. And you met with
this young man more than one hundred times over two years.
So if you had to use one word to describe
what your experience, what your time was like with SBF
as he's called, what word would that be?
Speaker 2 (03:30):
I'm excuse a strange one satiric in that right from
the beginning, He struck me as walking social satire. He
had acquired. He'd gone from zero to having twenty two
billion dollars in about eighteen months, and all of society
had reorganized itself around this pile of money. And everywhere
he goes what is either happening to him or his
(03:50):
observations because he's a bit, he's a Martian, he comes
from another planet, and he sees the world in just
a different way. It felt like social satire, so satiric. Well,
I mean, it's gonna sound very odd given these circumstances.
It was funny. I mean it was a funny. It
was a funny funny and sad. You know, funny and
sad go together. But there was a lot of funny
(04:13):
and so satiric, that's.
Speaker 1 (04:14):
The thing, and surreal and something that almost sounds like
the pages of a Tom Wolfe novel.
Speaker 2 (04:21):
Honestly.
Speaker 1 (04:21):
So, I just watched a documentary about Tom Wolf. You're
heavily featured. I loved it. By the way, it was
based on your profile of Tom Wolf in Vanity Fair.
And you know, as I read about Sam, I thought, whoa,
this is the kind of thing Tom Wolf, the kind
of person Tom Wolf would have been all over. Do
(04:43):
you agree?
Speaker 2 (04:43):
I agree, especially early Wolf. You know, he wrote these
pieces that were fabulous about Silicon Valley people right before
before the Internet. Right it was like the semiconductor people.
It was like, these people are of the moment and
they're changing the culture in some way. Also, the Mary
pranks that crowd, I mean, this is a version of
the Mary Pranksters. I mean these people who are rolling
(05:03):
through the world just creating disruption wherever they go. He
would have been drawn to Sambangman Freed. So yes, I
think that's completely true.
Speaker 1 (05:11):
Do you think that SBF represents capitalism at its worst?
Speaker 2 (05:16):
In a way, it represents capitalism and it's most chaotic,
And there's a reason for them. He was drawn to
chaos when he figured out that he excelled relative to
other people in these semi chaotic environments where his math
he brain still was useful, but he needed it to
be really messy at the same time. It couldn't be orderly,
(05:38):
couldn't be structured, couldn't be perfectly predictable. When he figure
that out, figure that out on Wall Street when he's
twenty one years old, he then proceeds to create those
environments in which he'll succeed.
Speaker 1 (05:50):
So he thrives in chaos.
Speaker 2 (05:52):
He for thrives in mess and chaos, and he knows
that everybody else doesn't so at some level, and so
he feels most comfortable when that it's the environment. He's
also capitalism at its most current. I mean, if you
think about history, just put him in some sort of
historical context, you think, oh, this is just how it
is now. Mark Zuckerberg is a bit like this. He
came out of nowhere and it had billions of dollars instantly.
(06:15):
But that doesn't really happen in history. Like most people
who got this rich, they had to like dig oil
out of grounds, right, build railroads, build stuff, build companies.
This instant acquisition of a fortune is so peculiarly of now.
And what's so among the things that are so odd
(06:36):
about it is that the person who in possession of
the fortune is a stranger to the world, like nobody
knows who they are. He goes from being nobody and
he has no social relations kind of thing to being
at the center of some universe instantly before anybody has
a chance to figure out should he be. You know.
(06:56):
So that's a curious feature of modern capitalism. I think.
Speaker 1 (07:00):
So you meet this guy, you guys, take a walk,
you take a hike in California. Tell me what was
your first impression.
Speaker 2 (07:08):
First impression was there's a kind of artlessness about him,
and an openness and a willingness to answer. Talk about
things that normally people just wouldn't be easy talking about,
like how much money he had, where to come from,
how crazy it was he had it that his parents
didn't know what to make of it, because they were
two professors at Stanford, and he was raised not caring
about money, and so first impression was very He was
(07:30):
also very peculiar that he was disheveled when he came out.
He look, he always looks like he just fell out
of a dumpster, right.
Speaker 1 (07:37):
I mean he's got he looks like an unmade bed.
Speaker 2 (07:39):
Oh my god, yes, yeah, an unimated bed on top
of an unmade bed. He looks. And it was the
total absence of interest in his own appearance, the total
in his head noss. So normally, when you meet somebody,
it's an exchange, right, they asked questions about you, you
ask questions about them.
Speaker 1 (07:59):
Let me get yes, he asked you no questions.
Speaker 2 (08:01):
Zero, and we are, I'm going to tell you something.
Two years later, he's still not asked me any questions.
So as far as anyone knows nothing about me and
knows nothing about what I was writing about, but he
never asked me like, what's the book gonna look like? Nothing?
So it was all one way.
Speaker 1 (08:18):
It's so interesting because he's this odd combination. And we'll
talk about this in a moment too. And I want
to get too ahead of myself, an incredible desire to
do good without any emotional intelligence. Yeah, that's true, like
this strange combination. Yes, Well, let's talk about his childhood.
As you mentioned, his parents were two Stanford law professors
(08:39):
who I guess are having their own legal problems right now, right,
I mean, they've been sued for their involvement in this
whole enterprise. But tell us about where he grew up,
what his life was like, and I'm curious about the
nurture nature aspect of him. Help us understand him.
Speaker 2 (08:57):
His parents both tax law professor is Stanford. That sounds boring, well,
unless unless that's your cup of tea, right, Yeah, And
the kind of person for whom that's like a cup
of tea is a different kind of person. They like
to live in their head, and tax law does get
to kind of like structure of society, questions like how
you distribute wealth, And it's not just it isn't just
(09:19):
like wooden numbers. And it wasn't just it isn't just numbers,
it's ideas. They there are two people who live for ideas.
Speaker 1 (09:25):
To all the tax lawyers out there, I deeply apologize.
Speaker 2 (09:29):
Do I need to too?
Speaker 1 (09:30):
I mean, no, you're you're defending them insane. It's ideas.
Speaker 2 (09:34):
But they've sat in the middle of actually pretty active,
interesting social circle. They were very social people. Their dinner
parties on Sunday nights were famous on the Stanford campus.
Their son struck even their friends as peculiar right from
the beginning, and one comment that stuck with me is
one of the distinguished guests that the Sunday night dinner
party said he always thought that the parents were afraid
(09:57):
for and of Sam like they did, and that they
were worried about where he was going to end up
in the world because he didn't make social connections. He
was so isolated as a kid, and the feeling of
his childhood to me talking to him and to those
around him was that he was just waiting for it
to end, that he was waiting for everybody else to
grow up around him so that he would have people
to talk to, because he did not ever connect to peers.
(10:20):
He had one friend, and the one friend was a
child of his parents' friends, so they were kind of
put together that way, and they were connected through this
game they played called Magic the Gathering, which is a
complicated chao. It's a messy chaos but matthew card game,
and they didn't really have to talk about much because
they just played cards together the whole time. So it's
(10:42):
an unusual childhood. I mean, I asked.
Speaker 1 (10:45):
It doesn't sound necessarily unhappy, just different.
Speaker 2 (10:48):
You know that kept coming back to this. It sounds sad,
but he's not sad. It sounds almost tragic. He didn't
feel tragic. He felt like he was living in his
own head and trying to make sense of the world
around him in his own peculiar way. So verbally facile
and so interested in the world around him that and.
Speaker 1 (11:12):
Yet never asked you a question that doesn't really job.
Speaker 2 (11:15):
Yeah, no, it doesn't jibe, but he's interested in ideas.
