Time for our second 'Ask Me Anything!'

HI everyone, I'm Patrick McKenzie, a four-time software entrepreneur currently living in Japan. I've worked for Stripe for the last several years. In 2021, I kicked off and became CEO of VaccinateCA, a non-profit initiative to help Californians find the covid-19 vaccine. We ended up running the shadow national vaccine location information infrastructure.

I recently wrote an oral history of this effort. Some lessons learned seem interesting to people who are attempting to do ambitious things with ambiguous paths to achieving them, particularly at the intersection of socially important institutions.

Ask me anything! I will be on here from Monday, December 12 for a few days, and will endeavor to get to your questions each day during that time. 

Use the comments below to add questions, and upvote any questions you'd particularly like me to answer.

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Tyler Cowen Question: What parts of the government, or processes/bureaucracy, rise and fall in status for you as a result of seeing it close up?

Ooh good questions.

"Staff" level operators in some state governments: up, in a way which was surprising to me.

American governors: down markedly, both with regards to specific identifiable examples but also as an institution.

Public health as a field: they don't make numbers low enough to quantify my regard for it as a result of the pandemic.

FDA: Down markedly and continued going down with every additional decision.

CDC: Somewhere between FDA and public health as a field.

Pharmacies: down markedly.

Pharmacists: up markedly; I previously regarded this field as a charming historical anomaly and saw some genuinely heroic behavior (amid a lot of mediocrity) in service of patient health outcomes.

Doctors: down slightly as a class due to inconsistency on several subjects the field should have been markedly consistent in execution on.

The people in charge of complex public software projects for a nation other than the US: up markedly, in a way which was extremely surprising to me, because while operational hypercompetence for that nation is basically Tuesday I would not have predicted approximately mid private sector levels of competence in the field of software from the government under almost any circumstances.

AppAmaGooBookSoft: For reasons I cannot share, down on net with respect to my confidence in their ability to act correctly given their values, up slightly with regards to my perception of their realized ability to positively impact the world. (Note that I am near the extreme right of the curve with regards to my estimate of how good AppAmaGooBookSoft are for the world and I feel it depressing that the extreme right of the curve is not where everyone interest hangs out all the time because this should be extremely uncontroversial.)

What are plausible explanations for early "vaccination rollout" authorities' communications having been so aggressively wrongheaded, to hinder the use of about-to-expire doses?

Extreme risk-aversion, poor incentives to be right, a true values function which does not actually reflect the one we expect them to have, and extreme undercompetence in areas that we expect competence.

(this question is just a rephrasing of the "existence of the other kind of oversight" one, so please don't answer both.)

You seem talented at making statements that are both deniable and very clear to your target audience. Was this a skill that you deliberately practiced, were you naturally good at it, or did you pick it up some other way?

 For example, while running VaccinateCA, I could easily intuit your opinion on public Health as a field, but I don't recall you every saying anything explicitly negative during that time. I also vaguely remember some comment you made about a "certain monopsonistic firm in Nagoya" that you didn't name because, because... it would be impolite(?), but that every salaryman would instantly recognize. I figured it out, but it seemed unusual to deliberately not name a company out of politeness, while also making it very clear.

I was a Japanese salaryman during my formative years. This is the way salarymen talk, and sometimes it is diagnosed by people who do not understand it as e.g. duplicity or unwillingness to say what we mean, when it is more often just a culturally-inflected execution on saying something which is absolutely unambiguous to its target audience but not socially ruinous.

No Japanese salaryman needs you to spell out the identity of a large automobile manufacturer near Nagoya; literal children know what that must mean. But salarymen understand, and are frequently not merely participants in but active proponents of, a values system in which one must not make trouble for firms with which one was previously affiliated. 

Do I engage salaryman mode intentionally sometimes for tactical reasons? Absolutely. For example:

For example, while running VaccinateCA, I could easily intuit your opinion on public Health as a field, but I don't recall you every saying anything explicitly negative during that time.

Yes, you recall correctly. I would be negatively surprised if there was a single public statement I made anywhere between Day 0 and Day 200 which could be quoted in a news article as a criticism of e.g. the government. Being quoted in the news article as being critical of the government was, I perceived, likely to cost lives at the margin. I bent my professional energies and skill to not accidentally letting that quote slip, and other people were helping achieve the same (from us as an organization and from me specifically).

