Part Two: Leopold and the Media (The Access Economy)

“Skepticism is expensive before the collapse. After the collapse, it’s free.”

In Part Two of Leopold and the Media, I put you in the shoes of a young journalist and interviewer cast into the upper echelon of financial media.

How is it that people make mistakes, don’t challenge narratives, and start to merge with the machine? It’s all about incentives.

Part I is right here.

The Access Economy

To Whom It May Concern (You)

For months, the financial media had enough information to see that Leopold Aschenbrenner’s hedge fund combined extraordinary inexperience, heavy leverage, and a cultivated genius narrative that deserved real scrutiny…

So, when it faced margin calls, a lot of people seemed to act like his biography wasn’t really examined… even though the admiring profiles started last fall and contained all the information that the media needed to challenge the narrative.

That was back when he was often presented as an unusually gifted young thinker who had seen the AI future before almost everyone else.

Once again, it all ended with a carefully curated image that folded fast when the deleveraging accelerated and the lack of experience suddenly became a liability…

Why wasn’t any of this brought up with the prime brokers when they lent him money?

Well, that was a question for the profilers to ask… but those questions rarely appeared in the profiles.

This isn’t the first time I’ve seen a process of “Find genius. Fund genius. Leverage genius. Liquidate genius. And then Blame genius when it fails…”

I ask… who is the messenger…

How do certain parts of the media miss so much when they had all the information that early…

Why do people build these narratives of personality, and invite themselves to scrutiny?

Because if access becomes the product, journalism can quietly turn into something else.

And when you see how the whole image can be carefully built and the ecosystems that form around these people… and the incentives that are created for outsiders to maintain…

In the end, it’s a personal story about human beings, incentives, and the decisions they make…

I want to create a hypothetical that is based on countless examples of how this all works.

To start…

I want you to imagine that you’re a financial reporter.

Imagine you’ve been given a rare opportunity to handle an interview of an ascending fund manager or CEO at a fintech or a board member of a growing company (who once worked at a Fortune 500 firm) and it’s now generating a ton of buzz.

I want you to think about this because there’s a big part of this work that people don’t like to talk about, because it will sound rather petty… and maybe it is.

But I want you to understand that certain parts of financial journalism are driven by access.

Before I go any further, I should say what this isn’t.

I’m not talking about investigative reporters getting people off death row or digging through financial records or digging into laundering or things like that...

I’m not talking about local reporters who sit through six-hour zoning meetings because someone has to keep local power in check.

I’m not talking about the person knocking on doors after a bridge collapses.

Those are people doing the work that made me go into journalism in the first place.

There’s an irony that I’d probably admire the local reporter who covers City Hall more than the reporter who wants that front row seat in Davos, Switzerland.

One of them is trying to understand and challenge power.

The other wants a seat close to it.

So, I stress that this is a narrow corner of the profession… and it’s actually just a sliver of the population of reporters who navigate between Wall Street, Silicon Valley, public relations, conference stages, and financial television.

It’s not everyone… but it’s enough of them that help fuel the problem I describe...

Even good reporters can be pulled by these incentives without recognizing it in the moment… It’s human behavior.

And the currency in this ecosystem is human exchange…

And that’s why it will all work.

For a long time in this profession, you’ll find yourself knocking on doors and making phone calls just trying to get someone to talk to you. You’ll be looking for a scoop, a story… a source. And somewhere in that career pursuit after enough hours, things will change… sometimes rapidly.

Imagine you now get that interview at an event at a conference in Manhattan, and you’re from a small town. Once you experience what you’re about to experience, it might not be so much about the story as it is about a new desire to be invited back.

They’ll never say it out loud, but a writer secretly wants a text or an email after the piece runs… and there’s that message that says… not necessarily in these terms… but “Great piece. You really understood me.”

That’s the Pulitzer letter in the world of “Access Journalism.”

If you’re interviewing a fund manager, you don’t uncover the strategy’s leverage.

You just got told by the man using leverage that you understood how he is using leverage… correctly.

And I want to be honest about the word “correctly.”

It means that you understood it correctly… and that he was telling you that he was using leverage correctly. It’s in two parts. You didn’t understand the second meaning…

And there’s always another layer beneath a thank-you text, because journalism in the 21st century has quietly evolved into a personal branding business with social media accounts, and blogs, and special series that are shared between you and an audience outside of the parent brand...

I don’t think that every reporter really wants to be famous. But I will say that we all know that it’s like every industry. There’s always another rung to climb.

It doesn’t matter where you go, there’s always another publication… a bigger audience… a stronger byline… a podcast to launch… or a keynote opportunity.

