- Sam Bankman-Fried built FTX into a global exchange last valued at $25 billion in just two years.
- The crypto billionaire said he is most worried about the firm becoming “slow and dysfunctional.”
- To beat competitors, he maintains a small team, makes hard decisions, and works with regulators.
In just two years, Sam Bankman-Fried has built FTX into a $25 billion global crypto exchange as the 29-year-old himself went from relative obscurity to accumulating a net worth of $26.5 billion.
But the Wall Street trader-turned crypto founder has shown no signs of slowing down in his quest to rapidly expand FTX.
He is already seeking to raise another $1.5 billion for the company, just six weeks after the last funding round that drew 69 investors, according to The Information, which cited two unnamed sources with knowledge of the matter. A spokesperson for FTX said he could not confirm or deny reports of the new round, which would value FTX at $32 billion and its US division at $8 billion.
The latest milestone would cap off a blockbuster year for FTX, which has soared to rank sixth in spot trading and second in derivatives trading, according to CoinGecko. Along the way, the company bought US-based derivatives exchange LedgerX and launched an NFT marketplace all while winning naming rights to the Miami Heat’s home court and securing partnerships with some of the biggest names in sports, business, and entertainment, from NBA star Steph Curry to famed NFL quarterback Tom Brady.
Even with all these achievements, Bankman-Fried is still facing tough questions.
A thorny dilemma
For one thing, FTX has a remarkably small staff relative to competitors. The crypto exchange was built by just two software developers during its first six months, according to Bankman-Fried. Today, the company employs between 10 and 25 developers working on the exchange and all of its subsidiaries, it said.
“The single thing I’m most worried about for FTX is that we become slow and dysfunctional,” Bankman-Fried said. “I hope we won’t, but we’ve seen it happen at a lot of companies.”
In his view, hiring too many employees too quickly could lead to inefficiency and even internal chaos. As a result, FTX has hired “way fewer people than we otherwise would have,” Bankman-Fried said. “And there’s a cost to that but I think that cost is well worth paying.”
Indeed, some former FTX employees told Insider they had to leave their jobs due to burnout.
“Whilst it’s inspiring to work with SBF, it’s grueling at the same time,” said Noah Dummett, a former trader at FTX and Alameda, in an email to Insider. “The expectation is that everyone at the company is working towards a common goal, and you should optimize your time and direction to point towards that goal at all times. Maintaining relationships outside of Alameda and FTX is difficult, and burnouts are common.”
However, by having a smaller team, Bankman-Fried said he can quickly make decisions and push new releases.
“We will only grow the team to the extent that we feel like we can actually sustainably manage that growth and that will be adding for total output as a company rather than just leading to situations where people are getting in each other’s ways,” he said.
To ensure this, Bankman-Fried sometimes even helps out on technical support.
“Sam will still, to this day, jump in and answer a support ticket,” said Ryan Salame, CEO of FTX Digital Markets.
Working with regulators
Another potential roadblock to the growth of crypto companies like FTX is regulation.
While rival exchanges have racked up big fines or faced regulatory probes, FTX has managed to stay out of trouble.
Amy Wu, a venture capitalist at Lightspeed who invested in FTX’s most recent funding round, said that as far as she’s aware, FTX is the only exchange to avoid negative press around regulation.
“FTX actually is one of the most compliant and closest to regulators of any crypto exchange in the world,” she said.
In Bankman-Fried’s view, a company that is effective at building and rolling out products should be just as effective at responding to regulators.
“If you are not, as a company, able to successfully roll out a new product feature promptly,” he said, “that’s often also a sign that you would not as a company be able to successfully implement features for consumer protection promptly and that you would not be able to take feedback from regulators promptly.”
To achieve that kind of efficiency, FTX does “what needs to be done” when it comes to working with regulators, whether that is conforming with what they want or applying for licensing to be able to offer certain products.
Bankman-Fried also stays in active contact with regulators.
Earlier this month, he testified before Congress about digital assets and the future of finance. While most policymakers at the hearing said they were willing to engage in refining regulations for the crypto industry, some viewed the rapid growth of digital assets as a threat to financial stability and expressed other concerns, such as the use of digital currencies to fund criminal activities.
“The industry has the potential to improve a lot of people’s lives,” he countered at the hearing.
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