This is the way salarymen talk, and sometimes it is diagnosed by people who do not understand it as e.g. duplicity

In the not-to-distant past, I would have reflexively dismissed this sort of speech as "political BS", yes. :sweat_smile: I suspect I was far from alone, among engineer-types, though.

I'm somewhat reminded of how would-be technical founders are cautioned that, while it is indeed bad to let the sales team run the company, sales is a very real skill that that deserves respect.

Thank you for your response and, of course, for the work you did running VaccinateCA.

Assuming you're at liberty to comment, do you wish more companies adapted Elon's "show your work from the last 2 weeks or get fired" approach to managing engineers?

I wouldn't love the sort of culture this creates with regards to increasing perception of career risk from team constantly and making it almost impossible to construct longer-term plans or vision, as a general statement, but have some non-zero level of regard for the notion of "Sometimes one needs to radically change cultures in a hurry and the transition period for them may not resemble the new steady state."

Either way, I think that if pulled off correctly the Twitter transition will be one of the most important experiments done in the history of scaled management. I perceive 'smart money' (both literally and metaphorically from the management class) as assigning very low likelihood to success here. I think some smart money has not updated sufficiently on the track record of people confidently predicting Elon Musk will fail.

I think I am slightly better calibrated than smart money in that regard, and find myself in agreement with smart money anyway.

The percentage cost for card processing (US credit/debit cards in mind here) is set up in a way that would make sense if each individual transaction had a significant marginal cost. Is that the right way to think about the supply side cost of card processing? I don't think it is, so to me it feels like low-cost-transaction merchants are being way overcharged compared to high-cost-transaction merchants. What am I missing? My mental model of the cost of card processing is a big upfront cost for the initial network and for new features, but very very low marginal cost for each transaction (even including the servers etc required to keep it running).

For example, 2.9%+$0.30 per transaction is 3.2% for a single $100 transaction, 5.9% for 10 $10 transactions and 32.9% for 100 $1 transactions.

I am slightly constrained with respect to talking about the economics of credit card processing in particular, but can I make the observation "A lot of people want financial services to be almost free in sticker cost (at least for people they care about), and all of society wants financial services to be very useful, and almost nothing which is useful in society rounds to free."

And if I can make an analogy to software, many people wanted software to be basically free and we decided to make it basically free to consumers in return for locking them into fantastically lucrative ecosystems while keeping it very expensive for businesses. (And I think the model for software as "high fixed cost near zero marginal costs" would also need some very important asteriskes because it is factually not the case that Google can, on Tuesday, decide to simply let all the engineers go.)

There are various equilibria which could exist in regards to any particular set of financial services, and in fact we do see (different!) equilibria present in different places. In the place you live in, you see one particular equilibrium, and have a theory as to why you are there, which it is socially difficult for me to comment on.

Ok, thank you for the answer. Huge fan of your work and looking forward to seeing what you get up to next

Is it still possible to create and sell software as one person, or is a startup now the minimum viable size? 

Clearly yes; more people do it today than at any time in history.

Would you do it that way again?

I think there is perhaps a 20% chance that my next major adventure is another software company but feel like I've "got the merit badge" for doing a solo operation there and would likely not do it again.

How many years are we still away from being able to make (nearly) instant payments between developed countries with fees under 0.1%? (including hidden exchange rate fees)

This is currently possible in the Eurozone but AFAIK not possible between any other countries.

I do not perceive we are within 10 years of that happening (defined as "instant ~free money movement between banked people in US, JP, Australia, UK, Canada, and all present members of EU") and my estimate is increasing over time rather than decreasing, which is counterintuitive.

The reason here is that the first companies to do it would necessarily be tech companies with global reach, and not the traditionally-understood financial sector. There are many governments which, for reasons which sound excellent to them, would prefer a) clipping the wings of large tech companies doing business globally and b) increasing the height of the firewall between BigTech and the financial system.

I also think the salience of this particular measure is lower for institutions than it is for individual humans who are routinely exposed to exactly this need, because the types of life situations which expose you to exactly this need are anticorrelated with having power over institutions.

What have the best product managers you've worked with consistently done to make your life easier? 

Especially curious if those characteristics change working on payments infrastructure vs. something more consumer-facing.   

"Keep up a high velocity of shipping good product" seems like a vacuous answer to this question but it's a really important answer to this question.

Singapore has a government entity  that builds open source technologies (eg static site generator, form maker) for other government departments to use. Could you se this being replicated elsewhere?

