Patrick McKenzie Profile picture
Aug 5, 2019 4 tweets 1 min read Read on X
Many technologists fail to appreciate that security is not something which businesses want to provide at all margins.

(Consumers are similar; they're unwilling to literally or figuratively pay for security at all margins, too.)
However, since security is a sacred value, you're not really encouraged to voice aloud the necessary consequence of this, which is that e.g. there's some level of account takeovers or fraudulent claims or bank robberies which are acceptable losses (to be distributed somehow).
"You're being facetious about bank robberies, Patrick"

No I'm not. The direct cost of them is clustered around $8k per, which is less than the minimum buy-in for a lawsuit, which is why Don't Be A Hero is the first thing every bank employee learns at every training about this.
Society distributes the cost of bank robberies thus:

To deter potential scalable robberies, there is a bit of private investment in looking secure and some public investment in making "career bank robber" and "career prisoner" effectively synonymous.

Losses? Bank pays, the end.

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More from @patio11

Nov 11
It is useful to understand when you are dealing with a person who can be persuaded and when you are dealing with a state machine which has formal transitions for some things you could say and literally no emotional response per policy.
The second is a much better model for many large bureaucracies than the first.

This drives some people to hate bureaucracies, which is an aesthetic reaction they are welcome to. And it causes some people to return to the interpersonal maneuvering script that they expect to work.
I recommend not choosing to lose.
Read 5 tweets
Nov 7
Being bad at counting things is a policy choice.
I once had a conversation with California about counting. They were counting shots delivered. Bloomberg had published a league table which showed California ~48th in nation on delivery versus shipments, a fed number.
Good news, says California. The reality is probably better than the league table says. Not that we can admit this out loud, you see, because those are Official numbers and we have to pretend our submissions are not lies.

But we just didn’t see those numbers as important.
Read 8 tweets
Oct 25
This is sort of a niche financial product but I’ll explain mechanics since plausible a few readers will eventually be able to use it:

Banks want you to have ~20% equity in your house to protect them against default risk. (Lower down-payments are subsidized by USFG through GSEs.)
That equity will almost always be in the house but for wealth management customers it could be in many other things. You could pledge a CD (hah) or basically anything you keep in your brokerage account. (Some restrictions apply.)
The pledge immobilizes your stocks for a few years, generally at the wealth management division that is making this transaction happen. (But options exist for other arrangements.)

In event value of stock declines below level bank is comfortable with, you get a low-urgency call.
Read 8 tweets
Oct 11
I am reminded of the absolutely enormous detection of embezzlement as restaurants switched to cash registers, a switch which was not motivated by concerns of embezzlement.
(The combination of physically absent manager, socioeconomic realities of employee population, and no bookkeeping of marginal pizza created meant that places which believed they were high-trust environments were in fact not.)
(Ran into this once at Ardy’s in college on a debate team trip. Employee came out to take our order and said “OK that’s $20.”

Me: “$20 and what?”
Employee: “$20 will do. I’ll go tell kitchen.”
*leaves*
Me: “We’re leaving.”
Teammate: “What.”
Me: “Not eating a stolen burger.”)
Read 6 tweets
Oct 6
Interesting new AI interaction model which we'll see a lot of in the future, spotted on Bench (bookkeeping service):

Patrick: *uploads statements*
Regular computer system chugs
AI: We have questions on ten line items. Your chat about them will be reviewed by a human bookkeeper.
AI: What's this use of Paypal for?
Me: *explains that it is a coworking space*
AI: Was that for daily or monthly use of a coworking space?
Me: Yes.
AI: Preliminary categorization is as Rent or Lease Expense. Should I proceed.
Me: Yes.
AI. Noted for your bookkeeper. Next.
This is so unbelievably more time efficient than requiring either a synchronous back and forth with my bookkeeper or, more likely, requiring me to bat emails around with a latency of several days because my job is not actually responding to questions about a $5 invoice quickly.
Read 14 tweets
Oct 3
@GrantSlatton @waltuuuhr @tenobrus Some gaishikei (Western firms) do quite well for themselves in Japan (AppAmaGooFaceSoft for example) and *some* of those are *comparatively* not managed in the fashion of traditional Japanese companies *in many of their divisions.*

Real question is probably about startups right?
@GrantSlatton @waltuuuhr @tenobrus Question of why startups which adopted other-than-traditional management don’t just win outright is a subset of “Why don’t startups just win outright.” A Twitter thread will not usefully hold the answer to it.

Note: offering “better” culture *not necessarily in direct interest.*
@GrantSlatton @waltuuuhr @tenobrus There exist desirable candidates and desirable counterparties who are quite fine with the culture that exists, thank you very much, and will appreciate you credibly signaling your willingness to work within it to do business with you.
Read 4 tweets

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