Liquor, Ladies, Leverage: The Three Exploits No Patch Can Fix.

Summary: an old line from the investing world says a smart person can only go broke three ways: liquor, ladies and leverage. It went around again this week beside the Nvidia spy story. This essay argues that the line is also the best short description of social engineering ever written. It is about how intelligent, careful people end up opening the door for someone they should not have trusted, why it keeps happening, what it feels like from the inside, and what actually helps. The news takes up one short section. The human being takes up the rest. Historical cases sit collapsed at the end for anyone who wants more.

1. A line about money that is really about people

Charlie Munger, Warren Buffett's long-time partner, is credited with a piece of advice that fits on a napkin. There are only three ways a smart person can go broke, he said: liquor, ladies and leverage. Buffett liked to add that the first two were mostly there because they began with the same letter, and that the real danger was the third one, borrowed money. It is a joke with a serious centre. Notice the word that carries the weight. Not a foolish person, not a careless one. A smart person. The line is a warning to people who believe they are too clever to be ruined.

I saw the quote again this week in a post that was shared widely alongside the story about Nvidia's chief executive. The post was meant as a jab, and it worked as one. But reading it as someone who thinks about security for a living, I could not stop seeing something else in it. Change a single word and the investor's joke becomes a threat model:

There are only three ways a smart person gets compromised: liquor, ladies and leverage.

To make that useful, each word needs a wider meaning than the one it had at Munger's dinner table. Liquor is not really about drinking. It stands for state: every condition that makes your judgment worse for a while, including tiredness, hurry, fear, excitement and yes, alcohol. Ladies is not really about women. It stands for attachment: any relationship that makes you want to please another person, whether that is a lover, a friend, a mentor, an admirer or a recruiter who believes in you. And leverage is not about debt. It stands for hold: anything that makes it expensive for you to say no, such as a secret, a favour, an ambition or a mistake you would rather nobody found.

A word about that middle term before going further. The quote comes from another time, and it carries that time's assumptions. In real cases the person doing the approaching is a man about as often as a woman. East Germany ran one of the most successful espionage programmes of the Cold War by sending charming men to court lonely secretaries in West German ministries. And romance is not even the usual bait. A friendship or a job offer does the same work with far less risk. So wherever this essay says "ladies", read "attachment", and the idea applies to everybody.

State, attachment and hold. Almost every story of a person being manipulated into betraying something they were trusted with is built from those three parts. This essay takes them one at a time, then shows how they fit together into a single slow process, and finally asks what a person or a company can honestly do about it.

2. The story everyone is talking about

This is not a news article, and the facts are still moving, so this section is deliberately short and deliberately careful.

On 6 November 2026 The New York Times reported that United States intelligence officials had concluded that a businesswoman who had grown close to Nvidia's chief executive was working for China's Ministry of State Security. Reports identified her as Alice Huang, formerly a senior figure at Megaspeed, a Singapore cloud company that buys very large quantities of Nvidia chips and rents out computing power. According to the reporting, the aim was to learn more about American AI chips and perhaps to encourage looser rules on selling them to China. Two days later the chief executive wrote to his staff admitting he had been unfaithful to his wife, without naming anyone, and Nvidia's board announced an independent investigation into reports that he had been the target of a foreign intelligence effort.

Now the other half, which matters just as much. Nobody has been charged with anything. China's Foreign Ministry called the allegation unsubstantiated and a smear. Megaspeed denies diverting restricted chips and says inspections found no violations. Nvidia's board said it has no reason to believe that national security or company secrets were compromised. The intelligence assessment itself has not been made public, and it rests on anonymous officials. It may turn out to be right, partly right or wrong.

So why write about it at all? Because the shape of the story is instructive whichever way the facts fall. Look at what is not in it. No firewall was breached. No password was stolen. No malware was found. The thing alleged to have been attacked was a private life, and the thing alleged to have been sought was not a file but nearness to a man whose opinions move government policy and hundreds of billions of dollars. That is social engineering in its oldest and slowest form, and most security training never mentions it. The rest of this essay does.

3. The oldest hack there is

Social engineering means getting a person to do something that helps an attacker, by working on their mind instead of on their machine. The thing they do might be large or tiny. They might hand over a password, approve a payment, hold a door, make an introduction, or simply talk a little more than they should over dinner. What makes it social engineering is that the victim does it willingly, believing it to be reasonable.

It is tempting to treat this as the soft, unserious corner of security, the part with the posters about suspicious emails. That gets things exactly backwards. Every organisation on earth runs on people trusting one another. An engineer trusts that the message from the on-call lead is from the on-call lead. A clerk trusts that the invoice from a known supplier is from that supplier. A founder trusts that the investor asking sharp questions is who the business card says. Remove that trust and nothing gets done. Which means the trust cannot be patched out, and an attacker who learns to borrow it has found a weakness that no software update will ever close. Verizon's yearly breach report has for years put the share of breaches involving a human element somewhere between sixty and seventy percent. The number shifts with the definition, but the lesson does not. Most break-ins begin with a person.

