The Generalist - FTX: The Everything Exchange

Hey friends,

I hope everyone's having a great weekend.

This edition marks the finale of the FTX Trilogy, an investigation into crypto's wildest and fastest-growing exchange. If you're just joining us, you might want to start with Part One, which covers FTX's CEO, Sam Bankman-Fried. If you want to jump straight into the numbers, you might skip to Part Two.

Where do we travel in Part Three? The future, of course. If you're interested in thinking through how FTX might expand its footprint and what acquisitions might make sense, this piece is for you.

If you enjoy today's piece, or its predecessors, it would mean a lot to me if you'd share it with a friend. Just forward this email.

Now, for the last time, we return to FTX.

(I'm weirdly going to miss writing about this company...)

It feels strange to think that Amazon was once just a bookseller.

The young Jeff Bezos, a fresh defector from the hedge fund world, had studied a number of wedges before making a decision. Should his online business sell CDs? VHS tapes?

Books made the most sense. In their durability, portability, and especially variety, they were perfectly suited to be sold over the internet. It proved a sound decision.

In time, of course, Amazon became something much grander, more expansive. A place to buy almost every conceivable item — an “everything store,” as writer Brad Stone described it.

If FTX succeeds in maintaining its trajectory, we may look back on this period as the company’s “book” era. Today, FTX is mostly a cryptocurrency exchange, but that might not be the case for long.

Through conversions with leadership, investors, and crypto insiders — and access to internal strategy documents, The Generalist has developed a picture of a business that sees itself less as a cryptocurrency product, and more as a kind of “everything exchange,” a place to buy and sell, to trade, all manner of assets. Whether such a lofty goal can be reached remains in question.

In the final installment of our FTX Trilogy, we’ll unpack the four paths the company may pursue to grow its footprint, touching on feature development and M&A. In particular, we’ll discuss:

1. Betting on sports. Why FTX’s sponsorships may herald a greater involvement in the sector.
2. Expanding in crypto. How FTX could bolster its institutional and consumer crypto offerings.
3. Becoming a bank. FTX sees itself as a full-stack financial business — what does that mean?
4. Entering social media. Should FTX buy a social network? It may present the best opportunity to bulk acquire customers and mainstream crypto.

Sports: Playing in the Big Leagues

FTX’s decision to spend upwards of $500 million sponsoring the Miami Heat, MLB, and eSports team TSM, looks strange at first glance. Why would a cryptocurrency exchange fritter the equivalent of a growth round on such generic, targetless marketing? How many higher-precision avenues did the company overlook in favor of blanketing the sports world and its assemblage of fans in lucre?

If marketing is so often a game of sniping and scalpels, every decile optimized, FTX seems to be stampeding into battle with a shotgun. Indeed, why haven’t more established domestic entities like Coinbase or Gemini made similarly flashy moves?

It starts to make more sense when you consider that FTX’s approach may be targeted, after all — it’s simply aiming at a different bull’s eye: the world of sports. In the coming years, we may see FTX play in betting, tokenized contracts, NFTs, and ticketing.

The obvious place to start? Sports betting, of course. (Both traditional and eSports.)

When I asked Sam Bankman-Fried (SBF) about FTX entering this arena, he responded economically: “Possibly.”

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Spencer Dinwiddie, Axie Infinity, and Reddit...all discussed in the rest of the piece :)

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Lo

SCROLL PAST THIS PART 👇

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Nothing to see here.

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Keep going.

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Almost at the Puzzler.

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Ok!

If you're still with me, I'd like to tell you a quick story.

A month or so ago, a reader reached out to me. They'd just signed up for a Membership, and joined our private, curated community. And they liked it! They were meeting new people, jamming with brilliant investors and founders, and generally vibing.

So asked them: What made them sign up? Was it something I had written? Something I did?

Their response?

"I finally read one of your Membership plugs. I always just scrolled past that stuff."

This made me realize something.

You all are busy people, with tons of email. So it's only natural that you scroll past something that looks like a sales pitch. But I also know there are so many of you that would genuinely love what's on the other side of 30-second transaction to join.

So, if you're usually a scroller (no judgement), I hope this got your attention and made you excited to join the most thoughtful community in tech. I think you'd really enjoy it.

​>> No more scrolling, I'm in!​

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PS - I'm super confident in the value of Membership. So I always give 100% refunds if it's not your jam.

PUZZLER

If you're like me, you probably love a bit of trivia.

In that spirit, I'd like to invite us all to do something a little different: share our favorite weird, fun facts. Just respond to this email with your favorites, and I'll compile a list for us all to enjoy.

(Please don't share made-up ones. Although I would find it funny, I don't think I'll have great deal of time to fact check this week 😂)

Here's one I enjoyed, recently:

So useless! Yet, so enjoyable!

Now, onto last week's riddle.

The initials NMT once frequented this section. After an absence, they returned to secure victory in last week's filial flummoxing. They were joined by Prasanna D, Abhishek V, Keshav J, Sven K, Zac H, Joseph H, Sukumar R, Ajay J, Scott M, Stephen C, Kunal G, Terence F, Josh A, and Mark C in deciphering the below:

The answer: The man's son.

Some other creative answers were given including "Jesus" and a "step-brother." Well played to all who thought and fought their way to a clever response.

Happy watermelon thieving,

Mario