Disheveled, young and exceedingly brainy, Sam Bankman-Fried perfectly fit the role of a Silicon Valley mogul in the making. The 30-year-old founder of the cryptocurrency exchange FTX leaned into the Silicon Valley stereotype and then some, playing video games while pitching investors and wearing a T-shirt and shorts onstage with Bill Clinton and Tony Blair. Blue-chip investors fell for his persona, and Mr. Bankman-Fried profited greatly, with his estimated net worth reaching over $26 billion at one point.
That net worth is now close to zero. Last week’s sudden collapse of FTX — which nine months ago was the star of a Larry David Super Bowl ad — evaporated billions as revelations emerged of questionable transfers between FTX and Mr. Bankman-Fried’s trading company. Law enforcement is now investigating, which could lead to criminal charges.
We’ve seen this movie before: A casually attired whiz kid emerges from seemingly nowhere, is proclaimed both savant and saviour, and takes the world by storm. Growing concern about Big Tech’s power and intense criticism of onetime wunderkinds like Mark Zuckerberg and Jeff Bezos set the stage perfectly for a figure like Mr. Bankman-Fried. Amid power-hungry moguls and crypto hustlers, here was a white-knight superhero in the perfect costume, championing philanthropy and pledging to make the world a better place — for real, this time.
But even Mr. Bankman-Fried’s collapse probably won’t kill the whiz kid archetype. This all-American notion has fueled some spectacular meltdowns — but also scored big wins. The willingness of US investors and customers to take bets on the young, untested and brainy has delivered world-transforming innovations and companies — a computer on every desk, a smartphone in every hand.
But the whiz kid fixation also reflects a less healthy societal tendency to overstate the importance of individual “genius” and gloss over other things critical to any whiz kid’s success — especially connections, timing and luck. It also devalues experience and maturity. We invest so much in the ideal that it excludes those who don’t fit the part, and places too much faith in those who do.
Silicon Valley’s whiz kids owe their mythology to America’s very beginnings. Ben Franklin, who conducted electrical experiments in lightning storms in the 1750s, shocked the bewigged and bejeweled French court in the 1770s by arriving in a homespun coat and frontiersman’s fur cap. Thomas Jefferson, Virginia planter and perpetually tinkering inventor, padded around the White House wearing the early 1800s version of work-from-home sweatpants.
Their getups deliberately sent a message to their fellow citizens and to European rulers: Americans were democratic, humble and uninterested in dressing to show off their wealth. They were too busy working and inventing to bother.
The Great Inventor himself, Thomas Edison, holder of over 1,000 patents, cannily cultivated an eccentric-genius reputation. At the peak of his fame in the 1870s and 1880s, Edison wore rumpled suits and played pranks on co-workers using dangerous chemicals. Admirers pointed to these quirks as further signs of Edison’s brilliance.
And while Edison had detractors, he was never as controversial as the railroad barons, steel kings and financiers whose sharp-elbowed and sometimes fraudulent dealings drove the boom-and-bust Gilded Age economy.
The whiz kid myth lay largely dormant until the 1970s, when the buttoned-up business type was under siege, and once unassailable American brands were being battered by oil shocks, stagflation and foreign competition. Enter Steve Jobs of Apple and Bill Gates of Microsoft: impossibly young, tousle-haired, looking nothing like typical business executives. One venture capitalist who visited Apple’s first headquarters — in Mr. Jobs’ parents’ suburban garage — quipped that the wispy-bearded entrepreneur and his business partner Steve Wozniak looked like “renegades from the human race”.
Freckled and slight, Mr. Gates looked more like a teenager and could behave that way as well. “At times during an interview he slumped so far in his chair as to be almost prone,” wrote a Seattle Times reporter in 1982. Mr. Gates’s co-founder, Paul Allen, was “a large, heavily-bearded, mild-mannered man who wore a rumpled corduroy sports jacket”. To become a tech millionaire, it seems, you need to avoid using an iron.
Then the dot-com boom took the stereotype into hyperdrive, largely because being a tech whiz kid now meant becoming really, really rich. “The Golden Geeks”, exclaimed a headline on the cover of Time magazine in early 1996 featuring Marc Andreessen, the 24-year-old co-founder of Netscape, sitting (barefoot, of course) on a gilded throne.
The dot-com bust tanked companies and investment portfolios. Instead of dispensing with the whiz kid model, however, Silicon Valley doubled down. Venture capitalists lost money when the bubble burst, but they were still far wealthier than before the boom, and they knew that the internet age was only getting started.
Out of another garage came Sergey Brin and Larry Page of Google, who took that brand of iconoclasm and scaled it up to an entire enterprise. Six years later, in 2004, out of a Harvard dorm room, came Mark Zuckerberg of Facebook — similarly single-minded and geeky, readily posing barefoot, making the hoodie into a shorthand signal for business genius.
As the tech world and its group of golden geeks got larger, wealthier and ever more dominant, one thing stayed the same. The whiz kids were, almost exclusively, male, white and young. Women could never get away with being such slobs.
They could, however, dress the part in other ways. Less than a decade ago, the Theranos C.E.O. Elizabeth Holmes seized the public’s imagination by wearing Steve Jobs-style black turtlenecks and professing a single-minded devotion to changing the world. She had a seemingly monastic routine, an awkward affect and an unvarying wardrobe — like Mr. Zuckerberg, she explained that she wore the same thing every day to avoid having to make one more decision. All these things had become so strongly associated with successful tech founders that they served as proxies for her credibility.
Revelations that Theranos’ vaunted blood-testing technology didn’t work led to Ms. Holmes being tried and convicted of criminal fraud. Last week, Ms. Holmes was denied a retrial and will soon be sentenced. The downfall of “the female Steve Jobs” may have made it even more difficult for women and other underrepresented entrepreneurs to obtain funding.
We are waiting to learn whether Mr. Bankman-Fried’s actions crossed the line from questionable to fraudulent. But the fact that the rocketing rise and sudden tumble of him and Ms. Holmes — magnetic, charismatic and remarkably good at getting rich people to give them money — occurred so close together should serve as a warning.
It is not surprising that a nation born from the overthrow of hereditary wealth has long celebrated self-made inventors who forge an independent path. But the startling fall of Sam Bankman-Fried is a good moment to reflect on the perils of placing so much money, faith and power in the hands of a few golden geeks.
This article originally appeared in The New York Times.
Margaret O’Mara is a history professor at the University of Washington and the author of “The Code: Silicon Valley and the Remaking of America”.
