Patrick McKenzie Profile picture
Aug 7, 2019 5 tweets 1 min read Read on X
Had a really interesting conversation with @matt_levine about the intersection of technology and finance, coming to an Internets near you in the not too distant future.

I definitely learned something; hope everyone will enjoy it.
Specific interesting thing from about the first minute: I asked Matt what a convertible bond was for the audience and he gave the true technical answer (a bond which can be surrendered for stock at some agreed upon terms) and why it was interesting to companies.
That reason: you should only convert the bond above some share price, which effectively means you have a call option on buying the stock. Call options are more valuable if volatility is high. This is well understood.
Therefore, a borrower running a business with high variance (like a tech company with unproven model or a biotech firm) can get a loan which they’d probably not qualify for under traditional underwriting standards (“Where’s your cash flow?!”) by bundling implicit option premium.
That’s kind of beautiful: the very fact that your business is risky de-risks the offering enough such that you can access the money necessary to take your risky shot.

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More from @patio11

Dec 13
A contractor said something during this project which I thought was both compassionate and the sign that he was a skilled professional, and I thought I’d share:

Scene: My mother, who has some mobility challenges, is sketching out what she wants in her kitchen. He listens.
Then he takes me aside. Following conversation is indicative.

Me: All sound reasonable?
Him: I’ll build whatever you two decide on, but I wanted to have a conversation with you in private first.
Him: Nobody wants to get old and nobody wants their parents to get old, but it happens to everyone, and may God grant your mother many happy years.
Me: Thank you for saying that.
Him: How big do you think a wheelchair is?
Me: Mom doesn’t…
Read 6 tweets
Dec 11
Ruriko: I asked at the train station how to use the automated gates to get the child’s rate for Lillian.
Me: OK.
Ruriko: That was really hard.
Me: OK.
Ruriko: Then I asked the attendant how old children could be and still receive the child’s rate. Do you know what she told me?
Me: I will bet it did not include a correct answer.
Ruriko: How can you work as a train station attendant and not know that answer.
Me: *sigh* America.
Someday I need a better URL describing The Sort.
Read 5 tweets
Dec 9
So, debanking.
I try to be non-partisan in professional spaces. That is due, in no small part, to the acceptable spectrum of opinions in tech spaces as having been about 70 nanometers or so wide for much of the last few years.
Also, related to that, there is this fun game which is played on Twitter, where you adversarially claim that someone represents their employer, elaborate that something they have said causes a workplace safety or PR issue, and then ask for them to made an example of.
Read 17 tweets
Dec 5
We’re going to hear many, many more stories that round to this one.
One subvariant of them is that early adopters of LLMs outside of companies are going to tell those companies *things they do not know about themselves.*
People often diagnose malice or reckless indifference in a SOP which misquotes the constellation of agreements backing e.g. a rental contract.

Often it is more Seeing like a Really Big Business issues than either of those. Everyone did their job, system in totality failed.
Read 6 tweets
Dec 2
A thread on identity theft pervasiveness (and unpleasant remediation processes) in a population which experiences many challenges.
I'll observe two things which are counterintuitive:

1) You might naively assume that "identities" get more valuable as one moves up the socioeconomic ladder, but there is a discontinuity, because certain societally-favored identities have payment streams associated with them.
These go down sharply in working class and don't rise above that level again until you either a) get fairly deep into the upper middle class / PMC or b) somehow manage to get someone's full social security payment, which is (for various reasons) much less likely than other ways.
Read 14 tweets
Nov 21
Meta comment: this is going to be one of the longest and most heavily cited research results in the software industry.
As to the object level phenomenon, eh, clearly happens. I don’t know if I have strong impressions on where the number is for various orgs.
Many of these people believe they are good at their jobs and I am prepared to believe for a tiny slice of them that they are actually right.
Read 7 tweets

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