Complex Systems with Patrick McKenzie (patio11)

What LLMs can and can't do for writers, with Clara Collier of Asterisk Magazine Jul 16, 2026

Patrick McKenzie is joined by returning guest Clara Collier, editor-in-chief of Asterisk Magazine, to discuss how working writers and reporters actually use LLMs. Patrick walks through the machinery behind his recent SPLC reporting, including "parallel construction" with LLMs: when sources can't go on the record, models can surface public confirmation of the same facts in unguarded podcast interviews, press releases, and prepared remarks. They also cover why the best smoking gun sat unnoticed on the coalition's own Twitter account, the David O. Selznick theory of the corporate memo, and where hardball politics in a democracy ends and crimes begin.

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Full transcript available here: https://www.complexsystemspodcast.com/llms-and-writers-with-clara-collier-of-asterisk-magazine/

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Presenting Sponsors: Mercury, MongoDB & Chainguard

Complex Systems is presented by Mercury—radically better banking for founders. Mercury's new feature Command brings an LLM directly into your banking interface, so checking balances, finding invoices, or sending a wire is as easy as asking. Apply online in minutes at https://mercury.com/.

What's the point of building faster with AI if your database can't keep up? MongoDB's native data model mirrors the language LLMs already speak. Ship at the speed of AI while staying ACID compliant at Fortune 500 scale. Start building at https://mongodb.com/ai.

If attackers are using AI to weaponize code faster than any team can review it, your scanners won't save you. Chainguard builds libraries and container images from source, verified all the way down, with near-zero CVEs and zero malware. Build safely at https://www.chainguard.dev/.

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Links:

Complex Systems on YouTube: https://www.youtube.com/@patio11podcast
Asterisk Magazine: https://asteriskmag.com/

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Timestamps:

(00:00) Preview

(00:51) Intro

(01:16) How legacy media feels about LLMs

(05:02) Writing as thinking: why the byline matters

(08:51) LLMs as feedback partners and simulated readers

(12:39) The future of the corporate memo

(15:58) Sponsor: Mercury | MongoDB

(18:30) Memos, de-skilling, and thinking on paper

(20:02) David O. Selznick's memos and the MrBeast production doc

(23:28) Can models introspect on their own work?

(30:06) Sponsor: Chainguard

(31:27) The SPLC investigation

(37:07) Chains of evidence and protecting sources

(45:20) Parallel construction with LLMs

(49:41) Mining podcasts for unguarded admissions

(59:35) Deepen your strengths, don't just patch weaknesses

(1:03:34) The smoking gun the LLM missed

(1:04:48) Hardball politics versus crimes

(1:10:48) Why a payments newsletter reported a political story

(1:16:19) Reporting stories that will be weaponized

(1:20:24) The tech right and internal company politics

(1:23:44) Debanking discourse and drawing distinctions

(1:30:21) Hate speech, social sanctions, and owning decisions

(1:34:51) Wrap

YouTube economics now, with Justin Kuiper Jul 09, 2026

In this episode of Complex Systems, Patrick McKenzie (patio11) is joined by Justin Kuiper, a longtime writer for MatPat's Game Theory family of channels and now creator of Proof Positive, to discuss the microeconomics of YouTube. They break down how creators actually get paid — from $3–$20 CPMs and the leaky funnel where a million views yields perhaps 50,000 actual ad views, to sponsor reads, Super Chats, and MrBeast selling chocolate bars as his own advertiser of last resort. Along the way, they explore how a successful channel becomes a firm that absorbs specialist labor from less successful peers, why the algorithm gives every upload a trial by attention, and what parasocial spending has in common with Mark Twain's speaking circuit.

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Full transcript available here: https://www.complexsystemspodcast.com/justin-kuiper-youtube/

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Presenting Sponsors: Mercury, Chainguard & MongoDB

Complex Systems is presented by Mercury—radically better banking for founders. Mercury's new feature Command brings an LLM directly into your banking interface, so checking balances, finding invoices, or sending a wire is as easy as asking. Apply online in minutes at https://mercury.com/.

If attackers are using AI to weaponize code faster than any team can review it, your scanners won't save you. Chainguard builds libraries and container images from source, verified all the way down, with near-zero CVEs and zero malware. Build safely at https://www.chainguard.dev/.

What's the point of building faster with AI if your database can't keep up? MongoDB's native data model mirrors the language LLMs already speak. Ship at the speed of AI while staying ACID compliant at Fortune 500 scale. Start building at https://mongodb.com/ai.

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Links:

Proof Positive on YouTube: https://www.youtube.com/channel/UCns_C7cPAguFSv2YdltaOsg

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Timestamps:

(00:00) Preview

(00:45) How creators make money on YouTube

(04:06) CPMs and the international ad market

(06:36) From solo creator to firm: working for MatPat

(09:28) Sponsors: Mercury | Chainguard

(12:30) From solo creator to firm: working for MatPat (cont’d)

(13:49) YouTube as a farm league for other industries

(17:15) Why now is the best time to start: discovery and universal basic attention

(20:47) Power users and how recommendations work

(24:23) Brand safety, rabbit holes, and the money laundering short

(27:38) Fads, timing, and the day-two piece

(35:52) The production function: scripts, shot lists, and editing labor

(42:14) The aesthetics of authenticity

(46:58) Sponsor: MongoDB

(47:47) Why more people should make videos

(53:52) Content marketing, sponsor reads, and remnant inventory

(01:00:24) Chocolate bars, paint sets, and creator products

(01:05:00) Parasocial relationships and the market in status

(01:16:43) Where to find Justin: Proof Positive
(01:18:58) Wrap

The structural footprint of a bank run Jul 01, 2026

Patrick McKenzie (patio11) reads his 2023 essay "Deposit Franchises as Natural Hedges," written seven weeks into that year's banking crisis, making the case that deposit franchises are a natural hedge against interest rate risk (one regional banks were quietly encouraged to sell off by loading up on agency MBS). He walks through why "sweat and smiles" deposits were assumed to be sticky enough to fund long-duration assets, why that assumption broke down for retail and sophisticated depositors alike once rates rose, and how the resulting losses moved through bank balance sheets. Patrick closes with two years of hindsight: what the essay got right and wrong about how bad it would get.

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Full transcript available here: https://www.complexsystemspodcast.com/deposit-franchises/

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Presenting Sponsors: Mercury, MongoDB & Chainguard

Complex Systems is presented by Mercury—radically better banking for founders. Mercury's new feature Command brings an LLM directly into your banking interface, so checking balances, finding invoices, or sending a wire is as easy as asking. Apply online in minutes at https://mercury.com/.

What's the point of building faster with AI if your database can't keep up? MongoDB's native data model mirrors the language LLMs already speak. Ship at the speed of AI while staying ACID compliant at Fortune 500 scale. Start building at https://mongodb.com/ai.

If attackers are using AI to weaponize code faster than any team can review it, your scanners won't save you. Chainguard builds libraries and container images from source, verified all the way down, with near-zero CVEs and zero malware. Build safely at https://www.chainguard.dev/.

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Links:

Deposit franchises as natural hedges: https://www.bitsaboutmoney.com/archive/deposit-franchises-as-natural-hedges/

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Timestamps:

(00:00) Intro
(03:48) Natural hedges
(07:38) Deposit franchises as an asset
(10:53) The value of a deposit franchise increases with interest rates
(11:30) A brief aside about deposit beta
(14:58) Sponsors: Mercury | MongoDB
(17:30) A brief aside about deposit beta
(18:05) The deposit franchise as a hedge
(21:52) Regional banks were instructed to load up on agency MBS
(25:09) Why did the hedge bust?
(29:42) Sponsor: Chainguard
(31:03) Further bad news: the problem is bigger than MBS
(34:01) It is no longer February
(34:51) “Why didn’t the hedger hedge?!”
(35:37) So what do we do now?
(37:59) Postscript
(39:45) Wrap

Forty ways to pay for coffee in Japan Jun 25, 2026

Patrick McKenzie (patio11) reads his 2021 essay "Payments in Japan," tracing how Japanese consumers navigate a landscape with dozens of competing payment methods at once: credit cards, electronic money, QR-code super apps, convenience-store cash vouchers, and bank transfers. Along the way he covers the JFTC's campaign to force credit card networks to disclose interchange rates, how Rakuten and 7-Eleven each bought a bank to solve a payments problem blocking their core business, why PayPay's subsidized 2018 launch let it run away with the QR code market, and why konbini payments remain popular despite a user experience frozen in the late 1990s.

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Full transcript available here: https://www.complexsystemspodcast.com/japanpayments/

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Presenting Sponsors: Mercury & MongoDB

Complex Systems is presented by Mercury—radically better banking for founders. Mercury's new feature Command brings an LLM directly into your banking interface, so checking balances, finding invoices, or sending a wire is as easy as asking. Apply online in minutes at https://mercury.com/.

What's the point of building faster with AI if your database can't keep up? MongoDB's native data model mirrors the language LLMs already speak. Ship at the speed of AI while staying ACID compliant at Fortune 500 scale. Start building at https://mongodb.com/ai.

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Links:

Payments in Japan: https://www.bitsaboutmoney.com/archive/payments-in-japan/
An Introduction to Japanese Society: https://www.amazon.co.jp/Introduction-Japanese-Society-Yoshio-Sugimoto/dp/1107626676/
Use transit cards on your iPhone or Apple Watch in Japan: https://support.apple.com/en-us/120474

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Timestamps:
(00:00) Intro
(02:44) Credit cards
(10:40) Payment method heterogeneity
(12:57) Cash
(14:57) Sponsors: Mercury + MongoDB
(17:29) Cash (cont’d)
(19:58) Electronic money systems
(22:13) App-based payments
(28:27) Convenience store payments
(31:27) Bank transfers
(34:03) Ambitions thwarted
(34:30) Wrap

The factory behind your home loan Jun 18, 2026

Patrick McKenzie reads from his 2022 Bits About Money essay on mortgages, making the case that a mortgage is best understood as a manufactured product, not a simple loan between a bank and a customer. He walks through the assembly line behind every home loan, the loan officer and back-office staff who build the 700-page document. Then he traces the supply chain it gets sold into, where GSEs insure against non-payment risk, servicers buy the right to collect monthly checks, and pension funds and other private capital end up holding the economic exposure, because they want it more than banks do.
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Full transcript available here: https://www.complexsystemspodcast.com/mortgages/
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Presenting Sponsors: Mercury & Granola

Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

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Links:

Mortgages are a manufactured product: https://www.bitsaboutmoney.com/archive/mortgages-are-a-manufactured-product/
The 30-Year Mortgage is an Intrinsically Toxic Product: https://byrnehobart.medium.com/the-30-year-mortgage-is-an-intrinsically-toxic-product-200c901746a
Michael Lewis’ The Big Short: https://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393338827

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Timestamps:

(00:00) Intro

(02:26) Mortgages are a manufactured product

(04:19) Who manufactures mortgages?

(07:08) Who buys mortgages?

(07:42) The risk of non-payment

(10:08) Sponsor: Mercury | Granola

(14:35) The risk of failing to service a mortgage correctly

(17:51) Every other risk you could imagine, of which there are many

(24:04) Scratching the tip of the iceberg

(25:10) More about flow meters

(26:24) Wrap

How brokerage transfers actually work Jun 04, 2026

Patrick McKenzie reads from his 2024 Bits About Money essay on ACATS, the Automated Customer Account Transfer Service that governs how Americans move investment accounts between brokerages, then updates it with regulatory developments (and industry infighting) from early 2026. The essay covers why a system underpinning trillions of dollars in assets was deliberately designed to skip verifying whether transfers are actually authorized, what the three-business-day shot clock means in practice, and how a bad actor armed with a stolen identity and a mobile app can drain someone's retirement account before they notice it's gone. (Good news, though: they’ll almost certainly get it back. Bad news: quite stressful, and it often isn’t obvious when staring at the zero that this is a recoverable condition.)

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Full transcript available here: https://www.complexsystemspodcast.com/acats/

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Presenting Sponsors: Mercury & Granola

If you have more interesting hobbies than managing your money, Mercury Personal is built for you. It allows you to automate movement between accounts—allocating paychecks and tax prep the moment they hit—with a sensible permissions model for partners or accountants. It works the way tech people expect banking to work. Go to mercury.com/personal to experience banking built by the same folks Patrick trusts for his business.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

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Links:

Guys what is wrong with ACATS: https://www.bitsaboutmoney.com/archive/how-acats-transfers-work/

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Timestamps:
(00:00) Intro
(01:49) A brief digression into self-regulatory organizations
(03:04) FINRA regulates asset transfers between brokerages
(04:54) How does one transfer securities account assets?
(06:52) What does an ACATS request actually entail?
(09:44) Brokerages frequently do not verify incoming ACATS requests
(15:28) Recent developments in ACATS fraud
(19:13) Should I be terrified, Patrick?
(20:07) Sponsors: Mercury | Granola
(23:17) Should I be terrified, Patrick? (cont’d)
(24:46) Another fun wonky control
(28:29) A final ACATS story
(29:58) Regulatory updates: FINRA 26-02
(32:34) Comment letters from the industry
(43:20) Outro

Wrong numbers and why they survive, with Aaron Brown May 14, 2026

Patrick McKenzie (patio11) is joined by Aaron Brown, author of Wrong Number, to examine why institutions that produce bad statistics face so few consequences for doing so. They trace the pattern from Aaron's 1975 summer job, where two credentialed experts confidently produced opposite conclusions about whether American tractors ran on diesel or gasoline, through decades of case studies involving the NTSB, COVID-era research, and the eviction moratorium. Along the way they discuss why financial markets are unusually good at error-correction, why "wanna bet?" functions as a tax on bullshit, and what it means that every senior economist Aaron told about the tractor problem simply laughed and topped it with a worse story.

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Full transcript available here: https://www.complexsystemspodcast.com/aaron-brown/

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Presenting Sponsors: Mercury & Granola

Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

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Links:

Wrong Number (book): https://www.amazon.com/Wrong-Number-Blizzard-Quantitative-Disinformation/dp/1394379781
Wrong Number with Aaron Brown (video series): https://www.youtube.com/playlist?list=PLBuns9Evn1w_SLGfUY5i__wzUF5f8e7ec

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Timestamps:

(00:00) Intro
(01:12) The agricultural demand curve discrepancy
(04:06) Why experts prioritize teaching over learning
(05:17) Institutional indifference to error
(06:26) The brand halo of high-status institutions
(08:34) Lessons from COVID-era decision making
(10:19) Financial statements versus scientific rigor
(14:53) Sponsors: Mercury | Granola
(18:19) The difficulty of auditing and replicating research
(22:12) The CDC eviction moratorium and its justification
(23:34) The NTSB curbside carrier safety study
(26:41) Conspiracy versus incompetence in data manipulation
(30:05) Error correction in financial markets
(32:52) The culture of the advantage gambler versus the academic
(35:28) Betting as a tax on bullshit
(38:44) Using market pricing to evaluate risks
(41:04) The track record of scary predictions
(43:34) Environmental success stories and technological optimism
(48:21) Energy efficiency and the path to global wealth
(54:10) Wrap and where to find Wrong Number

Defendant, Censor, Politico, Spy May 08, 2026

The improbable but true story of how non-profits operating a private intelligence agency to combat terrorism decided to interfere with campaign infrastructure in a U.S. election.

This piece includes original public interest reporting, following on the previous episode on how the Southern Poverty Law Center became financial infrastructure. If you have previously read Bits about Money's reporting on this subject, note there are two major additions here: 1) direct evidence of interference in campaign infrastructure for a declared candidate in a U.S. election, which was newly developed after our original reporting and 2) responses (and lack thereof) from the non-profits at issue.

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Full transcript available here: www.complexsystemspodcast.com/defendant-censor-politico-spy/

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Presenting Sponsors: Mercury, Granola & Meter

Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

Networking infrastructure has a way of accumulating technical debt faster than almost anything else in IT. Meter handles the full stack (wired, wireless, and cellular) as a single integrated solution: designed, deployed, and managed end-to-end so there's only one vendor to call when something goes wrong. Visit meter.com/complexsystems to book a demo.

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Links:

Notes on a non-profit indicted for bank fraud (Bits about Money): https://www.bitsaboutmoney.com/archive/nonprofit-indicted-bank-fraud/

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Timestamps:

(00:00) Intro
(02:50) The coordinated pressure campaign, as experienced by industry
(08:13) The coordinated pressure campaign, as narrated by its authors
(08:36) Mid-2017: Color of Change dialogue with PayPal begins
(09:27) August 11, 2017: Charlottesville Unite the Right Rally
(10:58) August 21, 2017: JPMorgan Chase Foundation donates $500k to the SPLC
(11:44) 2018: SPLC organizes Change the Terms, which becomes the coalition's nucleus
(19:07) March 2021: Color of Change describes the meetings on a podcast
(21:42) A brief interlude about causality and communications strategy
(22:58) The coalition targets politicians in nonpartisan fashion
(28:20) Early 2020: The SPLC describes this campaign to Congress
(31:26) June 2020: Widespread protests throughout America; National Guard, Facebook deployed
(35:33) July 29, 2020: Antitrust Committee hearing about market power
(38:05) January 6, 2021: A riot at the Capitol
(42:51) February 25, 2021: The SPLC lobbies Congress to require companies to inform on nonprofits and others to government
(44:49) June 4, 2021: Facebook rescinds newsworthiness exception to multiple policies
(45:22) July 2021: The Change the Terms coalition attempts nonpartisan interdiction of Trump PAC fundraising
(48:16) Later in 2021: Coalition members fundraise in reliance upon this conduct
(50:52) 2022 to present: The Change the Terms coalition evolves posture
(52:10) January 2023: Change the Terms intervenes in its own name against a declared candidate for the presidency
(53:53) A brief parable about maintaining tax-exempt status
(55:30) We have invited coalition participants to comment
(57:50) We received a statement from the Center for American Progress
(01:02:43) No other member of the coalition offered any comment
(01:03:13) The moral authority of charities is a commons

How the SPLC became financial infrastructure May 01, 2026

Patrick McKenzie reads from his latest Bits About Money essay, walking through why bank fraud charges are a prosecutor's favorite tool, how the Bank Secrecy Act's surveillance regime is designed to force criminals into impossible tradeoffs, and why lying to a bank is one of the easiest crimes to prove. He then applies that framework to the April 2026 DOJ indictment of the Southern Poverty Law Center, tracing how a covert informant-payment scheme run through fictitious shell entities to become a near-textbook bank fraud case. Part 2 releases next week.
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Full transcript available here: www.complexsystemspodcast.com/splc-financial-infrastructure/
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Presenting Sponsors: Mercury, Granola, & Meter

Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

Networking infrastructure has a way of accumulating technical debt faster than almost anything else in IT. Meter handles the full stack (wired, wireless, and cellular) as a single integrated solution: designed, deployed, and managed end-to-end so there's only one vendor to call when something goes wrong. Visit meter.com/complexsystems to book a demo.

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Links:

Bits About Money, Notes on a non-profit indicted for bank fraud https://www.bitsaboutmoney.com/archive/nonprofit-indicted-bank-fraud/

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Timestamps:
(00:00) Intro
(02:43) The strategic logic of bank fraud charges in white collar indictments
(05:47) Some worked examples of this in white-collar prosecutions
(10:49) Criminal law textbooks published on the Internet
(12:22) FFIEC BSA/AML Examination Manual
(19:07) A textbook prosecution of bank fraud in many respects
(27:48) This written communication is a succinct confession to bank fraud.
(32:27) Data products and mechanistic decisioning

The honey badger of payments Apr 23, 2026

Patrick McKenzie (patio11) reads his classic Bits about Money essay on how checks shaped the entire American payments infrastructure, from the origins of ACH to why a standard US bank account is, technically, a credit product. He then examines what happened when DOGE tried, via Executive Order 14247, to eliminate federal paper check disbursements by September 2025. The carve-outs Treasury eventually had to make map almost exactly onto the essay's original argument. Checks are the honey badger of payments: the numbers keep dwindling, but the edge cases are irreducible, and the second-best pathway for reaching them doesn't really exist yet.

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Full transcript available here: www.complexsystemspodcast.com/checks/
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Presenting Sponsors: Mercury & Granola

Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

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Links:

The Long Shadow of Checks: https://www.bitsaboutmoney.com/archive/the-long-shadow-of-checks/

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Timestamps:
(00:00) Intro

(01:12) A brief digression for people who use functioning payment forms

(02:45) Check settlement in the pre-computer era

(07:28) Some funny consequences of checks underpinning everything

(13:20) Money in transit

(14:42) Sponsors: Mercury | Granola

(17:56) Money in transit (part 2)

(21:12) Deposit accounts and their discontents

(23:25) The DOGE postscript

(29:03) Honey Badger Jingle

Cash received is not revenue earned Apr 16, 2026

Patrick McKenzie (patio11) reads his classic Bits about Money essay explaining why revenue recognition in software is more complicated than most engineers, founders, and financial reporters think. The essay covers the accounting rules behind SaaS subscriptions, the deferred revenue problem that surprised him when he sold his own companies, and the surprisingly intricate standards governing virtual goods in mobile games. He then turns to AI labs, where rapid revenue growth has prompted questions about whether the numbers mean what they seem. They mostly do, but understanding why requires knowing the difference between bookings, deferred revenue, and a minimum commit.

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Full transcript available here: www.complexsystemspodcast.com/cash-received-is-not-revenue-earned/
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Presenting Sponsors: Mercury & Granola

Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

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Links:

Accounting for SaaS and swords: https://www.bitsaboutmoney.com/archive/accounting-for-saas-and-swords/

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Timestamps:

(00:00) Intro
(00:56) Accounting for SaaS and swords
(03:22) Why revenue recognition matters
(05:49) Revenue recognition in SaaS
(09:54) Revenue recognition in virtual goods
(12:52) Accounting for potions
(13:24) Accounting for swords
(14:56) Sponsors: Mercury | Granola
(18:34) Accounting for swords (cont’d)
(20:49) Game mechanics as accounting optimizations
(22:10) So about that goblin
(23:25) Back to the real world
(25:00) How this applies to AI labs
(32:48) Wrap

Your bank balance isn’t in the bank, and other alchemy Apr 09, 2026

Patrick McKenzie (patio11) reads his classic Bits About Money essay on why your bank deposit is not what you think it is. He explains the capital stack that makes deposits appear riskless while funding genuinely risky businesses, and why the "no questions asked" property of money took the United States roughly a hundred years to engineer.