I don't particularly think OSS is a necessary component of that model, but we've seen similar things with some level of efficacy in both the UK and Japan, which suggests to me that a very similar thing would achieve some level of impact in the US. The US Digital Service and similar have a portfolio approach; it will be interesting to see if they move in the direction of producing self-serve tools. (I do not perceive that as being a large portion of their portfolio as of today but am not an expert w/r/t their portfolio.)

What’s something actionable US startups could do to help bring to the US the best parts of Japanese culture?

"Open Tokyo engineering offices and give them material responsibility for products that ship globally" might be one of them. There are many, many reasons that companies don't do that, and the biggest one is that it is hard and exposes the company to an internal language barrier, but all are solvable issues. (Also the market price of engineering in Tokyo is far less than the market price of engineering in many countries that U.S. startups happily put engineering offices.)

Any thoughts or meta-level lessons after VaccinateCA about how to improve competence in our institutions, particularly in government? So many problems (not just in the US) come down to corruption in government, or institutionalized incompetence, or a cultural expectation of slowness and low productivity, etc. How do we get underneath these problems to structural issues of organization and incentives, and fix the root causes?

From seeing parts of the official effort that vastly outperformed the median entry in the official effort, some ideas:

Continued experimentation with approaches like the U.S. Digital Service which attempt to create pockets of high-functioning competence and make them available at-need to people in the rest of the system who desire to consume e.g. engineering competence but cannot avail themselves of it locally due to institutional constraints. Stop trying to boil the ocean; start embracing boiling a pot of drinking water and then creating a factory to do that at scale.

This would have been against my beliefs for most of my life, but I think I am in favor of less people in strategic decisionmaking and more accountability for them versus having strategic decision being delegated to hundreds of thousands of people across tens of thousands of orgs, none of them feeling responsible for the final outcome. It may be a true statement that no individual anywhere thinks that they were ultimately responsible for vaccine administration policy or accountable for vaccination rates or other metrics of interest. That... is an insane result.

I think people outside the government need to become radically more familiar with how it operates, not as described in civics class but how it actually functions in the real world. The details of e.g. org charts, reporting lines, incentives, etc matter an awful lot, and to the extent those details are unknown outside of local communities of practice, they are unlikely to reflect our true values. (Or, in some cases, any values at all.) I think many mechanisms for transparency in government (public records laws, FOIA, etc) are positive, but it seems like we have a great deal of low-hanging fruit.

Is there a compelling reason why the state doesn't publish an org chart, for example? I can imagine many; for one, I doubt the state actually is capable of publishing an org chart. That seems like a capability that we should demand from it as a condition of giving it unique authority to do certain things.

I feel like this answers my question quite well!

Are there interests that would have wanted the U.S. pandemic response to be low-efficacy, or is that not a productive line of thinking?

See the VaccinateCA piece, but there are many institutions which were not optimizing for "The US should attempt to maximize the number of lives saved during the pandemic" and we should be scandalized by that.

What sort of oversight can prevent a headless (or "committee") venture from being launched, and what explains the existence of the other kind of oversight, that lets it happen?

I've worked at some tech companies which had a very effective answer to that question. At those companies here's a strong cultural expectation that anything you want to get done should have a known Directly Responsible Individual. As the name suggests, the DRI is exactly one person who is responsible for making sure the thing gets done, and has the authority to make relevant decisions as an individual. (This sometimes goes by other names, but the concept is more or less the same.) If this person is doing poorly they can be replaced with someone else, but there needs to be one person who is ultimately individually responsible and has the corresponding individual authority.

This was probably a formal rule, but the real enforcement was cultural. Everybody Knew that there had to be someone in charge of doing the thing; otherwise how could they possibly expect the thing to get done? Putting a committee in charge instead of a person would have just felt bizarre, as unexpected and transgressive as dropping one's trousers in a meeting.

This kind of culture can perpetuate itself easily once it exists, but I don't know how to change an existing organizational culture to be this way, short of having someone at the top with a lot of power and the willingness to use it on this.

I upvoted this but would also like to explicitly endorse it, as it saves me from redundantly typing a worse version of the same answer.

I notice that there's nothing at http://vaccinateca.com currently. Do you plan to point to your oral history? Maybe list the volunteers?

sigh DNS issues, I swear. (It is designed to redirect to vaccines.gov, which seems to be the best thing for patients and therefore what we should do.)

Ideally problematic payments are caught immediately, but in the real world you end up with a bucket of "clearly shady in retrospect" payments that you have to work with.