It helps to know that this kind of attack runs at two very different speeds. The fast kind lasts minutes. It is the phishing email, the fake call from IT, the message that says your account will be locked in an hour. It is cheap, it is sent to millions, and it works on a small fraction of them, which is enough. The slow kind lasts months or years. It is the friendship that begins at a conference, the consulting relationship that starts with harmless questions, the romance. It is expensive and patient and aimed only at people who are worth the trouble. The Nvidia allegations describe the slow kind. Your inbox is full of the fast kind. As we will see, they are the same trick played at different tempos.

There is one more thing to accept at the start, and it is uncomfortable. The victims of social engineering are, for the most part, behaving well. They are being helpful to someone who asked for help, polite to someone who seemed senior, loyal to someone they had come to love. They do what a decent person would do. The flaw being exploited is not stupidity. It is decency, aimed at the wrong person.

4. The myth of the careless victim

When a story like this breaks, the first reaction is usually a kind of disbelief. How could someone that capable be that naive? The question assumes that intelligence protects you. It does not, and understanding why is the most important step in this whole subject.

Start with the plainest reason. Attackers go where the access is. Nobody spends eight months building a false friendship with a person who has nothing to give. The senior engineer has the production credentials. The finance director can release the money. The founder carries the roadmap in her head. The chief executive can alter a decision with one phone call. Being targeted is not a comment on your character. It is a description of what you can reach. The more capable and trusted you become, the more reason someone has to work on you.

The second reason is confidence. People who are excellent at one thing tend to assume they are at least competent at reading other people. Decades of research on lie detection say otherwise. Ordinary people can tell truth from lies only slightly better than a coin toss, and trained professionals such as police officers and customs agents do barely better, while feeling far more certain. The belief "I would know" is not a defence. It is the reason a person never bothers to check.

The third reason is the cruellest, because it turns the victim's best quality against them. A clever mind is very good at building explanations, and it will build them in whichever direction its owner wants. When something feels slightly wrong, the intelligent person does not ignore the feeling. They reason about it, and they reason their way to comfort. She asks a lot about my work because she is in the same industry. He wants to move to a different chat app because the first one has been unreliable. They paid me well for that short report because my expertise is rare. Each explanation is plausible. Psychologists call this motivated reasoning, and its bitter rule is that the smarter you are, the more convincing your excuses become.

Then there is isolation. The higher a person rises, the fewer people speak to them plainly. Colleagues want things. Subordinates agree. The calendar fills, and friendships that are not also transactions quietly thin out. Into that life walks somebody warm and interested who appears to want nothing. For a lonely and overworked person at the top of something, that is not a small event. It may be the most pleasant thing that has happened in a year, and it is very hard to be suspicious of the best thing in your week.

Finally, rules. Security policies, disclosure forms and conflict-of-interest procedures are usually written for employees and gently waived for leaders. The person with the widest access often has the lightest oversight, the most public schedule and the least practice at being told no. An attacker could hardly design a better arrangement.

5. The shortcuts we live by

Nobody can think every decision through from first principles. We would never get out of the house. So the mind runs on shortcuts. We return favours. We trust people who seem to be in charge. We do what others around us are doing. We hurry when told something is about to run out. These habits are not defects. They are what makes it possible to live among other people, and they give the right answer nearly every time.

A social engineer is someone who has noticed that these shortcuts can be triggered on purpose. The psychologist Robert Cialdini spent years studying salesmen, fundraisers, recruiters and con artists, and in his book Influence he boiled what he saw down to a short list of principles. They are worth knowing by name, because once you can name them you begin to feel them being used on you.

Read down that list and think of the last time someone persuaded you of something. You will probably find three or four of them at work, and most of the time that is perfectly innocent. A good manager uses liking and reciprocity every day. The difference in an attack is intent, not technique. That is precisely why it is so hard to spot.

Beneath Cialdini's principles lie a few deeper weaknesses that matter especially in the slow kind of operation. The first is what researchers call truth bias: we assume people are being honest unless we are given a strong reason to think otherwise. Society would not function without it, and liars depend on it completely. The second is pride in our work. Experts love to explain. Ask a proud engineer a question that is slightly wrong and they will correct you, at length, with the right answer. Intelligence officers have a name for the craft of drawing information out through what feels like ordinary conversation. They call it elicitation, and its practitioners say the easiest people to elicit from are specialists who feel underappreciated.

The third is loneliness, which has already come up and will come up again, because attention is one of the strongest rewards a person can be given. The fourth is shame. A person who has done something embarrassing hides it, and the hiding is what hands power to anyone who knows. The fifth is what economists call sunk cost. After months or years invested in a relationship, admitting that it was false is agonising. Many victims go on defending the person who deceived them even after they have been shown the evidence. They are not protecting the deceiver. They are protecting themselves from what the truth would mean.