You might not know it yet, but there might be a conference moderator role waiting and maybe even a television contract if you’re good on camera and know how to hold your shit together when asked a question and you don’t stray from the subject...

You know that building a genuine niche used to mean years of graduate school, multiple markets, obscure reporting, and falling flat until you knew something nobody else knew. Or you somehow became the one guy who covers something obvious but surprisingly niche… like the business of the sports business like Darren Rovell… and what he did was pretty genius. But if you try to do that, people will then say to you, “So. you’re trying to be like Darren Rovell…”

That said, sometimes getting that one extraordinary interview can be enough to put you on a stage instead of in the audience.

When you go that route, your biography stops telling people that you cover the AI industry and now says that you’re a “leading voice on artificial intelligence.”

But, remember, you now write your own biography, so you can call yourself an expert in anything now, and becoming a leading voice might just mean speaking at two conferences and wearing a blazer and strong tie that photographs well.

Over time, the conference and interview invitations will evolve.

And then, one day, someone emails you and says they’re hosting an AI conference.

The founder liked your article, and they think you’d be perfect to interview the CIO on stage. You look at the agenda to see who is interviewing the founder (because you really were hoping that you might get to interview the founder).

It turns out that you see that it’s someone you’ve watched on television for years.

You thought that person was a reporter. It turns out they moonlight as an emcee at industry conferences. Which, I would later discover, is where journalists go when they have decided they’d rather be on the agenda than cover it…

That reporter will interview the founder under a giant sponsor logo, nod thoughtfully while he says the word “ecosystem” 32 times and then thank one of the banks financing the entire operation for making the conversation possible.

This journalist isn’t just covering the industry anymore.

They’ve become part of its programming… a cheerleader for what it may represent.

Depending on the channel or publication, that industry might be patriotic, opportunistic, futuristic, or a pathway to political influence… or all of the above.

You scroll down the speaker list.

There’s a White House cabinet secretary, three billionaires, a Nobel Prize winner, and one man whose biography simply says “futurist.” Seven years ago, you were in the basement of a college newspaper trying to get the printer to work.

Now your headshot is in a program and on a well-designed conference website between a sovereign wealth fund CIO and the futurist.

You still don’t know what a futurist does.

And you realize he has a better hotel room than you as you get out on the third floor of the elevator, and he pushes 20 where the suites are.

You’ll learn that no one tells you to be careful at these events. Your publisher hasn’t attended before, and your parents still don’t understand what you do. But you’ll suddenly understand why people are careful.

It turns out the most valuable currency in the media isn’t access to powerful people.

It’s the pathway to becoming one of the names on the program yourself.

Access journalists…

The incentives begin to favor the private dinner, the Friday happy hour, and the chance to say you were there.

They want to walk into a conference happy hour and recognize Stripe’s Patrick Collison… but they always want Patrick Collison to recognize them.

So… let’s say the invitation finally arrives.

Here you are… late 20s, early 30s.

It feels like you’re Anne Hathaway in the Devil Wears Prada.

You step outside after the keynote conference room and someone says they’re going to a pool bar, because that’s where the real conversations happen.

Someone is pouring natural wine and saying something about their friend opening a yoga retreat in Nicaragua, and one of the hedge fund founder’s college friends is laughing about that one time THEY were in Nicaragua… a story that only they understand, but much later you’ll be allowed into that story from 2012.

And that may be your first clue that the room is beginning to change you…

You turn, and THERE’S THE NEW HEDGE FUND FOUNDER standing beside a heat lamp, explaining artificial super-intelligence to a Stanford University grad student who interns at a venture capital firm that summer.

Someone from Anthropic is having an argument with a guy from OpenAI about whether the human species will make it to 2031, and you think they don’t like each other because they work for rival companies. But you soon realize that they went to MIT together for business school and started drinking together at noon.

Then someone remembers you from this panel and asks you if you’d like a drink.

You’re not this reporter out on the sidewalk anymore.

You’re now inside, and you’re one of the people who knows what is going on at these parties that nobody talks about and those board rooms that no one sees because you agreed to only speak when you ask if we’re “On the Record.”

That entire landscape will have the capacity to instantly change you.

Why?

Because for the first time in your lifetime… while your other friends have gone on to make small fortunes at banks… and consulting firms… and large software companies… you… on your reporter’s salary… finally have something to lose.

Here’s the reality of the situation.

Let’s say that you’re standing beside someone who has just launched a fund, and people are waiting in line to talk to them.

And you have questions about their leverage, and about their strategy, and why they make the decisions that they make. And why they might use leverage to buy high-beta, profitless companies.

