Code That Cost Billions: 3 Tales of Automated Bankruptcy
Mario again. You think your bad day at work was expensive?
Automated Follies Billion Dollar Tech and Finance Blunders
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Some of the biggest names in finance and tech built algorithms they thought were magic money printers. They pushed a button and watched in horror as their creations turned into high-speed paper shredders, vaporizing billions in minutes.
This is what happens when you trust the machine without building an off-switch.
1. Knight Capital: The 45-Minute, $440 Million Glitch
On August 1, 2012, Knight Capital deployed new trading software. A bug sent it on an uncontrollable buying spree, gobbling up $7 billion in stocks. When they tried to roll it back, they accidentally re-deployed the same buggy code. There was no kill switch. They just had to watch the fire burn.
They lost nearly half a billion dollars before they could even find the plug.
Metric
Figure
Total Loss
$440 Million
Time to Disaster
45 minutes
The Sin
No kill switch, bad deploy
The lesson: TEST. YOUR. DEPLOYMENTS. And for the love of God, build a big, red button that stops the bleeding. If your automation can’t be stopped, it’s not a tool; it’s a bomb.
2. Zillow: The Algorithm That Ate the Housing Market
Zillow thought their "Zestimate" was a crystal ball. They launched "Zillow Offers" to buy and flip thousands of homes, trusting their algorithm to predict future prices. But an error rate that seems tiny on paper becomes a monster at scale. They were wrong, over and over, to the tune of hundreds of millions.