Speaker 1 (11:20):
We'll be back with more of Michael Lewis. Right after this,
we're back with author Michael Lewis. Let's talk about his
sort of rais on detra. So he had a dream
(11:41):
and that was to make a shitload of money and
give it away. Something that's called effective altruism, which actually
I hadn't heard of before. I mean, I know the
idea of it, you know, but that term.
Speaker 2 (11:53):
Yeah, the movie is fascinating.
Speaker 1 (11:55):
And well tell me, tell me about the movement and
how he got sucked into it.
Speaker 2 (11:59):
Right, So there's a whole intellectual prehistory we don't need
to get into. The modern version of it. Is Oxford
professors two thousand and eight ihs or so start to
make an argument that very little cost to yourself, you
middle class English person, could give away money so effectively
that you know, what might cost you a cup of
(12:20):
coffee saves a life in Africa. So how can you
possibly buy that cup of coffee for yourself if you
could save a life in Africa with that same money.
And they actually start to make the calculations on their
own salaries, like if we take everything but what we
absolutely need to live on, what over our lifetimes, what
could we accomplish? And it was like we save eighty
thousand African children from blindness. Then some numbers like that,
(12:43):
and they start to kind of put these ideas out
to young people actually, kind of almost like you build
a religion or a cult.
Speaker 1 (12:52):
When does this whole movement start.
Speaker 2 (12:54):
About two thousand and eight, two thousand and nine. But
by twenty twelve, when one of these philosophers names Will
mcgahe gives a talk that Sam here is at MIT.
It's in Cambridge at Harvard, but he was at MIT mcgaskell.
It is morphed a little bit. The movement morphs like
a few times, but this big morph was the idea was,
all right, you kid, you could go become a doctor
(13:16):
and go to Africa and in your lifetime you would
save two hundred people's lives. Or you could go work
at a high frequency trading from a Wall street and
make lots of money and pay fifty doctors to go
to Africa and save fifty times the number of lives.
So it thought he has earned a give and that's
the idea that animates Sam. It's like up to that point,
(13:39):
money's not on his radar screen. It's not like I
don't really care about it, doesn't think about it. He's
a kid of two professors at Safford who probably think
he's going to become a professor. Now where the movement
gets really a little out there is right after he
gets into it, it morphs again and they start to
argue about like the math of saving lives, and yeah,
(13:59):
you could give your dollars to save that kid's life
in Africa, but those same dollars could be given to
reduce certain existential risks to humanity. A pandemic that wipes
out the species, AI, out of control, climate change, risk
of nuclear war, and if you can do anything to
(14:19):
tilt the odds against all future human beings being wiped out,
the math suggests you should do that rather than safe living,
breathing ones.
Speaker 1 (14:27):
Now, so it swings to prevention.
Speaker 2 (14:29):
To prevention, that's for to prevention of a thing that's
going to be very hard to know whether you succeed
it or not, you know, because what you're trying to
do is stop something from happening. Right, So, all of
a sudden, there's a reason not to make just a
few million that this is like unlimited sums of money.
Infinite money is what we need. And that's the climate
in which Sam comes of age and develops his own
(14:50):
life ambition.
Speaker 1 (14:51):
So he wants more and more and more and more
for good?
Speaker 2 (14:54):
Is that more and more and more and more. Not
just more and more and more and more, but the
the twenty billionth dollar or the trillionth dollar is as
valuable as the nine hundred and ninety nine billionth dollar.
That it's just like there's no diminishing returns.
Speaker 1 (15:07):
So that captures his attention, gives him purpose, and he
settles on two causes, pandemic prevention, which you mentioned, and
then protecting democracies.
Speaker 2 (15:17):
So that's controversial, right. He has these effective altrus. It
is a movement. There are thousands of people involved in it.
It has certain cult like qualities, but it's also kind
of like an ant culpe because they're all into argument
and reason. So the movement can change, like someone makes
a better argument and it goes a different direction, and
Sam makes a new argument that actually irritates all the
effective altrus. It's that in addition to climate change, AI, pandemics, asteroids, whatever,
(15:43):
Donald Trump should be on that list right.
Speaker 1 (15:45):
Well, Basically his argument is that you need government. Government
is essential, and this is of course arguable and debatable,
but government is essential to solve some of the most
intractable societal problems. So we have to protect government, we
have to proctocracy, and that means basically neutralizing Donald Trump
at any cost.
Speaker 2 (16:04):
Yeah, that's exactly right, right, Yes, Yes, it's sort of
like if American democracy fails, democracy is going to fail,
and democracy is the best tool for addressing these problems.
And so Donald Trump has his name has been added
to this list of existential risk to humanity, and he.
Speaker 1 (16:19):
In fact offers fifty billion dollars to five Yeah, fifty
billion would be pretty hard to resist, wouldn't it. But
five billion dollars to Donald Trump to not run for
president of the United States, which apparently gets some traction.
Who did he meet with people high up in his circle?
Speaker 2 (16:39):
Sam?
Speaker 1 (16:40):
So?
Speaker 2 (16:40):
The way Sam's best I can tell political operation worked
is it essentially had two almost identical parts, one Republican,
one Democrat. He hired a bunch of Republicans in one
silo and a bunch of Democrats in the other, and
funded them both. And in the Republican silo, I do
know that the people there met with people very close
to Trump.
Speaker 1 (17:01):
That I do know that happened So how did Sam
Bankman Freed make so much money? Everyone thinks he's going
to be the world's first trillionaire. Let's break down what
he was doing for the bitcoin challenged, I among them,
which I now understand more having read your book and
read a lot of articles about this. But think of
(17:23):
this as cryptocurrency for dummies. What is exactly is cryptocurrency.
Speaker 2 (17:29):
It's made up money. It's a so it is an
idea that is hatched by someone. We don't know who
he is, but his pseudonym was Satoshi Nakamoto in two
thousand and eight. And the idea is a means of exchange,
a form of payment of a store of value that
is not sourced by the government, doesn't come out of
(17:52):
the government. It's us like this thing. We're going to
get a digital digital currency. It's a string of digits,
and we're going to say this is valuable, and it's
valuable if people believe it's valuable. And when it starts,
it seems preposterous, like why would anybody want a bitcoin?
It turns out it's not preposterous. Why would people want
a bitcoin? That ends up being an answer to the
(18:13):
question people who were kind of suspicious of governments, of institutions,
of banks, people who want to hold wealth in ways
that are hard to detect, people who want to make
payments without anybody knowing what they've done. That Bitcoin catches
on with a kind of a smallish group of people
who have got a religious fervor about it, and it's
mostly kind of libertarian types. When bitcoin starts to go
(18:36):
up in price the first place, there's only one digital currency,
it's just bitcoin.
Speaker 1 (18:40):
In the end, they're now thousands of them, right, And
he starts as an investor and then figures out there's,
you know, there's got to be a way to build
a better mouse trap. So he creates a platform called
ftx right.
Speaker 2 (18:52):
With that you can think of that as the cryptocurrency casino, right,
And just to sort of ease your anxiety about all this,
he didn't know about cryptocurrency care about it. I mean,
there's a technology underneath it that would take a long
time to explain. And every time I think I understand it,
I come back and I think I actually didn't understand
that as well as I should. He didn't care about
any of that. It was just a thing that went
(19:13):
up and down like tulip bulbs in price and then
he could buy and sell. That's how he gets in,
and he never really has to understand a whole lot more.
But what he does see when he gets in is
that the exchanges like the New York Stock Exchange, but
there are versions of the New York Stock Exchange for
cryptocurrencies where you can go and buy and sell cryptocurrencies,
and those exchanges, a lot of them were kind of flawed.