Patrick updates the essay with commentary on SVB's collapse, the Voyager collapse and emergency injunctions about the finer points of ACH plumbing, and the GENIUS Act's stablecoin interest ban. He argues that crypto keeps rediscovering the same hard truth: things that behave like deposits without being deposits eventually break. When they break, they will break other structures they have wormed into, and they will tend to have wormed into a lot, because deposits are extremely useful and are perceived to never break.

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Full transcript available here: www.complexsystemspodcast.com/your-bank-balance-isnt-in-the-bank/
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Presenting Sponsors: Mercury, Meter, & Granola

Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

Networking infrastructure has a way of accumulating technical debt faster than almost anything else in IT. Meter handles the full stack (wired, wireless, and cellular) as a single integrated solution: designed, deployed, and managed end-to-end so there's only one vendor to call when something goes wrong. Visit meter.com/complexsystems to book a demo.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

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Links:

The alchemy of deposits: https://www.bitsaboutmoney.com/archive/the-alchemy-of-deposits/
Deposit Insurance: https://www.bitsaboutmoney.com/archive/deposit-insurance/
Gift Cards: https://www.bitsaboutmoney.com/archive/gift-card-accountability-sink/
Debanking (and Debunking?) https://www.bitsaboutmoney.com/archive/debanking-and-debunking/

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Timestamps:

(00:00) Intro
(00:20) Why revisit this essay now
(02:03) Deposits are money
(06:53) Heavily engineered structured products pretending to be simple
(09:11) Credit card charge-offs as an underappreciated welfare program
(10:16) Deposits as pink slime
(13:08) Silicon Valley Bank and information sensitivity in the real world
(19:06) Many things are quasi-deposits
(20:00) Sponsors: Mercury | Meter
(23:13) Many things are quasi-deposits (cont’d)
(25:10) Voyager bankruptcy
(32:29) How the FDIC resolves bank failures over weekends
(34:49) Making the magic happen
(35:13) The GENIUS Act and the stablecoin interest debate
(40:31) Sponsor: Granola
(47:45) Wrap

Payroll, pins, and punch cards Apr 02, 2026

In this episode of Complex Systems, Patrick McKenzie riffs on why public sector payroll modernization is even more likely to fail than the typical public software procurement project. He then goes into a wider discussion about payroll providers and their role as software, payment rails, and a sink for an enduring controversy in political economy. We want robust state capacity and hate income taxes. He breaks down the history of tax withholding as a state-deputized collection mechanism and explains how providers like ADP manage a lucrative "conveyor belt" of money to earn interest on the "float". Finally, he discusses how fintech innovations like Earned Wage Access (EWA) are providing a pro-social, daily-pay alternative to predatory payday loans.

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Full transcript available here: https://www.complexsystemspodcast.com/public-payroll/

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Presenting Sponsors: Mercury, Meter, & Granola

Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

Networking infrastructure has a way of accumulating technical debt faster than almost anything else in IT. Meter handles the full stack (wired, wireless, and cellular) as a single integrated solution: designed, deployed, and managed end-to-end so there's only one vendor to call when something goes wrong. Visit meter.com/complexsystems to book a demo.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

–

Links:

Mikey Dickerson episode: https://www.complexsystemspodcast.com/episodes/fixing-government-technology-with-mikey-dickerson/

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Timestamps:

(00:00) Intro
(01:10) Why government payroll projects keep failing
(02:08) The root cause: rules nobody can write down
(05:22) Fraud in plain sight: pension spiking
(10:18) The Information theory problem
(11:57) Essay: “Payroll Providers, Power, Respect”
(13:54) Why does payroll exist, anyway?
(16:13) Enter tax withholding
(18:20) An aside about tax preparation software
(20:05) Sponsors: Mercury | Meter
(22:54) An aside about tax preparation software (cont’d)
(25:00) Withholding taxes were an operational disaster in early implementations
(27:08) So what happens in payroll, anyway?
(29:50) “Where is the risk transfer?”
(33:43) What about those other payments?
(39:01) Where is the frontier in payroll?
(39:25) Sponsor: Granola
(41:15) Where is the frontier in payroll? (cont’d)
(45:59) Rideshare apps vs. payday loans: Byrne Hobart's insight
(46:05) FinTech's net impact
(47:12) Wrap

Delve into compliance theatre Mar 26, 2026

Patrick McKenzie (patio11) explains how compliance regimes designed to be viral brought many more firms into the scope of frameworks like SOC 2. This created a market demand for compliance-on-the-cheap by companies like Delve. Delve has been accused in an anonymous bit of investigative journalism as engaging in Potemkin compliance.

Patrick contrasts what real audits look like with what Delve allegedly delivered. He argues that selling compliance theater as compliance is fraud, not the sort of benign rule-breaking celebrated in startup culture.

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Full transcript available here: https://www.complexsystemspodcast.com/delve-into-compliance-theatre/

–
Presenting Sponsors: Mercury, Meter, Granola & Framer

Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

Networking infrastructure has a way of accumulating technical debt faster than almost anything else in IT. Meter handles the full stack (wired, wireless, and cellular) as a single integrated solution: designed, deployed, and managed end-to-end so there's only one vendor to call when something goes wrong. Visit meter.com/complexsystems to book a demo.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

Building and maintaining marketing websites shouldn’t slow down your engineers. Framer gives design and marketing teams an all-in-one platform to ship landing pages, microsites, or full site redesigns instantly—without engineering bottlenecks. Get 30% off Framer Pro at framer.com/complexsystems.

–
Links:
Fake Compliance as a Service - Part 1: https://substack.com/home/post/p-191342187
Editorial independence episode: https://www.complexsystemspodcast.com/episodes/editorial-standards-and-independence/
Dan Davies episode: https://www.complexsystemspodcast.com/episodes/dan-davies-organizations-fraud/

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Timestamps:
(00:00) Intro
(02:14) The taxonomy of compliance
(04:11) Why compliance is viral
(09:08) Defense in depth
(14:19) Accountability and liability
(16:05) The allegations against Delve
(19:53) Sponsors: Mercury | Meter
(22:41) The allegations against Delve (cont'd)
(24:31) The response and evidence
(29:38) Implausible patterns
(38:22) Heuristics for truth
(40:10) Sponsors: Granola | Framer
(42:52) Heuristics for truth (cont'd)
(44:28) Naughtiness vs. fraud
(51:16) A voice in the startup community
(53:05) Advice for the exposed
(56:38) Wrap

Understanding consumer debt collections: the underbelly of finance Mar 19, 2026

Patrick McKenzie (patio11) reads his classic Bits about Money essay explaining why the debt collection industry earns its “river of effluvia” metaphor. From the accounting standards that force banks to "charge off" delinquent accounts to the large CSV files that constitute the only proof of a debt's existence, he explores how the system prioritizes accounting finality over legal and factual accuracy. The conversation reveals why the single most effective way to resolve a debt is often forcing a collector to read and write paper. They can’t, operationally, and don’t see that as an impediment to making money, especially because the paper will often document their lies and crimes.

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Full transcript available here: https://www.complexsystemspodcast.com/debt-collections/
–
Presenting Sponsors: Mercury, Granola & Framer
If you have more interesting hobbies than managing your money, Mercury Personal is built for you. It allows you to automate movement between accounts—allocating paychecks and tax prep the moment they hit—with a sensible permissions model for partners or accountants. It works the way tech people expect banking to work. Go to mercury.com/personal to experience banking built by the same folks Patrick trusts for his business.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

Building and maintaining marketing websites shouldn’t slow down your engineers. Framer gives design and marketing teams an all-in-one platform to ship landing pages, microsites, or full site redesigns instantly—without engineering bottlenecks. Get 30% off Framer Pro at framer.com/complexsystems.

–
Links:

https://www.bitsaboutmoney.com/archive/the-waste-stream-of-consumer-finance/

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Timestamps:
(00:00) Intro
(05:20) The lifecycle of a defaulted debt
(14:17) The debt collection industry
(19:58) Sponsors: Mercury | Granola
(23:36) The debt collection industry (cont’d)
(25:55) The operations of a debt collection firm
(34:02) What does the debt collector hope to get from a call?
(36:52) Why does this continue being so broken?
(39:34) Suing people with robots
(40:26) Sponsor: Framer
(41:43) Suing people with robots (cont’d)
(44:14) What can be done about this?

Inference engineering and the real-world deployment of LLMs, with Philip Kiely Mar 12, 2026

Patrick McKenzie (patio11) and Philip Kiely, early employee at Baseten, discuss the inference stack: the critical layer of software and hardware that sits between a model’s weights and a user’s prompt. They cover inference engineering, how intermediate layers are evolving over a technical stack that is changing every six months, and how sophisticated organizations are actually consuming LLMs beyond just writing their questions into chatbot apps.
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Full transcript available here: www.complexsystemspodcast.com/inference-engineering-with-philip-kiely/

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Presenting Sponsors: Mercury, Meter, & Granola

Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

Networking infrastructure has a way of accumulating technical debt faster than almost anything else in IT. Meter handles the full stack (wired, wireless, and cellular) as a single integrated solution: designed, deployed, and managed end-to-end so there's only one vendor to call when something goes wrong. Visit meter.com/complexsystems to book a demo.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS
–

Links:

Download Inference Engineering: https://www.baseten.com/inference-engineering/
Philip's website: https://philipkiely.com/
Stripe's Emily Sands on Complex Systems: https://www.complexsystemspodcast.com/episodes/the-past-present-and-future-of-ai-with-stripe/
Des Traynor on Complex Systems: https://www.complexsystemspodcast.com/episodes/des-traynor/

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Timestamps:
(00:00) Intro
(00:30) The AI deployment pipeline
(03:04) Evolution of abstraction layers in engineering
(05:14) Defining inference and model weights
(08:45) Architecture of language and diffusion models
(10:11) AI adoption in the broader economy
(11:30) The shift toward agentic workflows and RL
(14:55) Function calling and real-world actions
(20:10) Sponsors: Mercury | Meter
(22:59) Technologies for agentic tools: MCP and skills
(25:32) The craft of writing a harness
(29:56) Using AI for automated proofreading and tool creation
(34:12) Balancing LLMs with deterministic code
(37:31) Observability and chain of thought reasoning
(39:31) Sponsor: Granola
(41:21) Observability and chain of thought reasoning
(50:45) Speculative decoding and hidden states
(55:37) The value of smaller, task-specific models
(59:55) Internal competencies versus buying solutions
(01:09:27) Self-publishing a technical book in record time
(01:23:20) Wrap

Secrets designed to be divulged and other payment oddities Mar 05, 2026

Patrick McKenzie (patio11) deconstructs the "original sin" of payments: building a global financial substrate on shared secrets that were distributed promiscuously to function. He examines the multi-decade game of Whack-a-Mole played by the industry to balance the "optimal amount of fraud" against the catastrophic conversion hit of high-friction security. From the physical failure of terminal buttons to the smartphone finally solving the lifecycle problem of cryptographic tokens, Patrick explores the technical and social reasons why we’ve moved from "something you know" to the "continuity of access" provided by the device in your pocket.

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Full transcript available here: www.complexsystemspodcast.com/secondary-auth/

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Presenting Sponsors: Mercury & Granola

If you have more interesting hobbies than managing your money, Mercury Personal is built for you. It allows you to automate movement between accounts—allocating paychecks and tax prep the moment they hit—with a sensible permissions model for partners or accountants. It works the way tech people expect banking to work. Go to mercury.com/personal to experience banking built by the same folks Patrick trusts for his business.

If meetings consistently leave you with hazy action items and lost context, Granola handles the transcription so you can actually participate and gives you searchable notes afterward. Try it free at granola.ai/complexsystems with code COMPLEXSYSTEMS

–

Links:

Bits about Money: https://www.bitsaboutmoney.com/
Emily Sands on Complex Systems: https://www.complexsystemspodcast.com/episodes/the-past-present-and-future-of-ai-with-stripe/

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Timestamps:
(00:00) Intro
(01:32) Publishing the shared secret… again
(03:39) Manufacturing shared secrets at scale
(07:51) Something you own, take one
(10:10) Sponsors: Mercury | Granola
(13:48) Something you own, take two
(18:26) Something you own, take three
(21:24) One other semi-successful method: positive pay
(24:45) Wrap

Understanding government procurement, with Luke Farrell Feb 26, 2026

Patrick McKenzie (patio11) and Luke Farrell examine the structural "technical imagination" gap that prevents the US government from delivering high-fidelity digital services. They discuss why states routinely pay full price 29 times for the same buggy codebase, why failure is the default outcome, and why rooms full of government administrators cannot muster the expertise to say a two line code change should be trivial. They also discuss Luke’s work on the "means testing industrial complex,” why the government redundantly pays a private vendor to do a SQL query for information the IRS already knows, and what vendors would say about their own discontents.

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Full transcript available here: http://www.complexsystemspodcast.com/understanding-government-procurement-with-luke-farrell/

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Presenting Sponsors: Mercury & Framer

If you have more interesting hobbies than managing your money, Mercury Personal is built for you. It allows you to automate movement between accounts—allocating paychecks and tax prep the moment they hit—with a sensible permissions model for partners or accountants. It works the way tech people expect banking to work. Go to mercury.com/personal to experience banking built by the same folks Patrick trusts for his business.
Mercury is a fintech company, not an FDIC-insured bank. Banking services provided through Choice Financial Group and Column N.A., Members FDIC.

Building and maintaining marketing websites shouldn’t slow down your engineers. Framer gives design and marketing teams an all-in-one platform to ship landing pages, microsites, or full site redesigns instantly—without engineering bottlenecks. Get 30% off Framer Pro at framer.com/complexsystems.

–

Links:

Luke Farrell's Substack: https://donmoynihan.substack.com/
Luke Farrell, The Means-Testing Industrial Complex: https://donmoynihan.substack.com/p/the-means-testing-industrial-complex

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Timestamps:

(00:00) Intro
(01:52) Transitioning from Google to the US Digital Service (USDS)
(05:18) How rule buildup and administrative burdens create "Kafkaesque" mazes
(08:21) Using diagrams and funnels to visualize benefit denials
(11:49) Software logic errors that improperly kicked children off Medicaid
(18:25) Why government payroll IT costs hundreds of millions of dollars
(20:02) Sponsors: Mercury and Framer
(22:02) How recursive legal requirements and DOD standards inflate IT scope
(26:57) Market consolidation and the lack of competition in procurement
(33:47) Aligning program administrator incentives with successful service delivery
(36:03) Using in-house technologists to push back on vendor change orders
(39:27) Shifting from "Big Bang" contracts to iterative, agile development
(53:10) The moral incoherence of asset limits
(01:11:36) Insourcing electronic income verification databases
(01:16:56) Building public sector competence to manage modern technical risk
(01:20:08) Wrap

APIs of evil: studying fraud as infrastructure Feb 12, 2026

Patrick McKenzie (patio11) reads an essay about "industrial-scale" fraud and why it should be treated as a professional business process rather than a series of isolated accidents. He explains how fraudsters leverage specialized supply chains—shared CPAs, incorporation agents, and "least attentive" banks—to loot public funds. Patrick argues that the government’s "pay-and-chase" model is fundamentally broken and suggests that simple "proof of work" functions, like a 30-second cell phone video of a workspace, could provide the visceral signal that paperwork lacks, and examines the state’s lack of "object permanence" regarding serial fraudsters and how scaled data provides the defense-side advantage needed to catch modern frauds.

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Full transcript available here: www.complexsystemspodcast.com/fraud-as-infrastructure/

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Presenting Sponsor: Mercury

Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

Mercury is a fintech company, not an FDIC-insured bank. Banking services provided through Choice Financial Group and Column N.A., Members FDIC.
–

Links:

Bits about Money: https://www.bitsaboutmoney.com/archive/fraud-investigation/
Dan Davies on Complex Systems: https://open.spotify.com/episode/5QKxzgumJXSQuaWCmYAoM9
Jetson Leder-Luis on Complex Systems podcast: https://open.spotify.com/episode/3NiC7x9edoxJXkNW9vRfAT
Stripe’s Emily Sands on Complex Systems: https://open.spotify.com/episode/64Dyh6Gbg1lg4qUFwId0hc

–

Timestamps:

(00:00) Intro
(05:23) In which we briefly return to Minnesota
(09:26) Common signals, methods, and epiphenomena of fraud
(09:30) Fraudsters are playing an iterated game
(11:29) The fraud supply chain is detectable
(14:27) Investigators should expect to find ethnically clustered fraud
(20:11) Sponsor: Mercury
(21:47) High growth rate opportunities attract frauds
(26:04) Fraudsters find the weakest links in the financial system
(32:35) Frauds openly suborn identities
(35:57) Asymmetry in attacker and defender burdens of proof
(40:13) Fraudsters under-paperwork their epiphenomena
(44:22) Machine learning can adaptively identify fraud
(48:14) Frauds have a lifecycle
(50:34) Should we care about fraud investigation, anyway

Why check cashing businesses exist Feb 05, 2026

Patrick McKenzie (patio11) reads an essay about the business of check cashing, a misunderstood industry. He explains why cashing a check is actually a "new credit extension" where the bank bets on both the writer and the payee, and why profit-maximizing institutions often decline to bank individuals who represent even a "material risk" of a single bounced check. From the manual "rituals" of endorsement to the way fintechs like Ingo Money and Cash App use persistent identity to narrow the risk envelope, Patrick examines the technical and social reasons why some people pay to access their own wages, others don’t, and whether we can do anything about that.

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Full transcript available here: www.complexsystemspodcast.com/check-cashing/

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Presenting Sponsor: Mercury
Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com.

Mercury is a fintech company, not an FDIC-insured bank. Banking services provided through Choice Financial Group and Column N.A., Members FDIC.
–

Links:

Bits about Money: www.bitsaboutmoney.com/archive/the-business-of-check-cashing/

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Timestamps:
(0:00) Introduction
(2:15) Check cashing
(2:57) An oversimplified explanation of check presentment
(5:48) Depositing a check requires an extension of credit
(10:47) How cashing a check works if you're not banked
(12:16) A brief aside about endorsement
(14:39) Many people hate check cashing and everything about it
(17:06) The internal logic behind that pricing grid
(19:59) Sponsor: Mercury
(21:36) The internal logic behind that pricing grid (continued)
(23:10) Persistent identities as a KYC possibility
(25:12) A brief discussion about class distinctions in America
(30:45) Check cashing on phones
(34:28) Outro

Claude Code makes several thousand dollars in 30 minutes, with Patrick McKenzie Jan 29, 2026

Patrick McKenzie (patio11) walks through a coding session with Claude Code to demonstrate what the fuss is about. The business problem: recovering failed subscription payments that required coordinating APIs across Stripe, Ghost, and email providers, and the surprising experience of watching Claude read documentation, resolve dependency conflicts, and make sensible security choices. The episode offers a pedantic level of detail on why the sharpest technologists use words like “fundamentally transformed” to describe the impact of LLMs on coding.

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Full annotated transcript available here: www.complexsystemspodcast.com/claude-code/

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Sponsor: Framer

Building and maintaining marketing websites shouldn’t slow down your engineers. Framer gives design and marketing teams an all-in-one platform to ship landing pages, microsites, or full site redesigns instantly—without engineering bottlenecks. Get 30% off Framer Pro at framer.com/complexsystems.
–

Links:

Odd Lots episode with Noah Brier: https://open.spotify.com/episode/2fd3hvYmplEnQzxYZaxPg3?si=ylFxFe3HQ4uivH29uqC_rA
Bits about Money: https://www.bitsaboutmoney.com/

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Timestamps:

(00:00) Intro

(02:21) All engineering work happens in a business context

(03:47) Payment failures briefly taxonomized

(08:25) Now follows a conversation with Claude Code

(20:37) Sponsor: Framer

(21:53) Conversation with Claude Code (continued)

(39:07) My final thoughts on this

(41:15) Wrap

We should stop burning pharma trials’ lab notes, with Ruxandra Teslo Jan 22, 2026

Patrick McKenzie (patio11) is joined by Ruxandra Teslo to discuss why drug development keeps getting more expensive despite revolutionary new treatment modalities from GLP-1 agonists to gene therapies. They discuss Eroom’s Law (Moore’s Law in reverse) and Ruxandra's Common Technical Document Project, which aims to build the "Stack Overflow of clinical development" by making regulatory submissions publicly accessible. This will fill a present hole in the education of researchers, lower barriers for small biotechs, and accelerate drug discovery.
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Full transcript available here: https://www.complexsystemspodcast.com/ruxandra-teslo/

–
Sponsor: Framer
Building and maintaining marketing websites shouldn’t slow down your engineers. Framer gives design and marketing teams an all-in-one platform to ship landing pages, microsites, or full site redesigns instantly—without engineering bottlenecks. Get 30% off Framer Pro at framer.com/complexsystems.

