Patrick McKenzie Profile picture
Jan 31 10 tweets 2 min read
I watched a creator describe their journey from underutilized technical civil servant to full-time small entertainment business. Won't link to avoid stigmatization but parts of it reminded me of my own experience back in BCC days.
"The only labor market I have available to me misuses me in pathologically bad ways so my options are either a) emigrate or b) do literally anything else, and I choose the subtype of b where there is a script available to me." sums up our mutual thought process quite a bit.
On the one hand: yay for having more choices in the world.

On the other hand: wonder how much of this is just a reflection of non-borked labor markets having structural reasons why they can't hire in XYZ.

(Said creator in Germany, me in Japan, etc etc.)
Another thought I periodically have: the world still needs without-loss-of-generality patent clerks, and have employers of patent clerks realized that people now have attractive options despite not being literally Einstein.
Related thought: many US-based technologists of my acquaintance fail to understand how attractive, let me pick a number, $3k a month in gross revenue can sound to gainfully employed technologists in some nations they consider close peers of the US.
(In some ways this is a reflection of the U.S. being a much more wealthy country than many Americans perceive it to be, so much so that it can afford to hire German civil servants to do (insert thing which you would assume is much more trivial than "German civil service.")
(Like, if you're capable of being a productive engineer anywhere in the world, and you e.g. write technical documentation, you will be *more* productive selling that technical documentation to employees at the engines of the global economy than you will be selling to employer.)
(I will pause to acknowledge that there's... something... of cultural note in the salaryman in me immediately deciding "I will not bring shame to a German civil servant by linking to his public discussion of how a platform was a better employer for him than the German state.")
Anyhow, seen in this light, platform "take rates" are sort of an ongoing charge for restructuring the global economy such that people who would be inefficiently employed in German civil service have options to sell entertainment to without-loss-of-generality Americans.
And when you think of it less as "They're just hosting $CONTENT" and more "They're constructing global economic overlays" maaaaaybe that puts those take rates into perspective.

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More from @patio11

Feb 1
“We did not pay interest on time” is sometimes considered a consequential issue for financial services providers.
“It will be a day or two late due to computer issues”, posted to one’s status page, is also generally speaking not seen as a complete response.
I’m not sure I even buy the “They can’t pay because of solvency” source of risk; I just think of “Oh you’re going to try continue being a regulated financial entity after this. Um, well, about that.” source of risk.
Read 4 tweets
Feb 1
Here's a really interesting thread about a recent startup financing.
With a VC hat on, there's a big question as to whether investors are paying valuations rationally calculated to some discounted percentage chance of an outlier return, and whether businesses on this model can generate outlier returns to grow into market-comparable valuations.
With a technologist's hat on, this seems like disruptive innovation of the early-stage VC model, where funding happens in a dense network not by serial approaching angels or by getting into the YC/Demo Day pipeline but instead by an ad hoc process akin to GoFundMe or crypto.
Read 8 tweets
Jan 30
. @ByrneHobart had this in his newsletter, the last sentence of which is very relevant to the relative size of Tether’s claimed reserves and the commercial paper market.
I’d phrase it as this: “Ponzi schemes have an unbridled urge to expand, and eventually the expansion of the fake books is so large that it should produce a visible change outside those books, but does not. This fact is often noticed casually by someone uninterested in scheme.”
Even the smallest businesses create ripples in the outside world, and are very detectable if one knows what to look for, but Ponzi schemes describe themselves as roiling tsunami generators than fail to measure up to that.

(Satoshi schemes also have this property.)
Read 5 tweets
Jan 27
I invested in @compound because some tech people are going to have a class of very niche financial challenges, and there existed basically no good solution for them, to the enduring detriment of many.

They launched today: withcompound.com/a/introducing-…
It’s occasionally socially discouraged to talk about these sort of things in tech, which is one reason why people who don’t come from money get rolled by commissioned sales reps (or given catastrophically poor advice by the friendly neighborhood non-specialist accountant).
And so most of the existing advice is either a) oral lore or b) a very small number of very skilled professionals who, if you have to ask, do not want to work with you.

Compound is trying to bring that, with some actual software involved, to the broader set of tech workers.
Read 6 tweets
Jan 26
Both a good line and a mostly accurate description of forensic accounting!
Frauds collapse mostly because the scale of lies (promises of returns, chiefly, but then checkable metadata about operations) compounds on itself more rapidly than anything should compound in most legitimate businesses, eventually hitting a checkpoint that can not be bullshit.
Frequently that is a liquidity crisis; less frequently it is intervention by a partner or government.
Read 10 tweets
Jan 19
This is one of those facts that make one go “Huh”, and suggests there might be fewer physical dollars in the hands of people who have long-term positive views on Bitcoin than there are widely believed to be, or that those dollars are somehow not available.
“Is he subtweeting tether?” I mean dollars are dollars and they’re all fungible. I’m referring to longs in their entirety.
Markets can have weird discounts for a long time for structural reasons! But they generally close.

A favorite anecdote of mine: way back in the day, McDonalds spin out Chipotle and retained (then sold) a B share class which was equivalent to As but had more voting rights.
Read 9 tweets

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