(19:36):
They they were risky to trade on. Sometimes they lost
everybody's money. And he realized that if you created a
better exchange, you could own the casino. And if you
own the casino, the way you get paid is every
time someone comes and makes a bet, you take a
little piece of it. You get a fee for every
bet that gets made. And so ultimately they're two hundred
and fifty billion dollars a month being traded on his
(19:58):
exchange FTX, and he takes out a tiny percentage, but
it ends up being a lot of money, so much
money that in twenty twenty one, he's they have a
billion dollars in revenues, four hun a million dollars in profits,
and venture capitalists are investing in him at a rate
that suggests the company's worth forty billion dollars. And this
happens in a matter of eighteen months from the time
(20:19):
he creates it in early twenty nineteen.
Speaker 1 (20:22):
But he had two companies. So he establishes FTX, but
the first company he built was called Alameda Alimeter Research,
Alameda Research, and that's where the trouble began.
Speaker 2 (20:33):
So he starts this his own little trading firm, Alameda.
Then he starts out of that this exchange and Alameda
is just one of the traders on the exchange. The
problem was when he started FTX, he couldn't get bank
accounts like dollar bank accounts for FTX. So if you, Katie,
wanted to put your money on FTX to start to
buy cryptocurrencies, there was no account at FTX you could
(20:56):
wire your dollars to or bring your dollars to. They
would hold the doll that could then be turned into cryptocurrency.
I mean you physically couldn't turn up right. You can
go from in Hong Kong. You got to wire some
money into account and the money is government money. It's
euros or dollars or it's yen. It starts that way.
And so people wanted to wire their money onto FTX.
(21:16):
FTIX didn't have any bank accounts because banks didn't want
to bank crypto exchanges, but they would bank Sam's original
trading business. And so in the beginning, you would wire
your money to Alameda in order to get it to FTX,
And I mean that was already bulky, Like that's weird,
and it's amazing that people did eight point eight billion
(21:37):
dollars turn up that way and nobody asked any questions.
And I've seen them, like the statements says you think
you're wiring at f TX, but it actually says Alameda
on it or some other Alameda subsidiary. But what should
have happened is once FTX got bank accounts or once
it got turned into crypto, that it be held in
either crypto wallets or in FTX bank accounts and be
(21:58):
completely separate From's trading fund. And it never was. So
that's that's not the only way the customer's money ended
up in Alameda, but it's the main way. And one
can speculate about how and why it didn't ever get
moved over like that that chunk of money. You know,
I have my theories, but they're unfounded and Sam's story
(22:22):
is that by the time they got a bank accounts
for FTX, the kind of pool of money that had
piled up inside of Alameda was such a small fraction
of what was in Alameda, eight out of one hundred,
So you know that it was just sort of like
he wasn't even thinking about it. That's his story. The
other thing is Sam is different, and so he's capable
(22:43):
of thinking things that I wouldn't think. And he was
capable of a radical sloppiness with money that I just
wouldn't be capable of. But if it were me and
I was thinking I have sinister intent or I just
don't care about my customer, I would think, well, they'll
never know. And it's a free loan, because that's how
it functioned, right, It's like the customer's money is in
the private hedge fund and no one's paying interest on it.
(23:06):
It's a free loan. And that's how it looks to
most people.
Speaker 1 (23:09):
When it all falls apart, how much money just vanished
into thin air.
Speaker 2 (23:14):
This is a great question. When the customers all come
from their money.
Speaker 1 (23:19):
At once, there's a run on the plan.
Speaker 2 (23:22):
There's a run on the on Sam's world, it's there's
about fifteen billion dollars that should have been there. When
they stop paying people back, there's about ten billion dollars
that's still missing. So five billion dollars got paid back,
and then so there's customers are out ten What we
now know is it was actually so the bankruptcy people
(23:44):
have announced these numbers. There's now eight point six billion
dollars of customers deposits, like customers are waiting to get
their eight point six billion dollars back. But against that,
the bankruptcy people have already found seven point three billion
dollars in liquid assets. So the whole right there is
one point three billion that looks like this went poof. However,
(24:05):
in addition, in Sam's world, there were all these investments
made that are not liquid assets. They are investments in
weird companies, startup companies, and at least one of those
investments is clearly worth more than a billion dollars one
out of a pile of three hundred. It's an investment
in an artificial intelligence company called Anthropic. So it is
(24:25):
conceivable that nothing went poof. It's conceivable that the customers
will all get one hundred cents on the dollar bag,
and that what they will have suffered was the inconvenience
of waiting for it. And it may be years, maybe
two or three years.
Speaker 1 (24:37):
I'm going to say conceivable, but likely.
Speaker 2 (24:40):
I mean, so it seems possibly, very possible, very possible
that people will all get their money bag, which would
be very Sam Bankman freed. It's sort of like this
huge mess, this huge drama, this huge like you know,
social convulsion, and in the end it's a shaggy dog story.
Speaker 1 (25:00):
While he could spend the rest of his life in
Christy good, right, I mean, whether people get their money
back or not, right, Michael, So what is what the
charges is he facing?
Speaker 2 (25:09):
This is what I've been told by a former prosecutor
who who now is a defense attorney, but she worked
in this office. Is prosecuting him that I'm told oddly
that there are no federal statutes about theft. You can't
just charge him with stealing people's money. The laws that
do exist are by using the federal mails, using the
(25:29):
internet to facilitate a theft. So he's charged with wire fraud,
with money laundering, with bank fraud. He's not charged with theft,
which is what really is the problem is here. So
they are complicated charges. There's seven of them. I think
they tried to throw in some more but they were
not able to do it. And when you add up
all the charges and the kind of sentences that attach
(25:50):
to those charges, he facing one hundred and twenty years
in jail. But then so first the jury will decide
convictor or quit. If they e quit, he's off. But
if he convict, the judge decides the sentence, and the
judge can do anything from just let him go, I
mean like a day of house arrest or something to
one hundred and twenty years in jail. And I suspect
(26:11):
this judge who has become so irritated with Sam he
can't even look at him. Sam, you know, under house
arrest has not been the best behaved defendant, that the
sentence was going to be heavy. So I don't know.
I think he's very likely going to go to jail.
It's possible, you never know what a jury's going to
do that he won't, but he's very likely to go
(26:32):
to jail. And what happens to him then, I don't know.
He's I really I said this on sixty Minutes and
it was a joke kind of, But think.
Speaker 1 (26:40):
Yeah, but I heard you said he'd be happier in
prison with the Internet than in a beautiful with penthouse
with no WiFi without exactly.
Speaker 2 (26:50):
And he apparently saw the Sixty Minutes Show in jail,
and he apparently told as lure as that's true.
Speaker 1 (26:58):
You know, he was surrounded by a lot of it people.
Nothing says I want to be your friend like someone
with a lot of money, right. I mean, you talked
about Anna Wintour doing a zoom. He got Tom Brady
to you know, to promote FTX, Steph Curry, Shaquille O'Neill,
Larry David got paid ten million dollars to do that
(27:20):
Super Bowl commercial. They spent what twenty five million dollars
on that commercial? Line yead, Yeah, it was, it was
it was. Yeah, it was a funny ad. Anything Larry
David does is funny to me. But do they have
any culpability? You know, they're they're promoting this unregulated platform,
They're they're vouching in essence for this kid and what
(27:41):
he's created, and a lot of people admire them and
listen to them and then invested in crypto. I mean,
I'm just curious, what do you think I don't think
they will, but I wonder if they should.
Speaker 2 (27:55):
Everybody was so all in on Sam bankmanfree it would
have been unusual for someone and not take the money.