–
Links:
Eroom's Law (original paper): https://www.nature.com/articles/nrd3681
Ruxandra’s writing: https://www.writingruxandrabio.com/
Ross Rheingans-Yoo on drug development: https://open.spotify.com/episode/4GiO0KYqxJNCIdltCyhN6m?si=2znQniZ3RXKuX8keNcwWtw
Ben Reinhardt on science and development: https://open.spotify.com/episode/0GHegWgLSubYxvATmbWhQu?si=pVCJVITYTqaq65BiST2d0Q

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Timestamps:
(00:00) Intro
(00:56) Challenges in biopharma productivity
(03:12) Understanding clinical development
(04:59) The role of basic science in drug development
(07:39) Clinical development process explained
(09:25) Issues in clinical trials and development
(19:33) The role of information in clinical trials
(20:30) Sponsor: Framer
(21:42) The role of information in clinical trials (continued)
(32:55) Proposed solutions for clinical development
(40:31) Consultant opinions and regulatory documents
(41:28) Streamlining the regulatory process
(43:06) Understanding FDA interactions
(45:35) Building a public library of regulatory documents
(48:18) Encouraging novel approaches in biotech
(50:06) Addressing risk aversion in the industry
(51:52) Analyzing FDA consistency and reviewer heterogeneity
(01:02:15) The importance of courage in professional growth
(01:06:39) Supporting young professionals and catalyzing change
(01:16:14) Wrap

Your support rep is also trapped in this call, with Des Traynor of Intercom Jan 15, 2026

Patrick McKenzie (patio11) sits down with Intercom co-founder Des Traynor to examine customer support through the lens of Conway's Law, Goodhart's Law, and several decades of accumulated organizational scar tissue. They discuss how AI agents are democratizing white-glove service, why modern LLMs have retrained user expectations around “chatbots” very quickly, and the surprisingly liberating effect of talking to something that will never judge you for missing a loan payment.
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Full transcript available here: www.complexsystemspodcast.com/des-traynor/

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Sponsor: MongoDB

Tired of database limitations and architectures that break when you scale? MongoDB is the database built for developers, by developers: ACID compliant, Enterprise-ready, and fluent in AI. Start building faster at mongodb.com/build

–

Timestamps:
(00:00) Intro
(00:29) Intercom and its evolution
(00:51) Challenges in customer service systems
(02:54) Scaling customer support in startups
(04:53) Organizational inefficiencies and customer experience
(06:53) Metrics and their impact on customer support
(12:40) Human capital issues in customer support
(15:53) AI's role in customer support
(17:01) Future of customer support roles
(20:09) Sponsor: MongoDB
(20:53) Future of customer support roles (continued)
(26:19) AI and customer interaction
(26:55) The myth of artisanal customer support
(27:45) Fin Guidance: Evolution and user behavior
(29:10) Fin's impact on customer support efficiency
(33:30) Expanding Fin's capabilities beyond support
(42:50) AI in government and other sectors
(49:20) The future of AI connectivity and integration

The magic spell that makes banks give you your money back Jan 08, 2026

Patrick McKenzie (@patio11) reads his latest Bits about Money essay explaining why he “loves Regulation E more than any rational person does.” He explains how Reg E created a privately-administered legal system processing over 100 million complaints annually—dwarfing the formal U.S. court system—and why banks are now trying to avoid these obligations for Zelle's nine figure fraud problem.
–

Full transcript available here: www.complexsystemspodcast.com/the-magic-spell-reg-e/

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Sponsors: MongoDB & Framer
Tired of database limitations and architectures that break when you scale? MongoDB is the database built for developers, by developers: ACID compliant, Enterprise-ready, and fluent in AI. Start building faster at mongodb.com/build

Building and maintaining marketing websites shouldn’t slow down your engineers. Framer gives design and marketing teams an all-in-one platform to ship landing pages, microsites, or full site redesigns instantly—without engineering bottlenecks. Get 30% off Framer Pro at framer.com/complexsystems.

–

Links:

Bits about Money, One Regulation E, Two Very Different Regimes
Full version of "Doesn't Matter, That's Reg E": https://suno.com/song/173bbd67-92f7-4868-930f-efeca4b373c0

–

Timestamps:

(00:00) Introduction
(02:46) These newfangled computers might steal our money
(12:45) The contractual liability waterfall in card payments
(20:35) Sponsors: MongoDB and Framer
(22:23) The contractual liability waterfall in card payments (continued)
(23:47) Enter Zelle
(25:46) Zelle is an enormous fraud target
(32:23) Banks may attempt to extend the Zelle precedent
(35:02) Reg E encompasses almost every technology which exists and many which don't yet

2025 in review, with Sammy Cottrell Jan 03, 2026

Our annual year-in-review episode covers some recurring themes from 2025 and some behind-the-curtains discussion of running a podcast. Patrick McKenzie (patio11) sits down with producer Sammy Cottrell to discuss the most popular episodes of the year, the impact of AI coding tools, the challenges of video podcasting, Sammy's role as a "fixer" finding guests, and much more.
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Full transcript available here: www.complexsystemspodcast.com/2025-in-review-with-sammy-cottrell/

–

Sponsor:

Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.

–

Timestamps:

(00:00) Introduction

(01:38) Launching video podcasts this year

(02:52) AI ethics and risk discussions

(04:29) Supporting LessWrong and LightHaven

(07:24) Adventures in AI-assisted hobbies

(12:38) Most popular episodes of the year

(19:45) Sponsor: Framer

(20:52) Popular episodes (continued)

(29:06) Setting up a podcast studio at Lighthaven

(32:31) Internal company podcasts

(38:03) Year in review and investigative journalism

(43:02) Creating Isekai

(49:13) Wrap

Gift cards and the fraud supply chain Dec 26, 2025

For this week's holiday-inspired Complex Systems, Patrick reads his essay from Bits about Money on the gift card paradox: a legitimate payments rail, yet also a primary vector for fraud that leaves victims without recourse.
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Full transcript available here: www.complexsystemspodcast.com/gift-cards-and-the-fraud-supply-chain/

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Sponsors: Givewell & Framer

Support proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. Go to givewell.org, pick “Podcast” and enter Complex Systems at checkout.

Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.
–

Links:

Bits about Money, Gift cards accountability sink https://www.bitsaboutmoney.com/archive/gift-card-accountability-sink/
Global China Puise, Moving Bricks https://globalchinapulse.net/moving-bricks-money-laundering-practices-in-the-online-scam-industry/

–
Timestamps:
(00:00) Intro
(04:02) Most businesses do not run their own gift card programs
(06:40) Sponsors: Givewell and Framer
(09:00) Most businesses do not run their own gift card programs (part 2)
(10:27) Gift cards are not regulated like other electronic payments instruments
(12:07) Why do we choose this difference in regulation?

Understanding perpetual futures Dec 11, 2025

In this episode, Patrick McKenzie (patio11) walks through how perpetual futures work, from funding rates to liquidations to the surprise of automatic deleveraging. Perps are the dominant trading mechanism in crypto (6-8X larger than spot volume) and exist primarily to let exchanges and market makers run casinos more capital-efficiently. He explains why this intellectually interesting innovation probably won't escape crypto, despite what crypto enthusiasts might expect.
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Full transcript available here: www.complexsystemspodcast.com/understanding-perpetual-futures/

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Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.

–

Links:

Bits about Money, Perpetual futures, explained www.bitsaboutmoney.com/archive/perpetual-futures-explained/

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Timestamps:
(00:00) Intro
(02:36) Beginning with the problem
(06:49) Perps predate crypto but found a home there
(08:19) Multiple settlements a day
(10:30) Convergence in prices via the basis trade
(13:44) Sponsor: Framer
(15:11) Leverage and liquidations
(18:46) We have altered the terms of your unregulated futures investment contract
(21:50) An aside about liquidations
(25:14) Will crypto successfully "export" perps

The economics of discovery, with Ben Reinhardt Dec 04, 2025

In this episode, Patrick McKenzie (patio11) is joined by Ben Reinhardt, founder of Speculative Technologies, to examine how science gets funded in the United States and why the current system leaves much to be desired. They dissect the outdated taxonomy of basic, applied, and development research, categories encoded into law that fail to capture how actual breakthrough science happens.
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Full transcript available here:
www.complexsystemspodcast.com/the-economics-of-discovery-with-ben-reinhardt/

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Sponsors: GiveWell & Framer

Support proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. First-time donors can go to givewell.org, pick “Podcast” and enter COMPLEXSYSTEMS at checkout to get $100 matched.

Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.

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Links:

Speculative Technologies: https://spec.tech

Ben Reinhardt's website: https://benjaminreinhardt.com

Bits About Money: https://www.bitsaboutmoney.com/

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Timestamps:

(00:00) Intro
(00:26) Understanding focused research organizations (FROs)
(01:52) The evolution of science funding
(03:59) Taxonomy of research: basic, applied, and development
(06:14) Challenges in science funding and research
(08:12) The role of process knowledge in research
(18:52) The bureaucracy of tech transfer offices
(20:00) Sponsors: GiveWell & Framer
(22:33) Critique of tech transfer offices
(25:20) The burden of bureaucracy on researchers
(44:34) Emerging solutions and optimism in research
(46:58) Wrap

Understanding equity at tech companies, with Billy Gallagher of Prospect Nov 20, 2025

Why do billions of dollars of stock trade hands based on napkin math and vibes? Billy Gallagher, CEO of Prospect and former Rippling employee, joins Patrick McKenzie (patio11) to walk through the information asymmetry that costs less-sophisticated employees massive amounts of money. From understanding when to early exercise options to navigating 83B elections and tender offers, they discuss the critical decisions that have a shot clock ticking the day you sign your offer letter.

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Full transcript available here: www.complexsystemspodcast.com/understanding-equity-at-tech-companies/

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Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.
–

Links:

Prospect: www.joinprospect.com/

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Timestamps:
(00:00) Intro

(00:44) Billy's professional journey

(01:07) Equity management challenges

(02:29) The importance of equity compensation

(04:53) Equity grant structures in startups

(06:09) Understanding vesting terms

(07:09) The value of equity over time

(08:48) The myth of options as lottery tickets

(11:23) Career tailwinds from startup experience

(14:25) Breaking into the tech industry

(15:16) The role of equity in compensation

(17:49) Employee equity plans and dilution

(19:59) Sponsor: Framer

(21:06) Stock options vs. RSUs

(21:55) The decision to exercise options

(27:11) Tax implications of exercising options

(33:03) The role of HR in equity management

(36:14) Bootleg spreadsheets and vibes-based investing

(38:09) Navigating tax complexities in different scenarios

(41:31) The importance of extended exercise windows

(44:18) Challenges with tax residency and remote work

(49:43) The role of accountants in managing equity

(53:41) Understanding the 83(b) election and QSBS

(01:01:03) Tender offers and secondary sales

(01:08:38) Strategies for exercising and selling options

(01:12:28) Navigating financial decisions in startups

(01:16:59) Wrap

The $4,000 insurance policy designed to never pay out Nov 12, 2025

Patrick McKenzie (patio11) reads his essay on title insurance, a service designed to never be performed with a "laughably low" 5% loss ratio compared to 50-80% for almost all types of insurance. The typical American moves every seven to eight years, paying a $500 annual tax for basically no good or service. This is due to a quirk about how America records real estate ownership: it mostly doesn’t. Confused? Welcome to the joyous anarchy that is American real estate.
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Full transcript available here: www.complexsystemspodcast.com/the-4-000-insurance-policy-designed-to-never-pay-out/

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Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.

–

Links:

Bits about Money, Working title (insurance) https://www.bitsaboutmoney.com/archive/working-title-insurance/

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Timestamps:
(00:00) Intro
(01:59) What is "title," anyway?
(02:48) Distributed versus centralized database design in property rights
(04:50) A quick digression for privacy-minded buyers
(08:21) High confidence and complete confidence are different
(11:28) Title insurance and title searches
(14:33) One very quirky risk transfer and a statistical artifact
(19:14) How title insurance is sold
(20:03) Sponsor: Framer
(21:34) How title insurance is sold (cont’d)
(23:36) Is there anything to be done here?
(25:47) Potential innovations in title insurance

How deposit insurance actually works Nov 05, 2025

Patrick McKenzie (patio11) reads his Bits about Money essay on deposit insurance, explaining this critical financial infrastructure, with some thoughts on its performance during 2023. He covers what deposit insurance actually covers (and critically, what it doesn't), how fintech users often misunderstand their exposure to counterparty risk, and the anatomy of bank failures. This is infrastructure you rely on as much as electricity: ubiquitous, critical, hopefully invisible, and worth understanding before it matters again.
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Full transcript available here: www.complexsystemspodcast.com/how-deposit-insurance-actually-works/

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Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.
–
Links:

Bits about Money, https://www.bitsaboutmoney.com/archive/deposit-insurance/

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Timestamps:
(00:00) Intro
(03:10) The covered peril
(07:07) Anatomy of a bank failure
(12:55) Keeping your bank hydrated
(19:58) Sponsor: Framer
(23:20) Orderly bank failures
(28:25) The cost of insurance
(30:15) The ultimate backstop
(31:48) Deposit insurance as ubiquitous infrastructure

Home improvement lending with fewer bankers and more computers Oct 30, 2025

In this episode, Patrick McKenzie reads his essay about the financial infrastructure that makes buying windows painless. When a window installer can originate, underwrite, and fund a $25,000 loan in 15 minutes before leaving your house, it's because four parties—window companies, facilitating platforms, specialized banks, and capital providers—have built a system that actually works. Patrick explains how modern consumer lending learned from 2008 to create better underwriting, clearer compliance, and properly distributed risk, all in service of enabling commerce in the real economy.
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Full transcript available here: www.complexsystemspodcast.com/home-improvement-lending/

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Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.

–

Links:

Bits about Money: https://www.bitsaboutmoney.com/archive/window-modern-loan-origination/

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Timestamps:

(00:00) Intro
(02:46) Why not just have banks loan money for home improvement?
(06:43) Modern installment loan origination as a service
(09:58) Sponsor: Framer
(11:09) Modern installment loan origination as a service (part 2)
(15:17) What's the actual product offered?
(19:03) How does this pie get divvied up?
(24:12) Is this unsecured lending?
(26:12) Should we be happy this Rube Goldberg machine exists?

Talking to the Bank of England about systemic risk and systems engineering Oct 23, 2025

Patrick McKenzie (@patio11) shares his remarks to the Bank of England on critical vulnerabilities in financial infrastructure. Drawing from the July 2024 CrowdStrike outage which brought down teller systems at major US banks, Patrick discusses how regulatory guidance inadvertently created dangerous software monocultures. He also examines the stablecoin market, its impressive growth, and the elephant tethered to the room. He also delivers a message from Silicon Valley to other centers of power on the urgent necessity of waking up regarding AI, which almost the entire world currently far underrates.
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Full transcript available here: www.complexsystemspodcast.com/talking-to-the-bank-of-england/

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Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.
–

Links:

The Bank of England: https://www.bankofengland.co.uk/
Bits about Money, Why the CrowdStrike bug hit banks hard: https://www.bitsaboutmoney.com/archive/crowdstrike-bug-hit-banks-hard/
Scaling Laws for Neural Language Models" by Kaplan et al: https://arxiv.org/pdf/2001.08361
Stripe Annual Letter 2024: https://stripe.com/annual-updates/2024

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Timestamps:

(00:00) Intro
(01:48) The importance of implementation-level understanding
(03:00) Single points of failure
(04:25) Can a 22-year-old engineer close all the banks?
(05:18) The CrowdStrike incident: A case study
(08:34) The culture of "shut up and shuffle"
(09:54) Blameless postmortems
(12:25) What actually happened during CrowdStrike
(18:01) Five whys: Root cause analysis
(19:03) How software monocultures are created
(22:54) Understanding endpoint monitoring software
(25:25) Distributed systems and the nature of CrowdStrike
(31:22) The economics of software monocultures
(33:29) Why wasn't there defense in depth?
(37:05) Why was recovery so difficult?
(40:32) The domino effect across financial institutions
(43:36) What went right: Electronic systems remained up
(45:10) This was a near miss
(49:29) Potential policy responses
(54:03) Switching gears: Stablecoins
(01:01:37) The elephant in the room: Tether
(01:15:32) Who loses if Tether implodes?
(01:16:59) AI and the future of trading
(01:26:47) AI risks in the trading space
(01:30:41) Closing

Narrative, mastery, and character bleed in games, with Ricki Heicklen Oct 16, 2025

Patrick McKenzie (patio11) is joined again by Ricki Heicklen to discuss Metagame 2025, a conference where 250 attendees were divided into Purple and Orange teams competing for territories across campus. Patrick built a complete roguelike RPG in 25 days using LLMs, discovering that providing minimal world-building context transformed generic fantasy outputs into emotionally resonant storytelling. They discuss the power and responsibility of game designers, how games create pedagogical experiences that traditional teaching cannot, and what happens when the line between player identity and character identity starts to blur.

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Full transcript available here:
www.complexsystemspodcast.com/narrative-mastery-character-bleed-in-games-with-ricki-heicklen/

–

Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.
–

Links:

Metagame: https://www.metagame.games/

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Timestamps:
(00:00) Intro

(00:25) Using games to teach trading

(00:57) Game design conference insights

(01:12) Ricki’s personal journey into game design

(02:41) Exploring different game types

(03:35) Challenges in game design

(04:44) Metagame conference overview

(08:23) Escape room design experience

(11:25) Building a rogue-like game

(15:35) Metagame mechanics and challenges

(18:25) Sponsor: Framer

(19:37) Metagame mechanics and challenges (part 2)

(31:10) Event management and lessons learned

(44:00) Game mechanics and player roles

(45:09) Complex encounters and Plague Town

(48:44) Moral choices and player decisions

(50:59) Game design and narrative impact

(55:36) Character bleed and real-world influence

(01:02:00) Game design challenges and player agency

(01:24:16) Community and player interaction

(01:30:04) Wrap

Bits and bricks: Oliver Habryka on LessWrong, LightHaven, and community infrastructure Oct 09, 2025

Patrick McKenzie (patio11) is joined by Oliver Habryka, who runs Lightcone Infrastructure—the organization behind both the LessWrong forum and the Lighthaven conference venue in Berkeley. They explore how LessWrong became one of the most intellectually consequential forums on the internet, the surprising challenges of running a hotel with fractal geometry, and why Berkeley's building regulations include an explicit permission to plug in a lamp. The conversation ranges from fire codes that inadvertently shape traffic deaths, to nonprofit fundraising strategies borrowed from church capital campaigns, to why coordination is scarcer than money in philanthropy.
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Full transcript available here: www.complexsystemspodcast.com/bits-and-bricks-oliver-habryka/
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Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.
–

Links:

Lightcone Infrastructure: https://www.lightconeinfrastructure.com/
Lighthaven: https://www.lighthaven.space/
LessWrong: https://www.lesswrong.com/

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Timestamps:
(00:00) Intro

(01:08) The origins and evolution of LessWrong

(03:54) Challenges of running an online forum

(05:57) Reviving LessWrong

(14:51) The unique structure of Lighthaven

(17:35) The complexities of conference venues

(19:14) Sponsor: Framer

(20:14) The realities of conference planning

(25:32) Challenges of maintaining Lighthaven

(29:54) Navigating permits and regulations

(37:02) Impact of fire code regulations on traffic fatalities

(39:06) Economic analysis of safety regulations

(41:39) Housing policy and construction in Berkeley

(43:30) Fundraising challenges in the nonprofit sector

(46:44) Effective altruism and fundraising dynamics

(54:20) Lessons from religious fundraising practices

(01:05:36) Reflections on fundraising

(01:13:26) Wrap

Building institutions that bend towards truth, with Clara Collier of Asterisk Magazine Oct 02, 2025

Patrick McKenzie is joined by Clara Collier, editor and publisher of Asterisk Magazine, to discuss how we create institutions that bend towards truth. Clara explains why she launched a quarterly print magazine in the Internet age. She traces how 19th century German universities invented the modern infrastructure for rewarding knowledge production and training researchers at scale, and where our public science communication falls short of that heritage. The conversation examines why institutional trust has declined, particularly around science communication and public health, and whether we can rebuild trust in knowledge-producing institutions.
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Full transcript available here: www.complexsystemspodcast.com/building-institutions-that-bend-towards-truth-with-clara-collier-of-asterisk-magazine/
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Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.
–

Links:

Asterisk Magazine: https://asteriskmag.com

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Timestamps:
(00:00) Intro

(00:44) The birth of Asterisk Magazine

(02:58) Challenges of print media

(04:41) The media landscape and Twitter's influence

(06:03) The art of long-form writing

(13:08) Editing and copy editing in magazines

(19:33) Sponsor: Framer

(20:45) Editing and copy editing in magazines (part 2)

(25:24) AI in writing and editing

(30:33) The origins of research universities

(34:19) The flawed promotion system in academia

(34:40) The rise of research institutions

(35:32) The birth of modern research culture in Germany

(36:27) The global influence of German universities

(40:13) The American university system vs. German system

(41:50) The role of public and private partnerships in science

(42:47) Challenges in science communication

(56:22) The impact of COVID-19 on public trust in science

(01:06:42) Historical perspectives on medical trust

(01:11:15) Wrap

How blogging went legit, with Substack CEO Chris Best Sep 25, 2025

Patrick McKenzie is joined by Chris Best, CEO of Substack, to discuss how the platform created new economic infrastructure for independent media. They explore Substack's evolution from a simple newsletter tool to a full media network, the revenue guarantee program that attracted prominent writers, and the company's principled stance on press freedom during the "cancel culture" years. Chris explains how subscription-based business models create better incentive alignment than attention-based advertising, and discusses new features like AI-powered video production and Substack Defender, their legal protection program for writers facing lawsuits.
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Full transcript available here: www.complexsystemspodcast.com/how-blogging-went-legit-with-substack-ceo-chris-best/

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Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.
–

Links:

Chris Best’s Substack: https://cb.substack.com/

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Timestamps:

(00:00) Intro

(00:53) The evolution of online publishing

(01:20) Substack's business model

(02:05) Challenges and opportunities in media

(03:47) The role of engagement in media

(06:03) The birth of Substack

(08:58) Making paid newsletters accessible

(10:54) Revenue guarantees and early success

(13:05) Substack's impact on journalism

(17:59) Freedom of the press and Substack's stance

(19:24) Sponsor: Framer

(20:40) Twitter's influence on journalism

(24:09) Substack's role in modern media

(26:04) The impact of cancel culture on journalism

(26:53) The evolution of blogging and discourse

(30:53) Substack's expansion into podcasts and video

(32:42) AI and the future of media production

(38:20) Substack defender

(42:22) The growing network and future of Substack

(46:03) Wrap

Prestige media, new media, and the US government, with Kelsey Piper Sep 19, 2025

Patrick McKenzie is joined again by Kelsey Piper, who has co-founded "The Argument" to revive principled liberal discourse after witnessing how coordinated social media campaigns replaced substantive disagreement in newsrooms. Their conversation traces this institutional breakdown from media to government, examining how DOGE's spreadsheet-driven governance nearly destroyed PEPFAR, America's most successful foreign aid program that had driven infant coffin manufacturers out of business across Africa. The discussion ultimately argues that rebuilding both effective journalism and competent governance requires returning to the hard work of engaging with ground-level reality rather than managing online narratives.