After 20 minutes, you find yourself standing right next to that guy, and there are other people there. And he’s right beside you. You’re there… in the room with a guy who worked on super-intelligence projects and now runs a hedge fund…

You could ask why a fund financed by some of the world's largest banks could obtain that much leverage.

But the truth is that this question is an unwelcome guest.

The second the question lands, the temperature outside the pool drops, and people start finding interesting things at the bottom of their glasses.

This is the point where the founder’s communications assistant may appear at your elbow as if teleporting.

Your invitation to the following Friday’s happy hour and your invitation to the conference next year enters a sudden phase of… what’s the term… price discovery?

Because an invitation is an asset.

It doesn’t throw off any cash, and it doesn’t produce anything.

But it appreciates in value every time a more important person sees you holding it.

A Silicon Valley dinner invitation for a journalist is basically an NFT, and the image is a location pin, and the blockchain is some publicist named Madison. All the while, you’re carrying the first link in an important chain for your publication.

After all, your editor wants the exclusive interview that you might deliver.

The publication wants the traffic to the article that carries your byline.

The publicist wants a dedicated outlet that can validate and elevate the fund manager (or other client’s) profile, and the expectation is that you’ll deliver… and accommodate.

This is the chain… and the incentives all line up on their own.

And that’s exactly how the most durable forms of bullshit survive…

Nobody has to coordinate it. The incentives do the work…

So… you don’t ask the question about leverage.

And when you do get the chance to sit down and interview the fund manager on camera at the conference, you ask the other question… and it’s the one that makes the publicist smile. You ask something like…

“What is it… that other traditional investors don’t understand about your vision?”

Or some variation of that… and that’s not even a softball question.

And you hear yourself doing it…

That’s a first-class ticket with no destination… and by the time you’re done writing down the notes, you’ll find that it sounds inspiring, but you have no clue what that person just said… and you never will…

Because his word salad of… “We’re making the world a better place through situational opportunistic capital allocation on world-changing technologies that can enhance every portion of the human experience…” isn’t a real answer.

But you asked that question, and you deserved that answer.

But it also gets you a refill and a seat at the dinner that is happening after some panel discussion. And you arrived a little late and confused to that panel, because they told you the name of it, but it was so bland and absurd and was called “The Future of Intelligence, Capital, and Human Flourishing.”

It’s the type of panel where no one can ask what happens if SanDisk stock plunges 40% because that wouldn’t be flourishing… or opportunistic.

That’s just “bad energy.”

You’re now just building a little world where skepticism feels rude and you’re a guest...

You were standing beside the pool, and he remembered your name, you ate the little chicken on a melba toast thing off the tray that you washed down with a Vodka soda.

Are you really going to ruin happy hour asking if the fund survives a 10% drawdown?

Of course not. You’ll put it in an email next week.

But there’s a good chance you don’t send that email…

And this is… honestly… how the leverage ends up in Paragraph 27 in a profile about the firm six months later…

At high-visibility financial conferences, you might find yourself judged by after-events, and if you’re invited.

These are the parties that the press pretends not to care about, but really cares about it more than anything. The conversations among various journalists sound like Patrick Bateman trying to get into Dorsia as the night wears on…

The top parties bring the top future sources, and the sources offer future scoops, and the scoops are the pathway to personal brand and promotion.

I’ve seen people walk into a party to investigate power, and then six months later, he or she is now quietly hurt when no one has saved them a seat next to it.

Which is why I argue that Leo’s whole world was built for it all… and there are a lot of people who saw a ticket to something bigger… There would be conferences and speaker dinners in the future… and maybe even a job one day in communications...

There would be more famous investors, and exclusive funds, and happy hours with the best networkers on the coasts, and a hand-selected press by hedge fund conference ticket allocators who have a “Naughty and Nice” list for who gets it and who does not.

Hell, even his wedding was going to have panels and breakout sessions, because this whole world can’t function without turning a simple human ritual into a Davos practice session.

Somewhere, there was probably a journalist texting with a source at the wedding, or a hand-selected media member who could write a review about this wedding, redemption, and the most important minds in technology gathering in Santa Barbara.

That person exists… and that access is what people want.

It’s not just finance. It’s sports (as controversy has hammered the industry in recent months, but it’s long been a protection and access racket in the sports industry, as Skip Bayless describes. There are many arrangements where some journalists act as de facto PR assistants for various financial leaders and corporate executives as well. That’s not even a secret. It’s business. It’s all done out in the open.)

When you have that access, you stop being the person who writes about important people, and get to feel - if only for a conference or two a year - like you’re one of them.