And it wasn't just that's when you need Warren Buffett, right, Yes,
that's right, And it wasn't. This is going to sound odd.
It wasn't just the money. I mean, many of these
people could get their money from a lot of different places.
It's a bit more money than they might have gotten
from other places. But they really liked him. They really
(28:18):
liked him.
Speaker 1 (28:19):
Now can you understand that? Yes, after spending all that
time with him.
Speaker 2 (28:23):
Because he's so different from anything anyone they knew, and
he didn't behave the way people behave around celebrity.
Speaker 1 (28:28):
It's such a one way relationship. Like do you think
he ever asked Tom Brady a question?
Speaker 2 (28:32):
No, people wanted to hear what he had to say.
He was the new thing. He was a new thing.
And it wasn't that this money was falling off him.
That was part of it, but it wasn't just that,
And it was like.
Speaker 1 (28:45):
It was also that he understood this world that nobody
else did in a way.
Speaker 2 (28:50):
That's true, that he was explaining crypto. But take what
the other thing was. He is a response if you
look at the rise of Sam Beckmerfried and what are
the ingredients The decline line of institutional authority in the world,
the decline of government's ability to do anything about anything.
People are so sick of it, like why can't we
address climate change? Why can't these problems be? And people
(29:11):
are defaulting to looking to people. And he seemed actually
sincere in his desire to fix these problems, and people
wanted him to exist. People wanted there to be a Sam.
And you saw that it was palpable. It was not
just greed. It was more than that. It was complicated.
Speaker 1 (29:29):
When we come back, I'm going to finish things up
by talking with Michael about a personal tragedy is family experienced.
That's right after this, we're back with more of my
conversation with Michael Lewis. We only have five minutes. Can
(29:52):
I ask you just some general questions about your career, Michael.
One of your former subjects Billy Bean, of course from Moneyball.
He once said, you have a horsesh This is a
funny quote, A horseshoe in your underwear when it comes
to finding a good story. I mean, you do seem
to really be able to.
Speaker 2 (30:12):
I'm sorry, Katie, that's not a horseshoe.
Speaker 1 (30:20):
Okay, how do you find these good stories? Michael?
Speaker 2 (30:23):
I just wonder. It's not that there's no science to it.
I just wonder. I mean, Sam mcmurfree collides with me, right.
But here's what helps, not thinking you know what the
story is, not prejudging, not trying to impose order too
early on what you're saying. Just feeling like this is
interesting and I want more.
Speaker 1 (30:44):
Of it and I want to see what happens, and
having the luxury, to be honest with you, to spend
two years.
Speaker 2 (30:50):
But then there's a risk. I mean I got to
November of last year and I wasn't sure I had
a book. I was having arguments with friends about whether this.
They were arguing with me, like you should do it,
and I I'm not sure. I don't know where it's going.
And that has happened to me that I get stuck
in something for a while and it doesn't yield anything.
But I've marinated it for a year and where did
that year go? But that is it's just sort of like,
(31:12):
if I'm interested, genuinely interested, not trying to like force
some idea upon the world, and I let that interest
just flow over me. It eventually leads somewhere good. And
what's going on is if I'm interested, really interested, the
reader will be interested. And if I'm not interested, the
reader is going to be bored.
Speaker 1 (31:27):
But I think also you're able to marry personality with
complicated topics with sort of social impact, and you're able
to weave them all together in a way that's understandable
and entertaining, and I think that's your gift. Michael. Meanwhile,
congratulations for selling Going Infinite for five million clams to Apple.
Speaker 2 (31:48):
Do you believe the numbers you read in the newspaper?
Speaker 1 (31:50):
Is that not true?
Speaker 2 (31:51):
Well, it's never you know, they have to make the movie.
There's incentives as that kind of stuff. But yeah, it's.
Speaker 1 (31:55):
Still it's a nice chunk of change. Michael.
Speaker 2 (31:57):
Uh. Yeah, I hope it makes my horseshoe look even bigger.
Speaker 1 (32:03):
I love talking to You're such a fun interview and
you're heading out, but I just want to say one
thing before you leave. I just want you to know
that you and Tabitha and your family have been in
my thoughts so much since you lost your daughter Dixie
and her boyfriend in a car accident. I read that, Michael,
(32:26):
and I was honestly it was from afar crushing.
Speaker 2 (32:30):
I know that you know what pain is.
Speaker 1 (32:33):
I do, but losing a child I think is indescribable
and unparalleled pain. And you know, I know Tabitha a
little bit from when she was on NBC and always
really liked her. And I'm just so sorry for your loss,
and I'm glad that you are moving forward because you know,
(32:55):
I always think we're all terminal, like we just have
to make the most of the time we have. And
I just I just wanted you to know that you
and your family, your two other kids, Quinn and Walker, right, yep,
I've just been holding you all in my heart.
Speaker 2 (33:10):
Thank you. She sticks us alive in me. She's with me,
So she's in this book in a funny way. So yeah,
thank you.
Speaker 1 (33:21):
By the way, everybody, if you just can't get enough
of Sam Bankman Freed, Michael is going to be doing
a podcast called Judging Sam, chronicling the trial with the
different guest every week, so check it out. Thanks for
listening everyone. If you have a question for me, a
subject you want us to cover, or you want to
(33:41):
share your thoughts about how you navigate this crazy world
reach out. You can leave a short message at six
oh nine five one two by five oh five, or
you can send me a DM on Instagram. I would
love to hear from you. Next Question is a production
of iHeartMedia and Katie Kurk Media. The executive producers are Me,
(34:02):
Katie Couric, and Courtney Ltz. Our supervising producer is Marcy Thompson.
Our producers are Adrianna Fazzio and Catherine Law. Our audio
engineer is Matt Russell, who also composed our theme music.
For more information about today's episode, or to sign up
for my newsletter, wake Up Call, go to the description
in the podcast app, or visit us at Katiecouric dot com.
(34:26):
You can also find me on Instagram and all my
social media channels. For more podcasts from iHeartRadio, visit the
iHeartRadio app, Apple Podcasts, or wherever you listen to your
favorite shows.
Hi everyone. I'm Katie Couric, and I'm very excited to
tell you that the new season of Next Question is
on its way. But to tide you over, I have
the hottest ticket in town, and that's an interview with
the one and only Michael Lewis. You know him, you
love him. You've heard of all of his books, like
The blind Side, Moneyball, The Big Short. Well, now he's
(00:27):
got a new one out and his timing, can I say,
could not be better. It's called Going Infinite, The Rise
and Fall of a New Tycoon. Here is our conversation.
I had so much fun talking to Michael Lewis. Now
I understand crypto a little bit better, and I hope
you all have as much fun listening to our conversation.
(00:49):
Here it is hellos. Oh no, you're good. You're good.
You can relax. So should we go? You guys? Are
we ready? Okay? All right? Wow? Michael Lewis, how many
books have you written?
Speaker 2 (01:06):
By the way, I don't know.
Speaker 1 (01:08):
I looked it up and it kept going and going
and going and going.
Speaker 2 (01:11):
It's just I don't know, and they've a distinction needs
to be made. There's a list there in the front
of the in front of this book. Some of them
are books and some of them are a book like objects.
They I mean, so it's one thing to sit down
like this and plot creates structure old book. It's another
to write four magazine articles and put them together in
a book. And so Boomerang or the Fifth Risk or
(01:35):
the Money Culture, those are all I mean, don't I'll
defend them. But they were booklike objects.
Speaker 1 (01:39):
All right, I have sixteen I counted.
Speaker 2 (01:41):
On the sixteen things.