6. Liquor: the five-minute fool

We like to think of judgment as a fixed quality, something a person either has or lacks. In practice it rises and falls through the day like blood sugar. The engineer who reviews every pull request with care at ten in the morning is a different decision-maker at midnight, in a hotel bar, after fourteen hours of travel and three glasses of wine. Same person, same intelligence, same training. Different state.

This is the first thing an attacker understands and the last thing a victim considers. Nobody needs you to be a fool. They need you to be a fool for five minutes, and so they choose the five minutes. Alcohol is the obvious tool, which is why it gives the first L its name. It loosens the tongue, lowers the guard and blurs the memory of what was said. But exhaustion does much the same, since the slow and careful part of thinking is the first to shut down when we are tired. So does hurry, which leaves no time to check anything. So does fear, which narrows attention to the threat in front of us. And so, more surprisingly, does good news. A flattering job offer or sudden interest from somebody impressive switches off suspicion just as well as panic does. We do not interrogate the things we want to be true.

Consider what an industry conference does to a person. You have travelled, so you are tired. You are away from home, so the routines and the people who normally keep you steady are missing. There is free drink at every evening event. You are wearing a badge that states your name and employer to every stranger in the room. Those strangers share your interests and are pleased to hear about your work, and meeting them is the entire reason you were sent. In that setting an approach does not look like an approach. It looks like the event going well. Government travel briefings spend so much time on hotels, bars and hospitality for exactly this reason. It is not prudishness. It is the recognition that such places are engineered, innocently, for lowered guard.

The fast version of the same idea arrives in your inbox every week. A phishing message is a machine for manufacturing a state. It produces fear ("unusual sign-in detected"), or hurry ("payment must be released before five"), or excitement ("you have been selected"), and then it asks for an action before the feeling fades. It is no accident that so many of these messages land late on a Friday, at the end of a financial quarter, or in the middle of an outage. The sender is not hoping you are stupid. The sender is hoping you are busy.

There is a simple discipline borrowed from addiction counselling that works well here. It goes by the letters HALT: do not make important decisions when you are hungry, angry, lonely or tired. Add drunk and rushed to that list and you have a complete personal rule for approvals, access requests and conversations about work. The point is not to distrust yourself all the time. The point is to know which version of yourself is on duty, and to let the tired version say the most useful sentence in security: "I will look at this in the morning."

7. Ladies: when the relationship is the attack

The second L is the one that makes headlines, and the one people find hardest to discuss without either giggling or moralising. Neither response is useful. What matters is the mechanism, and the mechanism is simple. Affection changes whose side you believe you are on.

Before you care about someone, their questions are questions from an outsider, and you answer them with an outsider's caution. After you care about them, the same questions are just conversation. Telling them about a hard week at work is not disclosing information. It is being close. Helping them with a problem is not granting access. It is being kind. The categories that security training teaches us to watch for simply stop applying, because the person has moved from the outside of your life to the inside, and we do not keep guard against the inside.

The honeytrap proper, a romantic or sexual relationship begun for a purpose, is the famous form. But it is the rarest, because it is risky and expensive to run. Far more common is the cultivated friend: someone who shares your interests, remembers your children's names, is always pleased to hear how the project is going, and never once makes you feel questioned. There is also the admirer, often younger, perhaps a student or a journalist or someone new to the field, who makes you feel like an authority and asks you to explain things. And there is the helpful contact with a perfectly ordinary reason to be in touch: a recruiter, a consultant, an investor, a customer. At the bottom of the market there is the mass-produced version, the dating app match who moves the conversation to a private channel and, weeks later, begins to talk about an investment. That last one is run by the thousand, and it wrecks ordinary people's savings every day.

What all of these share is that they bundle several of Cialdini's principles into one package. There is liking, obviously. There is reciprocity, because this person has been good to you. There is commitment, because you have put months into the relationship. There is unity, the feeling that the two of you understand each other in a way that others do not. Each of those is strong alone. Together they are close to irresistible, and no access control has been designed that survives them.

People picture a honeytrap as a stranger across a bar. The harder case, and the one worth studying, is where the personal relationship sits on top of a real business one. The other person is a customer, a supplier, an executive at a partner firm. Now there is a legitimate reason to meet, to travel to the same events, to talk about products and plans and people. Every single meeting has an innocent explanation, because every single meeting is also, truly, business. This is the structure alleged in the Nvidia story: a person reported to have been a senior figure at a major customer. Whatever the facts prove to be, the structure is the lesson. A relationship that is both commercial and personal has two cover stories, and each one hides the other. The business explains the closeness. The closeness explains why the business questions feel so natural.

One more point, and it is the one most often missed. The feelings do not have to be fake. A person can be honestly fond of someone and still be passing along what they hear, sometimes because they are under pressure themselves, from an employer or a government or a family situation back home. A real relationship with someone who is controlled by a third party carries exactly the same risk as a staged one. So the useful question is never "is this love real?" That question has no answer you can check, and asking it leads nowhere good. The useful question is colder and much easier: what does this relationship give access to, and who else might benefit from that?

