Elon Musk has a strange nerdy personality.
He joked that he has Aspergers when hosting Saturday Night Live. He also regularly sleeps on the couches of his friends because he does not own a house.
Elon Musk’s worth is $200B, too, because he cofounded Neuralink, OpenAI and SpaceX. He also founded X.com, which was acquired by PayPal, SpaceX and the Boring company.
Mark Zuckerberg also is a weird nerd.
He hacked into the Harvard directory as a student to create facemash. This website allowed male students rate their female peers by attractiveness. Zuckerberg declared in 2011 that he only wanted to eat animals that he killed himself. He served Twitter founder Jack Dorsey goats that he raised and slaughtered. Most importantly, every time Zuck appears on TV he looks like an alien who is impersonating a person.
Mark Zuckerberg’s worth is $50 billion, too. He changed the way humans communicate online forever.
The past 20 years were the Golden Age for weird nerds such as Musk and Zuckerberg.
As the internet developed, strange nerds moved to Silicon Valley in order to transform their bizarre business ideas into odd businesses. Thanks to technological advances, some of these odd businesses have become multi-billion dollar companies like Facebook, Uber and Airbnb.
The new billionaire class, made up of nerdy weirdos who founded companies, didn’t *need* Wall Street norms. They wore sneakers and hoodies instead.
The investors who made early investments in the companies of these weird geeks were the ones who benefitted the most. Investors began to look for the next generation of weird nerds that would create the next Facebooks or Teslas.
Sam Bankman Fried is a strange nerd.
He sleeps on beanbags in his office, and he is constantly fiddling with fidgets spinners. His conversations are often interrupted by stutters and broken eye contact. He studied math and physics at MIT – the nerdiest fields possible at the nation’s top nerd-per capita university.
He made his initial wealth by arbitrage trading Bitcoin on foreign markets. He also subscribed to a social movement called effective altruism, which dictated that he give as much away as he could to help as many as he could.
SBF built FTX as the best crypto derivatives exchange. He founded Alameda Research in order to trade crypto markets. Sam Bankman Fried was the best-known nerd of a field that is dominated by strange nerds. The crypto market.
Before SBF, the weird nerds who built their fortunes on pipe dreams such as online payment, mass-produced cars, privatized satellite travel, social networks and music streaming, they turned them into reality.
Crypto was expected to be the next big success story.
What if you don’t know about DeFi, yield farming, web3, bitcoin, ethereum and decentralization. Unusual nerds were raising money to build a platform with millions users. Would you miss the next Facebook if it was announced?
As Sam Bankman-Fried played League of Legends and pretended to be interested in the conversations about fundraising, investors were taken by him.
We like to pretend in finance that valuation is a scientific discipline and decisions are made based on logic. This has never been the case, and especially not now. CFOs create EBITDA projections by using hard data, while founders seduce investors through stories of how they will change the world.
You could buy some self-storage that would generate free cash flow of $150,000. You could also invest in a crypto startup whose seed round will revolutionize the finance industry.
Screenwriters and novelists often use “The Hero’s Journey”, to create their plots, in films and novels. Joseph Campbell divides The Hero’s Journey in three stages: the departure, the initiation and the return.
DepartureThe hero is often of modest means and receives an urgent call to action. However, they ignore it. The protagonist is pushed to take action by a supernatural guide, whether externally or mentally.
The Hero’s Initiation:Then, the hero faces a series trials and tribulations. In their first conflicts, they are often defeated by the enemies and lose family and friends. Before they meet a temptress, the hero receives aid in their quest. This can be anything from weapons and tools to advice and information. This temptress could be a love interest who is dangerous, or it could be an internal battle with greed or jealousy. The hero will then seek atonement by a higher authority, usually a boss, god or father figure. The hero can now pursue their goal.
Return After achieving their goal, the hero is so enamored of bliss that he initially refuses to go back to “normal life.” The feelings of bliss fade and the hero embarks on a dangerous journey to return home. They eventually make it back home, sometimes with the help of a friend or two. Our protagonist is now free to live their elevated state, armed with higher knowledge.
The Hero’s Journey is oversimplified and cliche. It is present in film and literature. Harry Potter and James Bond both exhibit the Hero’s Journey. The Hero’s Journey is also evident in the original Halo trilogy as well as Prison Break and The Lord of the Rings.
We also view our career through the lense of a Hero’s Journey in our lives. We go to school or begin our careers knowing we will face a difficult, long road. We’ll be working long hours and earning low wages, but mentors will guide us along the way. We will gain immense wealth and regain control of our lives if we are successful.
The Hero’s Journey works because humans have a thirst for stories that help them understand the world. We can’t help but be fascinated by stories, from Homer’s Iliad up to Harry Potter. We are drawn to patterns.
Sam Bankman Fried fit a pattern.
It never made any sense if you just looked at the numbers and data surrounding FTX. A non-audited, unregulated exchange in the Bahamas with a CEO and founder who is also the majority shareholder of a crypto trading firm that operates on the platform should raise a red alert.
Red flag: A founder who is too busy to answer investor calls during a League of Legends mid-career should be avoided.
A business based on derivative trading assets with no value at all is a warning sign.
A CEO who told Bloomberg’s Matt Levine, quite literally, that yield farming was nothing more than a Ponzi scheme is a warning sign.
Red flag: A company that has a checkbook with an apparent blank to bail out imploding cryptocurrency firms.
No one bothered to look at the numbers and data, as they were so enthralled by the story. The pattern. The Hero’s Journey. The Nerd’s Journey.
You might be able to create the next trillion dollar company by taking a young founder with autistic traits and poor communication skills. Let him share his eccentric ideas and life philosophy, or tell you of his ambitious plans for dominating a new industry no one has ever heard of.
Morgan Housel says it often: “The best story always wins.” While a good story might grab attention on the short term, the truth will always come out over time.
Elizabeth Holmes’ story was a success, but then it wasn’t.
Trevor Milton’s story was a success, but then it wasn’t.
Sam Bankman-Fried’s story was successful, but then it failed.
Some of the most impressive companies in the world are built by weird nerds. Sometimes, it’s just weird nerds who commit white collar crimes.