Speaker 1 (01:42):
Yes, six No, well sixteen. I think most of these
were books.
Speaker 2 (01:46):
Yeah, sixteen items, and I bet six of them were
book like objects.
Speaker 1 (01:49):
Really, yes, Well, talk about the stars aligning. Your book
is coming out at the same time, Sam Bankman Freed
is on trial. I mean, did you all plan this?
Was this serendipitous? How did this happen?
Speaker 2 (02:04):
We kind of planned it. I started writing this thing
at the end of January, and I know it usually
takes me six months once I've got all my stuff,
and so I knew when i'd have it finished. So
they knew when they arranged then it was coming on
the fall, and they announced the trial date, and it
seemed made sense. Oddly, the trial was supposed to start Monday,
(02:25):
but the judge has some personal reason he wanted to
start at Tuesday, so we actually start. The book was
launched on the day of the trial, so as part
of me kills me that I'm not there, because I've
seen the list of the prosecutors' witnesses who were there
likely to call, and it maps very closely on the
characters in the book. So it'd be like watching, you know,
(02:45):
characters from a novel come to life or something like that.
It feels like that.
Speaker 1 (02:49):
We're going to get into the intricacies a little bit
simplified of the trial and the crimes, et cetera. But
I want to go back to the beginning, Michael, because
you're almost a little anthropologist. I find your book so
interesting because I think, in fairness, I saw this on
sixty minutes. But you take a character and that character
(03:09):
becomes emblematic of another big issue. And you met with
this young man more than one hundred times over two years.
So if you had to use one word to describe
what your experience, what your time was like with SBF
as he's called, what word would that be?
Speaker 2 (03:30):
I'm excuse a strange one satiric in that right from
the beginning, He struck me as walking social satire. He
had acquired. He'd gone from zero to having twenty two
billion dollars in about eighteen months, and all of society
had reorganized itself around this pile of money. And everywhere
he goes what is either happening to him or his
(03:50):
observations because he's a bit, he's a Martian, he comes
from another planet, and he sees the world in just
a different way. It felt like social satire, so satiric. Well,
I mean, it's gonna sound very odd given these circumstances.
It was funny. I mean it was a funny. It
was a funny funny and sad. You know, funny and
sad go together. But there was a lot of funny
(04:13):
and so satiric, that's.
Speaker 1 (04:14):
The thing, and surreal and something that almost sounds like
the pages of a Tom Wolfe novel.
Speaker 2 (04:21):
Honestly.
Speaker 1 (04:21):
So, I just watched a documentary about Tom Wolf. You're
heavily featured. I loved it. By the way, it was
based on your profile of Tom Wolf in Vanity Fair.
And you know, as I read about Sam, I thought, whoa,
this is the kind of thing Tom Wolf, the kind
of person Tom Wolf would have been all over. Do
(04:43):
you agree?
Speaker 2 (04:43):
I agree, especially early Wolf. You know, he wrote these
pieces that were fabulous about Silicon Valley people right before
before the Internet. Right it was like the semiconductor people.
It was like, these people are of the moment and
they're changing the culture in some way. Also, the Mary
pranks that crowd, I mean, this is a version of
the Mary Pranksters. I mean these people who are rolling
(05:03):
through the world just creating disruption wherever they go. He
would have been drawn to Sambangman Freed. So yes, I
think that's completely true.
Speaker 1 (05:11):
Do you think that SBF represents capitalism at its worst?
Speaker 2 (05:16):
In a way, it represents capitalism and it's most chaotic,
And there's a reason for them. He was drawn to
chaos when he figured out that he excelled relative to
other people in these semi chaotic environments where his math
he brain still was useful, but he needed it to
be really messy at the same time. It couldn't be orderly,
(05:38):
couldn't be structured, couldn't be perfectly predictable. When he figure
that out, figure that out on Wall Street when he's
twenty one years old, he then proceeds to create those
environments in which he'll succeed.
Speaker 1 (05:50):
So he thrives in chaos.
Speaker 2 (05:52):
He for thrives in mess and chaos, and he knows
that everybody else doesn't so at some level, and so
he feels most comfortable when that it's the environment. He's
also capitalism at its most current. I mean, if you
think about history, just put him in some sort of
historical context, you think, oh, this is just how it
is now. Mark Zuckerberg is a bit like this. He
came out of nowhere and it had billions of dollars instantly.
(06:15):
But that doesn't really happen in history. Like most people
who got this rich, they had to like dig oil
out of grounds, right, build railroads, build stuff, build companies.
This instant acquisition of a fortune is so peculiarly of now.
And what's so among the things that are so odd
(06:36):
about it is that the person who in possession of
the fortune is a stranger to the world, like nobody
knows who they are. He goes from being nobody and
he has no social relations kind of thing to being
at the center of some universe instantly before anybody has
a chance to figure out should he be. You know.
(06:56):
So that's a curious feature of modern capitalism. I think.
Speaker 1 (07:00):
So you meet this guy, you guys, take a walk,
you take a hike in California. Tell me what was
your first impression.
Speaker 2 (07:08):
First impression was there's a kind of artlessness about him,
and an openness and a willingness to answer. Talk about
things that normally people just wouldn't be easy talking about,
like how much money he had, where to come from,
how crazy it was he had it that his parents
didn't know what to make of it, because they were
two professors at Stanford, and he was raised not caring
about money, and so first impression was very He was
(07:30):
also very peculiar that he was disheveled when he came out.
He look, he always looks like he just fell out
of a dumpster, right.
Speaker 1 (07:37):
I mean he's got he looks like an unmade bed.
Speaker 2 (07:39):
Oh my god, yes, yeah, an unimated bed on top
of an unmade bed. He looks. And it was the
total absence of interest in his own appearance, the total
in his head noss. So normally, when you meet somebody,
it's an exchange, right, they asked questions about you, you
ask questions about them.
Speaker 1 (07:59):
Let me get yes, he asked you no questions.
Speaker 2 (08:01):
Zero, and we are, I'm going to tell you something.
Two years later, he's still not asked me any questions.
So as far as anyone knows nothing about me and
knows nothing about what I was writing about, but he
never asked me like, what's the book gonna look like? Nothing?
So it was all one way.
Speaker 1 (08:18):
It's so interesting because he's this odd combination. And we'll
talk about this in a moment too. And I want
to get too ahead of myself, an incredible desire to
do good without any emotional intelligence. Yeah, that's true, like
this strange combination. Yes, Well, let's talk about his childhood.
As you mentioned, his parents were two Stanford law professors
(08:39):
who I guess are having their own legal problems right now, right,
I mean, they've been sued for their involvement in this
whole enterprise. But tell us about where he grew up,
what his life was like, and I'm curious about the
nurture nature aspect of him. Help us understand him.
Speaker 2 (08:57):
His parents both tax law professor is Stanford. That sounds boring, well,
unless unless that's your cup of tea, right, Yeah, And
the kind of person for whom that's like a cup
of tea is a different kind of person. They like
to live in their head, and tax law does get
to kind of like structure of society, questions like how
you distribute wealth, And it's not just it isn't just
(09:19):
like wooden numbers. And it wasn't just it isn't just numbers,
it's ideas. They there are two people who live for ideas.
Speaker 1 (09:25):
To all the tax lawyers out there, I deeply apologize.
Speaker 2 (09:29):
Do I need to too?
Speaker 1 (09:30):
I mean, no, you're you're defending them insane. It's ideas.
Speaker 2 (09:34):
But they've sat in the middle of actually pretty active,
interesting social circle. They were very social people. Their dinner
parties on Sunday nights were famous on the Stanford campus.
