Going Infinite: The Rise and Fall of a New Tycoon

Nonfiction | Book | Adult | Published in 2023

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Summary

Background

Chapter Summaries & Analyses

Preface-Part 1, Chapter 2

Part 1, Chapters 3-4

Part 2, Chapters 5-7

Part 3, Chapters 8-9

Part 3, Chapter 10-Coda

Key Figures

Themes

Index of Terms

Important Quotes

Essay Topics

Tools

Beta

Discussion Questions

Part 1, Chapters 3-4Chapter Summaries & Analyses

Part 1: “Act I”

Part 1, Chapter 3 Summary: “Meta Games”

Two major events happened in Sam's life in the fall of 2012, when he was a junior at MIT.

The first event was a job fair on the MIT campus that led him to consider a future in finance. Although Sam was a physics major, he had lost interest in his studies. Hearing that most of MIT’s physics majors went on to work for tech companies or trading firms, rather than becoming physicists, Sam submitted his resume at the job fair and received invitations to three different high-frequency trading firms: Susquehanna, Wolverine, and Jane Street Capital. All three eventually offered him internships, and Sam accepted the offer at Jane Street.

Part of the interview process Sam underwent at Jane Street included a series of games and meta-games with ever-evolving rules and stakes: poker and coin-flipping, with new and unusual rules that changed during play. Interviewers also goaded applicants into making side bets with each other at every turn. Sam found that these unusual games perfectly aligned with his skills, his temperament, and his experience with games and puzzles. Unlike other applicants, he did not feel nervous when faced with a ticking clock, unknown variables, messy rules, or incomplete information. The games engaged his brain and allowed him to think strategically and make quick decisions based on limited information.

Also in the fall of 2012, a group of students from Oxford, led by Will MacAskill, introduced Sam to the concept of effective altruism (EA). The students based their ideas on ideas of philosopher Peter Singer, who argues that affluent individuals have a moral obligation to share their wealth. Effective altruists approached charitable giving with a focus on efficiency rather than sentimentality, seeking out opportunities that would provide the greatest measurable impact. They sought to quantify and optimize their philanthropic efforts, aiming to do the most good with their resources. They argued that people could maximize their odds of doing good in the world by going into banking and other lucrative professions to make money that they could then donate to highly effective charities.

At Jane Street, Sam performed well at quantitative pursuits, but the other traders noticed that his social skills were lacking. For instance, in one incident, another intern, Asher Mellman, made a bet with Sam. Sam proceeded to humiliate Asher by exploiting the fact that Asher had not fully considered the possible outcomes of the bet; Sam accepted the bet and proceeded to gamble, causing Asher to lose at every turn. Rather than stop after one turn, Sam kept going, even though Asher clearly felt embarrassed: Sam thought it was more important to make his point than to consider the feelings of another person. Moreover, he did not understand why his superiors were concerned about his behavior.

Part 1, Chapter 4 Summary: “The March of Progress”

Lewis explains how financial markets and traders changed in the decade leading up to Sam’s time at Jane Street Capital. After the 2008 financial crisis, investment banks like Goldman Sachs and Morgan Stanley no longer took “interesting trading risks” (58). These types of trades were instead made by secretive private trading firms like Jane Street. These firms focused on high-frequency trading, using complex algorithms and advanced technology to make rapid trades and capture small price discrepancies in the market. Moreover, the type of people who worked as traders changed, too. The shift from human-to-human to machine-to-machine trading favored math, science, or computer science majors who were adept at higher-order thinking and sometimes lacked social skills.

At Jane Street, Sam was one of many traders on the firm’s most profitable desk, the one that traded exchange-traded funds, or ETFs. He was responsible for calculating the price of ETFs, a role that required analyzing complex, rapidly shifting market data, in an attempt to make small profits on each trade. Since traders worked in tandem with machines that helped them calculate trading decisions, they often spent much of their time looking to optimize their algorithms and replicate the success of previous trades. They engaged in research projects spurred by strange inconsistencies or patterns in market data, and they constantly sought ways to improve their trading strategies.

One research project that Sam led involved predicting the outcome of the 2016 US presidential election. Sam marshaled dozens of traders to assemble the fastest possible predictions of statewide vote tallies, hoping to outstrip the slow and outdated predictions of traditional polling methods. He wagered that if they could predict the outcome faster than TV political pundits, and therefore faster than other firms (since the firms would be paying attention to the news), they could make huge bets against certain financial markets, using advance knowledge of the election outcome. In the end, the Jane Street traders correctly predicted the outcome before anyone else, but they made the wrong bet. The night of the election, they stood to make hundreds of millions of dollars, but by the next morning, the US financial market had rebounded, and they had instead lost hundreds of millions of dollars.