In a situation where a fix is available (e.g. refund/cancellation), there's an interesting timing question.

If you take action immediately, you have the satisfaction of knowing victims are made square, likely before they notice the problem.

If you delay a little, possibly till just before the benefits are reaped, you reduce the speed at which the attackers can learn about your systems.

How do you think about this balance? There's also the question of if it's worth investing in systems to fake out scammers by tweaking visibility (similar to shadow-banning).

Double dipping - I'm interested in if you've built principles around this, or if it's something you think about per-incident based on the apparent sophistication of the attackers.

The amount of work given to these questions in industry is far, far higher a) than people model it as and b) that I can conveniently fit in a comment.

To the second question, the answer is Yes. Sometimes this question is answered by plans informed by written principles drawn up well in advance of need and enforced through systems implemented by people, where the actual decisioning substrate might be professionals or might be a computer system. Sometimes it is ad hoc decisionmaking in the moment.

Hi Patio11, 

 

With regards to "nerdy writing on the internet", there seems to be some sort of loose consensus that moving slowly is a policy choice and that there's lots of relatively cheap ways we could improve the lives of many, many people. 

There's also been a parallel convergence within the policy space of the great power of cash benefits, culminating in the COVID relief bills and the fully refundable Child Tax Credit. This follows the same "we can do better" theme as the above consensus, but instead ends up talking about theories of politics. Mainly end up on the Nordic Social Welfare States - best example would probably be Matt Bruenig and his People's Policy Project.

What is curious is that these two themes avoid intermingling. Can I ask you why you think that is? That more tech-optimists don't also promote and campaign for greater social welfare? 

 

Especially with Stripe, as it is so focused on building extremely robust, invisible, powerful infrastructure. In a way, that could also be seen as effective, egalitarian, statecraft. Obviously, your recent piece is on how the current state of affairs is anything but that.

 

So why is it that tech-optimists put their efforts into the private space, rather than in public office? Why do you? Is it because you've been so disappointed in the status quo? Do you think any efforts would be futile? Are you suspicious of states?

I think that there is a nuanced discourse to be made about tech and power, but a comment field is likely not the place to do it.

I will note that tech has no small amount of power, that traditional power centers are not uniformly thrilled about that, and that tech's response to that has not been to stop doing the things that make tech powerful, like e.g. building things people find useful, getting them to use those things, and exercising responsible discretion as to decisions made about how those things should interface with broader society.

So why is it that tech-optimists put their efforts into the private space, rather than in public office? Why do you? Is it because you've been so disappointed in the status quo? Do you think any efforts would be futile? Are you suspicious of states?

Speaking only for myself, for most of my life, I did not want power and (mostly) do not want power. There was a brief period during which the prevailing allocation of power between duly constituted authorities and myself was actively killing people, and during that period my duty was clear. My most preferred world vis the public sector for the rest of my life is I occasionally send them paperwork and money and they process that paperwork efficiently. There are other potential future worlds; I predict I would enjoy them much less.

Just finished this book by Kate Bingham, a venture capitalist who was head of the UK Vaccine Task Force which invested and got companies to build their supply chains in the country, then was crucified by the media for her efforts. Similar themes to you - gov naivety, lack of technical knowledge, obsession with process over outcome, the optics over the details. I recommend it https://www.goodreads.com/book/show/63124712-the-long-shot

Thank you! 
 

 

"My most preferred world vis the public sector for the rest of my life is I occasionally send them paperwork and money and they process that paperwork efficiently"

This sounds very Stripe-y to me! 
 

What's your resin 3d printing setup like? Specifically on the chemical waste side of things, how does disposal work in Tokyo vs [insert generic stateside metro area]? I guess this is more of a question about Japanese infrastructure for disposal of small-scale hazardous waste and possible connections to "the will to have nice things".

In exchange for this information, I offer 2 lesser known tips for resin printing 😁 (that I assume you may not be aware of yet):

  1. Ultrasonic cleaners are way more efficient and effective than pickle containers and toothbrushes at cleaning (though more expensive).
  2. Hot (near boiling/as hot as you're comfortable touching briefly with a gloved hand) water makes most supports quickly and easily peel off in seconds (saving tons of time). Dunk models in the water for about 10 seconds at a time. Remove supports with (gloved) hands until it starts to cool. Repeat until they're all gone. Naturally, there's a burn risk here, so this tip comes with an obligatory "use at your own risk" disclaimer.