Their son struck even their friends as peculiar right from
the beginning, and one comment that stuck with me is
one of the distinguished guests that the Sunday night dinner
party said he always thought that the parents were afraid
(09:57):
for and of Sam like they did, and that they
were worried about where he was going to end up
in the world because he didn't make social connections. He
was so isolated as a kid, and the feeling of
his childhood to me talking to him and to those
around him was that he was just waiting for it
to end, that he was waiting for everybody else to
grow up around him so that he would have people
to talk to, because he did not ever connect to peers.
(10:20):
He had one friend, and the one friend was a
child of his parents' friends, so they were kind of
put together that way, and they were connected through this
game they played called Magic the Gathering, which is a
complicated chao. It's a messy chaos but matthew card game,
and they didn't really have to talk about much because
they just played cards together the whole time. So it's
(10:42):
an unusual childhood. I mean, I asked.
Speaker 1 (10:45):
It doesn't sound necessarily unhappy, just different.
Speaker 2 (10:48):
You know that kept coming back to this. It sounds sad,
but he's not sad. It sounds almost tragic. He didn't
feel tragic. He felt like he was living in his
own head and trying to make sense of the world
around him in his own peculiar way. So verbally facile
and so interested in the world around him that and.
Speaker 1 (11:12):
Yet never asked you a question that doesn't really job.
Speaker 2 (11:15):
Yeah, no, it doesn't jibe, but he's interested in ideas.
Speaker 1 (11:20):
We'll be back with more of Michael Lewis. Right after this,
we're back with author Michael Lewis. Let's talk about his
sort of rais on detra. So he had a dream
(11:41):
and that was to make a shitload of money and
give it away. Something that's called effective altruism, which actually
I hadn't heard of before. I mean, I know the
idea of it, you know, but that term.
Speaker 2 (11:53):
Yeah, the movie is fascinating.
Speaker 1 (11:55):
And well tell me, tell me about the movement and
how he got sucked into it.
Speaker 2 (11:59):
Right, So there's a whole intellectual prehistory we don't need
to get into. The modern version of it. Is Oxford
professors two thousand and eight ihs or so start to
make an argument that very little cost to yourself, you
middle class English person, could give away money so effectively
that you know, what might cost you a cup of
(12:20):
coffee saves a life in Africa. So how can you
possibly buy that cup of coffee for yourself if you
could save a life in Africa with that same money.
And they actually start to make the calculations on their
own salaries, like if we take everything but what we
absolutely need to live on, what over our lifetimes, what
could we accomplish? And it was like we save eighty
thousand African children from blindness. Then some numbers like that,
(12:43):
and they start to kind of put these ideas out
to young people actually, kind of almost like you build
a religion or a cult.
Speaker 1 (12:52):
When does this whole movement start.
Speaker 2 (12:54):
About two thousand and eight, two thousand and nine. But
by twenty twelve, when one of these philosophers names Will
mcgahe gives a talk that Sam here is at MIT.
It's in Cambridge at Harvard, but he was at MIT mcgaskell.
It is morphed a little bit. The movement morphs like
a few times, but this big morph was the idea was,
all right, you kid, you could go become a doctor
(13:16):
and go to Africa and in your lifetime you would
save two hundred people's lives. Or you could go work
at a high frequency trading from a Wall street and
make lots of money and pay fifty doctors to go
to Africa and save fifty times the number of lives.
So it thought he has earned a give and that's
the idea that animates Sam. It's like up to that point,
(13:39):
money's not on his radar screen. It's not like I
don't really care about it, doesn't think about it. He's
a kid of two professors at Safford who probably think
he's going to become a professor. Now where the movement
gets really a little out there is right after he
gets into it, it morphs again and they start to
argue about like the math of saving lives, and yeah,
(13:59):
you could give your dollars to save that kid's life
in Africa, but those same dollars could be given to
reduce certain existential risks to humanity. A pandemic that wipes
out the species, AI, out of control, climate change, risk
of nuclear war, and if you can do anything to
(14:19):
tilt the odds against all future human beings being wiped out,
the math suggests you should do that rather than safe living,
breathing ones.
Speaker 1 (14:27):
Now, so it swings to prevention.
Speaker 2 (14:29):
To prevention, that's for to prevention of a thing that's
going to be very hard to know whether you succeed
it or not, you know, because what you're trying to
do is stop something from happening. Right, So, all of
a sudden, there's a reason not to make just a
few million that this is like unlimited sums of money.
Infinite money is what we need. And that's the climate
in which Sam comes of age and develops his own
(14:50):
life ambition.
Speaker 1 (14:51):
So he wants more and more and more and more
for good?
Speaker 2 (14:54):
Is that more and more and more and more. Not
just more and more and more and more, but the
the twenty billionth dollar or the trillionth dollar is as
valuable as the nine hundred and ninety nine billionth dollar.
That it's just like there's no diminishing returns.
Speaker 1 (15:07):
So that captures his attention, gives him purpose, and he
settles on two causes, pandemic prevention, which you mentioned, and
then protecting democracies.
Speaker 2 (15:17):
So that's controversial, right. He has these effective altrus. It
is a movement. There are thousands of people involved in it.
It has certain cult like qualities, but it's also kind
of like an ant culpe because they're all into argument
and reason. So the movement can change, like someone makes
a better argument and it goes a different direction, and
Sam makes a new argument that actually irritates all the
effective altrus. It's that in addition to climate change, AI, pandemics, asteroids, whatever,
(15:43):
Donald Trump should be on that list right.
Speaker 1 (15:45):
Well, Basically his argument is that you need government. Government
is essential, and this is of course arguable and debatable,
but government is essential to solve some of the most
intractable societal problems. So we have to protect government, we
have to proctocracy, and that means basically neutralizing Donald Trump
at any cost.
Speaker 2 (16:04):
Yeah, that's exactly right, right, Yes, Yes, it's sort of
like if American democracy fails, democracy is going to fail,
and democracy is the best tool for addressing these problems.
And so Donald Trump has his name has been added
to this list of existential risk to humanity, and he.
Speaker 1 (16:19):
In fact offers fifty billion dollars to five Yeah, fifty
billion would be pretty hard to resist, wouldn't it. But
five billion dollars to Donald Trump to not run for
president of the United States, which apparently gets some traction.
Who did he meet with people high up in his circle?
Speaker 2 (16:39):
Sam?
Speaker 1 (16:40):
So?
Speaker 2 (16:40):
The way Sam's best I can tell political operation worked
is it essentially had two almost identical parts, one Republican,
one Democrat. He hired a bunch of Republicans in one
silo and a bunch of Democrats in the other, and
funded them both. And in the Republican silo, I do
know that the people there met with people very close
to Trump.
Speaker 1 (17:01):
That I do know that happened So how did Sam
Bankman Freed make so much money? Everyone thinks he's going
to be the world's first trillionaire. Let's break down what
he was doing for the bitcoin challenged, I among them,
which I now understand more having read your book and
read a lot of articles about this. But think of
(17:23):
this as cryptocurrency for dummies. What is exactly is cryptocurrency.
Speaker 2 (17:29):
It's made up money. It's a so it is an
idea that is hatched by someone. We don't know who
he is, but his pseudonym was Satoshi Nakamoto in two
thousand and eight. And the idea is a means of exchange,
a form of payment of a store of value that
is not sourced by the government, doesn't come out of
(17:52):
the government. It's us like this thing. We're going to
get a digital digital currency. It's a string of digits,
and we're going to say this is valuable, and it's
valuable if people believe it's valuable. And when it starts,
it seems preposterous, like why would anybody want a bitcoin?
