4 ms·

Always makes you wonder how many companies that are successes today could’ve had their SBF moment, but market conditions kept them afloat

adamgordonbell 1y ago
> In the early days of FedEx, Smith had to go to great lengths to keep the company afloat. In one instance, after a crucial business loan was denied, he took the company's last $5,000 to Las Vegas and won $27,000 gambling on blackjack to cover the company's $24,000 fuel bill. Some who take on unreasonable risk will be among the most successful people alive. Most will lose eventually, long before you hear about them if they keep too many taking crazy risks. Who is a great genius, and is who is just winning at "The Martingale entrepreneurial strategy"?
- matheist 1y ago
  You know, it only just now occurs to me to wonder if the blackjack story is the public sanitized version of "how I got $24k because I'm not allowed to tell you the real version"
  - askafriend 1y ago
    Great thought, that seems very likely since so many "founder stories" are heavily spun tales.
  - Analemma_ 1y ago
    Las Vegas still had deep mafia ties in the 1970s so that’s very possible.
- FireBeyond 1y ago
  What this version of the FedEx story doesn't mention is that Fred was already stiffing his pilots on their salaries. Taking the last money in the company and deciding that the best use for it was the blackjack table in Vegas and not paying his employees ... worked well, but it was a gamble, let's be clear, not a calculated decision - like you say, not the decision of a "great genius". It goes a different way, and you have "FedEx founder decides to go gambling, leaving his employees without paychecks".
  - jjmarr 1y ago
    If your marginal utility of money increases with more, it's a rational decision to go to a casino and gamble.
    - mothballed 1y ago
      The casino is an extremely rational savings model if you expected to constantly be robbed and want to convert small (and thus not worth robbing) income streams into occasionally large sums of money to be spent rapidly. I.e. say you are a north korean worker in China/Russia and you occasionally get small change to spend on cigarettes, you could gamble it every 'paycheck' and eventually buy a phone to escape with the winnings. Filipinos have a more predictable low-loss version of this call Paluwagan.
      - barchar 1y ago
        It can also be a way to evade capital controls. You know you'll lose, but otoh you also know you'll probably not lose _everything_ and you buy in with RMB and cash out in HKD.
hn_throwaway_99 1y ago
I think it's really objectionable to refer to this as an "SBF moment". It's not just about surviving a downtown and unforseen circumstances with some luck (like the sibling talking about FedEx barely making it). Tesla, for example, was famously extremely close to bankruptcy. But SBF got into the situation he was in due to his egregious fraud. The accounting at FTX was a criminal joke, with multiple sets of books, bypassable controls, outright fake numbers. My guess is that if SBF had survived that particular BTC downturn that his extreme hubris and willingness to commit fraud would have eventually done him in - downturns always happen at some point, and his brazenness in his criminal enterprise showed no signs of learning from mistakes. Sure, all hugely successful companies have a ton of luck involved. But I think it's a mistake to pretend that SBF was just done in by bad timing, or that all companies do what he did. His empire collapse was pretty inevitable IMO if you look at what a clown show FTX was under the covers.
- arduanika 1y ago
  Correct. Companies go bust all the time, for market timing reasons that are mostly out of their control. But going bust is different from going bust and stealing billions. Whether by negligence or intent, FTX was arranged so that they couldn't go bust without stealing.
- FinnLobsien 1y ago
  But that’s precisely what I mean. How many companies had similarly sketchy situations, cleaned up their act and nobody ever noticed? That number isn’t 0
- llamasushi 1y ago
  Lol, tether, bitfinex are examples that came to mind. A lot of the OG crypto instutions got to where they are by "faking it till they made it" long enough to actually make it. Does no one still remember that tether continually stalled audits FOR YEARS in the face of increasing scrutiny?
zmmmmm 1y ago
It's a slightly different context, but Apple probably would have gone out of business if Microsoft hadn't needed them so badly to exist due to antitrust. Hard to imagine how different the world would have been now if that had happened.

adamgordonbell 1y ago

> In the early days of FedEx, Smith had to go to great lengths to keep the company afloat. In one instance, after a crucial business loan was denied, he took the company's last $5,000 to Las Vegas and won $27,000 gambling on blackjack to cover the company's $24,000 fuel bill. Some who take on unreasonable risk will be among the most successful people alive. Most will lose eventually, long before you hear about them if they keep too many taking crazy risks. Who is a great genius, and is who is just winning at "The Martingale entrepreneurial strategy"?

matheist 1y ago
You know, it only just now occurs to me to wonder if the blackjack story is the public sanitized version of "how I got $24k because I'm not allowed to tell you the real version"
- askafriend 1y ago
  Great thought, that seems very likely since so many "founder stories" are heavily spun tales.
- Analemma_ 1y ago
  Las Vegas still had deep mafia ties in the 1970s so that’s very possible.
FireBeyond 1y ago
What this version of the FedEx story doesn't mention is that Fred was already stiffing his pilots on their salaries. Taking the last money in the company and deciding that the best use for it was the blackjack table in Vegas and not paying his employees ... worked well, but it was a gamble, let's be clear, not a calculated decision - like you say, not the decision of a "great genius". It goes a different way, and you have "FedEx founder decides to go gambling, leaving his employees without paychecks".
- jjmarr 1y ago
  If your marginal utility of money increases with more, it's a rational decision to go to a casino and gamble.
  - mothballed 1y ago
    The casino is an extremely rational savings model if you expected to constantly be robbed and want to convert small (and thus not worth robbing) income streams into occasionally large sums of money to be spent rapidly. I.e. say you are a north korean worker in China/Russia and you occasionally get small change to spend on cigarettes, you could gamble it every 'paycheck' and eventually buy a phone to escape with the winnings. Filipinos have a more predictable low-loss version of this call Paluwagan.
    - barchar 1y ago
      It can also be a way to evade capital controls. You know you'll lose, but otoh you also know you'll probably not lose _everything_ and you buy in with RMB and cash out in HKD.

hn_throwaway_99 1y ago

I think it's really objectionable to refer to this as an "SBF moment". It's not just about surviving a downtown and unforseen circumstances with some luck (like the sibling talking about FedEx barely making it). Tesla, for example, was famously extremely close to bankruptcy. But SBF got into the situation he was in due to his egregious fraud. The accounting at FTX was a criminal joke, with multiple sets of books, bypassable controls, outright fake numbers. My guess is that if SBF had survived that particular BTC downturn that his extreme hubris and willingness to commit fraud would have eventually done him in - downturns always happen at some point, and his brazenness in his criminal enterprise showed no signs of learning from mistakes. Sure, all hugely successful companies have a ton of luck involved. But I think it's a mistake to pretend that SBF was just done in by bad timing, or that all companies do what he did. His empire collapse was pretty inevitable IMO if you look at what a clown show FTX was under the covers.

arduanika 1y ago
Correct. Companies go bust all the time, for market timing reasons that are mostly out of their control. But going bust is different from going bust and stealing billions. Whether by negligence or intent, FTX was arranged so that they couldn't go bust without stealing.
FinnLobsien 1y ago
But that’s precisely what I mean. How many companies had similarly sketchy situations, cleaned up their act and nobody ever noticed? That number isn’t 0
llamasushi 1y ago
Lol, tether, bitfinex are examples that came to mind. A lot of the OG crypto instutions got to where they are by "faking it till they made it" long enough to actually make it. Does no one still remember that tether continually stalled audits FOR YEARS in the face of increasing scrutiny?

zmmmmm 1y ago

It's a slightly different context, but Apple probably would have gone out of business if Microsoft hadn't needed them so badly to exist due to antitrust. Hard to imagine how different the world would have been now if that had happened.