Complex Systems with Patrick McKenzie (patio11)

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

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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 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/)

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Twitter:
@patio11

@byrnehobart

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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

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

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.

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

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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:

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

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Twitter:
@patio11

@allafarce

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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

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

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.

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

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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:

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

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Twitter:
@patio11

@eriktorenberg

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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

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Complex Systems is part of the Turpentine podcast network.

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.

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

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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 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 

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Twitter:
@patio11

@David_Kasten

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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

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Complex Systems is part of the Turpentine podcast network.

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.

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

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

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Twitter:
@patio11

@Vernon3Austin

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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

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Complex Systems is part of the Turpentine podcast network.

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.

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

• 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 

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Twitter:
@patio11
@dsquareddigest

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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

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Complex Systems is part of the Turpentine podcast network.

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.

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

• 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

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Twitter:
@patio11
@CJHandmer

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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

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.

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

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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:

• https://thezvi.wordpress.com/
• https://www.bitsaboutmoney.com/

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Twitter:
@patio11
@TheZvi

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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

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

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.

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

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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 

–

Links:

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

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Twitter:
@patio11

@ManifoldMarkets

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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

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Complex Systems is part of the Turpentine podcast network.

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.

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

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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:

• https://www.vox.com/future-perfect/351132/openai-vested-equity-nda-sam-altman-documents-employees
• https://www.vox.com/authors/kelsey-piper 
• https://www.bitsaboutmoney.com/

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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.