8. Leverage: the door that will not close

Buffett's joke was that leverage is the one that really ruins people, and he was right in more ways than he meant. In finance, leverage is borrowed money. It multiplies what you can do and it multiplies what you can lose, and its special cruelty is that it removes your freedom to wait. A person without debt can sit out a bad year. A person with debt cannot. In social engineering, leverage does the same thing to your freedom to refuse. Liquor and attachment open the door. Leverage is what stops you from closing it again.

The crude picture of leverage is blackmail: a photograph, an envelope, a threat. That does happen, but much less than films suggest, because open threats make people desperate and desperate people go to the authorities. The quieter forms are far more common and far more effective. A favour that was done for you, such as a job found for a relative or help with a visa, leaves a feeling of debt that looks for a way to be repaid. Money paid for a few easy "consulting reports" creates both a habit and a record. An ambition, the promise of a board seat or an investment or a future role, makes a person start behaving as though they already belong to the other side. And most powerful of all is complicity. Once someone has crossed a line a single time, however small, the argument for continuing writes itself: you have already sent the first document, so what would stopping achieve now?

Intelligence services have long used a four-letter summary of why people agree to work for the other side. It is MICE: money, ideology, compromise and ego. Money means need or greed. Ideology means belief in a cause or a grievance against one's own side. Compromise means a secret or a threat. Ego means the wish to feel important, clever and appreciated. Officers who have spent careers recruiting sources tend to say that ego is the one outsiders underrate. A person who feels overlooked at work, and who is treated as brilliant by an attentive outsider, will often give more, and give it more willingly, than someone who is simply paid. A later model, sometimes written RASCLS, goes further and argues that most recruitment is not about exploiting weakness at all. It is ordinary persuasion, Cialdini's principles applied with patience by someone who has taken the trouble to understand what you need.

Here is the thing about leverage that matters most, and it is oddly hopeful. The victim nearly always manufactures it personally. Nobody can blackmail you over an affair you did not have. Just as importantly, nobody can blackmail you over a relationship that the people who need to know already know about. The handle is not the fact. The handle is the hiding. The instant something is concealed it becomes a thing that can be used, and the instant it is disclosed to the right person it stops being one.

9. Anatomy of a slow approach

Long operations follow a pattern so regular that intelligence services teach it as a cycle with named stages: spotting, assessing, developing, recruiting and handling. Lists of stages are easy to nod at and forget, so let me tell it as a story instead. The person in it is invented, a composite of details from many public cases. Call him Arjun.

Arjun is a staff engineer at a company that designs chips. He is good at his work, a little bored, and privately sore about a promotion that went to someone else last spring. He does not know it, but he has already been through the first stage. Spotting took someone an afternoon. His employer, title and team are on LinkedIn. His conference talk from two years ago is on YouTube. His name is on a patent. None of that is secret, and all of it says the same thing: this man has access to something worth having.

The second stage, assessing, he also supplied himself. His posts show that he runs marathons and supports a football club. A comment under an article about tech careers hints at the promotion. A property listing suggests a large mortgage. Whoever is studying him now knows what he likes, what he lacks, and where he feels unappreciated. Nothing has happened yet. Not a word has been exchanged.

Then comes developing, and it begins at a conference in Singapore. During a coffee break a woman from a small consultancy asks an intelligent question about his talk. She has read it properly. She runs too, it turns out, and they laugh about training in the heat. Over the following months they stay in touch. She sends an article he would enjoy. She congratulates him on a race. She asks what he thinks about trends in the industry and listens to the answers with real attention. She never once asks about his employer's work, and if she had he would have been on guard at once. This stage lasts half a year, and it is the part Arjun will later remember with something like grief, because it was the best professional friendship he had.

Then, the first ask. Her firm is putting together a report on where the industry is going. Would he write two pages of his own views, using only public information? They pay well for expert opinion. He checks his contract, sees nothing against it, and writes the piece on a Sunday. The money is pleasant. The praise is more pleasant. He does not mention it to anyone at work, not because it is forbidden but because it does not seem to be anyone's business. That small silence is the most important event in the whole story, and it passes without his noticing.

Escalation is slow. The second report asks him to compare a few companies' approaches, including his own, "at a high level". The third asks about timelines, "roughly". By the fifth he is describing things that are not public, though each new step is only slightly beyond the last, and he has a reason ready for every one. Somewhere in that sequence he crossed a line. He could not tell you which report it was. What he knows is that he could no longer explain the arrangement comfortably to his manager, and that he has now been paid, several times, for doing it.

From here on is handling, and it needs almost no effort. Nobody threatens Arjun. Nobody has to. His own wish not to be found out does all the work. When he hesitates, his friend is understanding, and mentions gently how much everyone has valued his contributions. He hears the other meaning without it being spoken.

