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 regula...
Apr 10, 2025•1 hr 8 min•Ep. 38
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 player...
Apr 03, 2025•2 hr 34 min•Ep. 37
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 spe...
Mar 27, 2025•1 hr 7 min•Ep. 36
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...
Mar 20, 2025•2 hr 31 min•Ep. 35
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-pol...
Mar 13, 2025•1 hr 17 min•Ep. 34
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 reques...
Mar 06, 2025•41 min•Ep. 33
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 powe...
Feb 27, 2025•1 hr 14 min•Ep. 32
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 ...
Feb 20, 2025•42 min•Ep. 31
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 ...
Feb 13, 2025•1 hr 27 min•Ep. 30
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...
Feb 06, 2025•1 hr 14 min•Ep. 29
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-buri...
Jan 30, 2025•45 min•Ep. 28
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 e...
Jan 23, 2025•1 hr 11 min•Ep. 27
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 highlighti...
Jan 16, 2025•1 hr 2 min•Ep. 26
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 ah...
Jan 09, 2025•1 hr 5 min•Ep. 25
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 ...
Jan 02, 2025•1 hr 20 min•Ep. 24
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 sh...
Dec 19, 2024•1 hr 14 min•Ep. 23
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 ...
Dec 12, 2024•1 hr 11 min•Ep. 22
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 exa...
Dec 05, 2024•51 min•Ep. 21
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, whil...
Nov 21, 2024•56 min•Ep. 20
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 develop...
Nov 14, 2024•2 hr 44 min•Ep. 19
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:...
Nov 07, 2024•39 min•Ep. 18
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...
Oct 31, 2024•1 hr 29 min•Ep. 17
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 opportu...
Oct 24, 2024•1 hr 20 min•Ep. 16
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 co...
Oct 17, 2024•2 hr 30 min•Ep. 15
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 foll...
Oct 10, 2024•1 hr•Ep. 14
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...
Oct 03, 2024•2 hr 54 min•Ep. 13
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 securit...
Sep 26, 2024•1 hr 28 min•Ep. 12
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...
Sep 19, 2024•1 hr 24 min•Ep. 11
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 conve...
Sep 12, 2024•55 min•Ep. 10
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...
Sep 05, 2024•2 hr 37 min•Ep. 9
