Bankman-Fried’s Stanford-Connected Backers and the Decline of Tech Prestige
In his immediate response to media queries, former dean of Stanford’s law school Larry Kramer gave a very personal explanation for why he’d pledge $500,000 to get Sam Bankman-Fried out on bail. Kramer, along with Stanford computer scientist Andreas Paepcke, were both identified yesterday as bail guarantors after Bankman-Fried’s lawyers missed a window to appeal the decision.
For his part, Kramer and SBF’s parents Joe Bankman and Barbara Fried have been “close friends since the mid-1990s.” They were very supportive during a cancer scare in Kramer’s family. “In turn, we have sought to support them as they face their own crisis,” Kramer said, adding he was acting solely in a personal capacity and does not have financial exposure to the mess that is FTX.
This article is excerpted from The Node, CoinDesk’s daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.
No one could fault a lawyer for giving a canned response, especially considering the many legal uncertainties surrounding Bankman-Fried’s criminal trial and FTX’s bankruptcy process. Kramer must have had his statement prepared, at least since District Judge Lewis signaled the public’s right to know who co-signed SBF’s bond outweighed potential risks to their safety.
See also: James Murphy – Bankman-Fried’s Incredible Shrinking ‘$250 Million Bond’ | Opinion
All four of Sam’s backers have ties to Stanford University, an Ivy League school that acts as a pipeline to the tech industry. Whatever damage happens to their individual reputations pales in comparison to the latest impact FTX will have on the tech and crypto industries – including the longstanding ties between prestigious research industries and the startups founded by alumni.
Pulling back, the tech industry is already going through a period of forced reinvention, amid a shrinking economy, dwindling financial prospects and the “techlash” against companies once positively called disruptive. Public perception of tech firms, once seen as building a better, “flatter” future, has shifted – as their unaccountable power and ties to The Establishment grow.
Tech skeptics have been proven right in recent months as Facebook, Google and other tech giants have laid off well-paid employees, even as total U.S. unemployment shrinks, about the unsustainability of the contemporary tech industry. The unofficial feeder system between top-rated computer science schools and the largest tech companies is clogged.
Crypto, which has a presence in both Silicon Valley and Wall Street, has certainly benefited from this system. But it might benefit more from the tarnishing of Big Tech’s prestige. Companies like Google and Facebook used to sop up talent by offering generous benefits, uber-competitive salaries and, perhaps most importantly but hardest to quantify, prestige.
That may have been why Bankman-Fried spent so lavishly building FTX’s brand, both in the public light by paying celebrity endorsers and for stadium naming rights as well as gaining respect in the tech industry by funding Effective Altruism causes popular among tech elite and on campuses. At least some of FTX’s questionable expenditures in the Bahamas were a way to reward and attract top talent.
Crypto firms, too, have cut back. CoinDesk found the industry shed nearly 30,000 jobs since April. But at its best, crypto also provides a way for young innovators to build the things they think will benefit everyone. Energy and time once spent coding the-next-hated-Gmail update, could be put towards the next open source innovation.
See also: Marc Hochstein – Theranos Fraud Holds Harsh Lessons for Crypto | Opinion
Sure, this is an optimistic appraisal. Crypto is no longer very sexy. But as more and more Theranoses and FTXes come out of the traditional tech carnival, reputations will be built elsewhere. People will be forced to think about who they’re working for. And, if nothing else, the only thing better than working for yourself is working for the world.