Sam Bankman-Fried Version 2.0

At HX Daily, we typically talk about companies and stocks, however we don’t normally dive into insider industry news. However, occasionally, the actions of specific business leaders are so impactful that they affect markets and investors like you.

Over the past few years, Silicon Valley drama has resembled a winner-takes-all dramatic series like Billions or Game of Thrones.

An immense concentration of capital surrounds a small circle of people whose activities and decisions have the power to affect everyone.

Right or wrong, Silicon Valley business leaders like Elon Musk, Mark Zuckerberg, Larry Page, and others have become household names and celebrities.

OpenAI CEO, Sam Altman, is one of the main characters in this ongoing drama. We will examine his background and offer our perspective on his broader importance to investors.

Sam Altman was born in Chicago in 1985 to a dermatologist mother and a real estate agent father. He received his first computer at eight and quickly learned to code and take apart hardware.

After 2 years studying computer science at Stanford, he dropped out and founded his first company, Loopt, in 2005 at 19.

In 2011, he became a partner in the famed startup incubator Y Combinator.

In 2012, he co-founded Hydrazine Capital, and in 2015, he co-founded OpenAI with Elon Musk, Peter Thiel, and other Silicon Valley luminaries. As you most likely know, OpenAI is the company behind ChatGPT.

This isn't about ChatGPT or even AI, but rather the cult of personality surrounding Sam Altman, a business leader who people think has the Midas touch.

In 2023, Time Magazine named Altman one of the 100 most influential people in the world.

Behind the constant and primarily positive media onslaught surrounding Altman hides a more nuanced and, some would say, problematic story.

Few will recall that in 2020, Y Combinator fired him for appointing himself Chairman without authorization.

More recently, in November 2023, OpenAI’s board ousted Altman as its CEO for being “not consistently candid in his communications with the board” before reinstating him following an intra-company employee revolt.

In fact, many controversies surrounding Altman resemble patterns displayed by notorious former Silicon Valley royalty like Sam Bankman-Fried (FTX) and Elizabeth Homes (Theranos).

All three founded companies at very young ages.

All three rubbed elbows with Valley legends like Musk and Thiel.

Politicians, market pundits, and the media at large crowned all three as future kings and queens of the business world.

In addition, rumors of impropriety have surrounded all three.

We're not saying that Sam Altman is the same as SBF or Holmes, or that he has done anything wrong. We’ll leave that for the market to decide.

So, you may be asking how this affects me as an investor?

We believe Altman's story offers a classic and cautionary tale.

After all, SBF and Holmes ended their stories by obliterating billions of dollars of investor capital. The moral of their story is don’t believe in FALSE IDOLS.

The great thing is that America's system works, and people like Holmes and SBF do not last. Capital always eventually flows to legitimate winners in the marketplace.

As we always recommend at HX Research, when considering a new investment, DO THE WORK. Focus on a company's fundamentals, such as earnings per share and profitability, and tune out the NOISE from the media and market pundits.

This is a solid perspective for both the markets and life in general!