Why FTX continues to expand as several trading platforms announce layoffs

Original source: FTX

Coinbase is laying off 18% of its staff, while Gemini will lay off 10% of its staff, citing the "recession". But FTX, another trading giant, has announced that it will continue to hire staff on demand. What's the difference?

According to the Business RoundtableQ2 CEO Economic Outlook 2020The prospect of a recession has led to a decline in confidence among ceos of big U.S. companies, including worsening expectations for hiring, capital investment and sales. The economic outlook fell 19 points, hiring plans 22 points and capital investment expectations 20 points.

The gloomy economic outlook is reflected in the currency circle. Citing the recession, U.S. listed trading platform Coinbase announced a layoff of 18 percent and Gemini will lay off 10 percent of its staff. But other crypto companies, such as FTX, continue to expand at a slower pace.

CEO of FTX Digital Markets: SBF made the right decision

In the past two years, due to the rapid development of the crypto market, many enterprises are expanding at a high speed, which is also normal. Because in a bull market, companies see opportunities and they need to expand their teams dramatically, but no one is sure when the economy will turn around. Coinbase CEO Brian Armstrong admitted that the expansion since early 2021 looks excessive.

FTX, meanwhile, announced that it would not stop recruiting and would continue to expand its services in a bear market.

Ryan Salame, CO-CEO of FTX Digital Markets, said that was because Sam Bankman-Fried, founder of FTX, resisted the pressure of venture capital expectations during the bull market and insisted on not overextending.

Ryan Salame "He wrote on Twitter:

"Venture capitalists and consultants told us time and time again that FTX needed to hire more quickly and increase its headcount, but SBF insisted that increasing headcount quickly would not significantly increase output."

Ryan Salame thinks it was the right decision. This decision also puts FTX in a very good position to continue recruiting and expand its service scope.

"FTX is very advantageous in the current environment as we can continue to hire and expand while maintaining our corporate culture. Ultimately, this will allow us to increase our range of services, which will benefit our users."

The culture of FTX: Rapid expansion will lead to lower efficiency

The culture Ryan Salame talked about was actually the first thing SBF learned as CEO.

In a June 7 tweet, SBF said that a few months ago, when bitcoin was trading at $44,000, he wrote a statement to employees saying that while he would continue to hire, he would slow down a bit.

This is because, as CEO, SBF believes that the number of team members does not equal the efficiency of the team:

"The first lesson I learned as CEO, and it took me a long time to learn this, was to make sure that the speed with which new people pick up is proportionate to the number of people you hire, otherwise things will only get worse.

I've studied high-growth companies over and over again and concluded that going from 200 employees to 2,000 doesn't increase productivity tenfold, or even less than double it. Sometimes the more people you hire, the less you can get done."

SBF explained that when companies expand at a rapid rate, it becomes difficult to coordinate between departments, while increasing the number of employees can blur responsibilities and increase the number of people playing ball.

In addition, rapid expansion lowers the standards of employment, resulting in poor communication between colleagues and, ultimately, no one to communicate with, even if there is a reward system.

"As far as I know, this is a common reason for the rapid decline of successful startups. Expansion is like a race, and it's faster to see if you can hire quickly or if new employees can pick up the pace and learn the culture."

In order to maintain FTX's corporate culture, SBF withstood the pressure of venture capital. Last year, he says, almost every venture capitalist told him that FTX's headcount was not growing exponentially, which would slow the company's expansion.

"We had about 200 people at the time and VCS estimated we needed to expand to 2,000, but we told them it wasn't good to hire too many people, so they could either invest or not, but FTX would keep pace."

At present, FTX has about 300 employees and continues to grow. Like all companies, there is a turnover rate of employees, but the increase was 50% last year. The SBF says there may be 400 next year.

SBF concluded:

"When it comes to growth, you can't equate 'increased expenses' with' constant growth. '"

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