Complex Systems with Patrick McKenzie (patio11)

Patrick McKenzie (patio11) is joined by Garrison Lovely, journalist and author of Obsolete: The AI Industry's Trillion-Dollar Race to Replace Us and How to Stop It, to map the three-sided debate over AI risk and why the arguments keep talking past each other. 

They then turn to what cheap cognition does to surveillance that already exists: FinCEN receives roughly 4 million suspicious activity reports a year and reads almost none of them, ICE agents run about a million queries against that database annually, and every podcast ever recorded is now transcribable for approximately nothing. The conversation covers capabilities denialism, ablated open-weights models, the fraud supply chain, and why AI is also unusually good at writing the Regulation E letter that gets your bank to fix your problem.
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Full transcript available here: https://www.complexsystemspodcast.com/cheap-cognition-and-the-end-of-practical-obscurity-with-garrison-lovely/
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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:
Obsolete: The AI Industry’s Trillion Dollar Race to Replace Us―and How to Stop It: https://www.amazon.com/Obsolete-Power-Profit-Machine-Superintelligence/dp/1682196305 
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Timestamps:
(00:00) Preview
(00:43) Intro
(01:51) The three-sided debate over AI risk
(05:32) Power, politics, and the tech backlash
(09:49) Capabilities denialism and AI tells
(14:54) The obsoleting machine
(17:09) The Turing test is dead
(18:56) Languages for free, then software engineering
(22:37) Sponsors: Mercury | MongoDB
(25:09) How high up the stack do the models decide?
(29:11) Surveillance and cheap cognition
(32:38) Podcasts, FinCEN, and the end of practical obscurity
(38:35) Section 702 and the data broker loophole
(39:35) Sponsor: Chainguard
(40:55) Section 702 and the data broker loophole (cont’d)
(47:23) Institutional friction and a million ICE queries
(53:29) Security through obscurity no longer works
(54:54) Scams, fraud, and ablated models
(1:00:20) Personal utility versus societal backlash
(1:02:16) AI as a tool for redress
(1:06:34) State capacity and regulating what you understand
(1:12:37) Tobacco, nuclear, and AlphaFold: strangle it or steer it
(1:18:37) Where to find Garrison and the book
(1:20:32) Wrap

In this episode, Patrick McKenzie (patio11) is joined by Leila Clark, founder of Stardrift and formerly a software engineer at Jane Street, to discuss her essay "What Are You Getting Paid In?"  They cover how a Jane Street manager staffed the firm's least lucrative corner by paying people in culture, why Ken Griffin is worth roughly fifty Taylor Swifts, and how a longtime Google product manager quietly ends up with Grammy-winner money. The conversation ranges from academia's brutal tournament structure and YC as a script to founderdom to the one currency Taylor Swift holds that Ken Griffin's $50 billion buys only awkwardly: a restaurant reservation anywhere in New York.
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Full transcript available here: https://www.complexsystemspodcast.com/what-youre-actually-getting-paid-in-with-leila-clark/
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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:
What are you getting paid in: https://www.approachwithalacrity.com/p/what-are-you-getting-paid-in 
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Timestamps:
(00:00) Intro
(01:23) What are you getting paid in?
(03:16) Scripts, teacher figures, and hitting capitalism
(08:18) The academia trap
(11:08) Paying people in culture: Jane Street's back office
(14:03) Ken Griffin vs. Taylor Swift
(16:53) Learning about finance by osmosis (or not)
(20:44) Sponsors: Mercury | Chainguard
(23:46) Musician money vs. Google money
(30:03) Keeping up with the Joneses and the meritocratic ladder
(33:12) YC as a script to founderdom
(36:19) What entrepreneurship pays you in
(39:12) Gratitude, culture, and quirky preferences
(40:11) Sponsor: MongoDB
(43:48) Does winning this script look like winning to you?
(48:29) Don't end the week with nothing
(51:06) Fame and living in bubbles
(56:57) Restaurant reservations as a currency
(1:02:57) Where to find Leila
(01:03:35) Wrap

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

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

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/. 
–
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