Maybe a few years in a federal prison will be good for Sam Bankman-Fried. The high-tech grifter went from billionaire to broke in a matter of days when investors realized that his FTX crypto-currency trading platform had vaporized their money. FTX was a Ponzi scheme purpose-built to snare investors like them—people who thought they were smarter than everyone else. Up until his arrest on December 11, SBF, as Bankman-Fried styles himself, was still giving interviews. Like a frat boy who got caught “borrowing” the college president’s car, he seemed to think he could still talk his way out of this mess. But he’s about to learn that embezzling money is a crime. Even when the alleged embezzler is a fuzzy-headed nerd who convinced everyone he was just trying to save the world.
He’ll have time in the pokey to reflect on his place in history. Because, like John DeLorean, or Bernie Madoff, or those jerks at Enron—or, heck, like Charles Ponzi—SBF is going to be remembered as the face of an era. For decades to come, he will symbolize a turning point in our culture: the moment we stopped believing in the limitless genius of our tech gurus.
I’ve spent much of my career covering technology. I’ve met visionaries like Akio Morita, Bill Gates, Steve Jobs, and Elon Musk. And I’ve seen how journalists, investors, and tech fans sometimes erect credulous cults around the entrepreneurs they admire. Fortunately, most tech superstars aren’t crooks like SBF. And their products are more than smoke and mirrors. Steve Jobs’s vision for the Mac, the iPhone, and the iPad really did change the world. And Musk’s Tesla vehicles and SpaceX rockets are reinventing transportation on this planet—and off it. Until this year at least, anyone who invested early in today’s leading tech companies did very, very well.
But for decades, warning signs have been flashing that even entrepreneurial geniuses shouldn’t be immune from skepticism. In the 1990s, Enron claimed to have invented a high-tech system for trading energy supplies. Wall Street and the financial press believed that Enron’s energy wonks were “the smartest guys in the room.” New York Times columnist Paul Krugman signed on as an adviser. When the shell game finally imploded, investors lost billions.
In 2003, Stanford dropout Elizabeth Holmes—an Enron VP’s daughter—launched Theranos. The company was going to revolutionize health care by making lab tests quick and cheap. Holmes recruited famous board members (Henry Kissinger, James Mattis), appeared on magazine covers (Fortune, Forbes, Glamour), and quickly became “the world’s youngest, self-made, female billionaire.” Theranos and Enron had a lot in common. Both companies touted tech platforms that would transform their industries; and, in both cases, even their investors and board members didn’t understand how those technologies worked. Initially, Holmes probably believed her blood-testing gizmo would eventually perform as promised. But when it didn’t, she ordered her staff to start faking test results. She should get out of prison by 2034.
SBF, Holmes, and the Enron gang are outliers, of course. But some of our most acclaimed entrepreneurs have skated pretty close to this ethical precipice. After all, any great tech breakthrough involves a leap of faith on the part of inventors and investors alike. Steve Jobs’s first iPhone demonstration involved elaborate sleights of hand to keep the crash-prone device working. He gambled that the bugs would be fixed before the first units shipped—and they were. Elon Musk is notorious for promising wildly optimistic product timelines. Over time, we remember the gambles that worked and forgive the rest (unless they wind up in court). In fact, we celebrate the entrepreneurial high-wire act.
Or at least we did. These days, our tech visionaries seem to be stumbling more than at any time since the first digital bubble burst two decades ago. It’s not because they are all crooks like SBF. More often they’re just overconfident, or simply in over their heads. Are the wheels coming off the tech juggernaut? There’s no doubt the digital business isn’t what it used to be. Online advertising plummeted in the past year, undermining revenues for platforms including Google, Twitter, and Facebook. Facebook’s parent company has seen its stock price fall more than 60 percent since 2021.
As these businesses tumble, so do our opinions of their founders. From the time he launched Facebook in his dorm room, Mark Zuckerberg was the paradigm of the young tech visionary. His nerdy awkwardness was seen as proof of his brilliance and authenticity. He could do no wrong. Today, Zuckerberg seems a bit lost. With Facebook’s popularity sliding among young people, he bet on the next big thing: a virtual-reality “metaverse” where VR-goggle-wearing users can interact in a vast digital netherworld. He even changed the company’s name to Meta Platforms. Oops. The company’s VR division is on track to lose $10 billion in 2022. Now the company is firing workers and closing offices as quickly as it can.
Amazon is shedding staff as well. Founder Jeff Bezos became one of the world’s richest people by building a company that delivers everything from food to furniture directly to your door. It’s a logistical miracle. But it wasn’t enough. Bezos wanted his company to be even more intertwined with our lives, to be part of our conversations and involved in all our transactions (of which Amazon would take its cut, of course). So the company launched the Alexa voice assistant. The product sold well, and people like using Alexa to cue up their favorite songs. But it turns out they don’t want to order pizzas or plane tickets by talking to a gadget that keeps mixing up “Madonna” and “Wynonna.” Alexa became a “colossal failure,” writes Ars Technica. Amazon’s hardware division is forecast to lose $10 billion this year.
Bezos and Zuckerberg are learning that just because someone is fabulously successful in one arena doesn’t mean he’s a natural genius in every field. But you can see where they would get that idea. Decades of fawning press coverage, tech-fanboy adoration, and massive wealth accumulation can go to a person’s head. No one exemplifies that occupational hazard more than Elon Musk. The thing is, Musk actually has been successful in wildly diverse fields. He moved from Pay Pal to Tesla to SpaceX and defied the skeptics each time. But he has often veered off on quixotic quests: his Hyperloop alternative to high-speed rail, a rooftop solar company that fizzled, his tunnel-boring start-up that has yet to complete a major project despite years of promises. Now Musk says that his Neuralink start-up will begin implanting computer chips in human brains “in about six months.” Along the way he finds time to offer advice on Taiwan’s independence, how to end the war in Ukraine… He’s an instant expert on everything.
It’s enough to make even the most ardent Musk fan want to say: Focus, man. Focus! Musk might be the greatest entrepreneur of his generation, but that doesn’t make him a geopolitical savant, or a neuroscientist, or an infrastructure expert. I’d like to see him salvage Twitter before he goes looking for more dragons to slay. Not so long ago, the media would have overlooked Musk’s overreach. These days he can’t catch a break—especially since he left the progressive reservation and started talking about allowing free speech on the Internet. Imagine the gall.
So far, Sam Bankman-Fried has been getting gentler treatment from the press than Twitter’s new owner. When he appeared at a recent New York Times conference, SBF got a warm round of applause. It probably doesn’t hurt that he dropped $40 million supporting Democrats in the last election cycle. Or that he sluiced millions to liberal journalism outlets.
Now that SBF’s checks are bouncing, maybe our media and financial luminaries see him in a more jaundiced light. They might even look a little more skeptically at all the stories spun by our tech geniuses. It won’t be a moment too soon.
This piece orignially appeared on Commentary
James B. Meigs is a senior fellow at the Manhattan Institute, a City Journal contributing editor, cohost of the How Do We Fix It? podcast, and the former editor of Popular Mechanics.
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