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Full transcript available here: www.complexsystemspodcast.com/prestige-media-new-media-with-kelsey-piper/
–

Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.
–

Links:

The Argument https://www.theargumentmag.com/

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Timestamps:

(00:00) Intro

(00:31) The Argument

(03:19) Challenges in modern journalism

(06:42) The impact of social media on discourse

(13:37) The role of Substack and independent media

(20:13) Sponsor: Framer

(21:30) The role of Substack and independent media (part 2)

(30:59) The PEPFAR program and its importance

(44:01) Impact of US aid cuts on global mortality

(45:25) Substitution efforts and their limitations

(47:54) PEPFAR's partial continuation and challenges

(51:21) Consequences of administrative decisions

(54:28) Elon Musk's influence and government actions

(01:00:14) Challenges in government accountability

(01:15:47) Reforming administrative processes

(01:24:45) The role of community input in development

(01:28:28) The power of constituent voices

(01:30:15) Wrap

AI alignment, with Emmett Shear Sep 11, 2025

Patrick McKenzie (patio11) is joined by Emmett Shear, co-founder of Twitch, former interim CEO of OpenAI, who now runs Softmax AI alignment. Emmett argues that current AI safety approaches focused on "systems of control" are fundamentally flawed and proposes "organic alignment" instead—where AI systems develop genuine care for their local communities rather than following rigid rules.
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Full transcript available here: www.complexsystemspodcast.com/ai-alignment-with-emmett-shear/
–

Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.
–

Links:

Softmax - https://www.softmax.com/

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Timestamps:
(01:26) Understanding AI alignment
(04:42) The concept of universal constructors
(13:45) AI's rapid progress and practical applications
(19:08) Sponsor: Framer
(20:19) AI's impact on work
(34:59) AI's sensory and action space
(42:10) User intent vs. user request
(44:35) The illusion of a perfect AI
(49:57) Causal emergence and system dynamics
(55:19) Reflective and intentional alignment
(01:01:08) Engineering challenges in AI alignment
(01:04:15) The future of AI
(01:26:40) Wrap

Building software that survives contact with reality, with Will Wilson Sep 04, 2025

Patrick McKenzie (patio11) is joined by Will Wilson, CEO of Antithesis, to discuss the evolution of software testing from traditional approaches to cutting-edge deterministic simulation. Will explains how his team built technology that creates "time machines" for distributed systems, enabling developers to find and debug complex failures that would be nearly impossible to reproduce in traditional testing environments. They explore how this approach scales from finding novel bugs in Super Mario Brothers to ensuring the reliability of critical financial and infrastructure systems, and discuss the implications for a future where AI writes increasingly more code.
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Full transcript available here: www.complexsystemspodcast.com/software-testing-with-will-wilson/

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Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Design, iterate, and publish in one workspace. Start free at framer.com/design with code COMPLEXSYSTEMS for a free month of Framer Pro.
–

Recommended in this episode:

Antithesis: https://antithesis.com/

––

Timestamps:
(00:00) Intro
(01:23) Database scaling and the CAP theorem
(08:13) Abstraction layers and hardware reality
(15:28) The problem with traditional testing
(19:43) Sponsor: Framer
(23:16) The fuzzing revolution
(30:35) Deterministic simulation testing
(42:36) Real-world testing strategies
(47:22) Introducing Antithesis
(59:23) The CrowdStrike example
(01:01:15) Finding bugs in Mario
(01:07:37) Property-based vs conventional testing
(01:09:51) The future of AI-assisted development
(01:14:51) Wrap

Defense, drones, and military procurement, with Bean of Naval Gazing Aug 28, 2025

Patrick McKenzie (patio11) is joined by Bean, a pseudonymous defense industry expert, to explore the intellectual crossovers between military and civilian domains. The conversation reveals how the defense industry's fundamental constraint of having only one customer (a monopsony) creates entirely different incentives than tech, leading to conservatism and 30-50 year product lifecycles. Bean argues that drones are largely modern iterations of cruise missiles we've had since the 1950s, and explains why current anti-drone defenses make swarm attacks less threatening than headlines suggest.
–

Full transcript available here: www.complexsystemspodcast.com/defense-with-bean-of-naval-gazing/

–
Sponsor:
This episode is brought to you by Mercury, the fintech trusted by 200K+ companies — from first milestones to running complex systems. Mercury offers banking that truly understands startups and scales with them. Start today at Mercury.com

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.
–

Recommended in this episode:

Naval Gazing: https://www.navalgazing.net/

––

Timestamps:

(00:00) Intro

(00:29) The overlap between tech and defense

(01:35) Operations research in World War II

(02:55) Mathematical insights and military strategies

(05:28) The role of operations research in modern warfare

(16:59) Tech and defense (Part 1)

(19:48) Sponsor: Mercury

(21:00) Tech and defense (Part 2)

(26:07) Economics behind the defense industry

(32:07) SpaceX's early challenges and achievements

(33:00) The Super Hornet development story

(34:39) Military procurement lessons

(37:42) Aerospace industry retention rates

(38:42) Lockheed Martin's dominance and supply chain

(40:55) Drone technology and military applications

(46:53) Anti-drone defenses and future warfare

(48:01) Naval warfare and historical perspectives

(01:01:03) Wrap

AI and the great developer speed-up, with Joel Becker of METR Aug 21, 2025

This week on Complex Systems, Patrick McKenzie (patio11) is joined by Joel Becker from METR. They discuss groundbreaking research on AI coding assistants.

Joel et al’s randomized controlled trial of 16 expert developers working on major open source projects revealed a counterintuitive finding: despite predictions of 24-40% speed improvements, developers actually took 19% longer to complete tasks when using AI tools, even though they retrospectively believed they were 20% faster. The conversation explores why even sophisticated professionals struggle to accurately assess their own productivity with AI tools, the industrial organization of software development, and the implications for AI's recursive self-improvement in research and development. It also touches on other perspectives from software developers using these tools professionally, and where we can expect them to improve rapidly.

–

Full transcript available here: www.complexsystemspodcast.com/the-great-developer-speed-up-with-joel-becker/

–
Sponsor:
This episode is brought to you by Mercury, the fintech trusted by 200K+ companies — from first milestones to running complex systems. Mercury offers banking that truly understands startups and scales with them. Start today at Mercury.com

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.
–

Recommended in this episode:

METR: https://metr.org/
Joel Becker’s site: https://joel-becker.com/

–

Timestamps:

(00:00) Intro

(00:34) Understanding AI evaluation methods

(02:04) METR's unique approach to AI evaluation

(03:10) The evolution of AI capabilities

(06:44) AI as coding assistants

(09:15) Research on AI's impact on developer productivity

(13:55) Sponsor: Mercury

(15:07) Challenges in measuring developer productivity

(20:38) Insights from the research paper

(31:26) The formalities of software development

(32:07) Automated tools and human discussions

(32:47) AI and style transfer in software

(34:35) The role of comments in AI coding

(36:51) The future of AI in software engineering

(40:25) Economic implications of AI in software

(46:53) Challenges and risks of AI in software

(59:03) Security concerns with AI-generated code

(01:04:59) Wrap

How banks actually work (and don't work) Aug 14, 2025

In this solo episode, Patrick McKenzie reads his classic essay "Seeing Like a Bank," exploring why financial institutions often appear to have no memory of previous customer interactions despite being excellent at tracking money itself. He breaks down the complex web of legacy systems, tiered support structures, and regulatory constraints that create Kafka-esque experiences for bank customers. Using the lens of institutional legibility borrowed from "Seeing Like a State," Patrick explains how banks' technical architecture and organizational design choices—from core processing systems to customer service tiers—systematically generate the dysfunction that customers experience when things go wrong.

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Full transcript available here:
www.complexsystemspodcast.com/how-banks-actually-work/

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Recommended in this episode:

Patrick’s Bits about Money essay, Seeing like a bank: https://www.bitsaboutmoney.com/archive/seeing-like-a-bank/

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Timestamps:

(00:00) Intro
(03:52) Recordkeeping systems
(10:20) Sponsor: Safebase
(11:50) Human accountability and its malcontents
(22:57) Two embedded surprises about bank staffing
(27:47) Society has goals which conflict with banks being good at banking
(30:52) So what can be done about this?

Building software in Japan, with Jim Weisser Aug 07, 2025

Patrick McKenzie (patio11) is joined by Jim Weisser, a serial entrepreneur and founder of SignTime, for an in-depth exploration of Japan's software market and startup ecosystem. They discuss the unique challenges of building software in a culture that prizes stability over rapid iteration, the dominance of systems integrators, and how Japan's economic stagnation shaped its relationship with technology. The conversation covers everything from Excel-driven development processes to the recent transformation of Japan's VC landscape, offering insights for anyone considering doing business in the world's third-largest economy.

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Full transcript: https://www.complexsystemspodcast.com/building-software-in-japan-with-jim-weisser/

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Sponsor: BoxWorks 2025

Discover hands-on AI data extraction techniques, network with industry experts, and hear featured speakers Vinod Khosla, Jared Kaplan, and Aaron Levie at BoxWorks 2025 in San Francisco (Sept 11-12). Use code BW25-ComplexSystems for 50% off at this link: https://bit.ly/452036h

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Links:

Signtime:: https://www.signtime.com/en/

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Timestamps:

(00:00) Intro

(00:24) Exploring the Japanese software market

(01:25) Challenges in the Japanese startup ecosystem

(02:37) Jim Weisser's background and journey

(05:14) The evolution of Japan's economy and business practices

(10:15) Understanding Japan Inc. and its impact on software

(10:28) The role of systems integrators in Japan
(19:01) Sponsor: BoxWorks Conference 2025 (*discounted tickets for Complex Systems listeners)

(20:29) Cultural differences in software development

(26:06) Digital transformation and efficiency in Japan

(32:44) Labor market dynamics and employment practices

(35:50) Startup ecosystem and equity culture in Japan

(42:53) Success stories and market potential in Japan

(43:42) Corporate relationships in Japanese companies

(44:10) Salesforce's success in Japan

(45:44) E-commerce boom in Japan

(46:33) Rakuten's evolution and strategy

(48:27) Amazon's journey in Japan

(49:13) Cloud services and security concerns

(51:18) Sansan: Business card management

(55:14) Venture capital landscape in Japan

(01:05:02) Personal reflections on living in Japan

(01:16:21) Wrap

Startup investing in Tokyo, with Coral Capital’s James Riney Jul 31, 2025

Patrick McKenzie (patio11) is joined by James Riney, partner at Coral Capital, to explore Japan's transformation from a $700 million startup ecosystem to today's $5-10 billion market. They discuss the cultural and structural factors that initially limited venture activity in Japan. The conversation covers unique aspects of building startups in Japan, from the quirks of being a foreign professional to why Japanese engineers love Twitter but ignore LinkedIn, plus insights into Japan's "time machine advantage" and why American-developed dev tools are going viral in Tokyo.
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Read full transcript here:
www.complexsystemspodcast.com/startup-investing-in-tokyo/

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[Patrick notes: Complex Systems now produces occasional video episodes! You can access them directly on YouTube: www.youtube.com/@patio11podcast. My kids inform me that I’m supposed to tell you to like and subscribe.]
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Sponsor: Safebase
Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

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Links:

Coral Capital: https://coralcap.co/

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Timestamps:

(00:00) Intro

(01:57) The early days of Japanese startups

(04:08) The rise of Coin Check

(05:54) Challenges and opportunities in the Japanese startup ecosystem

(16:09) Cultural and structural differences in hiring
(19:47) Sponsor: Safebase

(21:22) The role of content and communication in Japanese startups

(31:29) LinkedIn vs. Facebook in Japanese work culture

(32:38) LinkedIn's social capital issues in Japan

(33:58) Cultural differences in asking for permission

(34:31) Navigating Japanese regulatory clarity

(36:49) The evolution of VC investment in Japan

(39:54) The rise of SaaS in Japan

(45:26) System integrators and software development in Japan

(50:39) Challenges in Japanese tech companies

(54:36) Opportunities for foreign companies in Japan

(55:03) The importance of commitment in the Japanese market

(57:08) Dev tools and viral adoption in Japan

(59:31) Japan's influence on global tech

(01:03:23) Wrap

How AI reshapes the craft of software engineering, with Yoav Tzfati Jul 24, 2025

Patrick McKenzie is joined by AI researcher Yoav Tzfati to discuss “vibe coding” - using LLMs to delegate software engineering work to AI models. Yoav runs a bootcamp teaching programming novices to build full-stack web applications using AI, without them ever looking at code. Patrick and Yoav discuss the fundamental shift in software engineering, where humans increasingly act as product managers directing AI "junior engineers," and explore the implications for the future of programming careers and the democratization of software development.

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Read full transcript here: www.complexsystemspodcast.com/how-ai-reshapes-software-engineering/
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[Patrick notes: Complex Systems now produces occasional video episodes like this one!You can access them directly on YouTube: https://www.youtube.com/@patio11podcast. My kids inform me that I’m supposed to tell you to like and subscribe.]
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Links:

Follow Yoav Tzfati: https://x.com/yoavtzfati
Yoav's bootcamp: https://www.code-bloom.app/

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Timestamps:
(00:00) Intro

(00:32) Defining vibe coding

(01:35) The evolution of software engineering with LLMs

(04:07) Practical applications of vibe coding

(09:37) Teaching vibe coding to novices

(18:30) Future of AI in software development

(21:42) Discussing timelines and model capabilities

(22:12) Flappy Bird and the evolution of game development

(23:27) The impact of LLMs on software engineering

(24:46) Future of coding and human roles

(29:47) Monitoring and error handling in software

(31:20) The role of LLMs in code review and maintenance

(35:12) Wireframing and project management with LLMs

(36:40) The future of software engineering careers

(43:07) Practical tips for software engineers

(44:38) Wrap

Stacking the odds: Cate Hall on agency and outlier success Jul 17, 2025

Patrick McKenzie (patio11) is joined by Cate Hall, CEO of Astera Institute and author of a forthcoming book on agency, to explore how individuals can systematically develop higher agency in their lives. They discuss the selection effects that draw agentic people to fields like poker and startups, the importance of being comfortable with ignorance and feedback, and practical strategies like asking "Is there a better way to do this?" ten times daily. Cate shares insights from her journey from Supreme Court lawyer to world champion poker player, including how peer groups, emergencies, and what addicts call "the gift of desperation" can trigger step-changes in personal agency.
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Full transcript available here:
https://www.complexsystemspodcast.com/stacking-the-odds-cate-hall/

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[Patrick notes: Complex Systems now produces occasional video episodes like this one.You can access them directly on YouTube: https://www.youtube.com/@patio11podcast. My kids inform me that I’m supposed to tell you to like and subscribe.]

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Links:

Cate Hall’s Writing: https://usefulfictions.substack.com/
Pre-order Cate's book on agency: https://mailchi.mp/44578760e686/book-preorder-signup
Astera: https://astera.org/

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Timestamps:

(00:00) Intro

(00:28) Exploring the concept of agency

(00:56) Selection effects in different fields

(01:31) The tech industry evolution

(02:54) Y Combinator's changing demographics

(04:23) Parallels between poker and startups

(15:48) The role of networking and relationships

(19:12) Embracing feedback and continuous improvement

(23:49) Exploring growth mindset

(24:35) AI and personal improvement

(27:04) Learning with AI: strategies and cautions

(27:53) The value of human interaction

(30:19) Professional gamblers and their unique insights

(35:05) Understanding agency and its development

(38:45) Triggers for increased agency

(45:23) Wrap

Think like a trader, with Ricki Heicklen Jul 10, 2025

Patrick McKenzie (patio11) is joined again by Ricki Heicklen to discuss the evolution of her trading education business, Arbor, one year after their first conversation. They dive deep into the pedagogy of trading, exploring how simulated markets teach concepts like adverse selection, team dynamics, and risk management through hands-on experience. Ricki shares war stories from the bootcamp trenches—infinite loop bugs that mirror Knight Capital's disaster, WiFi outages that create unexpected trading opportunities, and that the most successful trading teams often focus on internal team communication even more than trade execution or technical acumen.

See the full transcript:
https://www.complexsystemspodcast.com/think-like-a-trader-ricki-heicklen/

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[Patrick notes: Complex Systems now produces occasional video episodes.You can access them directly on YouTube: https://www.youtube.com/@patio11podcast. My kids inform me that I’m supposed to tell you to like and subscribe.]

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Links:

Trading Camp : https://trading.camp/
Metagame: https://www.metagame.games/#tickets
Story of Knight Capital: https://www.sec.gov/files/litigation/admin/2013/34-70694.pdf

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Timestamps:
(00:00) Intro

(00:46) Ricki's journey from trading to teaching

(01:25) The birth of Arbor and first bootcamps

(03:32) Developing a trader's mindset

(05:53) Understanding heuristics in trading

(08:21) Adverse selection in everyday life

(15:40) Insights from teaching trading bootcamps

(21:07) Pedagogical approach: learning by doing

(32:00) Handling mistakes and learning opportunities

(36:17) Unplanned bugs and real-world lessons

(39:47) Learning from Knight Capital's bug

(40:24) Understanding exchange-side bugs

(43:10) Risk limits and strategy separation

(44:41) Importance of UI in trading bots

(46:53) The Madagascar button

(48:20) The big red button in manufacturing

(49:45) Simulated trading and information aggregation

(50:29) Sibling trading game explained

(53:24) Modeling and hidden information

(01:01:15) Trading behavior and market updates

(01:04:38) Real-world applications and lessons

(01:13:58) Surprises and market opportunities

(01:16:24) Pedagogical approaches in trading education

(01:17:08) Market dynamics and counterparty behavior

(01:17:53) Retail vs. institutional order flow

(01:19:23) Simplifying trading concepts for beginners

(01:21:27) Introducing market characters and their roles

(01:31:31) Team dynamics and communication in trading

(01:39:13) The importance of redundancy in trading systems

(01:47:52) Future of trading education and online classes

(01:53:47) Wrap

Achieving results in the physical world, with Adam Jarvis of “Public Service” Jul 03, 2025

Patrick McKenzie is joined by Adam Jarvis, author of the Public Service substack and a New Zealand civil engineer and public sector veteran. They discuss how political capital constraints, funding misalignment across government levels, and accumulated regulatory "scar tissue" make infrastructure projects extraordinarily difficult. The conversation reveals why replacing a water pipe now costs more in planning than the entire project did a decade ago, and how talent sorting has drained capacity from public institutions. Despite these challenges, Patrick and Adam find reasons for optimism about reforming government capacity.

Complex Systems now has video episodes as well. Watch this episode and subscribe at: https://www.youtube.com/@patio11podcast
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Full transcript: www.complexsystemspodcast.com/achieving-results-in-the-physical-world-with-adam-jarvis-of-public-service/

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Links:

Public Service Substack: https://alethios.substack.com/

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Timestamps:

(00:00) Introduction to Complex Systems
(01:13) Understanding local government functions
(03:41) Challenges in public sector project delivery
(06:31) Funding complexities in public projects
(09:14) The burden of regulatory and legislative constraints
(17:04) Appreciating the infrastructure we take for granted
(23:02) Historical and modern infrastructure challenges
(30:04) Talent mobility and its impact on public sector
(33:35) Public sector hiring practices
(34:11) Agglomeration effects and brain drain
(36:04) Aging population and resource allocation
(36:59) Structural factors in public sector layoffs
(37:49) Hiring and firing in the public sector
(40:39) Labor mobility and job security
(46:34) AI and automation in public sector jobs
(52:56) Risk aversion and process overload
(01:01:30) Optimism for public sector reform

The AI infrastructure stack with Jennifer Li, a16z Jun 26, 2025

In this episode, Patrick McKenzie (@patio11) is joined by Jennifer Li, a general partner at a16z investing in enterprise, infrastructure and AI. Jennifer breaks down how AI workloads are creating new demands on everything from inference pipelines to observability systems, explaining why we're seeing a bifurcation between language models and diffusion models at the infrastructure level. They explore emerging categories like reinforcement learning environments that help train agents, the evolution of web scraping for agentic workflows, and why Jennifer believes the API economy is about to experience another boom as agents become the primary consumers of software interfaces.
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Full transcript:
www.complexsystemspodcast.com/the-ai-infrastructure-stack-with-jennifer-li-a16z/

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Sponsor: Vanta

Vanta automates security compliance and builds trust, helping companies streamline ISO, SOC 2, and AI framework certifications. Learn more at https://vanta.com/complex

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Links:

Jennifer Li’s writing at a16z https://a16z.com/author/jennifer-li/

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Timestamps:

(00:00) Intro
(00:55) The AI shift and infrastructure
(02:24) Diving into middleware and AI models
(04:23) Challenges in AI infrastructure
(07:07) Real-world applications and optimizations
(15:15) Sponsor: Vanta
(16:38) Real-world applications and optimizations (cont’d)
(19:05) Reinforcement learning and synthetic environments
(23:05) The future of SaaS and AI integration
(26:02) Observability and self-healing systems
(32:49) Web scraping and automation
(37:29) API economy and agent interactions
(44:47) Wrap

Getting better at LLMs, with Zvi Mowshowitz Jun 12, 2025

In this episode, Patrick McKenzie (patio11) recorded with Zvi Mowshowitz (TheZvi) live at the LessOnline conference. They explore practical strategies for getting better results from large language models. Zvi explains how to customize AI behavior through thoughtful system prompts, while Patrick shares techniques for using LLMs as writing partners and research assistants. They discuss the evolving relationship between content creators and AI training data, touching on the emerging field of "generative engine optimization" (GEO). The conversation also covers multimodal capabilities, recursive AI use, and strategies for avoiding common failure modes like hallucination and sycophancy.
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Full transcript: www.complexsystemspodcast.com/getting-better-at-llms-with-zvi-mowshowitz/

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Sponsor: Vanta

Vanta automates security compliance and builds trust, helping companies streamline ISO, SOC 2, and AI framework certifications. Learn more at https://vanta.com/complex

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Links:

Don’t Worry About the Vase https://thezvi.wordpress.com/

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Timestamps:

(01:08) Understanding system prompts

(02:04) Customizing LLM behavior

(05:58) Memory features in LLMs

(10:21) Generative Engine Optimization (GEO)

(15:59) Sponsor: Vanta

(17:17) Art and AI: Enhancing creativity

(20:36) Recursive use of AIs

(25:22) Addressing LLM frustrations

(27:05) Checking for hallucinations in AI outputs

(28:11) Experimenting with AI models

(29:44) Optimizing AI prompts and outputs

(31:19) Using AI for writing and editing

(32:32) AI as a research and writing partner

(33:26) Prompting AI and humans effectively

(39:39) Balancing AI assistance with personal voice

(51:03) Wrap

Machine learning meets malware, with Caleb Fenton Jun 05, 2025

Patrick McKenzie (patio11) discusses software reversing and AI's transformative impact on cybersecurity with Caleb Fenton, co-founder of Delphos Labs. They explore how LLMs are revolutionizing the traditionally tedious work of analyzing compiled binaries, the nation-state cyber warfare landscape, and how AI is shifting security from reactive to proactive defense. They cover the technical details of malware analysis, the economics of vulnerability detection, and the broader implications as both defenders and attackers gain access to increasingly powerful AI tools.
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Full transcript available here: https://www.complexsystemspodcast.com/machine-learning-meets-malware-with-caleb-fenton/

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Sponsor: Mercury

This episode is brought to you by Mercury, the fintech trusted by 200K+ companies — from first milestones to running complex systems. Mercury offers banking that truly understands startups and scales with them. Start today at Mercury.com

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.
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Links:

Delphos Labs: https://delphoslabs.com/
Virus Total: https://www.virustotal.com/gui/home/upload
“Thel fraud supply chain”, Bits about Money https://www.bitsaboutmoney.com/archive/the-fraud-supply-chain/

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Timestamps:

(00:00) Intro

(01:20) Understanding software reversing

(03:52) The role of AI in software security

(06:12) Nation-state cyber warfare

(09:33) The future of digital warfare

(16:45) Sponsor: Mercury

(17:49) Reverse engineering techniques

(30:15) AI's impact on reverse engineering

(41:45) The importance of urgency in security alerts

(42:47) The future of reverse engineering

(43:21) Challenges in security product development

(44:46) AI in vulnerability detection

(46:09) The evolution of AI models

(48:06) Reasoning models and their impact

(49:06) AI in software security

(49:49) The role of linters in security

(57:38) AI's impact on various fields

(01:02:42) AI in education and skill acquisition

(01:08:51) The future of AI in security and beyond

(01:12:43) The adversarial nature of AI in security

(01:19:46) Wrap

How to negotiate your salary package May 29, 2025

In this episode, Patrick McKenzie (patio11) revisits his widely-shared negotiation essay, which he notes may be the most impactful thing he's done in his career aside from VaccinateCA. The essay covers the psychology and tactics of salary negotiation, emphasizing that engineers have turned being bad at negotiation into a "perverse badge of virtue" and that the financial stakes are enormous—a small salary increase compounds over decades to six-figure differences. Patrick walks through practical advice including never giving a number first, understanding how employers actually think about compensation costs, and reframing negotiation as a professional business discussion rather than something morally questionable.