I use exclusively water soluble resins. 

There exists a type of resin called Ekimate in Japan which is much less smelly/irritating than most resin formulations, costs ~3X as much, and which represents itself as being pourable down the drain in a matter which suggests to me that lawyers/etc have reviewed the claim and think it is within appropriate bounds for marketing material made by chemical manufacturing companies. I do not pour it down the drain. If I had a high tolerance for running wonderful small businesses with inventory, I would try to get their exclusive license to distribute in the US and make it a thing; it's an obviously better (though premium) product than any other resin formulation I've seen.

My liquid waste gets cured outside in sun for several days while evaporating to reduce volume then wiped up with towels and discarded in standard (burnable) trash; my solid waste gets cured out of an abundance of caution then discarded in standard (burnable) trash. I have immaterial use of IPA which is not discardable in trash but which also evaporates easily, and simply let it evaporate outside after I am done with it (after cleaning/reuse cycles).

What do the Japanese think/write internally about being the nation with the highest median age in the world? Are there any drastic fertility-improvement proposals in the works, such as paying a $1m bounty to families with 6+ kids?

It is difficult for me to comment on issues of grave concern to the Japanese polity and I feel your first question is adequately answered (including in English) by appropriate Google searches, so I'd encourage you to make those Google searches. Your suggestion with regards to policy is materially outside of the present Overton window and almost all of my models for the Overton window in 10 years.

Suggestions which are much more inside the Overton window include gradually making Japan more hospitable to immigrants, which a) has already happened to a degree far underappreciated ex-Japan b) is more palatable to power than people model it as and c) would still have many kilometers to go to address long-term demographic trends.

I asked a question via this forum's Messages feature. I am hoping you saw it.

(It is an entirely within-bounds question)

Have recent layoffs in tech at all affected your view on the future of the industry?

Not materially.

I recall you writing at some point that you kept waiting for the "official" covid response team to take over for VaccinateCA, and were shocked at the realization that no such team existed.

This sentiment didn't come through in the oral history. Did your feelings on this matter change?

I have the perception that this is a pretty major undercurrent of the oral history.

Apologies, I didn't communicate what I meant very well (I read the whole piece, I promise!). But thinking it over, I'm not sure there's a useful conversation to be had around the question as I meant it.

How do you (Patrick) juxtapose "underpromise and overdeliver" against, when you're asked, assessing what someone with your (Patrick's) perceptions and skills could reasonably achieve going forward, given the opportunity?

This would depend markedly on who I was talking to and what I needed out of them. Certain audiences counsel being much more explicit about e.g. one's level of ambition and where one believes oneself to be on a spectrum of ability/drive/horsepower/etc.

Then there is the comms strategy bit of it, where "I have many weird hobbies, like sometimes running the U.S.'s shadow vaccine location data information provider" is both a self-deprecating joke and also a brief and loaded statement about recent realized results suggestive of my efficacy in doing hard things.

After reading your article on VaccinateCA, I walked away with a strong impression that "americans got the government they deserve". What's your thought on this?

I am extremely skeptical of desert narratives and feel they frequently blind us to actions which are in our locus of control and +EV in terms of impacts which are relevant to our moral calculi, like (as a not entirely random example) starting a crash effort to fix the government's manifest failure to act effectively during a pandemic with the goal of saving lives.

I am also extremely skeptical of desert narratives generally, but the above seems like a sufficient reason to reprogram oneself to not weight them highly.

Why is it so rare to see politicians running on the promise of eliminating government inefficiency? Closest we've got was Trump promising to "drain the swamp" but I doubt anyone took it to mean "I'll get the Department of State to issue passport in 72 hours instead of 6 weeks". I've heard numerous complaints about the California DMV but haven't heard of a major politician running on a promise to reduce the wait times there.

I do not perceive this as being particularly rare?

But the problem is systemic, the specific issues are individually generally low-salience or they would have long-since been fixed, and a lot of the things necessary for true change run up against entrenched concentrated interests like e.g. government employee unions, the contracting apparatus, etc.

Our polity does not consider "EINS will be issued within an hour because obviously we are a high-functioning society seriously what the actual #*(#(%#" to be a reason to vote for a candidate at the margin and so our political system does not prioritize making that happen by default.

How do you think recurring revenue financing based on SaaS recurring revenue will evolve?

What happened, to silence Patrick from this AMA?

I'm trying to devote approximately an hour a day as forecast, but the specific timing is a bit tough this week.

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