Tech and its cults of personalities
Updated: Dec 12, 2022
Tech has always played a key role in humanity, whether it is putting a man on the moon or literally saving the world when we were in a footrace with the Nazis to split the atom. So this tech universe sometimes seems like magic, for example, the ability to send a message into the universe and understand the world that we live in can border on fascinating and enthralling to the common man. It's sometimes no wonder that tech CEOs can sometimes seem otherworldly, and sometimes even godlike.
We've seen this happen in Theranos with Elizabeth Holmes, and now with FTX and its overhyped CEO, Sam Bankman-Fried. The most important part here of realising is how marketing and founder branding was ultimately responsible for both companies' sense of legitimacy and played a huge role in their user growth until finally, the overhyped, unsustainable image came crumbling down.
It looks like FTX's downfall would lead to a riveting book, written by none other than "The Big Short" author Mike Lewis, where I would surmise that sordid details of how FTX's lavish marketing and celebrity sponsorship spending would probably read as a measure of the hubris of Sam Bankman-Fried. Ironically even more so considering that just a few weeks ago FTX was valued at $32 billion US dollars. Before its collapse though, the FTX founder and chief executive had garnered a reputation for being one of the loudest voices of the Web3 industry, being active on social media, politics and in the press.
The funny thing is that Sam Bankman-Fried told everyone what he was doing. It was no secret about his appetite for risk, and he even went so far as to outright say that quite a number of associated crypto exchanges were "secretly insolvent". Even when declaring his net worth to be a whopping $10 billion, he was frank enough to say that it was in "mostly illiquid" assets, and in interviews with Forbes and Bloomberg, he didn't disagree with the idea that he was in the "Ponzi business". But with the ecosystem of hope and awe that was built around him, few really heard what he was actually saying, so much so that one of the titular investors, Sequoia Capital finally wrote its $213 million FTX investment down to $0.
This was not according to the plan
But that was not how it was meant to go, according to the legions of crypto fans, and big-name Silicon Valley venture capitalists, who were so busy heaping praise upon this demigod of the industry, as they continued to fail in ensuring his business had an iota of legitimacy. With the embrace of philosophies like effective altruism, promoted by social media influencers like Nas Daily, Sam employed a masterstroke of adding morality to his ruthless and precarious money-making. This rare façade of an altruistic billionaire was maintained by lavish spending on professional sports teams, stadiums and donations to multiple charities. Playing both Washington lawmakers, with large sums of political donations he managed a workforce who truly believed (or rather pretended to) in Bankman-Fried's mission to earn stupendous amounts of money only to give it away. On one hand, the famed crypto leader told Congress that the industry needed "disclosure and transparency", and on the other hand, his myriad of secrets was held closely between friends, leaving even the highest levels of his executives completely in the dark, on the true nature of FTX's financials.
While the book will definitely turn out to be a riveting read, this is a morally challenging example of what effective branding and marketing could do. Bolster the reputation and the outlook that a brand and/or company is doing so well, that it can afford to tell you about it. Ask the many normal people (and professional investors), who have lost enormous amounts of their money, some of them losing their entire life savings altogether, about whether such a company that didn't have their business fundamentals sorted, should even be allowed to advertise so extensively.
Too good to be true
Rings absolutely true here. I mean does the sound of a Bahamas-based firm run by a 30-year-old, with no actual board of directors, that deals in trading complex and rather unclear digital financial instruments, sound just a tad bit risky to the casual observer? It is an understatement to say that the company spent heavily on marketing, some hundreds of millions of dollars with publicly reported tags.
In the second half of 2021 alone, FTX signed deals with the NBA's Miami Heat, Major League Baseball, the Golden State Warriors, the Washington Wizards and Capitals, the F1 racing organization and finally esports giant TSM. A basic question, how could a company that hadn't even existed for three years, sign a 19-year contract with the Miami Heat? That's a grand total of $375 million in the above commitments, and that doesn't even include any of the fees given to individual sports athletes or their sponsorships, since they weren't publicly disclosed.
One particularly well-aged Super Bowl spot from 2022 cast the comedian Larry David as a nay-sayer to revolutionary inventions like the wheel, coffee, the American experiment, Nasa's lunar module, and then eventually, FTX as an easy way to get into crypto.
Aaaaah, I don't think so, and I'm never wrong about this stuff. Ever.
This was expensive advertising played in prime-time spots during the Super Bowl in 2022, averaging $233,000 per second!
Legitimacy through advertising?
FTX's most visible promotional efforts were surrounded by sports. Umpires in Major League Baseball all carried the FTX logo on their shirts, Tom Brady and Gisele Bündchen were also involved in multiple ad spots. Steph Curry, and Naomi Osaka were key ambassadors, and in Formula One, Mercedes-AMG Petronas were partners.
This was no shot in the dark either, Bankman-Fried even shamelessly noted that the high-reach sports marketing effort worked tremendously in introducing the brand to a new consumer market.
Clearly, this has penetrated more than everything else we've done combined, in terms of people's perception of us
And herein lies the danger, just like there is no overall regulator for crypto exchanges, the lack of ethics and a moral compass abound in advertising. It's hard to pin down, should we blame the advertising agency? Because after all they were just servicing the client with creative ideas, and if the senior management of FTX itself had virtually no clue about the major problems abound at FTX, how could an external service provider like an ad agency know?
But if anything else, this lesson definitely teaches us the dangers of how effective branding and marketing can be weaponised by a brand and executives with no moral compass...