Levchin's Pattern-Mathematics Over Human Judgment

“Frezza and Levchin’s efforts to apply this technique to patterns of fraudulent activity yielded another breakthrough: now, PayPal could match not just numbers to numbers but patterns to patterns. They augmented this with computer-generated rules that triggered an alert if one pattern resembled an earlier fradulent one. If such a fraud pattern registered frequently enough, the team could write a blanket rule in the system to prevent it from recurring again. “A simple layman’s explanation is that we started fighting patterns—more than [fighting] fraudsters,” observed engineer Santosh Janardhan. “Patterns are mathematics. Some of the folks who ended up working on this stuff were basically mathematics folks from Stanford that Max ended up hiring, and they ended up creating models that detected changes and anomalies in patterns, which was a very advanced way of looking at things at that time.””

““Max kept repeating, ‘As hire As. Bs hire Cs. So the first B you hire takes the whole company down.’”