Somewhere in there, the invitation can shape the reporting before you’d even admit that the invitation matters. But then a fund blows up… or something else happens… and the spell suddenly breaks.

Every fact that would have been rude to ask is now the entire story. Suddenly, the leverage around the firm and the inexperience are in paragraph two.

Suddenly, his age matters. No one ever remembers the question they never asked while they’re holding a vodka soda next to a heat lamp.

The same reporter who once said that the dinner is “now off the record…” now reports that there were always questions about the fund.

But the people with the greatest access were also the ones best positioned to ask the question early. Too often, it went unasked…

And that’s the thing I’ve discovered…

Skepticism is expensive for you before the collapse.

After the collapse, it’s free.

Again, all of this is hypothetical - although I’ll admit that I’ve pushed some lines with questions and had some people suggest to me that I might want to just use the pool…

I could sit here and tell you that this is a story about Leo…

It’s really not. But I could give you a dozen examples from the coverage of Sam Bankman-Fried, including from reporters and media figures I encountered at the FTX conference in the Bahamas…

Some of them have spoken as though the red flags had always been obvious.

History doesn’t offer much comfort. The press cycle changes from case to case, but the machinery underneath it is remarkably consistent.

To be fair, the press wasn’t responsible for Leo’s margin call.

It didn’t force or offer the leverage. It didn’t short the chip stocks that he owned, and it didn’t draft any prime-broker agreements.

That said, it did help construct an atmosphere that has evolved for decades where asking about the leverage feels small and sophisticated compared to the size of the vision. But when the fund cracked, it picked up the same mythology off the ground and branded it as a weapon.

You must appreciate the efficiency of this business.

It’s a place where a person can give you two completely different products.

The rise of the subject offers aspiration and access to the parties and the profiles and the feeling that you were the one who spotted the future of something bigger.

Then, there’s the collapse.

It offers conflict, and the chance of moral certainty, and then you go out and find a new protagonist and start all of this over. I want to wonder how after FTX and what happened there, that this happened all over again just four years later. But am I surprised? No… just like the fund manager using leverage, the media can’t help itself leveraging a reputation in print.

Financial media can build the statue on Monday and sell tickets to the demolition by Friday.

Meanwhile, there’s one article I haven’t seen, and perhaps I am the guy who needs to write it and publish it on the record. I want to see an article where prime brokers explain how a 24-year-old with little trading experience got that much financing…

Where’s the soft lighting on that story?

Where’s the photo of Greg from Risk standing at the window, a hand on the railing, staring beyond the camera and thinking about the future of collateral.

But no one is assigning that piece at Fortune or the Wall Street Journal.

And that’s because Greg from Risk can’t get you into a green room at a conference, and he has no manifesto or cult following. Greg doesn’t host Friday happy hour at Nobu.

The takeaway isn’t that young people shouldn’t be in charge of running money. But the next time that you see these things line up, take the time to ask three questions.

• Who financed the position (and the leverage)?

• What starts the clock that forces a sale even if the thesis is right?

• Is the profile treating a real financial risk like a personality quirk?

Run that on Leo and it falls right out.

The financing came from major banks… The collapsing collateral triggered the margin call, and every real risk got wrapped into his personality.

You can see the same pattern in Sam Bankman Fried. Then work backward… there’s probably 50 examples that you’ll find in finance, politics, and Hollywood in the last quarter century that you’ll ask yourself, why weren’t these questions asked Day One.

I want to conclude with a personal anecdote…

Because I’m 45 now, and I can look back on my “journalism” career and recognize where I started to observe this access game for what it is…

One of the first big financial conferences I ever attended was in Las Vegas, and I felt completely small and out of place from the second I walked in. I was 36…

The building was full of private-equity managers and hedge-fund leaders and political people and investors and wealthy human beings…

Every one of these people had mastered the art of sounding important while holding a tiny plate of eggrolls.

I remember meeting one of my academic heroes (never meet your heroes), and while laughing at how brief our interaction was, my eyes turned to one person.

She was high up in a political party as a leader in fundraising, walking from table to table and picking up every single pen, sticker, tote bag, and more, asking “Can I have this?” until she was walking out of there like a child holding an overstuffed animal full of pointless alternative investment swag.

I always found that behavior to be very strange…

Everyone else seemed to know exactly how and where to stand, and which person should be recognized and how. It was weird to see a person that controlled $100 billion walking down the hallway dressed like he was on the way to buy mulch.

I also worked out in a hurry why everyone kept looking over my shoulder while they were talking to me…

On the third day, the media pool had a chance to interview T. Boone Pickens for 30 minutes. Pickens had the reputation of the consummate oilman, corporate raider, political tidal wave, and of course eccentric billionaire.

