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.

–

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

–
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/ 

–

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

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.

–

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

–
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/ 

–

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

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.
–

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

–
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

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.
–

Full transcript available here: www.complexsystemspodcast.com/des-traynor/

–
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

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/

–
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

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.
–

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

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.
–

Full transcript available here: www.complexsystemspodcast.com/gift-cards-and-the-fraud-supply-chain/

–
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?

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.
–

Full transcript available here: www.complexsystemspodcast.com/understanding-perpetual-futures/

–

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/ 

–
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

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.
–

Full transcript available here:
www.complexsystemspodcast.com/the-economics-of-discovery-with-ben-reinhardt/

–

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.

– 

Links:

Speculative Technologies: https://spec.tech 

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

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

–

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

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.

–

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

–

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/

–
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