Complex Systems with Patrick McKenzie (patio11)
We live in a world where our civilization and daily lives depend upon institutions, infrastructure, and technological substrates that are _complicated_ but not _unknowable_. Join Patrick McKenzie (patio11) as he discusses how decisions, technology, culture, and incentives shape our finance, technology, government, and more, with the people who built (and build) those Complex Systems.
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The magic spell that makes banks give you your money back
<p>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.<br>–</p><p>Full transcript available here: www.complexsystemspodcast.com/the-magic-spell-reg-e/</p><p>– <br>Sponsors: MongoDB & Framer<br>Tired of database limitations and architectures that break when you scale? MongoDB is the database built for developers, by developers: ACID compliant, E...
2025 in review, with Sammy Cottrell
<p>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.<br>–</p><p>Full transcript available here: www.complexsystemspodcast.com/2025-in-review-with-sammy-cottrell/</p><p>–</p><p>Sponsor:</p><p>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 fr...
Gift cards and the fraud supply chain
<p>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.<br>–</p><p>Full transcript available here: www.complexsystemspodcast.com/gift-cards-and-the-fraud-supply-chain/</p><p>–<br>Sponsors: Givewell & Framer </p><p>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.</p><p>Framer is a design and publishing platform that collapses the toolchain between wireframes and productio...
Understanding perpetual futures
<p>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.<br>–</p><p>Full transcript available here: www.complexsystemspodcast.com/understanding-perpetual-futures/</p><p>–</p><p>Sponsor: Framer is a design and publishing platform that collapses the toolchain between wireframes and production-ready websites. Desi...
The economics of discovery, with Ben Reinhardt
<p>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.<br>–</p><p>Full transcript available here: <br>www.complexsystemspodcast.com/the-economics-of-discovery-with-ben-reinhardt/</p><p><br>–</p><p>Sponsors: GiveWell & Framer</p><p>Support proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. First-time dono...
Understanding equity at tech companies, with Billy Gallagher of Prospect
<p>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.</p><p>–</p><p>Full transcript available here: www.complexsystemspodcast.com/understanding-equity-at-tech-companies/</p><p>–</p><p>Sponsor: Framer is a design and publishing platform that coll...
The $4,000 insurance policy designed to never pay out
<p>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.<br>–</p><p>Full transcript available here: www.complexsystemspodcast.com/the-4-000-insurance-policy-designed-to-never-pay-out/</p><p>–</p><p>Sponsor: Framer is a design...
How deposit insurance actually works
<p>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.<br>–</p><p>Full transcript available here: www.complexsystemspodcast.com/how-deposit-insurance-actually-works/</p><p>–</p><p>Sponsor: Framer is a design and publishing platform that collapses the tool...
Home improvement lending with fewer bankers and more computers
<p>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.<br>–</p><p>Full transcript available here: www.complexsystemspodcast.com/home-improvement-lending/</p><p>–</p><p>Sponsor: Framer is a des...
Talking to the Bank of England about systemic risk and systems engineering
<p>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.<br>–</p><p>Full transcript available here: www.complexsystemspodcast.com/talking-to-the-bank-of-england/</p>...
