Link to the interview: https://www.youtube.com/watch?v=xiiJNXedzF8
[00:03:53.860] – Artur Kurasinski
Today’s meeting will be divided into two parts. First, I will talk with my and your guest Max Levchin. It takes about an hour. Then in the second part, you have the opportunity to ask questions. So, I think many of you will be able to really come up with nice and really interesting questions, I hope. All right, I think we’re going to get started. Thank you so much for coming today. My name is Artur Kurasinski and please join me in welcoming our guest Max Levchin. Amazing guy, who is the CEO of the Affirm right now. Of course, many of you know him because he was co-founder and CTO of PayPal. Welcome to Poland.
[00:04:57.150] – Max Levchin
[00:04:57.810] – Artur Kurasinski
We had this conversation just before entering the stage, and you said that this is your first time in Europe. I mean, like, giving this kind of speech.
[00:05:08.190] – Max Levchin
That’s true. It’s my first time in Europe, continental Europe, since the pandemic, and my first real time in Poland. I’d been in Poland very briefly 30 years ago last time. Now I’m back for more than ten minutes. I used to do a lot of the university talks until the pandemic began, and this is the first time I’ve done it.
[00:05:50.340] – Artur Kurasinski
Let’s start with the Affirm. Can you explain to us what is Affirm, what you guys are doing?
[00:05:57.090] – Max Levchin
Sure. The basic idea for Affirm was that financial services can be done in a more honest way. I think the stereotype exists worldwide that financial services are basically a deal between you and the bank, where the bank is betting that you will screw up and that how they make money is actually not okay as a status quo. I think we’ve lived in that status quo for maybe hundreds of years, but certainly in the last 50 years. When we started the company, I thought, well, maybe it’s possible to build a financial services company that is actually good. I would argue that with PayPal we started that work and built a company that was neutral. PayPal does not have necessarily its user’s best interest in mind, but it’s not actively trying to screw them. With Affirm we thought let’s build something where we’re actively trying to make the users life better. We started almost twelve years ago asking the question – how can we build a better credit score? Which came from my own experience. I grew up in Ukraine, moved to the US as a teenager. I had no credit score, ended up screwing up my credit, having a very bad credit score and took a long time to fix it and recover. So, on the strength of that memory, I thought, I’ll build a better credit score, the one that helps immigrants and students and people like me 30 years ago. Eventually, we ended up doing what is now known as „Buy Now, Pay Later.” We did it before it had a name. The idea was – what if we lent money, but instead of making it confusing, we would make it easy. Instead of overcharging, we would actually disclose everything we could possibly ever charge you and then make it less instead of more over time, where credit cards would do things like revolving credits. We would make it simple, so we would tell you exactly how many dollars you will ever pay and not a penny more, and so on and so forth. We built basically a borrowing product that was healthier for the end-borrower. One of the things that I wrote down when we started the company was this idea that credit used to be such a good word and debt is such a bad one. Yet now most people that borrow money don’t think they’re getting credit; they think they’re getting into debt. What if we fixed the meaning of the word credit and brought it back to what it needs to be? We started by creating a new credit score, then we built a new way to borrow that was much more pro-consumer. Then we figured out how to bring it to the consumer by embedding it at the point of sale. Today there’s this giant industry worldwide called „Buy Now, Pay Later.” We were one of the very first companies doing it. There’re obviously European competitors, Australian competitors. Every country now has their own „Buy Now Pay Later” leader. We were kind of there first, but it doesn’t really matter. That’s what Affirm does.
[00:09:20.860] – Artur Kurasinski
Affirm is kind of your next company. The first one, PayPal, and that was the fintech company. Can you tell us more about how you came up with the idea of PayPal?
[00:09:36.240] – Max Levchin
Idea for PayPal was actually not at all a fintech idea. The difference between PayPal and Affirm is that with Affirm I knew exactly what I wanted to build. I started the company I wanted to create and for the last almost twelve years I didn’t have to change the plans at all. With PayPal, I was just out of school. I majored in computer science, but I specialized in cryptography before cryptocurrencies were things. Crypto used to mean something else, but I wanted to break secret codes. At this time, I was not a citizen of anything because I left the Soviet Union, and I didn’t have a Soviet passport anymore because the country didn’t exist. I hadn’t yet gotten my American passport. As a result, I couldn’t get a job working for the United States government breaking codes. Instead, I moved to California and was trying to start a company to maybe break codes, maybe make codes. So, the original idea for PayPal was not called PayPal, it was something else entirely. The idea was let’s build secret codes for really, really small computers. The idea of a pocket computer (Palm Pilot) was just starting. I thought, no one who makes Palm Pilots understands anything about cryptography. That’s my opening. I’m going to go make a company that does both. And no one cared, it didn’t work at all. Then we had five other ideas, literally, and no one cared. The very last idea was a joke where you always find the thing you lost in the last place you look. We found our business model in the last place we looked but it worked out. It was what if we took two Palm Pilots and moved money between them? It turned out that even that nobody wanted, but the idea of moving money on the internet was good enough. But that one we literally knocked on every door and finally something happened.
