FTX crypto exchange vows to grow while others layoff people — CEO explains the new policy

Many companies in the crypto industry have recently announced a hiring freeze or even downsizing. But not all of them are so pessimistic and have resorted to desperate actions. FTX, for one, decided not to follow in the wake of Buenbit, Bitso, and 2TM. FTX CEO Sam Bankman-Fried says that they will keep growing even as others cut jobs. And that’s why. 

Some initial thoughts

Here is what he wrote in a thread on Twitter:

“One of the first lessons I learned as a CEO was, “Make sure your team can mentor employees as fast as you hire them.” Otherwise, as I learned the hard way, everything gets worse.

I’ve looked into hypergrowth companies. And it turns out that growing from 200 employees to 2,000 doesn’t seem to 10x your productivity as a company. In fact, sometimes it doesn’t even 1x your productivity. Sometimes, the more you hire, the less you get done.

You ask, “Why exactly is it that hiring doesn’t scale the way it should.” There are a few points:

• Coordination becomes really hard.
• If five people could theoretically do something, maybe no one will feel like they actually have to do it, and so it won’t get done. It’s called diffusion of responsibility.
• Companies lower the bar as they hire more, and over time the average coworker people interact with becomes a worse experience.
• Incentives become harder to align as people have less and less of a sense of what each other is doing.“

In conclusion, Sam Bankman-Fried stated that the most common reason for a successful company decay is “a race between how quickly new employees understand the company’s culture and how quickly people are hired”.

“The faster you hire, the harder it is to keep everyone on the same page.” 

For example, you can grow by 50% each year and still mentor each new employee. But if you grow by 300%, each new employee only has four months to learn before they have to teach others. Meanwhile, the company has to ensure the team is coordinated and the compensations are fair.

FTX path

When FTX hit around 250 people, the company slowed down hiring. As Sam Bankman-Fried said, they did it not because of money but because they wanted to make sure they could actually integrate everyone they hired into FTX’s working culture. 

“Because we hired carefully, we can keep growing regardless of market conditions. Because we exponentially scaled our revenue and productivity, now our expenses. But more importantly, each person we add takes on a huge opportunity and a huge responsibility”, — he said. 

And that’s why, as FTX CEO stated, the company will keep pushing forward and not scale back. According to his words, more will be joining than leaving, though the company will always be sure to add people at a sustainable rate and uphold a high standard. 

8 February 2022 Sam Bankman-Fried said that it’s time for the company to substantially slow down hiring for some time. But it was not about freezing hiring altogether. As he said, the company’s goal is to hire great people and be great to them. 

You can read Sam Bankman-Fried’s thread in full here.