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Full transcript available here:
www.complexsystemspodcast.com/how-to-negotiate-your-salary-package/

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Sponsor: Mercury

This episode is brought to you by Mercury, the fintech trusted by 200K+ companies — from first milestones to running complex systems. Mercury offers banking that truly understands startups and scales with them. Start today at Mercury.com

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.
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Recommended in this episode:

Patrick’s essay Salary Negotiation: Make More Money, Be More Valued: https://www.kalzumeus.com/2012/01/23/salary-negotiation/

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Timestamps:

(00:00) Intro

(03:25) Why negotiation matters

(05:21) Shifting your mindset to embrace negotiation

(06:49) Your counterparty does not share your mental model of negotiation

(12:46) Your negotiation started before you applied to this job

(17:21) When does a salary negotiation happen?

(19:38) Sponsor: Mercury

(23:16) The first rule is what everyone tells you it is: never give a number first

(28:45) Listen to what people tell you. Repeat it back to them.

(33:22) Research, research, research

(37:13) New information is valuable and can be traded for things you want

(41:20) You have a multi-dimensional preference set. Use it.

(44:08:) For your further perusal

The capitalist's guide to podcasting, with Ross Rheingans-Yoo May 22, 2025

In this episode, Patrick McKenzie (patio11) and returning guest Ross Rheingans-Yoo discuss the strategic advantages of starting a podcast, particularly for professionals seeking to build trust, expand their networks, and support fundraising efforts. They explore the nuts and bolts of podcast production models, recording logistics, transcript creation, and how to make the experience frictionless for high-value guests. Ross shares his thought process around his newly-launched show Development and Research while Patrick gives a behind the scenes look at the makings of Complex Systems.

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Full transcript available here: https://www.complexsystemspodcast.com/capitalists-guide-to-podcasting-with-ross-rheingans-yoo

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Sponsor: Mercury

This episode is brought to you by Mercury, the fintech trusted by 200K+ companies — from first milestones to running complex systems. Mercury offers banking that truly understands startups and scales with them. Start today at Mercury.com

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.

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Recommended in this episode:

Development and Research Podcast: https://developmentandresearch.bio/
Podcast Twitter feed: @DevAndResearch
Ross & Ricki’s Trading Bootcamp June 3-5: https://trading.camp/complex
Ross' first appearance on Complex Systems: https://open.spotify.com/episode/4GiO0KYqxJNCIdltCyhN6m
Ricki Heicklen on Complex Systems (our first episode!): https://open.spotify.com/episode/11kEUYRn4gXZGju232hzcg

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Timestamps:

(00:00) Intro

(01:18) The power of podcasting for venture capitalists

(03:09) Building trust through voice

(07:11) Podcast production models

(16:38) Recording and equipment essentials

(23:05) Sponsor: Mercury

(24:18) Post-production and transcripts

(32:22) Advertising vs. User experience

(33:28) Creating standalone artifacts

(34:20) The power of video clips

(35:22) Challenges in podcast distribution

(42:12) The role of guests in podcasts

(47:12) Pre-recording preparation

(49:22) Recording session best practices

(54:22) The value of silence in conversations

(56:38) Launching and growing a podcast

(59:18) Trading bootcamp

(1:02:27) Wrap

Killing viruses with light, with Jacob Swett May 15, 2025

In this episode, Patrick McKenzie (patio11) is joined by Jacob Swett of Blueprint Biosecurity to discuss far UVC technology - a specialized wavelength of UV light that kills airborne pathogens while remaining safe for humans. Jacob explains how widespread deployment of this technology in schools, hospitals, and public spaces could dramatically reduce respiratory diseases and prevent future pandemics, comparing our approach to air quality with the water sanitation revolution that eliminated diseases like typhoid. They discuss the economics of implementation (starting around $30 per student annually with costs likely decreasing), the historical reasons why this technology hasn't been widely deployed, and Blueprint Biosecurity's roadmap for increasing adoption from early users to eventual regulations similar to fire safety codes.

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Full transcript available here: https://www.complexsystemspodcast.com/killing-viruses-with-light-with-jacob-swett/

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Sponsor: Mercury

This episode is brought to you by Mercury, the fintech trusted by 200K+ companies — from first milestones to running complex systems. Mercury offers banking that truly understands startups and scales with them. Start today at Mercury.com

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.

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Recommended in this episode:

Blueprint Report: https://blueprintbiosecurity.org/u/2025/03/Blueprint-for-Far-UVC-PREPRINTv1.0.pdf

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Timestamps:
(00:00) Intro

(00:31) The importance of indoor air quality

(01:29) Technologies for cleaner air

(02:31) The promise of Far-UVC

(03:10) Impact of COVID-19 on air quality awareness

(04:11) Understanding Far-UVC light

(06:44) Applications and benefits of Far-UVC

(16:42) Challenges and adoption of Far-UVC

(20:40) Sponsor: Mercury

(21:53) Challenges and adoption of Far-UVC (Part 2)

(23:19) Cost and benefits of Far-UVC

(26:40) The broader impact of respiratory pathogens

(29:41) Rediscovering the world for better health

(30:05) Historical perspectives on infectious diseases

(30:57) The role of sanitation and antibiotics

(33:02) Miasma theory and airborne transmission

(34:59) Impact of World War II on disease research

(38:06) The evolution of public health priorities

(42:39) Future of Far-UVC Technology

(46:03) Challenges in implementing Far-UVC

(56:47) The importance of rigorous studies

(01:00:33) Wrap

Life insurance and your money, with Zac Townsend May 08, 2025

In this episode, Patrick McKenzie (patio11) is joined by Zac Townsend, a serial founder and CEO of Meanwhile, a fully regulated life insurance company operating in Bitcoin. They explore the differences between life and property insurance, explain why term life is essential financial protection everyone should consider, and dive into the tax benefits that shape the industry. Zac shares insights on how private equity firms are acquiring insurers for their stable capital base, and explains Bermuda's role as the world's insurance capital.

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Full transcript available here: https://www.complexsystemspodcast.com/life-insurance-and-your-money-with-zac-townsend/

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Sponsor: Mercury

This episode is brought to you by Mercury, the fintech trusted by 200K+ companies — from first milestones to running complex systems. Mercury offers banking that truly understands startups and scales with them. Start today at Mercury.com

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.

–

Recommended in this episode:

Meanwhile https://meanwhile.bm/

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Timestamps:

(00:00) Intro

(00:23) Overview of Meanwhile Insurance

(00:56) How Bitcoin is being used in the insurance industry

(02:12) Understanding different types of insurance

(06:13) Term life insurance explained

(07:26) Life insurance tips for tech professionals

(12:47) Permanent life insurance and annuities

(18:57) Sponsor: Mercury

(20:11) Insurance regulatory insights

(25:46) Principal-agent problems in insurance

(37:09) Tax considerations in life insurance

(42:16) Leveraging life insurance for estate planning

(44:55) Premium financing explained

(47:39) Wealth management and market segmentation

(52:09) Regulatory challenges and mispricing in insurance

(01:03:32) Reinsurance and the role of bermuda

(01:10:27) Private equity's interest in insurance

(01:14:24) Building a crypto life insurance company

(01:20:02) Wrap

Fixing government technology, with Mikey Dickerson May 01, 2025

In this episode, Patrick McKenzie (@patio11) is joined by Mikey Dickerson to discuss the complex realities behind government software projects. Mikey shares insights from leading the healthcare.gov rescue effort and founding the United States Digital Service, explaining how procurement processes create requirements through committee decision-making without market-based feedback loops. They explore how government systems handle software development differently than industry, with Mikey noting that the issues are less about individual competence and more about systemic incentives that reward risk aversion. The conversation covers the challenges of "modernization" efforts, the loss of organizational management knowledge over decades, and reflection on when and how technologists might effectively contribute to public service.

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Full transcript available here: https://www.complexsystemspodcast.com/episodes/fixing-government-technology-with-mikey-dickerson/

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Sponsor: Mercury

This episode is brought to you by Mercury, the fintech trusted by 200K+ companies — from first milestones to running complex systems. Mercury offers banking that truly understands startups and scales with them. Start today at Mercury.com

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.

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Bureaucracy by James Q. Wilson: https://www.amazon.com/Bureaucracy-Government-Agencies-Basic-Classics/dp/0465007856
Movie: The Pentagon Wars https://en.wikipedia.org/wiki/The_Pentagon_Wars
Mikey Dickerson's company Layer Aleph: https://layeraleph.com/
Complex Systems with Dan Davies https://open.spotify.com/episode/5QKxzgumJXSQuaWCmYAoM9?si=uQWgAx1iSzGm5iCUBWei8A
Complex Systems with Dave Guarino https://open.spotify.com/episode/0UlTIRosmjtvpcdHQ7t2tK?si=MlUqO3uWRie1E_GRQ5D7jg

–

Timestamps:

(00:00) Intro

(00:24) Government software procurement

(06:02) Fighter planes and requirements

(08:37) Software development cycles

(11:37) Deadline challenges

(12:18) California vaccine scheduling

(16:15) Pandemic priorities

(17:27) Sponsor: Mercury

(18:40) Government employee competence

(22:30) Government pay scales

(25:56) IRS modernization reports
(27:48) System modernization plans

(34:33) Healthcare.gov lessons

(36:59) Government software capability

(40:29) Feedback loops in civil service

(44:09) Legislative expertise

(46:49) Applied mathematics

(47:57) Loss of knowledge

(49:28) Tour of duty recommendation

(53:06) Wrap

Understanding and wielding power in local government, with Daniel Golliher Apr 24, 2025

In this episode, Patrick McKenzie (@patio11) is joined by Daniel Golliher, founder of Maximum New York, to discuss the opaque mechanics of political power and how everyday people can effectively engage with government systems. They explore the stark gap between formal political science degrees and how politics actually works, practical tactics for influencing policy (like optimizing the printability of a blog post to placing well-timed calls to legislators), and Daniel’s concept of ‘blue tape’. Throughout the conversation, they emphasize that participating in governance requires far less expertise and connections than most people assume—mainly just the willingness to show up prepared.

–

Full transcript available here:
www.complexsystemspodcast.com/understanding-and-wielding-power-in-local-government-with-daniel-golliher/

–
Sponsor: Vanta

Vanta automates security compliance and builds trust, helping companies streamline ISO, SOC 2, and AI framework certifications. Learn more at https://vanta.com/complex

–

Recommended in this episode:

Daniel Golliher’s essay: Political Science Degrees Must End: https://www.maximumnewyork.com/p/political-science-degrees
Patrick McKenzie: https://worksinprogress.co/issue/the-story-of-vaccinateca/
Statecraft by Santi Ruiz: https://www.statecraft.pub/

–
Timestamps

(00:00) Intro
(00:33) The reality of political science education
(02:45) The apprenticeship model in government
(04:24) Challenges in government training
(07:06) The role of legislative aides
(10:33) Local government and housing policies
(14:24) Effective political engagement
(16:15) The power of communication in policy
(20:26) Sponsor: Vanta
(21:44) Witnessing government in action
(31:29) Learning government and politics
(32:21) LLMs and policy
(35:10) Engaging with local politics
(37:58) Influencing policy
(43:25) Running for office
(47:10) Blue tape
(58:39) Wrap

The AI energy bottleneck, with Tim Fist Apr 17, 2025

In this episode, Patrick McKenzie (@patio11) is joined by Tim Fist, Director of Emerging Technologies at the Institute for Progress, to discuss how energy constraints could bottleneck AI development. They explore how AI training clusters will soon require gigawatts of power—equivalent to multiple nuclear plants—with projections showing a single cluster needing 5 gigawatts by 2030. Tim explains why behind-the-meter generation and geothermal energy offer promising solutions while regulatory hurdles like NEPA and transmission permitting create "litigation doom loops" that threaten America's competitiveness. The conversation covers the global race for compute infrastructure, with China and the UAE making aggressive investments while the US struggles with permitting delays, highlighting how energy policy will determine which nations lead the AI revolution.

–

Full transcript available here: www.complexsystemspodcast.com/the-ai-energy-bottleneck-with-tim-fist/
–
Sponsor: Vanta

Vanta automates security compliance and builds trust, helping companies streamline ISO, SOC 2, and AI framework certifications. Learn more at https://vanta.com/complex

–

Recommended in this episode:

Compute in America https://ifp.org/compute-in-america/
Tim Fist on Twitter https://x.com/fiiiiiist
The Enchippening by Sarah Constantin https://sarahconstantin.substack.com/p/the-enchippening
Solar economics with Casey Handmer https://open.spotify.com/episode/0GHegWgLSubYxvATmbWhQu?si=VKJYaSwaRJq_YcK8kJIdvQ
AI & Power economics with Azeem Azhar https://open.spotify.com/episode/3KkvPiYpGvXCRukWxHP7Ch?si=RPEjrs67S9CFA0lLak6OVA
Fracking with Austin Vernon https://open.spotify.com/episode/0YDV1XyjUCM2RtuTcBGYH9?si=hSniC3N0QkqhF74ra-XAcA
Economics of the grid with Travis Dauwalter https://open.spotify.com/episode/5JY8e84sEXmHFlc8IR2kRb?si=BsqMZGu6Qr-2F7-RSyyEhw

–
Timestamps:

(00:00) Intro

(00:40) Energy bottlenecks in AI development

(02:56) Technical and policy solutions for energy needs

(05:18) Challenges in transmission infrastructure

(12:14) Behind the meter generation explained

(17:50) Solar and storage: The future of energy

(18:47) Sponsor: Vanta

(20:05) Solar and storage: The future of energy (part 2)

(29:07) Power purchase agreements and financing

(33:17) Financing geothermal wells

(33:53) The promise of geothermal energy

(35:25) Challenges in geothermal adoption

(36:59) Industrial applications of geothermal heat

(45:01) Geothermal energy and national security

(49:27) Global investments in AI and energy infrastructure

(56:29) Policy and technical expertise in AI

(01:00:54) The role of government in technological advancements

(01:05:07) Wrap

Taking stablecoins seriously, with Haseeb Qureshi Apr 10, 2025

In this episode, Patrick McKenzie (@patio11) is joined by Haseeb Qureshi, a managing partner at Dragonfly, a crypto-focused VC fund. They discuss the evolution of stablecoins, three key use cases, and their impact on international finance. Haseeb explains how stablecoins have grown beyond their initial association with crypto trading and illicit activities to serve legitimate economic functions globally, in ways that many Americans might not fully appreciate. Patrick and Haseeb debate the regulatory landscape, the strategic ambiguity of crypto's positioning, and whether stablecoins represent a parallel financial system that might eventually converge with traditional banking.

–

Full transcript available here: www.complexsystemspodcast.com/taking-stablecoins-seriously-with-haseeb-qureshi/

–
Sponsor: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Recommended in this episode:

Zeke Faux on Complex Systems https://open.spotify.com/episode/5OnSK3PuhfipMHv9htvuyb
Chopping Block podcast https://unchainedcrypto.com/the-chopping-block/
Haseeb Qureshi’s website https://haseebq.com/about/

–

Timestamps:
(00:00) Intro

(00:55) Crypto industry insights and tether discussion

(02:52) Stablecoins and their economic models

(05:04) Decentralized stablecoins and their mechanisms

(07:41) VC perspective on stablecoin investments

(13:18) Regulatory challenges and lobbying in crypto

(20:36) Emerging use cases for stablecoins

(24:16) Sponsor: Safebase

(32:35) The initial response to stablecoins

(33:38) Stablecoins and national security concerns

(34:00) The shift in congressional attitude

(34:49) Stablecoins and dollar internationalization

(37:40) Retail payments in high-inflation countries

(38:41) The role of black markets

(46:13) International B2B payments

(01:02:57) The future of stablecoins

(01:05:44) Wrap

The past, present, and future of AI, with Stripe Apr 03, 2025

Patrick McKenzie (patio11) is joined by Emily Sands, Head of Information at Stripe, to discuss how they leverage AI to process over $1.4 trillion annually, while navigating the complex web of merchants, banks, and payment rails that facilitate online commerce. Patrick and Emily cover how Stripe’s layered stack of AI combats sophisticated card testing attacks, recovers billions in once-lost revenue through intelligent retry strategies, and enables new businesses to compete with established players through powerful network effects. They also talk about the meteoric rise of AI companies, and how agent-assisted commerce is beginning to transform online shopping through controlled financial rails.

–

Full transcript available here:
www.complexsystemspodcast.com/the-past-present-and-future-of-ai-with-stripe/

–
Sponsor: Vanta

Vanta automates security compliance and builds trust, helping companies streamline ISO, SOC 2, and AI framework certifications. Learn more at https://vanta.com/complex

–

Recommended in this episode:

Stripe’s Annual Letter: https://stripe.com/annual-updates/2024
Stripe Sessions 2025 https://stripesessions.com/

–

Timestamps:

(00:00) Intro

(01:21) Stripe's role in financial infrastructure

(02:20) AI and ML at Stripe

(07:36) Understanding payment processing

(15:06) The evolution of fraud detection

(19:22) Advanced fraud detection techniques

(22:55) Sponsor: Vanta

(24:14) Advanced fraud detection techniques (part 2)

(34:53) Card testing and fraud prevention

(45:29) Adaptive acceptance and future of payments

(46:35) Optimizing payment systems with AI

(47:13) Understanding ISO messages and credit card protocols

(48:37) The importance of semantically neutral changes

(51:22) Stripe's enhanced issuer network

(56:00) Handling chargebacks and friendly fraud

(01:04:55) Personalizing the checkout experience

(01:16:44) The meteoric rise of AI startups

(01:26:05) Agent-assisted commerce

(01:32:58) Wrap

No, poor people aren’t funding your credit card rewards Mar 27, 2025

In this episode, Patrick McKenzie (patio11) challenges a recent Atlantic article claiming that low-income cardholders subsidize credit card rewards through high interest payments. Drawing from his Bits About Money essay Anatomy of a credit card rewards program, Patrick explains that rewards are primarily funded by interchange fees paid by merchants, not by interest charges.

To the extent those interchange is passed along to customers, it falls mostly on rich customers, because rich customers spend more. They spend more in interchange than they earn in rewards. Issuing banks and researchers who have looked at the data mostly agree here.

Patrick also breaks down the credit card rewards game, showing how banks strategically design card offerings for different market segments and explains the portfolio mathematics that disprove the cross-subsidization narrative.

–

Full transcript available here:
www.complexsystemspodcast.com/credit-card-rewards-interchange/

–

Sponsor: Vanta

Vanta automates security compliance and builds trust, helping companies streamline ISO, SOC 2, and AI framework certifications. Learn more at https://vanta.com/complex
–
Recommended in this episode:

Bits about money: Anatomy of credit card rewards programs https://www.bitsaboutmoney.com/archive/anatomy-of-credit-card-rewards-programs/
The Atlantic: There Are Two Kinds of Credit Cards by Annie Lowrey https://www.theatlantic.com/ideas/archive/2025/03/credit-card-racket/682075/
Complex Systems episode with Gary Leff https://open.spotify.com/episode/1QqFw5hlHKRrjRUTVLfKRV?si=hNwbnyrmQiqHe9ziAnGCpQ
Complex Systems episode with Dave Guarino https://open.spotify.com/episode/0UlTIRosmjtvpcdHQ7t2tK?si=i8LYGS-iSfOoGsVmMFYWjA

–
Timestamps:

(00:31) A recent Atlantic article's false thesis

(09:35) Rebating interchange to earn share of wallet

(14:48) Sponsor: Vanta

(16:56) Why isn’t every card a rewards card?