[00:11:32.130] – Artur Kurasinski
How did you actually happen to find investors? Can you tell us more about how you guys secured the future of the company?
[00:11:43.680] – Max Levchin
The original investor into PayPal was Peter Thiel, who was my then co-founder and CEO. Although, the exact dynamic was that I told him about my cryptography idea. He thought it was a really cool idea and he immediately wanted to invest. Then it turned out that no one else wanted to invest. Peter was the only one who wanted to invest in that idea. After a while he realized that either I was very bad at gathering investors or it was not a good idea. But it was too embarrassing for him to admit it was a bad idea. So, he said he joined me as a co-founder and then we looked for investors together and still nobody cared. Then eventually we changed the plan over and over again until we finally chanced on this payment idea. Even then nobody wanted to give us money, but I was going to a conference for a couple of days in Finland, which will be my first time ever in Finland, even for ten minutes. The way we got our first round of funding for PayPal, I think we pitched 150 investors, and everyone said no. Then in the last-ditch effort, we pitched Nokia Ventures, which was the Nokia Corporate Arm Venture Investors, which was a completely unknown, tiny little group of people in Silicon Valley. It was led by a former Nokia corporate lawyer who was not a venture capitalist. By then it was not just two of us, it was four more people. One of them was Peter’s friend from school, but the other three were my classmates from University of Illinois, where I went to school. One of them was a Polish kid named Luke Nosek who happened to be friends with another Polish kid who was helping the Nokia Ventures guy. So, he said, all right, we’ve tried everything. We’re going to lean on our Eastern European connections. Luke called this guy and said hey, so we have a company. It’s probably going to fail, but you’re Polish, I’m Polish, we have to get together and we have a Ukrainian guy, so it’s going to be okay. They showed up in our office and they’re like, oh my God, what are you working on? But we like you. Somehow, we convinced them to give us our first check. So, the first investor in PayPal was Nokia Ventures. Now they’re known as BlueRun Ventures and with their big claim to fame they discovered PayPal. They renamed themselves after a while. There was no glory in our funding journey. There was no amazing moment. I guess that was the amazing moment after 150 investors.
[00:14:41.130] – Artur Kurasinski
And you became the CTO, the first CTO of this company.
[00:14:43.710] – Max Levchin
Yeah. I originally wanted to be the CEO and then after a while I realized…
[00:14:48.530] – Artur Kurasinski
[00:14:50.490] – Max Levchin
I definitely didn’t know anything about it. So, before PayPal, I started five other companies or maybe four other companies. Four or five other companies. It’s been a long time. And all failed. One after the other.
[00:15:03.310] – Artur Kurasinski
Do you know why?
[00:15:07.590] – Max Levchin
Certainly not the first three, because I would have done something different. I think I have a tendency if I find a wall, I just beat my head against it. They each failed for different reasons, but the umbrella reason was it’s very hard to raise funding in rural Illinois in the middle of cornfields. That’s where I went to school. You were very lucky to be in a metropolitan center and in a cool university. I was in a very cool university in the middle of absolutely nowhere. There was no funding available. It was also very early 90s and the idea of the Web was definitely not commonly known. One of my best funding pitches, right before company number three failed, was with a venture capitalist in Chicago who said, you seem like a really smart kid, I don’t understand anything you’re saying, you should come and work for me. I said, doing what? I was definitely not going to do it, but I was so curious. I asked them what would I do? Maybe you can manage a parking lot for me. That was the best response I got from my venture capital pitch. So, raising money in Illinois in the middle of the 90s was very difficult. I think the CEO to CTO transition was when I realized that my company never failed because the technical ideas were bad and the technical teams were very, very good. Clearly that was not the problem. I should focus on technology and let somebody else do the business side. When Peter said, I’ll join you for a while and help you raise money. I was like, you should join me for a long while and run the company. That’s what happened.
[00:16:59.370] – Artur Kurasinski
Okay, how many Ukrainians are with us tonight? Can you guys raise your hand? Okay, we have a couple people. So this is the question for you guys. You said you have Ukrainian roots.
[00:17:29.560] – Max Levchin
I was born in Kiev.
[00:17:30.920] – Artur Kurasinski
Do you speak Ukrainian?
