How Michael Lewis made a fortune writing about money

And yet, Lewis does not boast of having finely attuned antennae for a juicy story. He has confessed that he knew next to nothing about crypto or Bankman-Fried until the autumn of 2021, and even then, he stumbled on the subject only by chance: a friend was interested in doing business with FTX and asked Lewis to meet with Bankman-Fried and vet him as an investment prospect.

Bankman-Fried agreed to go hiking with him in the hills near Lewis’ home in California. Like many others before and after him – not least Bill Clinton and Tony Blair – Lewis was hooked by Bankman-Fried’s unconventional, nerdy charisma.

“After a couple of hours, I said: ‘I don’t know what’s going to happen to you, but I just want to watch,’” Lewis recalled in May this year.

“All I knew was I was supposed to evaluate his character,” Lewis told CBS’ 60 Minutes. “And that 18 months earlier, he had nothing. Now he had $US22.5 billion and was the richest person in the world under 30.”

Lewis decided to write a book about FTX but, after months of work, began to fear that it would lack drama.

A friend who read an early draft told him: “Your problem is you don’t have a third act. You have the first two acts, but you don’t have a third act.”

“I said, ‘That’s absolutely right; I don’t know how to end it.’ A week later, FTX blows up. I was so grateful.”

In a way, this book sees Lewis going full circle back to Liar’s Poker. That book also began with an enormous stroke of luck – an unlikely sequence of events involving dinner with the Queen Mother led to the young Lewis securing a job as a bond dealer.

And, as with Going Infinite, Lewis was panicking about how to end the book while he was writing it, until another financial earthquake provided him with the climax he needed: the crash of 1987, Black Monday.

‘Grifter and vandal’

Lewis’ story begins in New Orleans, where he was born in 1960, the son of a lawyer. He was brought up in a storytelling culture.

“There was just this impulse, it was in the air you breathed in New Orleans, to turn things into narrative,” he told the BBC’s Desert Island Discs in 2020. “The place shaped me that way.”

On the same programme he recalled that he “was a grifter and a vandal by the time I was 10, 11 years old” and amassed a collection of hundreds of hood ornaments that he snapped off cars in the middle of the night. “I had no sense that what I did had any connection with the future,” he said.

He studied art history at Princeton and developed a taste for writing.

“[But] it occurred to me that if I was going to make it in the world, I was going to have to learn economics because it was the language that successful people spoke,” he told Forbes magazine in 2019.

He enrolled at the London School of Economics, where his tutor was the future Governor of the Bank of England, Mervyn King.

As he recounts in Liar’s Poker, Lewis has a distant cousin who was married to a German aristocrat. While still studying at the LSE, he was invited through this connection to a banquet at St James’s Palace, hosted by the Queen Mother (whom he remembers as surrounded by corgis). He happened to be seated next to the wife of one of the managing directors of investment bank Salomon Brothers, and she was so charmed by him that she promised to secure him a job.

Lewis’ description of this woman in Liar’s Poker is an example of the vivid character sketches that bring his books to life: “Her desire to be noticed was tangible. There are a number of ways to grab the attention of royalty … but probably the surest is to shout. That’s what she did. Specifically, she shouted, ‘Hey, Queen, Nice Dogs You Have There!’”

As a bond dealer at the London office of Salomon Brothers, Lewis realised the true absurdity of the financial system – “because it’s paying me hundreds of thousands of dollars to give financial advice to serious institutional investors when I have no idea what I’m doing. Nobody in his right mind should be listening to me, much less paying me huge sums of money to do this.”

He began a book about Wall Street, and the drama of Black Monday – he recalls “taking notes while people were screaming and yelling” – gave it shape.

Against the advice of his colleagues and family – that childhood lack of concern about the future may have still been in play – he gave up his job to write full-time. (The advance for Liar’s Poker was a healthy $US40,000, but small beer compared with the $US250,000 he was earning every year at Salomon Brothers.)

The book was published in 1989.

“When it came out, I walked down the streets of Manhattan and looked to the tops of buildings to see if there were snipers because the senior people were extremely unhappy,” he said. “However … the people on the trading floor thought it was funny.”

Storytelling skills

In the 1990s, Lewis became a successful magazine journalist, and expanded his articles into further bestselling books. Trail Fever detailed his experiences covering the 1996 Presidential campaign; The New New Thing (1999) followed the fortunes of start-ups in Silicon Valley.

