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

0:00

/370.52

1×

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.

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.