Look back over the story and try to find the moment where Arjun did something a reasonable person would call obviously wrong. It is hard. Each step was small, and each had a sensible explanation. The danger was never in any single step. It was in the direction of travel, and direction is exactly what you cannot see from inside. That is why the people who catch these things are almost never the targets. They are a colleague, a spouse, a security officer: someone standing far enough back to see the line that all the small steps add up to.

10. What they actually want

When a story like the Nvidia one appears, the first question asked is whether any secrets were stolen. Companies answer it in a careful sentence about having no evidence that confidential information was compromised. The sentence is usually true. It is also much narrower than it sounds, because documents are only one of the things a well-placed relationship can yield, and often the least valuable.

Think about what it means to be close to someone who makes large decisions. You learn what they think, what worries them, what they intend to do next, whom they trust and whom they are tired of. None of that is written in a file, and none of it shows up in an access log. An intelligence officer would call it insight, and for anyone trying to predict or counter a company's next move it can be worth more than a stack of blueprints.

Beyond insight there is influence. A trusted companion can nudge. They can mention an article, express a view, raise a doubt, praise an idea. Over months that shapes how a person sees a question, and from the outside it cannot be told apart from the person simply holding that opinion honestly. This is what makes influence operations so difficult. Nothing is taken. Something is added, and the target experiences it as their own thinking.

There is also access in the social sense. A person seen at a powerful figure's side is welcomed into rooms, introduced to others, and trusted by association. And there is the patient option: collect nothing, ask for nothing, and simply keep what you know until a day when it becomes useful.

This is the sense in which people in security say that nobody at the top has a private life in the old meaning of the phrase. It is not that their affairs are anyone's business. It is that a leader's attention and opinions are themselves an asset, and whoever has their ear holds a share of it.

11. The same con, played in thirty seconds

Most readers will never be the subject of a two-year operation. All of us are subjects of the thirty-second kind, and it is worth seeing that the fast version is built from exactly the same three parts.

Take the call to the help desk. A pleasant, slightly flustered voice says they are a member of staff, they have lost their phone while travelling, they have a client presentation in twenty minutes, and could the agent please reset their sign-in. There is hurry, which is state. There is a likeable person in trouble, which is attachment in miniature. And there is the hold: the agent's fear of being the unhelpful one who made a colleague miss a meeting. In 2023 a call of roughly that kind is reported to have led to days of disruption at one of the largest casino groups in the world. The attackers did not defeat the technology. They asked a helpful person for help.

Take the payment request. An email that appears to come from the finance chief says a confidential acquisition is closing today and a transfer must be made within the hour, quietly. Authority, scarcity, secrecy. In early 2024 a finance employee at an engineering firm in Hong Kong went one better than email and joined a video call with the chief financial officer and several colleagues. Every face on the call was an AI-generated fake. About twenty-five million dollars left the company.

Take the recruiter. A message arrives offering a role that is a clear step up, at a company you admire. After a few friendly exchanges there is a document to review, or a coding exercise to run. People who are job hunting are in a state of hope, they are flattered, and they are keeping a secret from their employer, so they open files from strangers and tell nobody. A theft of around six hundred million dollars from a cryptocurrency network in 2022 was traced by reporters to a fake job offer sent as a PDF to one engineer.

And take the strangest recent case, which involved no money and no romance at all. For about two years a contributor using the name Jia Tan was patiently, consistently helpful on a small open source compression library called XZ, maintained by one overworked volunteer. Other accounts appeared and complained that the maintainer was too slow. Worn down, he shared control with his helpful contributor, who then inserted a hidden backdoor aimed at the remote login service on much of the world's Linux servers. It was caught in March 2024 only because an engineer elsewhere noticed that logins had become half a second slower. That was a recruitment cycle run against a tired man's goodwill, with a server fleet as the prize.

Two changes make all of this worse than it was a few years ago. The first is that AI systems can now write a flawless, personal message in any language and sustain a warm, attentive conversation for months, at almost no cost. The slow approach used to be reserved for important targets because it consumed a skilled person's time. It is becoming cheap enough to aim at anyone. The second is that voices and faces can be imitated well enough that "I heard her say it" and "I saw him on the call" no longer prove anything. The oldest check we have, recognising someone, has stopped working.

12. What it feels like from inside

Checklists of red flags are easy to write and hard to use, because in the moment none of the flags look red. So it is more honest to describe how these situations feel, and where the feeling should make you pause.

In the slow kind, the first sign is usually luck. You met by chance, and this person turned out to share a surprising number of your interests. They are more curious about your work than people generally are, which is flattering, and over time their curiosity becomes more specific. They are generous early, with introductions or hospitality or easy paid work. Their own history is a little thin, or hard to verify, or shifts slightly between tellings. They prefer private channels and meeting away from people who know you. And gradually a feeling grows that the two of you understand each other better than your colleagues or even your family do.

