Quoted on: AI infrastructure and compute, growth and marketing
BusinessComplex Systems
Patrick McKenzie breaks down the mechanics of financial leverage, explaining how balance sheet math dictates the exact asset price drop required to wipe out an institution's equity. He details how traditional brokerages…
- When an account holding Google stock falls to $1,600 in assets against $1,000 in debt, depositing $400 in cash drops the debt ratio to 0.6-to-1, while depositing $400 in shares on… Read →
- Solend offered a 5% liquidation bonus on an insolvent whale account during the FTX collapse, alongside a 2,600% interest rate to attract new deposits. Read →
- Patrick McKenzie shorted Tether without trusting centralized exchanges by depositing USDC and borrowing USDT on the Solana lending protocol Solend. Read →
BusinessComplex Systems
Patrick McKenzie and Zvi Mowshowitz analyze Anthropic's S-1 filing, examining the company's unconventional corporate governance, massive financial commitments, and high-growth dynamics. They evaluate the Class F founder…
- North Korea used AI to accelerate a cyber attack on Binance that netted more than $5 billion, pushing AI-enabled theft past 5% of North Korea's entire GDP. Read →
- Anthropic created a single Class F share that holds 50.1% of voting power, letting the founders overrule outside investors as long as at least three founders stay at the firm. Read →
- Wall Street analysts misread Anthropic's softer third-quarter revenue growth as weakening market demand or enterprise SaaS cohort exhaustion. Read →
BusinessComplex Systems
Patrick McKenzie analyzes the structural mechanics and economics of power grids, reading and updating his essay 'Markets in Power.' He explains how generation supply and instantaneous demand must balance continuously ac…
- Data centers consume between 5% and 10% of total electricity in the United States, and multi-trillion dollar infrastructure build-outs will drive a massive share of marginal grid… Read →
- Bitcoin miner Riot Platforms pocketed tens of millions of dollars from Texas grid operator ERCOT during the 2022 grid crisis by shutting down operations. Read →
- Electricity travels at near light speed, requiring supply and demand to match continuously because almost all power is consumed at the exact moment it is generated. Read →
BusinessComplex Systems
Patrick McKenzie reads and expands upon his 2022 essay examining the infrastructure, tax incentives, and operational mechanics of American charitable giving. He explores how donor-advised funds function as financial tim…
- Anthropic set up an uncapped 3-to-1 charitable match for employees, moving past the standard corporate policy of capping matches at a few thousand dollars per year. Read →
- Income tax rules operate on a strict annual cycle, while startup wealth creation is unpredictable and lumpy. Read →
- A legal IRS acknowledgment letter for a donation over $250 requires less than two minutes of instruction, yet non-profits spend billions on recordkeeping software. Read →
BusinessComplex Systems
Patrick McKenzie explains why payment finality is a legal and sociological construct rather than an absolute technical property, using examples ranging from Bitcoin clawbacks to credit card chargebacks. He analyzes Citi…
- Bank wires are not mathematically irreversible; domestic banking teams undo high-value erroneous transfers routinely through a legal process called hold harmless. Read →
- On August 11, 2020, an employee at an Indian business process outsourcing firm tried to key an $8 million interest payment for Revlon in Citibank's Flexcube software and accidenta… Read →
- Internet commerce did not take off because web encryption made transactions secure; it worked because credit card chargebacks promised buyers they could reverse bad trades. Read →
BusinessComplex Systems
Patrick McKenzie breaks down the microeconomics of the credit card industry, explaining how banks monetize card products through net interest, interchange fees, user fees, and merchant marketing contributions. He examin…
- In January 2026, political proposals surfaced in the United States targeting a temporary one-year cap on consumer credit card APRs at 10%. Read →
- Credit card interchange began as a merchant distribution fee, pitched to shops as an advertising channel rather than a simple transaction fee. Read →
- European regulators capped interchange fees to protect merchant margins, cutting credit card share to 50% of electronic transactions, compared to over 70% in the United States. Read →
BusinessComplex Systems
Patrick McKenzie details the financial and operational mechanics of airline travel disruptions after an air traffic control outage stranded him overnight. He breaks down the five-layer redress waterfall determining who…
- The Department of Transportation created an online dashboard after 2022 to track voluntary airline commitments for stranded passengers. Read →
- Airlines must give you a full cash refund to your original payment method if your flight is canceled or shifted past federal thresholds and you decline their rebooking. Read →
- Gate agents care about one metric: getting their assigned flight off the ground on schedule. Approaching them for complex rebooking during mass cancellations wastes your time and… Read →