The S.B.F. Orphanage

The FTX debacle is one of those rare instances where institutional investors have come forward to offer at least some semblance of an explanation for why they did what they did. Photo: Alex Wong/Getty Images
William D. Cohan
November 30, 2022

Supposedly smart investors lose money all the time in companies that go down the tubes, with nary a word of apology or explanation—that patented billionaire shit-happens shoulder-shrug that’s intended to make L.P.s recognize that they are lucky enough to have their money put to work by the pros. But there is something different about the Sam Bankman-Fried financial disaster that has caused at least two of the sophisticated money players behind FTX, his crypto exchange company, to come forward to try to explain publicly how and why they screwed up. 

It’s notable that Sequoia Capital, the legendary Sand Hill Road venture capital firm that invested early in companies from Apple to Google and LinkedIn to Instagram, and Temasek, the sovereign wealth fund of Singapore, wrote their own Ninety Five Theses of sorts explaining the errors of their ways (sanitized by their lawyers, obviously) in flushing $500 million down the toilet. These attempts at explanations are interesting from a forensic perspective. For instance, if they did all the due diligence on S.B.F. and FTX, as they claimed to have done in their apologias, they might think seriously about stepping up their games because this won’t cut it in the Big Leagues.

The Sequoia brain trust, led by partner Alfred Lin and “young gun” Michelle Bailhe, was particularly wowed by S.B.F.’s beanbag-lounging grad student schtick. Lin, of course, was the purported adult in the room during the infamous June, 2021 Zoom conversation in which S.B.F. was distractedly playing video games while Sequoia’s partner kvelled about his genius. (“I LOVE THIS FOUNDER,” typed one partner. “I am a 10 out of 10,” pinged another. “YES!!!” exclaimed a third.)