None of those proves anything. Lucky meetings happen. Generous people exist. But there is one sign that is close to decisive, and it does not concern the other person at all. It concerns you. It is the moment you realise that you have not mentioned this person to the people who would ordinarily know about them. Not because anyone told you to keep quiet, but because some part of you has already decided that it would be awkward to explain. That instinct is information. If you find yourself hiding a contact, ask what you already know that is making you hide it.

In the fast kind, the feeling is pressure. Something must be done now, and the reason cannot be checked just yet. The normal process should be skipped just this once. The matter is confidential, so please do not raise it with the team. The sender is on a personal number today. Whenever urgency and secrecy arrive together, you are almost certainly being worked, because honest emergencies want more people involved, not fewer.

13. What one person can do

You cannot stop being human, and you should not try. The goal is not to become cold. It is to remain warm and helpful while holding a small number of things fixed.

The first of those is a decision made in advance. Work out, on an ordinary calm day, what you will never discuss outside your organisation: unreleased work, credentials, internal troubles, details about colleagues. Then keep to it regardless of how much you like the person or how good the evening has been. A boundary set beforehand is easy to hold. A boundary invented in the moment, against someone charming, is nearly impossible. You can enjoy somebody's company completely and still not tell them certain things. Liking and access are separate matters, and keeping them separate is most of the skill.

The second is to treat other people's urgency as a signal and not a command. A request that is real will survive a ten-minute delay while you check it. Check it through a channel you chose yourself: a number you already had, an address you typed, a question only the real person could answer. Families and small teams can agree on a private word to be used on any unexpected call asking for money or access. It sounds childish and it defeats most voice cloning.

The third is to pay attention to your own state. No approvals, no access grants and no detailed talk about work when you are drunk, exhausted or rushed. At events, decide your limits before the first drink and not after the third.

The fourth is to shrink what strangers can learn about you. Every detail of your job, your team, your travel and your family that sits online is an opening line someone can use. You do not need to vanish. You need to be a little less convenient to study.

The fifth is technical and it is there to forgive you. Passkeys and hardware security keys are tied to the real website, so a fake page cannot use them. If you are fooled, and sooner or later everyone is, the stolen login is worthless. Good controls assume that people make mistakes and make the mistakes cheap.

The last is the hardest and the most valuable. Keep nothing hidden that could be used against you, and where something is already hidden, tell the person who needs to know before somebody else does it for you. And report small things early. "Someone odd asked me a lot about our roadmap at the conference" is a useful sentence to say to a security team. You do not need proof. You need only the willingness to look slightly foolish, which is a small price for not becoming Arjun.

14. What a company can do

Awareness posters do not stop a patient human adversary, and neither does an annual quiz. What works is design: arranging things so that a single deceived person is not enough.

That begins with requiring two people for anything that cannot be undone. Payments, changes to a supplier's bank details, access to production systems, large exports of data. It continues with keeping access narrow and short-lived, so that whoever is fooled holds only a small piece. It means writing call-back verification into finance and help desk procedures and allowing no exception for seniority, because "the chief executive needs this now" is the oldest pretext there is. And it means phishing-resistant sign-in for everyone, with strict proof of identity before any reset.

The second matter is uncomfortable, and the Nvidia story has made it impossible to avoid. Rules have to apply at the top first. Leaders have the most access, the most influence and the most public lives, and they are routinely the least briefed and the least overseen. A serious organisation gives its executives and directors personal security briefings, especially before travel. It has a clear rule that close personal relationships with customers, suppliers, investors, regulators and foreign officials are disclosed in confidence, and that the person then steps back from decisions involving the other party. It gives someone on the board ownership of this kind of risk, so that raising it does not depend on the chief executive volunteering concerns about themselves. And it has unusually large or fast-growing customers reviewed by people who do not own those relationships.

The third matter outweighs the others, and it costs nothing but nerve. Reporting must be safe. If saying "I think I was approached" or "I made a mistake" ends careers, people will stay silent, and silence is the entire mechanism by which leverage works. An organisation that punishes early honesty is manufacturing levers for its adversaries. The alternative is a named, confidential person to go to. It is a stated policy that reporting early counts in your favour. It is managers who thank the employee who admits to clicking the link. It is keeping the personal side of a matter apart from the security side wherever possible, so that telling the truth about a security concern does not automatically become a disciplinary case about one's private life.

Finally, train for what actually happens. Teach elicitation and the recruitment cycle, not only how to hover over a link. Brief people before conferences and foreign travel and talk to them afterwards. Test the help desk and the finance team with realistic phone calls. Check remote hires properly, with live video and identity verification. Banning workplace or customer relationships outright is tempting and usually backfires, because a ban produces secrecy and secrecy is the thing you were trying to prevent. A disclosure rule works better than a prohibition almost every time.

15. If it is already happening

Suppose some part of this essay has been uncomfortable to read, because it reminded you of someone. Here is what to do, in order.

Do not confront the person. It warns them and gains you nothing. Do not suddenly disappear either, since an abrupt change is also a warning. Simply stop offering anything new. Then write down what you remember while it is fresh: how you met, the dates, what they asked, what you told them, how you communicate. Keep every message. Do not delete chats or emails, however much you want to, because they are evidence and because they let others measure what was actually exposed.