It turns out it's not preposterous. Why would people want
a bitcoin? That ends up being an answer to the
(18:13):
question people who were kind of suspicious of governments, of institutions,
of banks, people who want to hold wealth in ways
that are hard to detect, people who want to make
payments without anybody knowing what they've done. That Bitcoin catches
on with a kind of a smallish group of people
who have got a religious fervor about it, and it's
mostly kind of libertarian types. When bitcoin starts to go
(18:36):
up in price the first place, there's only one digital currency,
it's just bitcoin.
Speaker 1 (18:40):
In the end, they're now thousands of them, right, And
he starts as an investor and then figures out there's,
you know, there's got to be a way to build
a better mouse trap. So he creates a platform called
ftx right.
Speaker 2 (18:52):
With that you can think of that as the cryptocurrency casino, right,
And just to sort of ease your anxiety about all this,
he didn't know about cryptocurrency care about it. I mean,
there's a technology underneath it that would take a long
time to explain. And every time I think I understand it,
I come back and I think I actually didn't understand
that as well as I should. He didn't care about
any of that. It was just a thing that went
(19:13):
up and down like tulip bulbs in price and then
he could buy and sell. That's how he gets in,
and he never really has to understand a whole lot more.
But what he does see when he gets in is
that the exchanges like the New York Stock Exchange, but
there are versions of the New York Stock Exchange for
cryptocurrencies where you can go and buy and sell cryptocurrencies,
and those exchanges, a lot of them were kind of flawed.
(19:36):
They they were risky to trade on. Sometimes they lost
everybody's money. And he realized that if you created a
better exchange, you could own the casino. And if you
own the casino, the way you get paid is every
time someone comes and makes a bet, you take a
little piece of it. You get a fee for every
bet that gets made. And so ultimately they're two hundred
and fifty billion dollars a month being traded on his
(19:58):
exchange FTX, and he takes out a tiny percentage, but
it ends up being a lot of money, so much
money that in twenty twenty one, he's they have a
billion dollars in revenues, four hun a million dollars in profits,
and venture capitalists are investing in him at a rate
that suggests the company's worth forty billion dollars. And this
happens in a matter of eighteen months from the time
(20:19):
he creates it in early twenty nineteen.
Speaker 1 (20:22):
But he had two companies. So he establishes FTX, but
the first company he built was called Alameda Alimeter Research,
Alameda Research, and that's where the trouble began.
Speaker 2 (20:33):
So he starts this his own little trading firm, Alameda.
Then he starts out of that this exchange and Alameda
is just one of the traders on the exchange. The
problem was when he started FTX, he couldn't get bank
accounts like dollar bank accounts for FTX. So if you, Katie,
wanted to put your money on FTX to start to
buy cryptocurrencies, there was no account at FTX you could
(20:56):
wire your dollars to or bring your dollars to. They
would hold the doll that could then be turned into cryptocurrency.
I mean you physically couldn't turn up right. You can
go from in Hong Kong. You got to wire some
money into account and the money is government money. It's
euros or dollars or it's yen. It starts that way.
And so people wanted to wire their money onto FTX.
(21:16):
FTIX didn't have any bank accounts because banks didn't want
to bank crypto exchanges, but they would bank Sam's original
trading business. And so in the beginning, you would wire
your money to Alameda in order to get it to FTX,
And I mean that was already bulky, Like that's weird,
and it's amazing that people did eight point eight billion
(21:37):
dollars turn up that way and nobody asked any questions.
And I've seen them, like the statements says you think
you're wiring at f TX, but it actually says Alameda
on it or some other Alameda subsidiary. But what should
have happened is once FTX got bank accounts or once
it got turned into crypto, that it be held in
either crypto wallets or in FTX bank accounts and be
(21:58):
completely separate From's trading fund. And it never was. So
that's that's not the only way the customer's money ended
up in Alameda, but it's the main way. And one
can speculate about how and why it didn't ever get
moved over like that that chunk of money. You know,
I have my theories, but they're unfounded and Sam's story
(22:22):
is that by the time they got a bank accounts
for FTX, the kind of pool of money that had
piled up inside of Alameda was such a small fraction
of what was in Alameda, eight out of one hundred,
So you know that it was just sort of like
he wasn't even thinking about it. That's his story. The
other thing is Sam is different, and so he's capable
(22:43):
of thinking things that I wouldn't think. And he was
capable of a radical sloppiness with money that I just
wouldn't be capable of. But if it were me and
I was thinking I have sinister intent or I just
don't care about my customer, I would think, well, they'll
never know. And it's a free loan, because that's how
it functioned, right, It's like the customer's money is in
the private hedge fund and no one's paying interest on it.
(23:06):
It's a free loan. And that's how it looks to
most people.
Speaker 1 (23:09):
When it all falls apart, how much money just vanished
into thin air.
Speaker 2 (23:14):
This is a great question. When the customers all come
from their money.
Speaker 1 (23:19):
At once, there's a run on the plan.
Speaker 2 (23:22):
There's a run on the on Sam's world, it's there's
about fifteen billion dollars that should have been there. When
they stop paying people back, there's about ten billion dollars
that's still missing. So five billion dollars got paid back,
and then so there's customers are out ten What we
now know is it was actually so the bankruptcy people
(23:44):
have announced these numbers. There's now eight point six billion
dollars of customers deposits, like customers are waiting to get
their eight point six billion dollars back. But against that,
the bankruptcy people have already found seven point three billion
dollars in liquid assets. So the whole right there is
one point three billion that looks like this went poof. However,
(24:05):
in addition, in Sam's world, there were all these investments
made that are not liquid assets. They are investments in
weird companies, startup companies, and at least one of those
investments is clearly worth more than a billion dollars one
out of a pile of three hundred. It's an investment
in an artificial intelligence company called Anthropic. So it is
(24:25):
conceivable that nothing went poof. It's conceivable that the customers
will all get one hundred cents on the dollar bag,
and that what they will have suffered was the inconvenience
of waiting for it. And it may be years, maybe
two or three years.
Speaker 1 (24:37):
I'm going to say conceivable, but likely.
Speaker 2 (24:40):
I mean, so it seems possibly, very possible, very possible
that people will all get their money bag, which would
be very Sam Bankman freed. It's sort of like this
huge mess, this huge drama, this huge like you know,
social convulsion, and in the end it's a shaggy dog story.
Speaker 1 (25:00):
While he could spend the rest of his life in
Christy good, right, I mean, whether people get their money
back or not, right, Michael, So what is what the
charges is he facing?
Speaker 2 (25:09):
This is what I've been told by a former prosecutor
who who now is a defense attorney, but she worked
in this office. Is prosecuting him that I'm told oddly
that there are no federal statutes about theft. You can't
just charge him with stealing people's money. The laws that
do exist are by using the federal mails, using the
(25:29):
internet to facilitate a theft. So he's charged with wire fraud,
with money laundering, with bank fraud. He's not charged with theft,
which is what really is the problem is here. So
they are complicated charges. There's seven of them. I think
they tried to throw in some more but they were
not able to do it. And when you add up
all the charges and the kind of sentences that attach
(25:50):
to those charges, he facing one hundred and twenty years
in jail. But then so first the jury will decide
convictor or quit. If they e quit, he's off. But
if he convict, the judge decides the sentence, and the
judge can do anything from just let him go, I
mean like a day of house arrest or something to
one hundred and twenty years in jail. And I suspect
(26:11):
this judge who has become so irritated with Sam he
can't even look at him. Sam, you know, under house
arrest has not been the best behaved defendant, that the
sentence was going to be heavy. So I don't know.