He had a huge hit with Moneyball (2003), in which he detailed how the struggling Oakland Athletics baseball team turned its fortunes around using data analysis. Where most teams relied on professional baseball scouts to seek out players, the Oakland Athletics manager Billy Beane argued that scouts were blinded by prejudices and preconceived ideas about what good baseball players looked like, and analysing players’ statistics was a more reliable method.

Lewis decided to write an article about the team and recalls that he knew he had a great story on his hands the first time he saw them naked.

“They were coming out of the shower with fat ankles – they all looked wrong. That’s when I knew I had a book.”

He has explained the book’s appeal thus: “Forget baseball, Moneyball was about how we misjudge and misvalue people … [Oakland Athletics] were using information to get below the surface of the appearance of a person and what their value is on the team. Data was enabling you to get to the true value of a human being.”

Moneyball is without a doubt one of the most influential sports books ever. The sabermetric analysis pioneered by Beane (who was played by Brad Pitt in the movie) has been adopted all over the world in different disciplines.

It’s one thing to make a successful film about a plucky baseball team. But thanks to Lewis’ storytelling skills, The Big Short – his wide-ranging book about the 2008 financial crash – also made for a compelling movie, again starring Brad Pitt.

Lewis explained in a Vanity Fair article in 2015 that the success of his books lies in finding the right people to use as focal points within the bigger picture.

“My job, as I saw it, was to make the reader badly want to know about credit-default swaps and collateralised debt obligations,” he said. “The marvellous characters who had foreseen the collapse of the financial system became the solution.

“My reader (so I hoped) would feel it was worth trying to understand credit-default swaps because these enthralling characters were also trying to understand them.”

Quirky details

Now, with Sam Bankman-Fried, Lewis has once again found the ideal colourful character on which to hang a complex story.

Lewis inclines to the view that Bankman-Fried is more incompetent than criminal.

“His sole experience of leadership was running puzzle hunts for math nerds out of high school,” Lewis told CBS. “And [he] actually thought deep down, if you asked him, people shouldn’t need to be managed.

“So he proceeded to act on that and basically didn’t manage them. It was all Sam’s world and there was nobody there to say, like: ‘Don’t, don’t do that.’”

Lewis has found room for the usual quirky details of character in his book, including the fact that Bankman-Fried is so addicted to video games that he was playing one during his first television interview.

“If you watch the clip you can see his eyes going back and forth, back and forth,” he said.

Lewis also revealed Bankman-Fried considers Donald Trump such a threat to democracy that at one point he contemplated paying him $US5 billion if he agreed not to run for president in 2024.

Poignantly, Lewis has spoken about his struggles to resume writing after his daughter Dixie was killed in a car crash with her boyfriend in 2021 (she was one of Lewis’ three children with his third wife, former MTV presenter Tabitha Soren).

The tragedy has helped him empathise with Bankman-Fried’s parents.

“I drove with them to the jail right after he was arrested in the Bahamas,” he said.

“Barbara, his mother on the way to the jail, she asked me, ‘Tell me something to make me feel better.’ And I said, ‘You’ll be amazed at how adaptable you are. You’ll be shocked by the ability of your mind to adjust to the circumstances and continue on.’”

Lewis has said of Bankman-Fried: “He genuinely thinks he’s innocent … He’s like: ‘If you offered me plead guilty and do six months of house arrest, I’d still say no.’”

There have been suggestions, however, that Lewis is a little too credulous where Bankman-Fried is concerned.

In a recent article in New York magazine, Zeke Faux noted that Lewis lavished Bankman-Fried with praise when introducing him at an FTX conference in the Bahamas in April last year, where the guests ranged from Clinton and Blair to Katy Perry.

“Lewis said he knew next to nothing about cryptocurrency,” Faux reports. “But he seemed quite confident that it was great. [He] pos­ited that US regulators were hostile to the industry because they’d been brainwashed or bought off by established Wall Street banks.”

Still, as Lewis has often spoken of his books as a means of self-education, he may have reached a different conclusion now he has finished Going Infinite.

One thing Lewis’ books have not done is reduced the world’s dependency on the volatile financial sector. Despite the revelations of Liar’s Poker, Wall Street thrives, and, as Lewis observed in Billions, the “crass motherf-----s” of 35 years ago are still in charge.

After he wrote The Big Short, Lewis observed: “I thought we’d figured out we’ve got to reel in the financial sector. [But] society has not put the sector back in its box.”

Still, if Lewis is the Cassandra of the financial world, the fact that nobody learns the lessons he preaches means he’ll have plenty of material for years to come.

The Telegraph London