The questions started. They were respectful and professional, and soft enough to open a follow-up conversation via email later.

But I won’t forget one person in the room, because it shook me straight.

Across the room was Hamilton Nolan, who at the time wrote for Gawker.

He appeared a bit gruff. He was openly progressive in the pre-DSA era, wrote anti-capitalist pieces, and had helped organize the union at the publication.

I remember him in a T-shirt rather than a suit, and he didn’t seem concerned if people in suits at the conference thought he had the right attitude.

I remember it as a question about water and resource rights, although I cannot reconstruct the exact wording now. I could feel the room temperature change.

Pickens had spent his life talking about oil and capital. In a quick turn, someone asked who deserved control of the very resources that they need to live.

That wasn’t the question that gets a reporter invited to dinner, and it wasn’t the one that Pickens came to answer. But it WAS the one Nolan came to ask.

I was still trying to make sense of what I’d entered… the people with access and the people protecting their access. And I want to be honest about the fact that I didn’t fit in and it wasn’t some grand theory of journalism.

I walked out of the conference that day, because I felt awkward. At times, people were asking me questions as if I were joining some seminar or something. “Isn’t this great, isn’t it so great. It’s so great!”

Yes, and it was weird, and I was way outside my element. I couldn’t make sense of the choreography. I ended up across the street at Blondies Sports Bar & Grill inside a mall drinking Bud Light draft and talking to a family from Kansas.

That was the place I felt at home, with beer-pong tables and people yelling at televisions. I had wanted to fit in at first, and I really wanted to be a part of it.

But I’d rather drink a beer in a mall bar than fake a conversation with a fund manager who wasn’t ever going to be my friend and genuinely didn’t care if I had some deeper understanding of how financial systems operated.

I wasn’t going to fit in. And I never have… in a lot of places… for a very long time.

Only later did I understand that afternoon changed my career.

Five years later, I couldn’t take it anymore… I ran into a fund manager who was praised nonstop by the media, and had to ask her why she bought stocks that were unprofitable… and if their own CEOs and CFOs WEREN’T buying the stock.

She didn’t like that question… and was somewhat flustered that I’d ask that.

A night later, I asked a table of people “going to Davos” after a crypto conference in the Bahamas whether “all of this” with FTX and Sam Bankman-Fried seemed “too good to be true,” and I could feel a table of five move against me. It was the day before SBF would interview Bill Clinton and Tony Blair on stage…

How could I ask that… let alone even joke it?

A woman from Los Angeles shh’d me… and never took my email.

Somewhere between that conversation and the collapse of FTX, I finally realized how the room worked, who supplied that money, and who controlled the clock.

And then, I spent the next four years teaching myself even more about who collected the upside, who got the bailout, and who was left holding the risk (usually the retail trader who gets dragged down alongside many of the games played in global finance.)

I haven’t gone back to any major event since, and it’s a shame, because I can be fun… but I don’t need the invitation or the private dinner or a text from someone telling me that I understood their business.

Would I appreciate an invitation to something? Of course, I’m human. And it’s not like I’m going there to create a scene. But I also don’t want to be a part of something badly enough to let it decide what I’m allowed to ask.

And I’m aware that writing this likely means I’m never getting into that club, and that’s a price I can live with.

Because Nolan, who I never saw at a hedge fund event ever again, taught me something in that room with Pickens… and I say that honestly, even though I don’t think the two of us ever talked about it or will ever agree on a solution on politics or society or structure… just that the problem exists.

Our job isn’t to make the powerful person comfortable enough to invite us back.

The job is to ask the question you came to ask.

And sometimes that question changes the temperature and ruins dessert, and afterward the publicist Madison somehow stops answering your emails.

That’s okay. No one needs me.

There are plenty of people who will walk into that room with a big smile, drink the champagne, and stand at the center of the party, and ask the questions that the person wants to be asked…

I’ll be across the street, drinking beer out of a mug with the tourists, trying to figure out what happens when the music stops…

I’ve seen enough… it was a lovely view… and I burned the candles at both ends… to… in the words of Hitchens… produce a lovely light.

But for now, I can sit here at the Edge of the World… and write from here… and have a greater impact than I ever could have elsewhere.

And that’s a good enough career for me.

Tomorrow, I’ll give you a trade/investment based on the broader trend of how leverage and margin work. There will be a simple report and a strategy that you can use to find success in very specific conditions. The report comes tomorrow for all paid subscribers…

Stay positive,

Garrett Baldwin