I think he's very likely going to go to jail.
It's possible, you never know what a jury's going to
do that he won't, but he's very likely to go
(26:32):
to jail. And what happens to him then, I don't know.
He's I really I said this on sixty Minutes and
it was a joke kind of, But think.
Speaker 1 (26:40):
Yeah, but I heard you said he'd be happier in
prison with the Internet than in a beautiful with penthouse
with no WiFi without exactly.
Speaker 2 (26:50):
And he apparently saw the Sixty Minutes Show in jail,
and he apparently told as lure as that's true.
Speaker 1 (26:58):
You know, he was surrounded by a lot of it people.
Nothing says I want to be your friend like someone
with a lot of money, right. I mean, you talked
about Anna Wintour doing a zoom. He got Tom Brady
to you know, to promote FTX, Steph Curry, Shaquille O'Neill,
Larry David got paid ten million dollars to do that
(27:20):
Super Bowl commercial. They spent what twenty five million dollars
on that commercial? Line yead, Yeah, it was, it was
it was. Yeah, it was a funny ad. Anything Larry
David does is funny to me. But do they have
any culpability? You know, they're they're promoting this unregulated platform,
They're they're vouching in essence for this kid and what
(27:41):
he's created, and a lot of people admire them and
listen to them and then invested in crypto. I mean,
I'm just curious, what do you think I don't think
they will, but I wonder if they should.
Speaker 2 (27:55):
Everybody was so all in on Sam bankmanfree it would
have been unusual for someone and not take the money.
And it wasn't just that's when you need Warren Buffett, right, Yes,
that's right, And it wasn't. This is going to sound odd.
It wasn't just the money. I mean, many of these
people could get their money from a lot of different places.
It's a bit more money than they might have gotten
from other places. But they really liked him. They really
(28:18):
liked him.
Speaker 1 (28:19):
Now can you understand that? Yes, after spending all that
time with him.
Speaker 2 (28:23):
Because he's so different from anything anyone they knew, and
he didn't behave the way people behave around celebrity.
Speaker 1 (28:28):
It's such a one way relationship. Like do you think
he ever asked Tom Brady a question?
Speaker 2 (28:32):
No, people wanted to hear what he had to say.
He was the new thing. He was a new thing.
And it wasn't that this money was falling off him.
That was part of it, but it wasn't just that,
And it was like.
Speaker 1 (28:45):
It was also that he understood this world that nobody
else did in a way.
Speaker 2 (28:50):
That's true, that he was explaining crypto. But take what
the other thing was. He is a response if you
look at the rise of Sam Beckmerfried and what are
the ingredients The decline line of institutional authority in the world,
the decline of government's ability to do anything about anything.
People are so sick of it, like why can't we
address climate change? Why can't these problems be? And people
(29:11):
are defaulting to looking to people. And he seemed actually
sincere in his desire to fix these problems, and people
wanted him to exist. People wanted there to be a Sam.
And you saw that it was palpable. It was not
just greed. It was more than that. It was complicated.
Speaker 1 (29:29):
When we come back, I'm going to finish things up
by talking with Michael about a personal tragedy is family experienced.
That's right after this, we're back with more of my
conversation with Michael Lewis. We only have five minutes. Can
(29:52):
I ask you just some general questions about your career, Michael.
One of your former subjects Billy Bean, of course from Moneyball.
He once said, you have a horsesh This is a
funny quote, A horseshoe in your underwear when it comes
to finding a good story. I mean, you do seem
to really be able to.
Speaker 2 (30:12):
I'm sorry, Katie, that's not a horseshoe.
Speaker 1 (30:20):
Okay, how do you find these good stories? Michael?
Speaker 2 (30:23):
I just wonder. It's not that there's no science to it.
I just wonder. I mean, Sam mcmurfree collides with me, right.
But here's what helps, not thinking you know what the
story is, not prejudging, not trying to impose order too
early on what you're saying. Just feeling like this is
interesting and I want more.
Speaker 1 (30:44):
Of it and I want to see what happens, and
having the luxury, to be honest with you, to spend
two years.
Speaker 2 (30:50):
But then there's a risk. I mean I got to
November of last year and I wasn't sure I had
a book. I was having arguments with friends about whether this.
They were arguing with me, like you should do it,
and I I'm not sure. I don't know where it's going.
And that has happened to me that I get stuck
in something for a while and it doesn't yield anything.
But I've marinated it for a year and where did
that year go? But that is it's just sort of like,
(31:12):
if I'm interested, genuinely interested, not trying to like force
some idea upon the world, and I let that interest
just flow over me. It eventually leads somewhere good. And
what's going on is if I'm interested, really interested, the
reader will be interested. And if I'm not interested, the
reader is going to be bored.
Speaker 1 (31:27):
But I think also you're able to marry personality with
complicated topics with sort of social impact, and you're able
to weave them all together in a way that's understandable
and entertaining, and I think that's your gift. Michael. Meanwhile,
congratulations for selling Going Infinite for five million clams to Apple.
Speaker 2 (31:48):
Do you believe the numbers you read in the newspaper?
Speaker 1 (31:50):
Is that not true?
Speaker 2 (31:51):
Well, it's never you know, they have to make the movie.
There's incentives as that kind of stuff. But yeah, it's.
Speaker 1 (31:55):
Still it's a nice chunk of change. Michael.
Speaker 2 (31:57):
Uh. Yeah, I hope it makes my horseshoe look even bigger.
Speaker 1 (32:03):
I love talking to You're such a fun interview and
you're heading out, but I just want to say one
thing before you leave. I just want you to know
that you and Tabitha and your family have been in
my thoughts so much since you lost your daughter Dixie
and her boyfriend in a car accident. I read that, Michael,
(32:26):
and I was honestly it was from afar crushing.
Speaker 2 (32:30):
I know that you know what pain is.
Speaker 1 (32:33):
I do, but losing a child I think is indescribable
and unparalleled pain. And you know, I know Tabitha a
little bit from when she was on NBC and always
really liked her. And I'm just so sorry for your loss,
and I'm glad that you are moving forward because you know,
(32:55):
I always think we're all terminal, like we just have
to make the most of the time we have. And
I just I just wanted you to know that you
and your family, your two other kids, Quinn and Walker, right, yep,
I've just been holding you all in my heart.
Speaker 2 (33:10):
Thank you. She sticks us alive in me. She's with me,
So she's in this book in a funny way. So yeah,
thank you.
Speaker 1 (33:21):
By the way, everybody, if you just can't get enough
of Sam Bankman Freed, Michael is going to be doing
a podcast called Judging Sam, chronicling the trial with the
different guest every week, so check it out. Thanks for
listening everyone. If you have a question for me, a
subject you want us to cover, or you want to
(33:41):
share your thoughts about how you navigate this crazy world
reach out. You can leave a short message at six
oh nine five one two by five oh five, or
you can send me a DM on Instagram. I would
love to hear from you. Next Question is a production
of iHeartMedia and Katie Kurk Media. The executive producers are Me,
(34:02):
Katie Couric, and Courtney Ltz. Our supervising producer is Marcy Thompson.
Our producers are Adrianna Fazzio and Catherine Law. Our audio
engineer is Matt Russell, who also composed our theme music.
For more information about today's episode, or to sign up
for my newsletter, wake Up Call, go to the description
in the podcast app, or visit us at Katiecouric dot com.
(34:26):
You can also find me on Instagram and all my
social media channels. For more podcasts from iHeartRadio, visit the
iHeartRadio app, Apple Podcasts, or wherever you listen to your
favorite shows.
Host
Katie Couric
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