🤺 Takeoff #16: FTX's sudden death, Jeff Bezos's decision making framework, what's new at Airtribe and much more..
Welcome to Takeoff, our weekly community newsletter that you lean on for some fresh news, information, insights, and a portion of good brain food.
🌟 What’s new at Airtribe
Join us for a 2-Day learning sprint that is designed to help you get started in the world of performance marketing and learn the most in-demand skills to become an ace performance marketeer.
In this workshop, you will design and deploy a campaign on Google and Facebook end-to-end. From fundamentals to real-life marketing execution of a project, we will cover a lot of useful information.
📉 FTX’s surprising death overnight
If you are a web3 or crypto enthusiast, you must be aware of last week’s mishap, which shocked the entire crypto market. FTX’s sudden death and market-wide crash raised a lot of questions again on decentralization and this non-regulated sector. The empire that Sam Bankman-Fried built in the form of FTX, went through a similar Titanic experience.
This story has 3 protagonists who played a massive role in this mishap. They are FTX, Binance, and Alameda Research. To begin with, let’s get back in time when Binance became an early investor in FTX.
There is no denying that FTX’s potential and growth attracted some of the early believers as investors. They continued to grow like crazy, which led them to become the #2 exchange in the world quite early, competing directly with Binance, one of their early investors. Their founder Sam Bankman-Fried was compared to Warren Buffett, and FTX started cutting huge marketing deals with famous athletes like Steph Curry and Tom Brady. Not only this, they built their own FTX arena to host events and different activities.
Money was raining. Everything was going well 💸
Due to this sudden and constant growth, FTX and Binance were competing with each other for a big market share. Now, the friendship has turned into brutual competition. Considering this, Binance decided to sell its stake in FTX and agreed to take $2B worth of it in FTT, a native token that FTX uses for trading fees. They wanted to get out.
Fasten your seat belt. Time for the climax!
Now let’s jump to status-quo. CZ, the founder of Binance, came out of the blue and announced publicly on Twitter that Binance is going to dump its entire $2B FTT in the market. CZ’s furious statement came after Sam’s open comments to the regulators that hurt Binance’s business in some way. This statement created big chaos in the market as one big whale was about to dump its holdings, which would crush the price for sure. The outcome was much worse than expected. The price of FTT dropped 15-20% overnight.
This created a massive domino effect and started the destruction. Now, it’s time to bring the last protagonist of the story - Alameda research. It’s the hedge fund Sam created before he founded FTX. Alameda is known as a pretty strong player in the market with lots of cash in the bank. Well, it came out that the reality was pretty different. They had major holdings of their assets in FTT tokens, and their liabilities were worth $7B. As evident, the FTT token was plummeting, and it was illiquid. The massive liabilities and this FTT situation were threatening their existence.
To cushion the blow and give people a sense of comfort, Alameda’s CEO announced through his Twitter account that his firm would be happy to buy the FTT token from Binance. But 24 hours passed, and there was no action taken by Alameda. The price kept dropping, and people were freaking out. Around $1B+ of withdrawals happened on FTX, and suddenly, it was a dangerous liquidity crunch for them. Somehow, to prevent sudden death, they had to pause withdrawals which they ultimately did.
Now comes a chess move by CZ (founder of Binance); he announced publicly that they are going to acquire FTX and save them from this crisis. Everyone applauded this smart move by CZ, who started this chaos in some way, made a threat, and ended up buying its biggest competitor overnight. Unfortunately, due to regulations, Binance backed out, and again it left FTX in a sinking situation.
FTX had to halt the withdrawal because of the massive liquidity crunch. It came out that FTX didn’t have money to pay as they have been using their customers' money to make risky bets through their firm Alameda. Due to all this chaos, FTX filed for bankruptcy and Sam resigned as the CEO on 11th November.
This fallout has been a major shock and led other major players to disclose their reserves to the customers and maintain full transparency. A few days back, Sam addressed the situation on Twitter and apologized for all that happened.
You can check out the thread below for more details:
What are your views on this? Tell us in the comments section.
📖 An interesting article for your tranquil Sunday afternoon
Hard Reset
"If your company is underperforming, you can continue in denial or misery and drive off the cliff, or you can choose intellectual honesty, vanquish useless delusions, and do a hard reset."
🧐 Food for thought
If you are out of ideas, go for a walk.
According to the research, walking (whether outdoors or on a treadmill) increased key types of creative thinking for over 80% of undergraduates.
💫 A recent discovery we found fascinating
This week, we discovered this insightful thread where the author talks about a fruitful way to analyse decisions 🤔
✨ Signing off with some wisdom
A leader without a title is better than a title without the ability to lead
~ Simon Sinek
Alright folks, that’s enough for this week, see you again next week. Thank you so much for reading.
Until then….