2 Lessons From the Fast Collapse of a Giant

Doing something just because others are or because we fear we may be behind the curve isn’t a strategy.

November 16, 2022

Sam Bankman-Fried was on top of the world.

FTX — the cryptocurrency giant he founded in 2019 — was valued at $32 billion in January, and Bankman-Fried was drawing comparisons to J.P. Morgan and Warren Buffett.

But on Friday, just 10 months after headlines celebrating the trading company’s meteoric rise, FTX filed for bankruptcy, a shocking collapse that’s drawn comparisons to Enron’s.

Why does this matter? What is the relevance to us as coaches, executives and teachers who may have no interest whatsoever in cryptocurrency?

There are two key lessons from the downfall that relate to our own teams:

1. Present success doesn’t guarantee future

FTX got off the ground fast. At its peak, it had over 1 million users, and last year, drew investments from high-end firms SoftBank and Sequoia Capital. A little over 15 months later, it’s filing for bankruptcy.

We often like to believe our great starts are indicators that we’re bound for the championship or more success in whatever capacity. But if we grow complacent or become overly satisfied with short-term results, the quality of our product can deteriorate in the blink of an eye — and our competitors can quickly catch up. The truly elite aren’t satisfied with short-term achievement. They know that larger prestige can only be established with consistency over time.

2. Beware of FOMO (fear of missing out)

After the bankruptcy filing, Marcelo Claure, a former SoftBank executive who helped lead the conglomerate’s massive investment into FTX, tweeted, “I have been reflecting personally on the whole FTX fiasco and it taught me one more time that we should NEVER invest because of FOMO and we should always 100% understand what we are investing in. I totally failed here on both.”

In essence, doing something just because others are or because we fear we may be behind the curve isn’t a strategy. We shouldn’t just run an offense because of another team or pursue a marketing strategy just because it’s worked for a competitor. We need to give far more consideration to whether this particular vision is practical for us at the moment or whether it’s just worth admiring from afar.

We don’t have to know the first thing about cryptocurrency to learn from the FTX debacle.

While it’s certainly far more complicated than just the aforementioned points, ultimately, it is a cautionary tale for any leader.

The descent from the top to the bottom can happen much quicker than we think.

HR professionals are expected to be the recruiter, the onboarding specialist, the mediator, the resident COVID expert, the Chief Culture Officer, and the CEO’s personal sounding board.

At the same time, the workplace is undergoing a monumental shift. With the so-called “future of work” comes the insane responsibility of rethinking the way that company culture is built.

Every company is a loosely-functioning disaster, but yours doesn’t have to be.