Jane Street did not chastise Sam or any other employee for this failure. Instead, they took the result as evidence that they should refrain from trading on elections. Sam disagreed with this; he believed that the failure was due to a flaw in their trading strategy rather than a reason to abandon trading on elections.

Sam earned an incredibly high salary, receiving raises each year he worked at Jane Street. However, he felt unfulfilled. He was donating much of his money to charitable causes, in accordance with his newfound EA beliefs, but he came to the conclusion that he could do more good for the world in a different line of work.

In 2017, he became interested in crypto. Jane Street did not trade in crypto and did not even allow its traders to personally invest in it. However, Sam estimated that he could become a billionaire by investing in cryptocurrencies.

Part 1, Chapters 3-4 Analysis

In Chapters 3 and 4, Lewis delves deeper into the theme of Games, Puzzles, and Probability as Shapers of Worldview as he explores Sam’s unique way of thinking. The narrative takes us through key events in Sam’s life during his time at MIT and Jane Street Capital. Sam’s accidental entry into the world of finance adds an element of unpredictability to Sam’s life, underscoring that his path was far from conventional—and adding to the gamification motif of the book. He initially enrolled as a physics major at MIT, but his interest waned, and he unexpectedly found himself exploring opportunities in finance during a job fair on campus. This deviation from his original academic path highlights the element of serendipity in his journey. Since Sam’s mind is wired for analytical games and puzzles, he was exceptionally suited for the competitive and complex environment of trading. Lewis’s portrayal reinforces the idea that Sam’s path in finance was not driven by a traditional interest in financial markets but by his inclination toward strategic thinking and his newfound EA philosophical beliefs. Sam did not view finance as an end in itself, but as a means to an end—the desire to have a greater impact on the world. Sam’s focus on effectiveness and his unique approach to the financial world set him apart from conventional financiers solely driven by profit and financial success.

Furthermore, these chapters illustrate Sam’s lack of empathy. In the incident involving the bet with fellow intern Asher Mellman, Sam’s disregard for Asher’s feelings is striking. Sam was driven by the need to make a point, prioritizing his intellectual victory over the emotional well-being of another person. Importantly, his lack of compassion did not come from a lack of self-awareness:

“It was not like I was unaware I was being a piece of shit to Asher,” he said. “The relevant thing was: Should I decide to prioritize making the people around me feel better, or proving my point?” Sam thought his bosses had misread his social problems. They thought he needed to learn how to read other people. Sam believed the opposite was true. “I read people pretty well,” he said. “They just didn’t read me.” (56).

Sam’s actions reveal callousness that foreshadows the challenges he later faced in navigating social dynamics as a manager; however, his awareness of his actions as those of “a piece of shit” belie Lewis’s depiction of Sam, in later chapters, as having little to no understanding of how his actions as the head of FTX negatively affected other people. Moreover, the fact that Jane Street superiors were concerned about his behavior but did nothing to curb it marks the first of many times Sam’s misbehavior would not result in consequences.

The theme of Money as a Moral Tool is explored through the lens of effective altruism. Sam’s encounter with EA, introduced by a group of students from Oxford, played a pivotal role in shaping his perspective. Effective altruism challenges individuals to maximize their impact on global issues through strategic and measurable philanthropy. Sam adopted these principles because of their appeal to his logical side, leading to a shift in his motivations. He saw amassing wealth as a way to address existential threats and global challenges. This philosophy drove force his financial pursuits and set the stage for his future philanthropic endeavors, reinforcing the claim that his financial journey was not driven by a profit motive, but by a broader sense of purpose—though revelations in later chapters about his luxurious lifestyle call into question some of Sam’s EA rhetoric.

In these chapters, Sam is shown to have a high tolerance for risk and significant losses. The description of the Jane Street traders and their forays into high-frequency trading reveals an environment where substantial risks were part of the process. Sam’s involvement in a research project attempting to predict the 2016 US presidential election demonstrates his willingness to engage in high-stakes ventures, even when facing potential losses. After taking on this project, which lost Jane Street hundreds of millions of dollars, Sam was not dissuaded from further experimentation, and, in fact, was annoyed that Jane Street saw the loss as a sign that they shouldn’t pursue similar investments: “Jane Street’s bosses decided they’d made a mistake by trying to do such a trade at all…This bothered Sam. It made him wonder if Jane Street was indeed set up to maximize its expected value” (70). This risk-taking behavior and tolerance for huge consequences foreshadows how Sam handled investments as the founder of FTX and Alameda Research.