(27:56) The complexity spectrum of rewards products

(29:55) A fun rabbit hole about credit card acceptance

(33:53) Back to more complicated cases

(45:45) Further refinements in cat and mouse games

(51:24) Giving the customer more choices more frequently

(58:10) More directions to go in

(01:01:54) Patrick’s counterproposal

Points, profits, and packed planes, with Gary Leff Mar 20, 2025

Patrick McKenzie (patio11) is joined by Gary Leff, the author of "View from the Wing", to discuss the economic systems behind airlines and loyalty programs. They discuss how airlines manage to stay profitable despite razor-thin margins, the economics of frequent flyer programs, and why these programs often generate more value than the airlines themselves. The conversation explores why many irrational airline policies reflect deeper economic realities and competitive constraints that shape flying today.

–

Full transcript available here: www.complexsystemspodcast.com/gary-leff-frequent-flier-programs/

–
Sponsor: Vanta

Vanta automates security compliance and builds trust, helping companies streamline ISO, SOC 2, and AI framework certifications. Learn more at https://vanta.com/complex

–

Recommended in this episode:

View From The Wing https://viewfromthewing.com/
Bits About Money: How credit cards make money https://www.bitsaboutmoney.com/archive/how-credit-cards-make-money/

–

Twitter:

@patio11

@garyleff
–

Timestamps:

(00:00) Intro

(01:10) History of airline loyalty programs

(04:36) The economics of airline loyalty programs

(08:01) Parallels and differences with hotel loyalty programs

(14:01) Tax implications and legal considerations

(19:50) Sponsor: Vanta

(21:08) Tax implications and legal considerations (part 2)

(34:02) Credit card reward programs

(46:56) The David Dao incident and its impact on airline policies

(47:29) Airline compensation strategies and Delta’s unique approach

(49:08) The economics of airline miles and accounting practices

(53:15) Airline debt and the role of frequent flyer programs

(55:21) The impact of airline policies on customer loyalty

(01:08:11) The value of partner miles and airline alliances

(01:13:11) Creative ways to earn miles and exploit promotions

(01:20:05) The infamous coin promotion and other mileage hacks

(01:30:39) Wrap

Tax the dirt, with Lars Doucet & Greg Miller Mar 13, 2025

Patrick McKenzie (patio11) is joined by Lars Doucet and Greg Miller, co-founders who have just launched the Center for Land Economics, to discuss improving property taxation in the US. They explore how shifting taxes from buildings to land could transform development patterns, why California's property tax caps coincide with its housing crisis, and how the fundamental trade-off between assessment accuracy and consistency creates winners and losers. The conversation also covers the posting-to-policy pipeline, their work developing open-source tools to improve assessment equity, and techniques citizens can use to influence their local assessment office.
–

Full transcript available here:
www.complexsystemspodcast.com/tax-the-dirt-with-lars-doucet-greg-miller/

–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast
–

Recommended in this episode:

Center for Land Economics: https://landeconomics.org/
Game of Rent by Lars Doucet: https://gameofrent.com/
Progress & Poverty: https://progressandpoverty.substack.com/
Mass Appraisal for the Masses: https://progressandpoverty.substack.com/p/mass-appraisal-for-the-masses-the
Lars Doucet on Complex Systems: https://www.complexsystemspodcast.com/episodes/property-assessment-lars-doucet/
Dave Kasten on Complex Systems: https://www.complexsystemspodcast.com/episodes/tech-government-dave-kasten/

–

Twitter:
@patio11
@larsiusprime
–

TIMESTAMPS:
(00:00) Intro

(00:45) Center for land economics

(04:01) Property tax basics

(05:31) Challenges in property valuation

(10:22) Impact of Proposition 13 in California

(12:28) Anti-market property tax policies

(14:43) Housing crisis and land value
(15:46) Sponsors: Safebase

(17:17) Housing crisis and land value (Part 2)

(27:49) Urban development incentives

(29:17) Tokyo's urban planning success

(39:23) The abundance movement in housing

(40:07) Innovative housing policies

(41:24) Government bureaucracy and policy making

(49:56) Mass appraisals and property tax fairness

(01:00:02) Technological advances in property assessment

(01:06:16) Empowering local governments and citizens

(01:16:02) Wrap

A tale of two Americas in one $50K cash withdrawal Mar 06, 2025

Patrick McKenzie (patio11) explains the standard procedure for large withdrawals in bank branches, with particular focus on the viral story published in The Cut about a woman who withdrew $50,000 cash from a bank and handed it to scammers. Certain minor details in the article set off a year-long investigation where he identified the exact physical location of the bank branch in question, researched the context for the transaction using public records, and obtained new details through FOIA requests. His investigation reveals an underlying narrative that accounts for what actually happened, and provides a worked example for fact-checking in journalism.
–

Full transcript available here:
www.complexsystemspodcast.com/two-americas-one-50k-withdrawal/

–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast
–
Recommended in this episode:

Two Americas, one bank, and $50,000 cash https://www.bitsaboutmoney.com/archive/two-americas-one-bank-branch/
The Cut, The Day I Put $50,000 in a Shoe Box and Handed It to a Stranger https://www.thecut.com/article/amazon-scam-call-ftc-arrest-warrants.html
Kelsey Piper on Complex Systems https://open.spotify.com/episode/33rHTZVowaq76tCTaKJfRB
Jim McKenzie on Complex Systems https://open.spotify.com/episode/6ocJirzGTStuf0K9ITM21X

–

Timestamps:

(00:55) Suppose you ask a bank to withdraw $50,000 in cash

(07:55) Style magazines sometimes publish hard-hitting journalism

(12:36) Reaching out to Vox Media

(17:09) Sources of doubt
(17:55) Sponsor: Safebase

(22:30) The physical reality of bank branches

(25:53) In which we became acquainted with brisk walks across Brooklyn

(34:42) New York’s Finest foil FOIL for a time

AI, data centers, and power economics, with Azeem Azhar Feb 27, 2025

Patrick McKenzie (patio11) is joined by Azeem Azhar, writer of the Exponential View newsletter, to discuss the massive data center buildout powering AI and its implications for our energy infrastructure. The conversation covers the physical limitations of modern datacenters, the challenges of electricity generation, the societal ripples from historical largescale infrastructure investments like railways and telecommunications, and the future of energy including solar, nuclear and geothermal power. Through their discussion, Patrick and Azeem explain why our mental models for both computing and energy systems need to be updated.
–
Full transcript available here: www.complexsystemspodcast.com/ai-llm-data-center-power-economics/

–
Sponsors: Safebase | Check

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

–

Recommended in this episode:

Azeem’s newsletter: https://www.exponentialview.co/
Azeem Azhar’s guest essay: The 19th-Century Technology That Threatens A.I. https://www.nytimes.com/2024/12/28/opinion/ai-electricity-power-plants.html
Electric Twin: https://www.electrictwin.com/
Video of Elon Musk’s Colossus https://www.youtube.com/watch?v=Tw696JVSxJQ
Complex Systems with Travis Dauwalter on the electrical grid: https://open.spotify.com/episode/5JY8e84sEXmHFlc8IR2kRb?si=35ymIC0UQ5SKdV8rrBcgIw
Complex Systems with Austin Vernon on fracking: https://open.spotify.com/episode/0YDV1XyjUCM2RtuTcBGYH9?si=YshjUXPEQBiScNxrNaI-Gw
Complex Systems with Casey Handmer on direct capture of CO2 to turn into hydrocarbon: https://open.spotify.com/episode/0GHegWgLSubYxvATmbWhQu?si=xNYBjn0ZTX2IT_pAZ5Ozsg

–

Twitter:

@azeem

@patio11

–

Timestamps:

(00:00) Intro

(00:27) The power economics of data centers

(01:12) Historical infrastructure rollouts

(04:58) The telecoms bubble

(06:22) Unprecedented enterprise spend on AI capabilities

(11:12) Let's have your LLM talk to my LLM

(16:44) Is there a saturation point?

(19:25) Sponsors: Safebase | Check

(21:55) What’s in a data center?

(24:52) The challenges of data centers

(29:40) Geographical considerations for data centers

(36:53) Energy consumption and future needs

(40:48) Challenges in building transmission lines

(41:35) The solar power learning curve

(43:51) Small modular nuclear reactors

(51:26) Geothermal energy and fracking

(01:01:34) The future of AI and energy systems

(01:12:57) Wrap

You can’t retract the facts Feb 20, 2025

In this episode, Patrick McKenzie (@patio11) responds to a recent request by a crypto unicorn founder / bank CEO to retract his essay Debanking (and debunking?). Come for the note about editorial standards and independence, stay for the diss track.
–

Full transcript available here: https://www.complexsystemspodcast.com/editorial-standards-and-independence/

–
Sponsors: Safebase | Check

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

–

Recommended in this episode:

Debanking (and debunking?): https://www.bitsaboutmoney.com/archive/debanking-and-debunking/
CEO: Retract your debanking article? Me: No. https://www.kalzumeus.com/2025/02/10/retraction-request-denied/
Geekiest rap single in history https://suno.com/song/c5ac7441-4a0b-4e5e-9c85-480e3ba63fc1

–

Twitter:

@patio11

–

Timestamps:

(00:00) Intro

(03:04) Musical interlude

(04:56) Return to commentary

(06:35) You can’t please everyone

(08:06) The bar for retraction is high

(10:07) Our review of the retraction request

(10:37) “A few areas were incorrect or misleading”

(16:12) “Lots of omission of key facts”

(18:57) “Missing the point about what we mean by debunking”

(20:40) Sponsors: Safebase | Check

(25:00) Our response to McCauley’s testimony
(28:24) McCauley’s concluding remarks and our response
(30:21) Bank CEOs do not often ask writers for retractions

(34:20) Some context regarding custodial banks

(40:50) Returning to our regularly scheduled programming

Stablecoins and shenanigans, with Zeke Faux Feb 13, 2025

In this episode, Patrick McKenzie (@patio11) is joined by Zeke Faux, investigative reporter at Bloomberg and author of Number Go Up, to discuss stablecoins and crypto fraud. They dive into Tether's controversial history, the senate’s emerging GENIUS act, and how crypto enables various types of financial crime. The conversation explores how Tether went from a “quilted collection of red flags” to becoming crypto's dominant stablecoin, its noteworthy relationship with Sam Bankman-Fried's FTX, and its current political maneuvering. They also discuss the societal value of financial regulation versus laissez-faire approaches to consumer protection.
–

Full transcript available here: www.complexsystemspodcast.com/zeke-faux-stablecoins-tether/

–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Recommended in this episode:

Number Go Up: https://zekefaux.com/
Anyone Seen Tether’s Billions? Zeke Faux, Bloomberg Businessweek: https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether
Patrick’s review of Number Go Up: https://www.bitsaboutmoney.com/archive/a-review-of-number-go-up-on-crypto-shenanigans/
Doesn't Matter, That's Reg E: https://suno.com/song/173bbd67-92f7-4868-930f-efeca4b373c0

–
Twitter:
@zekefaux
@patio11
–

Timestamps:
(00:00) Intro
(00:45) The GENIUS act of 2025
(02:28) Tether's audit controversy
(05:49) The origins and impact of Tether
(08:17) Investigative reporting and red flags
(12:58) Tether's shady business practices
(19:23) Tether meets SBF
(21:40) Sponsor: Check
(22:51) New anecdotes in the Number Go Up paperback
(28:53) The role of stable coins in crime
(38:20) The importance of AML and KYC rules
(44:21) Financial privacy
(45:18) Sam Bankman-Fried's conference in the Bahamas
(47:14) Loot NFTs
(49:34) Axie Infinity: a case study
(52:30) Crypto's real-world consequences
(58:15) Regulation and financial safety
(01:05:40) Stablecoin bill and ownership limits
(01:06:50) Political realignment and crypto
(01:14:40) Citizen journalists and the crypto-skeptic community
(01:20:36) The abilities and limitations of institutional journalists
(01:26:00) Wrap

Power plays: grid economics and engineering, with Travis Dauwalter Feb 06, 2025

Patrick McKenzie (@patio11) is joined by Travis Dauwalter, energy enthusiast (and PhD), to explain the systems we often take for granted behind the US electrical grid. The conversation covers how the grid maintains perfect supply-demand balance in real-time, the challenges of integrating renewable energy sources, and why America actually has three separate interconnected grids. Patrick and Travis weave through the economics of power generation, transmission line physics, and how data centers are reshaping energy markets. (Also, in a bit of a surprise, Patrick defends the honor of Bitcoin miners.)

–

Full transcript available here: complexsystemspodcast.com/electricity-grids-travis-dauwalter/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast
–

Links:

Utility Dive: https://www.utilitydive.com/
The Bitter Lesson by Rich Sutton: https://www.cs.utexas.edu/~eunsol/courses/data/bitter_lesson.pdf
Austin Vernon on Fracking: https://open.spotify.com/episode/0YDV1XyjUCM2RtuTcBGYH9
Casey Handmer on Solar Economics: https://open.spotify.com/episode/0GHegWgLSubYxvATmbWhQu

–

Twitter:

@TravisDauwalter

@patio11

Travis’ LinkedIn: https://www.linkedin.com/in/travisdauwalter/

–

Timestamps:

(00:00) Intro
(00:28) Understanding the energy grid
(02:22) The complexity of supply and demand
(05:43) Regional differences in energy grids
(08:16) Seasonal and daily energy demand
(11:22) Renewable energy and storage solutions
(17:17) Sponsor: Check
(18:29) Renewable energy and storage solutions (continued)
(24:07) Demand response and time of use rates
(34:08) Bitcoin mining and energy economics
(39:29) Exploring behind the meter arrangements
(40:44) Transmission line challenges and innovations
(45:51) Dynamic line rating and grid efficiency
(50:58) Data centers and energy demand
(58:33) Interconnection queue and grid security
(01:03:38) Understanding the US grid structure
(01:09:46) Wrap

The landmines buried in the fine print of Chicago’s new casino deal Jan 30, 2025

In today’s episode Patrick McKenzie (@patio11) examines a Chicago casino investment, first of its kind within the city limits. Patrick reads from his Bits About Money essay (published January 2025) with additional commentary based on recent developments. The discussion reveals how municipal politics, grievances about national and local economic history, and creative financing intersect for ‘a very Chicago gamble.’

–

Full transcript available here:
www.complexsystemspodcast.com/the-landmines-buried-in-the-fine-print-of-chicagos-new-casino-deal/

–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Bits About Money: https://www.bitsaboutmoney.com/archive/chicago-casino-investment-offering/
The Story of Vaccinate CA: https://worksinprogress.co/issue/the-story-of-vaccinateca/
The Conservative Investor: https://www.patreon.com/theconservativeincomeinvestor
Complex Systems interview with Jim McKenzie: https://open.spotify.com/episode/6ocJirzGTStuf0K9ITM21X?si=7HA0RhEOS8GFsA1MlY-EVw

–

Twitter:
@patio11

–

Timestamps:
(00:00) Intro
(01:43) Chicago has wanted a casino for a long time
(04:55) The stock offering
(10:29) Chicago’s peculiar definition of minority
(14:04) Sponsors: Vanta | Check
(16:26) Reading a complex corporate structure
(20:29) Is this valuation a gift to investors?
(23:20) Capital stack arbitrage
(30:04) The casino will not distribute profits, per se
(32:45) Tax consequences of this offering
(38:34) In conclusion

The banking crisis, two years later Jan 23, 2025

Patrick McKenzie (@patio11) revisits his March 2023 essay that explained the dynamics of bank runs and system stress during the banking crisis one month prior. With data from a newly released Federal Reserve paper, he analyzes the true scope of the banking stress - including revelations that 22 banks experienced severe deposit outflows, far more than publicly known at the time. While officials blamed social media for bank runs, data shows institutional players, not retail depositors, drove the events.

–

Full transcript available here: www.complexsystemspodcast.com/banking-crisis-two-years-later/

–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Bits About Money: https://www.bitsaboutmoney.com/archive/banking-in-very-uncertain-times/
Federal Reserve Report: Tracing Bank Runs in Real Time https://www.newyorkfed.org/research/staff_reports/sr1104.html
Byrne Hobart’s blog The Diff: https://www.thediff.co/
Matt Levine’s blog Money Stuff: https://www.bloomberg.com/account/newsletters/money-stuff

–

Twitter:
@patio11

–

Timestamps:
(00:00) Revisiting the March 2023 essay
(01:47) The Fed's study
(11:21) Why are banks failing?
(14:41) A useful heuristic from bond math
(18:05) Sponsors: Vanta | Check
(21:00) Maturity transformation
(29:54) Sponsor: GiveWell
(30:42) Liquidity problems are the proximate cause of bank failures
(33:43) Trying to forestall a banking crisis
(40:16) Deposit insurance expansion
(47:12) Deposit insurance has some legacy issues
(52:04) What would happen if my bank were to go into receivership this weekend?
(59:46) What should users of the banking system do?
(01:04:09) Parting thoughts
(01:05:08) Footnote

Debanking explained Jan 16, 2025

In this episode, Patrick McKenzie (@patio11) unpacks his 24k word essay Debanking (and Debunking?) originally published on Bits about Money. He discusses the contours of recent debanking claims made by the crypto community, notably Marc Andreessen, Nic Carter, and explains how banking actually works as infrastructure rather than conspiracy. The conversation moves from Operation Chokepoint's documented history to current claims about coordinated action against certain industries, while highlighting how banking access challenges disproportionately affect those who are "relatively less resourced, relatively less educated."

–

Full transcript available here:
www.complexsystemspodcast.com/debanking-patrick-mckenzie/

–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Debanking (and Debunking?) https://www.bitsaboutmoney.com/archive/debanking-and-debunking/
a16z's Debanking explainer: https://a16zcrypto.com/posts/article/debanking-explained/

–

Twitter:
@patio11
@eriktorenberg

–
Timestamps:
(00:00) Intro
(00:19) Marc Andreessen's debanking claims
(01:02) Understanding debanking and its implications
(02:18) Crypto enthusiasts' perspective
(07:43) Operation Chokepoint: A historical context
(18:09) Sponsors: Vanta | Check
(20:23) Operation Chokepoint 2.0: The present day
(22:12) The fall of Silvergate Bank
(29:55) Crypto advocates and Silvergate Bank
(30:45) Sponsor: GiveWell
(31:43) Understanding bank account closures
(32:35) Bodegas and money services businesses
(36:38) Crypto companies and credit risk
(47:24) Debanking and its broader implications
(49:24) Political ramifications and free speech
(59:27) Wrap

–

Complex Systems is part of the Turpentine podcast network.

Retrospective on 2024, with Sammy Cottrell Jan 09, 2025

In this special episode, Patrick McKenzie (@patio11) and his EA/producer Sammy Cottrell examine the production function behind Complex Systems, from studio logistics to transcript annotation and guest selection. They reflect on their most memorable episodes while discussing the podcast's core mission of making complex systems more legible and ensuring valuable content remains freely available on the internet. The conversation explores the subjective best episodes from 2024, plans for the year ahead, and how LLMs might transform both the systems they study and how we write about them.
–

Full transcript available here: https://www.complexsystemspodcast.com/2024-year-in-review-sammy-cottrell/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–
Links:

Ricki Heicklen on Complex Systems: https://open.spotify.com/episode/11kEUYRn4gXZGju232hzcg
Casey Handmer on Complex Systems: https://open.spotify.com/episode/0GHegWgLSubYxvATmbWhQu
Dan Davies on Complex Systems: https://open.spotify.com/episode/5QKxzgumJXSQuaWCmYAoM9
Zvi Mowshowitz on Complex Systems: https://open.spotify.com/episode/4itdtJFLCpLQNd2g1zTtdD
Ross Rheingans-Yoo on Complex Systems: https://open.spotify.com/episode/4GiO0KYqxJNCIdltCyhN6m
Patrick’s talk at Manifest 2024 (Manifold): https://www.youtube.com/watch?v=vfiiXq_bE1c
Article mentioned - ‘50K in a Shoebox’: https://www.thecut.com/article/amazon-scam-call-ftc-arrest-warrants.html
Copenhagen theory of culpability: https://laneless.substack.com/p/the-copenhagen-interpretation-of-ethics

–
Twitter:
@patio11
@haththerescuer
–

Timestamps:
(01:04) Introducing Sammy
(01:37) The offscreen symphony behind Complex Systems
(07:19) Production supply chain and transcript philosophy
(08:40) LLMs of choice
(15:11) Sponsors: Vanta | Check
(21:21) Favorite episodes
(25:49) Sponsor: GiveWell
(27:15) Beyoncé
(28:47) More subjectively favorite episodes
(32:34) Thesis of Complex Systems
(34:07) Canon in operations research
(40:51) Sabbatical mode
(48:52) Bits about Money and other writing in 2024
(51:22) On paywalls and not implementing them
(54:29) LLM plans for 2025
–

Complex Systems is part of the Turpentine podcast network.

Seeing like an outsider, with Yatharth Jan 02, 2025

In this episode, Yatharth (@askyatharth), a graduate student and software engineer, turns the tables to interview Patrick McKenzie (@patio11) about cultural codes, writing, and AI. Patrick shares how his early experiences fighting credit report errors and navigating cross-cultural business environments led to his distinctive approach to understanding and writing about institutional systems. The conversation spans from Patrick's methodical exploration of banking infrastructure to his predictions about LLMs, weaving in personal stories about dating, parenthood, and bridging American and Japanese cultures along the way.
–

Full transcript available here: www.complexsystemspodcast.com/outside-view-yatharth/
–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Yatharth’s writing https://itsyatharth.substack.com/
Rules for Radicals by Saul Alinsky https://en.wikipedia.org/wiki/Rules_for_Radicals
Dave Kasten on Complex Systems https://open.spotify.com/episode/66SSmxK2Kpyef7WUxXxS6w?si=5EZYfZ7gThG8WV7hSs1aFQ
Lars Doucet on Complex Systems https://open.spotify.com/episode/2XQjSGCfW6XIu1AFB4oZeR?si=n3C28PymT6m7pPqFb2NE8Q
Bits about Money: https://www.bitsaboutmoney.com/

–

Twitter:
@askyatharth
@patio11

–
Timestamps:

(00:00) Intro
(01:30) Patrick's early interest in credit cards
(03:53) Navigating financial challenges
(05:10) Becoming a financial advisor
(10:35) Cultural and educational insights
(18:57) Sponsor: Check
(22:14) Personal stories and reflections
(25:48) Parenting and cultural integration
(33:26) Writing and storytelling journey
(37:35) Translating financial systems for a new audience
(39:08) The role of AI in writing and style transfer
(40:46) The concept of alpha in writing
(44:48) Legal advice and AI's role
(52:12) The impact of AI on bureaucratic systems
(01:04:22) Reflections on government software and policy
(01:13:49) Sabbatical insights and future interests
(01:18:52) Wrap

–

Help shape our show by taking our quick listener survey at https://bit.ly/TurpentinePulse.