Then tell your security team or a senior person you trust, and tell them all of it, including the parts that embarrass you. Those are precisely the parts they need. If you are being openly threatened, do not pay and do not comply, because paying confirms that the lever works and guarantees it will be pulled again. Go to your security team and, where appropriate, to the police.

The cost of speaking will feel enormous. It is almost always smaller than the cost of waiting. Every month of silence strengthens the hold and worsens the eventual story. The people whose careers survive these episodes are, nearly without exception, the ones who came forward themselves.

16. Back to the napkin

Munger's line has lasted because it tells capable people something they do not wish to hear. Intelligence does not protect you from yourself. The smart person goes broke not from failing to understand compound interest but from a bad evening, a bad attachment or a debt that takes away the freedom to wait. Each is a failure of the person, not of the spreadsheet.

Security has spent thirty years on the spreadsheet: the code, the network, the cryptography. That work was necessary and much of it has succeeded, which is exactly why attention has moved to the one component that cannot be patched. Whatever the investigations into the Nvidia affair eventually find, the story has already done one useful thing. It has made a great many people look, perhaps for the first time, at the human layer of a company worth trillions and ask who was guarding it.

The honest answer for most organisations is nobody. And the honest answer for most of us, as individuals, is that we have never once thought about our own state, our own attachments and our own secrets as things an adversary might study. That is the change worth making. Not suspicion of everyone, and not coldness. Just a little self-knowledge: an understanding of when your judgment is at its weakest, whom you most want to please, and what you would rather nobody knew. Those are the three doors. It is worth knowing where they are before somebody else finds them.

17. FAQ

Is the Nvidia case proven to be a spy operation?

No. As of 10 November 2026 it rests on reporting about United States intelligence assessments. China denies it, no charges have been filed, and Nvidia's board has said it has no reason to believe secrets were compromised while its own investigation runs. This essay uses the story only as an example of a pattern.

What is the difference between a honeytrap and ordinary social engineering?

A honeytrap is one kind of social engineering, in which the relationship being used is romantic or sexual. The mechanics are the same as with a false friend or a fake recruiter: build trust, make a small request, increase it gradually, and rely on the victim's reluctance to admit what has happened.

What is elicitation?

Drawing out useful information through conversation that feels ordinary, so the other person never feels questioned. Common methods are saying something slightly wrong so that an expert corrects you, sharing a small confidence so that they share one in return, and praising their work so that they explain it.

Are junior employees really at risk?

Yes. Junior staff often have more direct access to systems than executives do, are easier to flatter, and are more likely to be looking for a new job. Help desk agents, finance operations staff, infrastructure engineers and executive assistants are favourite targets.

How does AI change this?

It lowers the cost. A convincing persona with photographs, a work history and perfect messages can be produced in minutes, and software can keep up hundreds of patient conversations at once. Voice and video cloning also remove "I recognised them" as a check.

What is the single most effective technical control?

Phishing-resistant sign-in, meaning passkeys or hardware security keys, together with a two-person rule on anything that cannot be undone. Both make a deceived human far less damaging.

18. Additional reads: case files

Short summaries of well-known cases, collapsed to keep the main essay flowing. Each is tagged with the L it shows best. Details come from public reporting and court records; where a person was never charged, that is stated.

The Romeo spies of East Germany (attachment)

During the Cold War, East Germany's foreign intelligence service under Markus Wolf sent male officers to form relationships with women working as secretaries and assistants in West German ministries and NATO offices. Many of the women passed documents for years out of affection, and some only learned the truth after arrest. The lesson: the target is often not the powerful person but the person next to them who handles the paper.

Katrina Leung, "Parlor Maid" (attachment and leverage)

A Los Angeles businesswoman who worked as a paid FBI informant on China for about two decades while having long affairs with two FBI agents, one of them her handler. Prosecutors alleged she took classified material from his briefcase and passed information to China. The main case collapsed on procedural grounds and she pleaded guilty in 2005 to lesser charges. The lesson: the relationship compromised the very people whose job was to judge her reliability.

Christine Fang and local politicians (attachment and access)

Axios reported in 2020 that a Chinese national known as Fang Fang built ties with up-and-coming politicians in California between about 2011 and 2015 through fundraising, networking and, in some cases, romantic relationships. US officials believed she was working for Chinese intelligence. She left the country in 2015 and was not charged, and officials did not believe she obtained classified information. The lesson: the aim was long-term access to people before they became important.

Robin Sage, the analyst who did not exist (liking and social proof)

In 2009 and 2010 security researcher Thomas Ryan created a fake profile of an attractive young "cyber threat analyst" and connected with hundreds of people in defence, intelligence and security firms. The persona received job offers, dinner invitations and sensitive details, including from people whose work was security. The lesson: each new connection made the next person more willing to accept.

