I think the encouragement I gave people represents a moral failure on my part. I should have realized I didn’t have enough information to justify it, even if I never heard about specific bad behavior.
I don’t know the specific circumstances of your or anyone else’s encouragement, so I want to be careful not to opine on any specific circumstances. But as a general matter, I’d encourage self-compassion for “small fish” [1] about getting caught up in “irrational exuberance.” Acting in the presence of suboptimal levels of information is unavoidable, and declining to act until things are clearer carries moral weight as well.
In retrospect, we know that the EA whispernet isn’t that reliable, that prominence in EA shouldn’t be seen as a strong indicator of reliability, that the media was asleep at the wheel, and that crypto investors exercise very minimial due dillgence. But I don’t think we should expect “small fish” to have known those things in 2021 and 2022.
Hell even if SBF wasn’t an unreliable asshole, Future Fund could have turned off the fire hose for lots of reasons. IIRC they weren’t even planning on continuing the regrantor project.
As far as other potential failure modes, I think an intelligent individual doing their due dilligence before making a major life decision would have spotted those risks. It would have been easy to find out (without relying on inside EA knowledge) that anything crypto is risky as hell, that anything involving a company that has only been in operation a few years is pretty risky on top of that, that SBF didn’t have a long track record of consistent philantrophy at this level, and (in most cases) that the grants were fairly short-term with no guarantee of renewal.
Given that we should be gentle and understanding toward small fish who relied on FTX funding to their detriment, I would extend similar gentleness and understanding toward small fish who encouraged others (at least without actively downplaying risks). So I think there’s a difference between encouragement that actively downplayed those risks, and encouragement that did not affirmatively include a recognition of the relatively high risk.
But it would also have been cool if that low key, “don’t rely on Sam- I’m not accusing him of anything malicious, he’s just not reliable” type of information had circulated widely enough that it reached me and the other very small fish, especially the ones taking major risks that only made sense in an environment where FTX money flowed freely.
I directionally agree, but think it is important to recognize that the signal of SBF’s unreliability would likely be contained in a sea of noise of inaccurate information, accurate information that didn’t predict future bad outcomes, and outright malicious falsehoods. A rational individual would discount the reports, with the degree of discount based on the signal:noise ratio of the whispernet and other factors.
Given the reasons FTX funding could fall through for reasons unrelated to SBF’s character or reliability, I predict that such a signal getting out would have had a meaningful—yet fairly modest—effect on proper risk evaluation by a small fish. For sure, an increase from 30% to 40% risk [making numbers up, but seems roughly plausible?] would have changed some decisions at the margin (either to accept grants or not to take more precautions).
But we would also need to weigh that other decisions would have changed for the worse because of noise in the whispernet about other people. While the tradeoff can be mitigated to some extent, I think it is largely inherent to whispernets and most other reputation-based systems. I generally think that assessing and communicating this sort of risk is very difficult, and that some sort of system for ameliorating the situation of people who get screwed is therefore a necessary piece of the solution. To me, this is similiar to how a rational response to the risk of fire includes both fire prevention (being aware of and mitigating risks) and fire insurance (because prevention is not a foolproof process).
I think expecting myself to figure out the fraud would be unreasonable. As you say, investors giving him billions of dollars didn’t notice, why should I, who received a few tens of thousands, be expected to do better due diligence? But I think a culture where this kind of information could have bubbled up gradually is an attainable and worthwhile goal.
E.g. I think my local community handled covid really well. That didn’t happen because someone wrote a big scary announcement. It was an accumulation of little things, like “this is probably nothing but always good to keep a stock of toilet paper” and “if this is airborne masks are probably useful”. And that could happen because those small statements were allowed. And I think it would have been good if people could similarly share small warnings about SBF as casually as they shared good things, and an increasingly accurate picture would emerge over time.
I don’t know the specific circumstances of your or anyone else’s encouragement, so I want to be careful not to opine on any specific circumstances. But as a general matter, I’d encourage self-compassion for “small fish” [1] about getting caught up in “irrational exuberance.” Acting in the presence of suboptimal levels of information is unavoidable, and declining to act until things are clearer carries moral weight as well.
In retrospect, we know that the EA whispernet isn’t that reliable, that prominence in EA shouldn’t be seen as a strong indicator of reliability, that the media was asleep at the wheel, and that crypto investors exercise very minimial due dillgence. But I don’t think we should expect “small fish” to have known those things in 2021 and 2022.
As far as other potential failure modes, I think an intelligent individual doing their due dilligence before making a major life decision would have spotted those risks. It would have been easy to find out (without relying on inside EA knowledge) that anything crypto is risky as hell, that anything involving a company that has only been in operation a few years is pretty risky on top of that, that SBF didn’t have a long track record of consistent philantrophy at this level, and (in most cases) that the grants were fairly short-term with no guarantee of renewal.
Given that we should be gentle and understanding toward small fish who relied on FTX funding to their detriment, I would extend similar gentleness and understanding toward small fish who encouraged others (at least without actively downplaying risks). So I think there’s a difference between encouragement that actively downplayed those risks, and encouragement that did not affirmatively include a recognition of the relatively high risk.
I directionally agree, but think it is important to recognize that the signal of SBF’s unreliability would likely be contained in a sea of noise of inaccurate information, accurate information that didn’t predict future bad outcomes, and outright malicious falsehoods. A rational individual would discount the reports, with the degree of discount based on the signal:noise ratio of the whispernet and other factors.
Given the reasons FTX funding could fall through for reasons unrelated to SBF’s character or reliability, I predict that such a signal getting out would have had a meaningful—yet fairly modest—effect on proper risk evaluation by a small fish. For sure, an increase from 30% to 40% risk [making numbers up, but seems roughly plausible?] would have changed some decisions at the margin (either to accept grants or not to take more precautions).
But we would also need to weigh that other decisions would have changed for the worse because of noise in the whispernet about other people. While the tradeoff can be mitigated to some extent, I think it is largely inherent to whispernets and most other reputation-based systems. I generally think that assessing and communicating this sort of risk is very difficult, and that some sort of system for ameliorating the situation of people who get screwed is therefore a necessary piece of the solution. To me, this is similiar to how a rational response to the risk of fire includes both fire prevention (being aware of and mitigating risks) and fire insurance (because prevention is not a foolproof process).
I’m not intending to offer an opinion about larger fish, or people with more direct information about SBF, either way.
I think expecting myself to figure out the fraud would be unreasonable. As you say, investors giving him billions of dollars didn’t notice, why should I, who received a few tens of thousands, be expected to do better due diligence? But I think a culture where this kind of information could have bubbled up gradually is an attainable and worthwhile goal.
E.g. I think my local community handled covid really well. That didn’t happen because someone wrote a big scary announcement. It was an accumulation of little things, like “this is probably nothing but always good to keep a stock of toilet paper” and “if this is airborne masks are probably useful”. And that could happen because those small statements were allowed. And I think it would have been good if people could similarly share small warnings about SBF as casually as they shared good things, and an increasingly accurate picture would emerge over time.