FTX (with Sam Bankman-Fried & Mario Gabriele)

**Ben Gilbert** (0:00)
Hey Acquired listeners, David and I are recording this in November of 2022, while lots of news is coming out about FTX's collapse in real time. We recorded this episode about a year ago, and we wanted to acknowledge there's been lots of accusations and lots of very apparent wrongdoing by FTX and potentially Alameda since we recorded this. We wanted to leave this up for posterity. We recorded this interview, we think it's worth watching with full context.

**David Rosenthal** (0:30)
Indeed. Rather than making any sort of statement instead, we just finished recording a three plus hour long episode about the history of Enron, which felt like a much more appropriate acquired way to add to the conversation around FTX.

**Ben Gilbert** (0:48)
If you're watching this, we also recommend watching the Enron episode and hearing the discussion on that show as well. With that, on to the episode. Welcome to season nine, episode seven of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert and I'm the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.

**David Rosenthal** (1:27)
And I'm David Rosenthal, and I am an angel investor based in San Francisco.

**Ben Gilbert** (1:33)
And we are your hosts. Today, we are telling the story of the crypto trading exchange, FTX, started just two and a half years ago and today worth over $25 billion. They're by far the fastest growing crypto exchange. In the research, I found that they grew an astonishing 10X by volume in the year 2020 I went to look if they repeated that unbelievable feat in 2021 and found out that they actually 10Xed just in the first half of 2021

**David Rosenthal** (2:03)
So the answer is no, they didn't, they doubled it.

**Ben Gilbert** (2:07)
Unbelievable. So the pace is accelerating for FTX. We're still waiting on end of year numbers, but this company is just astonishing. So FTX is now the sponsor of the Miami Heat's basketball arena, FTX arena. And you can see their logo on every Major League Baseball umpire's uniform. You can see Tom Brady and Gisele and FTX commercials. It's wild. So what is going on here? And how did they get so big, so fast? What's with these huge brand deals? Today, we're going to tell the story with the CEO and founder, Sam Bankman-Fried. Sam is a genius and effective altruist. And he's also the wealthiest person under 30 in the world with an estimated net worth of nearly $9 billion. And we are trying something new at Acquired. We have a guest host here with us today. We've brought in Mario Gabriele from The Generalist to team up for this episode. Welcome, Mario.

**Mario Gabriele** (3:02)
Thank you guys so much for having me. I'm quite honored to get to be the first.

**Ben Gilbert** (3:08)
You bet. Listeners, if you haven't read it yet, Mario did a three-part epic series on FTX over at The Generalist. I think it's safe to say, Mario, you are truly a world expert on this company after writing, I think, 36,000 words.

**Mario Gabriele** (3:23)
Yeah, it was a long series. Brevity is never really my strong suit, but I really let myself fly on this one.

**Ben Gilbert** (3:30)
I think that's why us and you and Paki get along so well.

**David Rosenthal** (3:34)
We are all birds of a feather.

**Ben Gilbert** (3:37)
Before we get in, is it right to say, Mario, is this company only 200 employees? And I think maybe started the year at a few dozen employees.

**Mario Gabriele** (3:45)
Yeah, that's right. When I wrote my pieces in summer, it was closer to, I want to say 70, 75 So they're growing extremely fast, but still, when you look at the output, the leverage on each individual person is astonishing.

**Ben Gilbert** (4:02)
This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (4:08)
So Crusoe, as listeners know by now, is a clean compute cloud provider, specifically built for AI workloads. NVIDIA is one of their major partners, and literally, Crusoe's data centers are nothing but racks and racks of A100s and H100s. And because Crusoe's cloud is purpose-built for AI and run on wasted, stranded or clean energy, they can provide significantly better performance per dollar than traditional cloud providers.

**Ben Gilbert** (4:33)
Yes, we talked about that on our ACQ2 episode with Crusoe's CEO, Chase Lockmiller.

**David Rosenthal** (4:39)
The other element that makes Crusoe special is the environmental angle. Crusoe, of course, locates their data centers at stranded energy sites. So think oil flares, wind farms that can't use all the energy they generate, etc. And uses that power that would otherwise be wasted to run your AI workloads instead.