Mia Ash (attachment, then malware)

Researchers at SecureWorks described in 2017 a fake persona, a London photographer, used by a group linked to Iran. Over weeks of friendly chat on LinkedIn and Facebook with employees at targeted companies, "Mia" eventually asked a victim to open a survey document on his work computer. It carried a remote access tool. The lesson: a slow personal approach was used to deliver an ordinary technical payload.

LinkedIn recruitment: Kevin Mallory and Dickson Yeo (money and ego)

Former CIA officer Kevin Mallory, in financial difficulty, was contacted on LinkedIn in 2017 by someone posing as a think tank recruiter, travelled to Shanghai and sold classified documents. He was convicted in 2018. Separately, Singaporean Dickson Yeo pleaded guilty in 2020 to working for Chinese intelligence by using a fake consulting firm and LinkedIn to find Americans with security clearances and pay them to write reports. Britain's MI5 said in 2021 that more than 10,000 UK nationals had been approached by fake profiles over five years. The lesson: "paid consulting" is the most common first ask.

Xu Yanjun and the invited lecture (ego and reciprocity)

A Chinese Ministry of State Security officer cultivated engineers at Western aviation companies, in one case inviting a GE Aviation engineer to give a talk at a university in China with travel paid. Follow-up requests then asked for technical material. The FBI ran the contact back against him, and he was arrested in Belgium in 2018, extradited, and convicted in the US in 2021. The lesson: an invitation to speak is flattering, feels academic, and creates a small debt.

Fake recruiters and the Ronin bridge theft (ambition)

In 2022 roughly 600 million dollars in cryptocurrency was stolen from the Ronin network behind the game Axie Infinity. Reporting attributed the entry point to a fake job offer sent to a senior engineer, delivered as a PDF, in a campaign linked to North Korea's Lazarus group. The lesson: a job hunt is a state in which people open files from strangers and tell nobody at work.

The XZ Utils backdoor (attachment at open source scale)

Disclosed in March 2024. A contributor using the name "Jia Tan" spent about two years being helpful on a widely used compression library, while other accounts pressured the tired sole maintainer to share control. Once trusted, the contributor slipped in a backdoor aimed at SSH on Linux systems. An engineer noticed a half-second slowdown and caught it before wide release. The lesson: patience, helpfulness and an exhausted target, with no romance and no money involved.

Help desk calls: Twitter 2020 and MGM 2023 (state and authority)

In 2020 attackers phoned Twitter staff posing as internal IT and obtained credentials that let them take over famous accounts. In 2023 attackers reportedly called the IT help desk of MGM Resorts posing as an employee, got a reset, and caused days of disruption across hotels and casinos. The lesson: a confident voice and a plausible story still beat expensive defences when the reset process trusts the caller.

The deepfake finance meeting (authority)

In early 2024 Hong Kong police described a case, later confirmed to involve the engineering firm Arup, in which a finance employee joined a video call where the chief financial officer and colleagues were all AI-generated fakes, and then transferred about 25 million dollars. The lesson: seeing and hearing someone is no longer verification. Process is.

Fake profiles aimed at soldiers' phones (attachment)

Israel's military has said several times since 2017 that Hamas operators used fake social media profiles of young women to chat with soldiers and persuade them to install apps that were actually spyware. The lesson: the romance was only a delivery method for access to a device.

Glossary

References

• Nvidia: Statement from the Board of Directors 8 Nov 2026. Independent investigation announced.
• CNBC: Nvidia investigates CEO's relationship with alleged Chinese spy The staff letter and board response.
• Bloomberg (via Yahoo Finance): US believes woman close to Nvidia CEO was a China spy, NYT says Summary of the original New York Times report.
• AP (via PBS NewsHour): China dismisses claims of spy plot as a smear campaign China's response.
• CNBC: What is Megaspeed? Background on the company and its denials.
• CNBC: the affair further complicates Nvidia's China problem Timeline and policy context.
• Verizon Data Breach Investigations Report Yearly figures on the human element in breaches.
• Wikipedia: Social engineering (security) Overview of techniques.
• Wikipedia: Motives for spying MICE and RASCLS.

Extra reads

• Influence: The Psychology of Persuasion, Robert Cialdini. The source of the seven principles.
• The Art of Deception, Kevin Mitnick. Classic stories of phone and pretext attacks.
• Social Engineering: The Science of Human Hacking, Christopher Hadnagy. A practitioner's handbook.
• Thinking, Fast and Slow, Daniel Kahneman. Why judgment changes with state.
• Wikipedia: XZ Utils backdoor The long-game case in open source.
• Wikipedia: Robin Sage The fake analyst experiment.
• The Internet Is Breaking Last month's security round-up on this blog.

Sourcing note: the espionage claims in section 2 come from anonymous officials cited by The New York Times and relayed by other outlets. They are disputed by China, no charges have been filed, and the people named have not been found to have done anything unlawful. The historical summaries are condensed from public reporting and court outcomes and leave out detail; follow the references before relying on any of them.