The future of pandemic preparedness, with Joshua Morrison Dec 19, 2024

In this episode, Patrick McKenzie (patio11) is joined by Joshua Morrison, the CEO of advocacy non-profit 1Day Sooner. They discuss what worked and what didn't in Operation Warp Speed's unprecedented push to develop COVID-19 vaccines. The conversation then turns to the future of pandemic preparedness, particularly the promising (and underappreciated) clean air technology. Throughout, Joshua and Patrick illuminate how institutional design choices, political incentives, and technical constraints shape our ability to respond to public health challenges.

–

Full transcript available here: www.complexsystemspodcast.com/warp-speed-joshua-morrison/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

1Day Sooner: https://www.1daysooner.org/
Patrick’s Complex Systems interview with Ross Rheingans-Yoo: https://open.spotify.com/episode/4GiO0KYqxJNCIdltCyhN6m
Patrick's Complex Systems interview with Dave Kasten about building VaccinateCA https://open.spotify.com/episode/66SSmxK2Kpyef7WUxXxS6w?si=VsSJMkktQiSGxtn9bFoOWA
Takeda's licensing deal with Moderna: https://www.takeda.com/newsroom/newsreleases/2021/takeda-announces-approval-of-modernas-covid-19-vaccine-in-japan/
Bits about Money: https://www.bitsaboutmoney.com/

–

Twitter:
@joshcmorrison
@patio11

–
Timestamps:

(00:00) Intro
(00:56) The role of challenge studies in vaccine development
(09:24) Understanding vaccine platforms
(18:33) Sponsor: Givewell | Check
(19:46) Regulatory system insights and future improvements
(20:41) Lessons for our regulatory system
(29:55) First doses first debate
(37:35) The surprising nature of COVID-19
(39:30) Vaccine hesitancy and public communication
(42:08) Political influence on vaccine distribution
(58:28) Indoor air quality and disease prevention
(01:06:52) Future of public health initiatives
(01:12:27) Wrap

How we tax property, with Lars Doucet Dec 12, 2024

In this episode, Patrick McKenzie (patio11) and Lars Doucet, the author of Land is a Big Deal, discuss how cities determine your property's value and collect taxes. They explore how assessment offices juggle political pressures, statistical models, and technological tools while trying to maintain equity across millions of properties. They also cover why assessment offices are separate from tax collectors, how property value protests actually work, and why your neighbor's house might be assessed differently than yours.

–

Full transcript available here: www.complexsystemspodcast.com/property-assessment-lars-doucet/

–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Lars’ book: https://www.landisabigdeal.com/

Lars’ blog: https://www.fortressofdoors.com/

Bits about Money: https://www.bitsaboutmoney.com/

–

Twitter

@larsiusprime

@patio11

–
Timestamps
(00:00) Introduction
(00:23) How property taxes work (Texas Example)
(02:45) The political art of avoiding tax rate blame
(05:53) Sources of real estate data
(08:08) Historical property assessment
(11:04) Statutory guidance vs. Actual practice on market value assessment
(14:25) Tax rate strategy and sandbagging
(15:17) Assessed value vs market value
(16:16) Assessment caps and Prop 13
(18:22) Sponsor: GiveWell | Check
(20:27) Data collection in the field
(22:54) Data collection methods
(25:08) Property valuation: Beyond location and correlative factors
(26:52) Depreciation of buildings
(27:37) Orthodox view of depreciation
(30:53) Real estate cultural differences
(33:59) Urban redevelopment and land value
(36:59) Small business realities and perceptions
(46:19) Property tax protests
(50:45) Predictive protests
(52:19) Accuracy vs equity testing
(58:50) Cook county assessor's office
(1:01:11) Lars's background
(1:05:38) What is GIS?
(1:09:52) Wrap

Fraud levels are a policy choice Dec 05, 2024

In this episode, Patrick McKenzie (patio11) offers a reading of his viral essay, "The optimal amount of fraud is non-zero" with extensive live commentary. Patrick examines payment systems, benefits programs, and pandemic-era policies, to uncover how businesses and governments often intentionally accept some level of fraud as a cost of doing business. Reducing fraud to zero would require such restrictive verification that it would severely hamper legitimate commerce and social programs. Using examples from credit card processing to PPP loans, Patrick illustrates how different industries calibrate their tolerance for fraud based on their margins, mission, and societal role.

–

Full transcript available here: https://www.complexsystemspodcast.com/fraud-choice-patrick-mckenzie

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Bits about Money, "The optimal amount of fraud is non-zero"https://www.bitsaboutmoney.com/archive/optimal-amount-of-fraud/
Bits about Money, "The fraud supply chain" https://www.bitsaboutmoney.com/archive/the-fraud-supply-chain/
Dan Davies on Complex Systems https://open.spotify.com/episode/5QKxzgumJXSQuaWCmYAoM9?si=AWkgvWEBSymrQNqpehg5tQ

–

Twitter:
@patio11

-
Timestamps:
(00:00) Intro
(00:32) Origins of the essay and Dan Davies' influence
(02:16) Fraud is a policy choice
(04:56) The unique nature of fraud enforcement
(07:54) Who pays for payment fraud?
(12:55) Fraud as a necessary business expense
(21:13) Sponsors: GiveWell & Check
(27:43) Credit reports
(29:19) Anti fraud loops used in online commerce
(35:38) Different business tolerances for fraud
(37:20) High vs low margin fraud strategies
(41:40) Fraud in Benefit Systems and Pandemic Programs
(43:29) Taxes
(45:38) Fraud as an intended component
(51:55) Wrap

AI, poker, and mind games, with Max Chiswick Nov 21, 2024

Patrick McKenzie (patio11) is joined by Max Chiswick, a former professional poker player turned AI educator, to explore how poker intersects with decision making. They discuss how the online poker boom created unprecedented opportunities to study decision-making at scale and how computational advances have transformed both the game's theory and practice. They dig into how poker serves as a laboratory for studying decision-making under uncertainty, pattern recognition, and opponent modeling, while also examining the sometimes problematic incentives that emerge in both online gambling and AI development.

–

Full transcript available here: https://www.complexsystemspodcast.com/ai-poker-max-chiswick/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Max's website: https://maxchiswick.com/
Max's startup for AI and Game Strategy: https://overbet.ai/
The Expected Value Foundation & poker camp course: https://expectedvalue.org/
Patrick's Bits about Money: https://www.bitsaboutmoney.com/

–

Twitter:
@chisness
@patio11

-
Timestamps:
(00:00) Intro

(00:26) Max's background and journey into poker

(03:45) The credit card rewards game tangent

(06:12) Why poker matters: reasoning and decision-making

(07:49) The problem areas in the poker AI space

(09:38) Poker as an assistive technology for reasoning

(10:59) Online poker history

(16:14) Understanding multitabling

(21:14) Casino economics and gambling regulation

(22:55) Sponsor: Check

(26:32) PokerStars VIP program and professional incentives

(29:47) Playing a million hands in a month

(37:26) AI poker history and counterfactual regret minimization

(43:35) Poker complexity

(45:01) The impact of solvers on modern poker

(45:52) Understanding poker game theory and decision trees

(49:26) Recent developments in poker AI education

(50:27) Teaching programmers to build poker bots

(53:05) Wrap

–

Complex Systems is part of the Turpentine podcast network, the network behind Econ 102 with Noah Smith, The Riff with Byrne Hobart, and Turpentine VC. Turpentine also has a social network for top tech founders: https://www.turpentinenetwork.com/

Boom, busts, and long term progress with Byrne Hobart Nov 14, 2024

By popular demand, Patrick McKenzie (patio11) is joined by Byrne Hobart for a 3rd conversation to discuss Byrne’s book "Boom: Bubbles and the End of Stagnation." They explore how periods of irrational market enthusiasm often create lasting value despite their painful endings. Using examples from the 1990s fiber optic boom that enabled modern streaming to today’s AI investment surge, they examine how even when investment manias end badly, they frequently pull forward crucial technological development that benefits society long-term. Byrne and Patrick weave through historical cases like Bell Labs to present day examples in crypto and energy infrastructure, revealing hidden cycles where speculative excess can drive genuine innovation.

–

Full transcript available here: https://www.complexsystemspodcast.com/episodes/boom-busts-and-long-term-progress-with-byrne-hobart-2/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Order Byrne Hobart’s book Boom: Bubbles and the End of Stagnation on Stripe Press / Bookshop / Amazon here: https://press.stripe.com/boom
The Diff https://diff.substack.com
Capital Gains https://capitalgains.thediff.co/
The Reckoning by David Halberstam: https://www.amazon.com/Reckoning-David-Halberstam/dp/0380721473
Austin Vernon on Fracking, Complex Systems Podcast: https://open.spotify.com/episode/0YDV1XyjUCM2RtuTcBGYH9?si=CDrPD3nNSP-MUV60qffglg

–

Twitter:
@byrnehobart
@patio11

-
Timestamps:
(00:00) Intro
(00:25) Discussing the book: Boom, Bubbles, and the End of Stagnation
(01:08) Economic growth and productivity
(04:42) Technological advancements and corporate R&D
(07:31) The role of government and private sector
(13:42) Sponsor: Check
(14:57) Economic history and industrial evolution
(20:12) Japanese industrial planning and efficiency
(27:16) The dot-com boom and fiber optic investment
(31:21) Bondholders vs. equity investors: A comparative analysis
(32:32) Google’s strategic fiber investments
(32:56) The evolution of online video and YouTube’s rise
(35:22) The dot-com bubble and its aftermath
(44:06) The housing bubble
(49:39) Financial manias and reflexivity
(52:23) The SaaS ecosystem and startup growth
(54:58) Stripe and the evolution of online payments
(01:00:22) Crypto
(01:04:58) The value of currency and crypto
(01:06:36) Exchange tokens and financial models
(01:08:55) Crypto’s impact on financial systems
(01:10:41) The evolution of banking technology
(01:13:18) Crypto regulations and financial freedom
(01:17:28) Smart contracts and financial innovation
(01:26:47) The role of AI in technological advancements
(01:29:18) The future of energy: Geothermal and fracking
(01:41:39) The journey of writing ‘Boom’
(01:42:57) Wrap

How money moves, with Erik Torenberg Nov 07, 2024

In this episode, Patrick McKenzie (patio11) is joined by Erik Torenberg, the founder of Turpentine, to discuss the fundamentals of money movement and banking systems. Patrick breaks down how banks facilitate transfers through correspondent accounts and clearinghouses, explaining the evolution from physical check movement to digitization. They cover the gold standard's history, and then dig into stablecoins and their implications for the future of finance.

–

Full transcript available here: https://complexsystemspodcast.com/money-movement-erik-torenberg

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Bits about Money - Bank Transfers https://www.bitsaboutmoney.com/archive/bank-transfers-as-a-payment-method/
Bits about Money - Stablecoins https://www.bitsaboutmoney.com/archive/stablecoin-mechanisms-and-use-cases/

–

Twitter:
@patio11

@eriktorenberg

-
Timestamps:
(00:00) Intro

(00:49) What is money?

(02:39) How money moves

(06:00) Banking and correspondent accounts

(07:59) Clearing houses and payment systems

(12:09) The gold standard and fractional reserve banking

(18:15) Introduction to stablecoins

(19:38) Sponsor: Check

(21:31) Stablecoin models and issues

(27:30) Crypto skepticism and innovations

(30:53) Regulatory arbitrage and future of money

(36:36) Wrap

From molecule to medicine, with Ross Rheingans-Yoo Oct 31, 2024

In this episode, Patrick McKenzie (patio11) is joined by Ross Rheingans-Yoo to discuss drug development and clinical trials. Ross breaks down how drugs progress from academic research through FDA approval, the challenging economics, and the many systemic inefficiencies in the current approval process. Patrick and Ross discuss historical cases like the thalidomide crisis that shaped FDA policy, the evolution of accelerated approvals during the AIDS epidemic, and lessons from COVID-19 trials. Ross shares his current work rescuing abandoned promising drugs from bankruptcy.

–

Full transcript available here: https://www.complexsystemspodcast.com/episodes/drug-development-ross-rheingans-yoo/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Ross' newsletter: https://essays.soletta.vc
Ross' blog post on drug development costs: https://blog.rossry.net/100x/
Ross' blog post on lessons from thalidomide https://blog.rossry.net/thalidomide/

–

Twitter:
@patio11
@_rossry

–
Timestamps:
(00:00) Intro

(02:28) Ross’ career transition to drug development

(03:12) The drug development process

(06:22) Clinical trials and FDA approval

(11:48) Challenges in clinical trials

(14:50) Case study: COVID-19 trials

(18:00) Sponsors: Manifold Markets | Check

(19:55) Pharmaceutical economics

(38:13) Rare diseases and regulatory strategies

(45:18) Advanced market commitments explained

(45:54) Operation warp speed and its impact

(47:45) How to get accelerated approvals

(52:49) The thalidomide tragedy and its legacy

(01:03:17) Modern regulatory challenges and patient advocacy

(01:07:14) Reviving abandoned drugs

(01:12:06) Innovative approaches to drug trials

(01:24:26) The future of pharmaceutical development

(01:26:34) Wrap

–

Complex Systems is part of the Turpentine podcast network. Turpentine also has a social network for top founders and execs: https://www.turpentinenetwork.com/

Picking Uncle Sam's pocket, with Jetson Leder-Luis Oct 24, 2024

In this episode, Patrick McKenzie (patio11) is joined by economist and fraud researcher Professor Jetson Luis-Leder to examine the systemic issues underlying government program fraud. Jetson and Patrick discuss healthcare fraud cases, including hospice eligibility manipulation and ambulance transport schemes, and other fraud practices against unemployment and the PPP program. The discussion reveals how institutional constraints, technological limitations, and policy design choices create opportunities for both beneficial and harmful rule violations. They also analyze the ROI of fraud prevention measures, the effectiveness of whistleblower incentives, and how bureaucratic systems can be redesigned to prevent abuse.

–

Full transcript available here: https://www.complexsystemspodcast.com/defrauding-government-jetson-leder-luis

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Jetson's website: https://sites.bu.edu/jetson/
Paper: Ambulance Taxis by Jetson Leder-Luis Ambulance Taxis: The Impact of Regulation and Litigation on Health Care Fraud
Paper: Did FinTech Lenders Facilitate PPP Fraud by John M Griffin, Samuel Kruger, Prateek Mahajan https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3906395
Paper: Is Fraud Contagious by John M Griffin https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4599654
Paper: Unemployment Insurance Fraud in the Debit Card Market by Jetson Leder-Luis with Umang Khetan, Yunrong Zhou and Jialan Wang https://www.nber.org/papers/w32527
Book: Recoding America by Jennifer Pahlka https://www.amazon.com/Recoding-America-Government-Failing-Digital-ebook/dp/B0B8644ZGY
Podcast: Jennifer Pahlka on Ezra Klein
https://open.spotify.com/episode/2VPErCIG1pbcnYFBojrKcG
Podcast: Dave Guarino on Odd Lots https://open.spotify.com/episode/43HI3NuxZGsl13U365xZxa
Bits About Money https://www.bitsaboutmoney.com/
Related Complex Systems episodes: Dan Davies and Dave Guarino's episodes

–

Twitter:
@patio11

@jetson_econ

–
Timestamps:

(00:00) Intro

(02:04) Overview of Medicare/Medicaid

(02:41) Estimated $50-100B fraud losses

(03:31) Taxonomy of healthcare fraud

(08:04) Hospice fraud; potentially saved money

(16:33) A $10 billion asterisk: ambulances for dialysis patients

(21:30) Sponsors: Work OS | Check

(24:45) Complexities of fraud detection and prevention

(39:02) Pandemic fraud

(41:34) Findings on PPP loans fraud

(48:19) Supply chain of fraud

(52:06) Policy and enforcement challenges

(01:08:32) Whistleblower programs

(01:14:54) Final thoughts

–

Complex Systems is part of the Turpentine podcast network. Turpentine also has a social network for top founders and execs: https://www.turpentinenetwork.com/

How real estate investing works with Moses Kagan Oct 17, 2024

In this episode, Patrick McKenzie (patio11) is joined by Moses Kagan, co-founder of Adaptive Realty, ReSeed, and Reconvene. Their deep dive into real estate investing and property management covers the different classes of apartment buildings, the challenges of property management, and the complexities of financing structures in the industry. They examine how the internet has transformed capital raising, the significance of cap rates, the effects of supply and demand on property values, and a comparison of the real estate markets in different major cities.

The episode is in many ways a follow up to Patrick’s conversation with Jim McKenzie and offers a window into the opaque world of real estate investment.

–

Full transcript available here: https://www.complexsystemspodcast.com/episodes/real-estate-moses-kagan/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Moses Kagan's blog:https://kagansblog.com/
Reconvene Conference: https://www.reconvene.com/

Seth Godin’s book Permission Marketing: https://www.amazon.com/Permission-Marketing-Strangers-Friends-Customers/dp/0684856360

Bits About Money: https://www.bitsaboutmoney.com/
Jim McKenzie on Complex Systems: https://open.spotify.com/episode/6ocJirzGTStuf0K9ITM21X

–
Timestamps:

(00:00) Intro

(00:25) Understanding the stigma of the maligned landlord

(04:07) Landlord spectrum: from mom-and-pops to institutional players

(05:29) Inside Adaptive Realty

(06:13) Owner vs. property manager

(07:34) Challenges and complexities of property management

(15:00) Capital stacks and loans

(18:17) Sponsor: Check

(26:25) The role of banks and underwriting in real estate

(40:28) Federal subsidies and small scale landlords

(44:26) Understanding commercial real estate classes

(46:20) Challenges of Class C assets

(47:13) Explaining cap rates

(52:20) Raising equity for real estate deals

(54:16) The syndication process

(56:30) The role of brokers and execution risk

(01:00:52) Legal structures and documentation

(01:10:52) The power of networking and reputation

(01:23:14) The impact of supply and demand on rents

(01:28:03) Wrap

Telling the tech story Oct 10, 2024

In this episode, Patrick McKenzie (patio11) and Erik Torenberg, investor and the media entrepreneur behind Turpentine, explore the evolving relationship between tech journalism and the industry it covers. They discuss how fictional portrayals of industries greatly inform how jobseekers understand those industries, and how the industries understand themselves.

They cover the vacuum in quality tech reporting, the emergence of independent media companies, and industry heavyweights with massive followings. Patrick also brings up the phenomenon of Twitter/Slack crossovers, where coordinated social media action is used to influence internal company policies and public narratives. They examine how this dynamic, combined with economic pressures and ideological motivations, has led to increased groupthink in tech journalism.

Expanding on themes covered in Kelsey Piper’s episode of Complex Systems, this conversation makes more legible the important ways media affects tech, even though tech is arguably a more sophisticated industry – and why there is a need to move beyond simplistic narratives of "holding power accountable" to provide nuanced, informative coverage that helps people understand tech’s impact on society.

–

Full transcript available here: https://www.complexsystemspodcast.com/episodes/tech-media-erik-torenberg

–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Bits About Money, “Fiction and Finance” https://www.bitsaboutmoney.com/archive/fiction-about-finance/

Byrne Hobart’s essay on The Social Network https://byrnehobart.medium.com/the-social-network-was-the-most-important-movie-of-all-time-9f91f66018d7
Kelsey Piper on Complex Systems https://open.spotify.com/episode/33rHTZVowaq76tCTaKJfRB

–

Twitter:
@patio11
@eriktorenberg

–
Timestamps:

(00:00) Intro

(00:27) Fiction and Finance: The power of narrative

(01:41) The Social Network's impact on career choices

(03:34) Cultural perceptions and entrepreneurship

(06:04) Media influence and tech industry perception

(11:01) The role of tech journalism

(14:15) Social media's impact on journalism

(19:39) Sponsors: WorkOS | Check

(21:54) The intersection of media and tech

(39:22) Public intellectualism in tech

(57:40) Wrap

–

Complex Systems is part of the Turpentine podcast network. Turpentine also has a social network for top founders and execs: https://www.turpentinenetwork.com/

The hundred-year-old telegram worth $5 million, with Jim McKenzie Oct 03, 2024

Patrick McKenzie (patio11) is joined by his father, Jim McKenzie, for an intimate and in depth exploration of commercial real estate development. They unravel the complex web of relationships, regulations, and often absurd situations that shape our built environment. From the intricacies of curb cuts and driveway permits to the art of navigating local politics and lobbyists, the conversation offers a rare glimpse into the hidden mechanisms of urban development. Jim shares the highlights from his career like transforming day-old bread stores into bank branches, dealing with Chicago's infamous aldermen, and spelunking in archives to find century-old telegrams with enforceable contractual implications.

