Patrick McKenzie
Spent six years at Stripe working on payments infrastructure before moving to an advisory role there, after founding several small software companies over the p...
“We have already passed the point at which AI is more than 5% of the GDP of a nation. It's more than 5% of the GDP of North Korea, by enabling them to innovate in their business model of stealing money from crypto people. … My estimate is like $500 billion of remediation, at least at pre-LLM prices. And this $500 billion feels like sort of a ransom demand from the labs, because the only way we can reasonably pay it is by adopting AI for the blue team, for defenders. You created the problem, and now you're selling us a solution to it for tens of billions of dollars. That's going to disconcert some people.”
Complex Systems with Patrick McKenzie (patio11) · Startups & Venture · November 2026
Context
Patrick turns to the Binance hack, which he links to North Korea and AI-assisted hacking. He predicts a backlash against the labs even though he argues software was always insecure. The line frames the cost of fixing that insecurity as something the labs both caused and profit from.
Transcript
…thing to say when it's like the thing that will be economically irrelevant is the one that was doing 15x revenue gain on a base of more than a billion dollars. But we are priced into a wild, wild few years, regardless of what happens to stock prices or individual returns to securities, I think.
Yeah, I mean, I think that's pretty much guaranteed. And the pace of things are accelerating. The hacking is only getting worse, it looks like, over the last few days.
Can we discuss the hacking briefly? I think there's going to be a bit of backlash against the labs for this because I don't think it's true that the labs made us more vulnerable to it. Software has been insecure for the entire lifetime of software. That's the default way to create it. And we are lately getting exposed to the bill via AI-uplifted hack incidents, where the, in most cases, it seems like the actual tool used to uplift the hackers was not directly one of the labs products, but it was one of the open weights models that were created with substantial reliance on distilling the labs products. Although there have been cases of documented misuse of the labs products directly against various targets. And so yesterday we had like two major incidents where I started the morning thinking, wow, polymarket had a loss which was large and now inconsequential. And then Binance had a hack loss north of $5 billion and counting to North Korea, which speaking of like AI impacts on the global economy, we have already passed the portion at which AI is more than 5% of the GDP of a nation. It's more than 5% of the GDP of North Korea by enabling them to innovate in their business model of stealing money from crypto people. And I shouldn't kick crypto too much. They're only stealing the money from crypto people preferentially because that is like the lowest hanging fruit. After they have taken many…
No, I feel like you're painting kind of the optimistic case where there's this fixed set of technical debt that we endured. And mostly it's just the bill is coming due much faster than it would have otherwise come due, which is forcing you to deal with this via AI, which is going to cost you a lot…
I also don't think of it as a one-time bill, but just like the backlog is already priced into $500 billion.
Right. The issue is that, like, you know, the moment we get down to that 500 billion, you know, I don't think that that results in something that is now robust. I think that's like, you know, now the next level of things, the next set of dominoes start to fall. I think it was very reasonable…
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