–

Full transcript available here: https://www.complexsystemspodcast.com/episodes/the-hundred-year-old-telegram-worth-5-million-with-jim-mckenzie-2/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Bits About Money: https://www.bitsaboutmoney.com/archive/why-is-that-bank-branch-there/

–
Timestamps:

(00:00) Intro

(00:27) Understanding real estate development with Jim

(03:13) The great rail lease story

(20:02) How real estate ownership is conducted

(25:58) Real estate acquisition strategies

(28:39) Sponsor: Check

(29:41) Banks and location

(34:25) Day-old bread: an opportunity

(38:45) The Walgreens development dilemma

(40:22) Strategic offers and unusual numbers

(42:25) The power of personal relationships

(46:37) Navigating real estate offers and execution quality

(52:51) The LaSalle Bank acquisition and its impact

(54:39) The 2008 quadruple whammy

(58:39) The West Town shopping center opportunity

(01:01:44) The complexities of real estate deals

(01:14:24) The 2008 financial crisis and its ripple effects

(01:15:36) The energy industry resurgence post-Ukraine incursion

(01:16:07) Navigating utility easements and real estate

(01:21:43) The complexities of curb cuts and driveway permits

(01:23:46) Chicago's political landscape and real estate development

(01:32:37) Lobbying and political influence in development

(01:51:58) Wrap

–

Complex Systems is part of the Turpentine podcast network. Turpentine also has a social network for top founders and execs: https://www.turpentinenetwork.com/

Bits, Bytes, and Burgers with Byrne Hobart Sep 26, 2024

Patrick McKenzie (patio11) is joined again by Byrne Hobart, writer of The Diff, for a follow up conversation about “whales” – and so much more – across the gaming, aviation, software, hospitality and fast food industries. Patrick and Byrne also discuss their writing process, knowledge management, and how they use AI tools.
–

Full transcript available here: www.complexsystemspodcast.com/byrne-hobart-whales-miscellany

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

The Diff thediff.co
Capital Gains capitalgains.thediff.co
Byrne Hobart’s book Boom: Bubbles and the End of Stagnation
Kongregate Presentation:
- Video (https://www.youtube.com/watch?v=P7SDByLlCHw)
- Slides (https://blog.kongregate.com/dont-call-them-whales-f2p-spenders-and-virtual-value/)

–

Twitter:
@patio11

@byrnehobart

–
Timestamps:

(00:00) Intro

(00:45) Economics of video game currencies

(02:56) Pricing strategies in mobile gaming

(05:08) Monetization skew towards high-end players

(08:08) VIP systems and casino host analogy

(11:08) Whale behavior in casual games

(15:03) Hyper-consuming outliers in other industries

(19:09) Sponsors: WorkOS | Check

(21:25) Hobbies and opportunity costs

(23:01) Custom software for tech billionaires

(26:30) Evolution of website development

(29:55) Restaurant websites and delivery apps

(40:17) McDonald's take rates

(44:59) Restaurant groups

(53:34) Tech company cafeterias and employee benefits

(57:57) Google's business model and economic feedback loops

(1:00:57) Early Google investment anecdote

(1:02:16) Writing as a memory aid

(1:04:46) Using ChatGPT for memory assistance

(1:10:30) LLMs as writing and coding aids

(1:13:34) Children's interaction with ChatGPT

(1:18:11) Arguing with LLMs and using them for research

(1:03:00) Wrap

–

Complex Systems is part of the Turpentine podcast network. Turpentine also has a social network for top founders and execs: https://www.turpentinenetwork.com/

Decisions Nobody Made, policy edition, with Dave Guarino Sep 19, 2024

In this episode of Complex Systems, Patrick McKenzie (aka @Patio11) is joined by Dave Guarino, a software engineer and policy wonk. They explore the complexities and challenges of public programs, focusing on SNAP aka CalFresh in California, where Dave was the founding engineer and then director. They discuss how society’s complex preferences become policy, driving obviously bad UXes (like 200+ questions for an application) for structural reasons. Patrick and Dave debate structural issues within government agencies that lead to these inefficiencies, the lack of user-centric design, misaligned incentives, a “cavernous gap” in feedback loops, and surprisingly simple ways anyone can influence public policy and improve government systems.

–

Full transcript available here: https://www.complexsystemspodcast.com/episodes/government-software-dave-guarino/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Dave Guarino's newsletter: https://daveguarino.substack.com/
Dan Davies episode of Complex Systems: https://open.spotify.com/show/3Mos4VE3figVXleHDqfXOH

–

Twitter:
@patio11

@allafarce

–
Timestamps:

(00:00) Intro

(01:03) Complexity of naming government programs

(03:45) How policy decisions are made

(07:19) Why SNAP applications are so complex

(14:17) Why no one stops overly complex applications

(18:44) Political economy of different benefit programs

(24:56) Sponsor: Check | WorkOS

(26:13) Limited visibility into user experience

(29:24) Lack of application completion rate tracking

(35:27) Starting where you are

(43:44) Challenges of modernizing legacy systems

(48:35) Broken feedback loops in government

(53:01) Tech's understanding of service design

(57:07) Issues with improper payments methodology

(1:04:45) Effective ways to influence policy

(1:09:43) Increasing agency in government agencies

(1:14:56) Getting niche policy ideas into circulation

(1:18:04) Importance of frontline knowledge and user feedback

(1:21:33) Improving government services

(1:22:06) Wrap

–

Complex Systems is part of the Turpentine podcast network. Turpentine also has a social network for top founders and execs: https://www.turpentinenetwork.com/

True Crime, banking edition Sep 12, 2024

In this episode of Complex System, the tables are turned and media entrepreneur/investor Erik Torenberg interviews Patrick McKenzie (patio11) about the intricacies of the financial system, focusing on banking, money laundering, and regulatory compliance. They discuss several of Patrick’s essays from Bits About Money.

Patrick discusses the three stages of money laundering - placement, layering, and integration - and how the financial system has been deputized to act as law enforcement. The conversation touches on the unintended consequences of strict regulations, including their impact on economic growth and financial inclusion.

–

Full transcript available here: https://www.complexsystemspodcast.com/true-crime-banking-edition

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Seeing Like a Bank https://www.bitsaboutmoney.com/archive/seeing-like-a-bank/
KYC and AMI: https://www.bitsaboutmoney.com/archive/kyc-and-aml-beyond-the-acronyms/
Money Laundering and AML Compliance: https://www.bitsaboutmoney.com/archive/money-laundering-and-aml-compliance/
Turpentine Media: www.turpentine.co
Turpentine network for Tech Founders & Execs: www.turpentinenetwork.co

–

Twitter:
@patio11

@eriktorenberg

–
Timestamps:

(00:00) Intro

(00:33) Seeing like big tech

(06:31) AI, centralization, and information processing

(09:23) Crypto vs AI: Thiel's perspective

(10:30) Seeing like a bank: ledgers and customer service

(19:57) Future of banking customer service

(22:27) Societal goals vs banking efficiency

(28:58) Sponsors: WorkOS | Check

(31:15) Understanding KYC and AML

(35:16) Money laundering explained

(42:28) Financial system as law enforcement

(51:41) Ideal changes in the financial system

(52:34) Wrap

–

Complex Systems is part of the Turpentine podcast network.

That time we accidentally created national healthcare infrastructure, with Dave Kasten Sep 05, 2024

In this episode, Patrick McKenzie (patio11) is joined by Dave Kasten, to discuss their experiences building VaccinateCA, a charitable effort that collected, collated, and distributed vaccine distribution information during the COVID-19 pandemic. (If you Googled for the vaccine, the search results likely came from VaccinateCA’s data.) They cover the challenges of rapidly scaling a volunteer-driven organization, the lessons learned about public health infrastructure, the intricacies of interfacing with government bureaucracy, and reasons to be cautiously optimistic about tech/government collaboration.

Expanding on a theme from recent episodes (see: Casey Handmer), Dave and Patrick cover the stark differences between government and tech sector’s approach to problem-solving. They offer insights into the often-misunderstood world of government operations, the individuals who make it function, and the "scar tissue" of regulations that can both protect and hinder progress.

–

Full transcript available here: https://www.complexsystemspodcast.com/episodes/tech-government-dave-kasten/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

The Story of VaccinateCA, Works in Progress https://worksinprogress.co/issue/the-story-of-vaccinateca/
https://davekasten.substack.com/

https://www.bitsaboutmoney.com/

Complex Systems episode ft. Kelsey Piper (Spotify): https://open.spotify.com/episode/33rHTZVowaq76tCTaKJfRB

–

Twitter:
@patio11

@David_Kasten

–
Timestamps:

(00:00) Intro

(00:23) Dave Kasten’s unique career path

(01:37) The beginning of VaccinateCA

(03:09) Early challenges and volunteer efforts

(07:24) Volunteer coordination and call center operations

(10:55) Navigating policies and procedures

(14:33) Navigating policies and prioritization

(21:00) Adapting to volunteer feedback

(22:50) Sponsors: WorkOS | Check

(25:07) Public reception and media involvement

(35:40) Government and institutional responses

(45:59) Differences between tech and government approaches

(47:52) Challenges in pandemic information dissemination

(49:10) Accuracy and information systems

(53:43) Government and agile development

(56:51) Bureaucratic constraints and historical practices

(01:08:55) Government workforce and technological challenges

(01:22:34) The importance of policy engagement

(01:33:42) Wrap

–

Complex Systems is part of the Turpentine podcast network.

The mad science of drilling the earth with Austin Vernon Aug 29, 2024

Patrick McKenzie (patio11) is joined by Austin Vernon, a petroleum engineer, to discuss the technology and economics of fracking. Austin explains the evolution of drilling technology, the financial ecosystem supporting the oil industry – including the unique "doctor and lawyer money" funding model – and the complex interplay of mineral rights laws and state/local politics in the United States. Patrick and Austin also discuss the cross-pollination of technologies between fracking and emerging fields like geothermal energy extraction.

–

Full transcript available here: www.complexsystemspodcast.com/fracking-austin-vernon/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:
Austin Vernon's Blog: https://austinvernon.site/

–

Twitter:
@patio11

@Vernon3Austin

–
Timestamps:

(00:00) Intro

(01:38) Fracking technology and horizontal drilling

(05:12) The history and development of fracking techniques

(12:26) Communication methods in drilling operations, including mud pulse technology

(15:50) The economics of drilling operations

(17:28) Scale and cost comparisons between different types of drilling projects

(19:30) Safety considerations in onshore vs offshore drilling

(20:50) Sponsors: WorkOS | Check

(24:04) Discussion of small-scale "mom and pop" oil operations

(27:13) The impact of oil drilling on local economies

(31:45) The lifecycle of fracked wells and their long-term production

(36:15) Financing in the oil and gas industry

(39:19) Unique aspects of US mineral rights laws and leasing practices

(42:38) The process of setting up and funding new drilling operations

(52:55) Environmental concerns and groundwater protection measures in fracking

(56:40) The physical footprint of drilling operations

(59:12) Learning curves in fracking and geothermal energy extraction

(59:56) Diamond drill bits are not quite forever

(01:03:59) Where fracking goes from here

–

Complex Systems is part of the Turpentine podcast network.

Balancing control and chaos: cybernetics, fraud, and modern organizations with Dan Davies Aug 22, 2024

In this episode, Patrick McKenzie (patio11) is joined by Dan Davies, author of Lying for Money, and The Unaccountability Machine. They discuss how cybernetics–the study of control and communication in complex systems–applies to modern organizations and decision-making. Dan and Patrick discuss how organizations change as they grow, financial fraud and its relevance to systems design, and the process of writing nonfiction books. The conversation touches on pathologies like what happens when organizations insulate decisionmakers from communications channels to on-the-ground reality.

–
Full transcript available here: https://www.complexsystemspodcast.com/episodes/dan-davies-organizations-fraud/
–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Dan Davies, Lying for Money
Dan Davies, The Unaccountability Machine: Why Big Systems Make Terrible Decisions — and How the World Lost Its Mind
Dan Davies Substack: https://backofmind.substack.com/
James Gleick, The Information
Malcolm K. Sparrow, License to Steal: How Fraud Bleeds America's Health Care System

–

Twitter:
@patio11
@dsquareddigest

–
Timestamps:

(00:00) Intro

(00:26) The Unaccountability Machine

(01:38) History and fundamentals of cybernetics

(08:10) Operations research and its evolution

(12:08) Theory of the Firm, revisited

(15:21) Monopolizing math for fun and profit

(18:38) Sponsor: Check

(19:50) Role of black boxes in systems

(25:11) AI and the future of system management

(30:02) Accountability sinks and organizational issues

(38:44) Optimism about future of organizational design

(43:45) Empowering employees: the CEO’s open door policy

(46:31) Lying for Money

(51:57) Psychology of fraudsters

(01:02:52) Fraudogenic environments

(01:09:49) Journey of becoming a published author

(01:18:13) Effective ways to sell books

(01:22:33) Wrap

–

Complex Systems is part of the Turpentine podcast network.

Energy economics and rocket science with Casey Handmer Aug 15, 2024

Patrick McKenzie (patio11) is joined by Casey Handmer, rocket scientist turned CEO of Terraform Industries. Casey discusses the rapid advancements in solar power, the bureaucratic challenges of NASA, the incomprehensible success of SpaceX, and the evolving energy landscape. Casey touches on his experiences at JPL revealing how the organization’s fear of waste and rigid processes often stifle innovation and efficiency.

The conversation then shifts to Terraform Industries' mission to create synthetic natural gas from sunlight and air, potentially revolutionizing the energy sector. The conversation dives into the complexities of large-scale systems, from space exploration to renewable energy, offering insights into how innovation and smart policy can shape a more sustainable and prosperous future.

–
Full transcript available here: https://www.complexsystemspodcast.com/episodes/solar-economics/
–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Terraform Industries: https://terraformindustries.com/
SpaceX: https://www.spacex.com/
JPL: https://www.jpl.nasa.gov/
Book: The Alchemy of Air: https://www.goodreads.com/book/show/3269091-the-alchemy-of-air

–

Twitter:
@patio11
@CJHandmer

-
Timestamps:

(00:00) Intro

(00:25) Casey’s startup: Terraform Industries

(00:48) The rise of solar power

(02:19) Solar power vs. traditional energy sources

(05:18) Economic and industrial impacts of solar

(09:02) Challenges in aviation and energy

(19:39) The role of policy in clean energy

(22:30) Sponsor: Check

(23:41) Casey’s experience at NASA and JPL

(34:17) SpaceX, Elon Musk and the US private space actors

(44:05) Solving problems and workplace politics

(45:10) Spreadsheets create their own reality, film at eleven

(48:35) Organizational challenges at NASA

(49:40) Challenges of innovation in bureaucracies

(51:07) The role of NASA and government in innovation

(55:25) The housing theory of everything

(58:36) Empowering employees for success

(01:02:41) Terraform Industries’ vision

(01:07:28) The future of energy and carbon neutrality

(01:10:52) The importance of hydrocarbons in aviation

(01:15:47) Challenges with hydrogen as a fuel

(01:18:21) Development of synthetic fertilizers

(01:21:54) Environmental considerations on industrial progress

(01:22:55) Wrap

Bet on it: Zvi Mowshowitz on professional gambling, trading, and AI futures Aug 08, 2024

In this episode, Patrick McKenzie (patio11) is joined by Zvi Mowshowitz (TheZvi) to discuss his wide-ranging career as a professional Magic: The Gathering player, sports gambler, equities trader, public intellectual on the covid-19 epidemic, and AI-focused journalist. They go into depth on how trading happens in less formal markets with lessons that resonate in more formal markets. They also explore the fallacies of rational decision-making in large organizations, the significance of obsession and practice in achieving excellence, and exchange predictions on AI.

–
Full transcript available here: https://www.complexsystemspodcast.com/betting-trading-zvi-mowshowitz/

–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–
Links:

–

Twitter:
@patio11
@TheZvi

–
Timestamps:

(00:00) Intro

(00:16) Meet Zvi Mowshowitz

(04:11) Trading and Magic: The Gathering

(07:24) Professional sports gambling

(11:58) Navigating the sportsbook market

(22:33) Sponsor: Check

(23:48) Financial markets vs. sports betting

(34:02) Covid-19 early predictions

(43:21) Covid-19 policy failures and blame

(49:52) Vaccine rollout chaos

(01:01:11) The importance of scaling effective strategies

(01:14:46) AI predictions

(01:23:58) Wrap

–

Complex Systems is part of the Turpentine podcast network. Learn more: Turpentine.co

Betting on the future via prediction markets, with Stephen Grugett of Manifold Aug 01, 2024

In this episode, Patrick McKenzie (patio11) is joined by Stephen Grugett, a co-founder of Manifold, to discuss prediction markets. They cover how prediction markets work, their efficiency in aggregating information, and why they serve as a minority report against prevailing narratives. They cover past controversies, potential risks, and the philosophical value of prediction markets.

–
Full transcript available here: https://www.complexsystemspodcast.com/prediction-markets-stephen-grugett/

–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

Manifold https://manifold.markets/
Bits About Money https://www.bitsaboutmoney.com/

–
Twitter:
@patio11

@ManifoldMarkets

–
Timestamps:

(00:00) Intro

(00:26) Understanding prediction markets

(02:15) Manifold's calibration and performance

(06:48) The role of bots in prediction markets

(10:52) User-created markets and community practices

(15:49) Forecasting, and superforecasters

(18:26) Crafting good markets on Manifold

(23:07) Sponsor: Check

(24:20) Evolution of Manifold's loan system

(26:13) Market participation and capital efficiency

(27:57) The LK-99 superconductor markets on Manifold

(28:57) Social aspects of market participation

(32:31) Building Manifold and user growth trajectory

(34:57) Innovative use cases for prediction markets

(38:52) Prediction market vs. traditional market

(42:22) Play money markets with real cash prizes

(46:14) Historical and regulatory context of prediction markets

(49:32) The importance of market optics

(50:44) Wrap

–

Complex Systems is part of the Turpentine podcast network.

Reporting on tech with Kelsey Piper Jul 25, 2024

Patrick McKenzie (patio11) is joined by Kelsey Piper, a journalist for Vox’s Future Perfect. Kelsey recently reported on equity irregularities at OpenAI in May of 2024, leading to an improvement of their policies in this area. We discuss the social function of equity in the technology industry, why the tech industry and reporters have had a frosty relationship the last several years, and more.

–
Full transcript available here: https://www.complexsystemspodcast.com/episodes/reporting-tech-kelsey-piper/

–

Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:

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Twitter:

@patio11
@KelseyTuoc

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Timestamps:
(00:00) Intro

(00:28) Kelsey Piper's journey into tech journalism

(01:34) Early reporting

(03:16) How Kelsey covers OpenAI

(05:27) Understanding equity in the tech industry

(11:29) Tender offers and employee equity

(20:00) Dangerous Professional: employee edition

(28:46) The frosty relationship between tech and media

(35:44) Editorial policies and tech reporting

(37:28) Media relations in the modern tech industry

(38:35) Historical media practices and PR strategies

(40:48) Challenges in modern journalism

(44:48) VaccinateCA

(56:12) Reflections on Effective Altruism and ethics

(01:03:52) The role of Twitter in modern coordination

(01:05:40) Final thoughts

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Complex Systems is part of the Turpentine podcast network.

Writing the first draft of financial history with Byrne Hobart Jul 18, 2024

Patrick McKenzie (patio11) is joined by Byrne Hobart to discuss Byrne’s vantage point as writer of The Diff, a tech and finance newsletter. Byrne explains the toxicity of the 30-year mortgage, the dynamics of the finance newsletter ecosystem, how rationalist epistemics can be applied to hedge funds, and the joy of learning about an industry from scratch.

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Full transcript here: https://www.complexsystemspodcast.com/episodes/writing-history-byrne-hobart/

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Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

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Links:

The Diff https://www.thediff.co/
Capital Gains https://capitalgains.thediff.co/
Pre-order Byrne Hobart’s book Boom: Bubbles and the End of Stagnation https://www.amazon.com/Boom-Bubbles-Stagnation-Byrne-Hobart/dp/1953953476
Bits About Money https://www.bitsaboutmoney.com/
Byrne's podcast The Riff: https://podcasts.apple.com/id1716646486

Referenced:

The Railway Mania of 1860 Paper by Andrew Odlyzko https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4006745
Seeing Like a State by James C. Scott https://www.amazon.com/Seeing-Like-State-Certain-Condition/dp/0300078153
The Dead Pledge by Judge Earl Glock https://www.amazon.com/Dead-Pledge-Mortgage-1913-1939-Capitalism/dp/0231192533
The Oral History of Travel’s Greatest Acquisition Bookings.com https://skift.com/oral-history-of-booking-acquisition

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Twitter:
@patio11

@byrnehobart
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Timestamps:

(00:00) Intro

(00:25) The 30-year mortgage is an intrinsically toxic product

(04:46) Young households are the socially optimal holders of equities risk

(10:19) The structure of private equity returns

(14:18) Sponsor: Check

(15:32) Meta-analysis of the finance newsletter space

(19:54) Byrne’s aspirations for The Diff

(25:01) The origins of names

(27:19) The epistemics of a hedge fund

(34:26) Venture capital vs hedge funds

(38:13) Understanding scrapers

(41:20) How to learn about an industry from scratch

(45:37) The business of online travel agencies

(49:21) Wrap

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Complex Systems is part of the Turpentine podcast network.

How the Smart Money teaches trading with Ricki Heicklen Jul 10, 2024

Patrick McKenzie (patio11) and Ricki Heicklen discuss Ricki’s innovative approaches to teaching trading. Trading is traditionally taught only by practitioners, to practitioners. The curricula that trading firms use are not published externally, to avoid empowering competitors. Ricki explains how she teaches trade mechanics, how markets and traders react to new information, and the security mindset necessary for trading, including protecting sensitive information and avoiding signaling strategies inadvertently.

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Full transcript available here: https://www.complexsystemspodcast.com/episodes/teaching-trading-ricki-heicklen/
–
Sponsors: Safebase

Ready to save time and close deals faster? Inbound security reviews shouldn’t slow down your team or your sales cycle. Leading companies use SafeBase to eliminate up to 98% of inbound security questionnaires, automate workflows, and accelerate pipeline. Go to safebase.io/podcast

–

Links:
https://rickiheicklen.com/

https://bayesshammai.substack.com/

https://www.bitsaboutmoney.com/

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Twitter:
@patio11
@tradegal_

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Timestamps:
(00:00) Intro
(00:58) Ricki’s background in trading
(01:07) Teaching trading: pedagogical approaches
(03:47) Challenges in learning trading
(07:08) The importance of adverse selection
(08:02) Crowdfunding and market dynamics
(11:49) Understanding order books
(19:53) Sponsor: Check
(21:07) Liquidity and market microstructure
(27:48) Teaching trading through practical examples
(35:14) Reacting to new market information
(36:47) Understanding order cancellations
(41:29) Order types and other oddities
(56:00) Introduction to arbitrage
(01:05:00) Teaching position sizing and risk management
(01:10:05) Thoughts on quant trading
(01:12:44) Trading simulations and mental models
(01:13:08) Simulated insider trading exercise
(01:20:18) Security mindset in trading
(01:24:41) Information leakage in trading firms
(01:38:17) Final thoughts

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Complex Systems is part of the Turpentine podcast network.

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