[00:17:34.590] – Max Levchin
This is not the day to admit it, but I speak better Russian than I speak Ukrainian. Kiev, when I was growing up there, was predominantly a Russian language city. So my Russian is fluent, my Ukrainian is fluent on the comprehension front, but when I speak it, half the time it comes out in English. I’m embarrassed to speak Ukrainian because one out of every three words I can’t think of, and my natural language of retreat is English. If you want to speak to me in Ukrainian, speak slowly, and I’ll understand you just fine. I don’t practice either language very much other than English these days.
[00:18:13.700] – Artur Kurasinski
My question is how is the conflict in Ukraine, the war in Ukraine, seen from the US right now, especially from Silicon Valley. Do you have some thoughts?
[00:18:28.810] – Max Levchin
Sure. I think the US is definitely very engaged. Obviously at the government level, the US congress is constantly passing more aid. There’s a lot of debate in the security circles around what kind of weapons are okay, which ones are not okay. All of that is very front and center. I think the population is very aware of what’s going on and cares a lot and thinks very poorly of Putin and his decisions and very positively of Ukraine and its fight for freedom. I think there’s a couple of things that are maybe more nuanced than the US public understands. I think the ideas of conflict in Eastern Europe are seen through a very different lens. US borders have not changed since the Louisiana Purchase. Plus Hawaii. Plus Alaska, but basically the last time a major change in the continental United States took place was in the 1800s. The idea of somebody coming over your border is incredible. Like, if Canada decided to take part of Idaho, we would not be okay, and it would be extraordinary. Yet the conversation around, well, Crimea was not always Ukrainian. It was for a while, Russian and before that there was something else too. I think a lot of people don’t fully understand how that is possible. I think that actually occurs to Ukraine because they see it as, well there was a border and Russians came over that’s terrible. But having a deep conversation, for example, when somebody says, well, you’re from Ukraine, which languages do you speak? I speak Russian better than I speak Ukrainian so that’s crazy are you not a patriot? I am extremely patriotic in my connection to Ukraine but that said, my dad is from Crimea and my mom is from Kiev and both places spoke more Russian than Ukrainian when I was there. These days Kiev is very Ukrainian spoken, and Crimea is still kind of Russian speaking primarily. I think that is lost on a lot of people. It doesn’t change their support for Ukraine for sure. I think generally speaking in my neighborhood, I live in San Francisco, probably on every city block, there’s at least two Ukrainian flags flying. On people’s windows and in front of people’s houses. So, it’s very strongly supportive.
[00:20:53.820] – Artur Kurasinski
Okay. Do you think that technology can help to solve the problem?
[00:21:02.260] – Max Levchin
I’m not a geopolitical specialist, so you’re now asking me questions I’m not qualified to answer. I think the most interesting thing from the technology and the conflict that I don’t know how to reconcile is we got very lucky. We were thinking of opening an office in Poland, in Ukraine, and in Russia. We never opened an office in Russia, so we never had to face the difficult decision of, what do you do? So, the US government at some point said it’s no longer okay to do business in Russia. Everybody had to withdraw, which makes a lot of sense. On the other hand, you’re telling people whom you’ve been supporting, sorry, we’re not going to help you anymore. That’s not good for Russian people’s view of the world. They feel abandoned, and that’s not what you want to see happen. We did not have to make that choice. So, we were very happy. We have folks that work for us in Ukraine, and we obviously have a huge investment in Poland. We’re very, very happy to continue investing in supporting both places, certainly here. I know a lot of people in Silicon Valley that we’re trying to reconcile. On the one hand, we want to continue communicating and being in touch with a Russian team. On the other hand, we have to cut off all ties. I know people that said we’re going to withdraw from Russia, but we’re going to pay engineers through the rest of the year just to make sure they’re okay. I think there’s a lot of human versus geopolitical tension that people have to deal with. In the end, I’m very happy that I didn’t have to make the decision. We only have to support the good side or the right side of the conflict. I’m glad I didn’t have to make any choices.
[00:22:41.640] – Artur Kurasinski
I’m going to ask you about the „Buy Now, Pay Later” model. Don’t you think this is like supportive of consumerism? Because it’s like you’re actually telling the clients, hey, buy these things. Don’t worry about your payment, your money right now, you can actually get the credit somehow. Do you think it’s okay to support this kind of technology?
[00:23:11.900] – Max Levchin
I don’t think we’re telling them, don’t worry about it. We’re actually saying, you have to be on time. So, when we designed the product, we made a lot of very deliberate choices. One choice was, we will not charge late fees. If you’re late, there are no fees. However, if you’re late and you’re not trying to become current, you cannot use a product. It’s very black and white. You’re basically cut off until you’re current. I’m a big believer in the ability to borrow as an access point for people. When I came to the US we had five people and $600. It was not a lot of money. Very soon after, I went to university, and at the university, I immediately had to borrow tens of thousands of dollars. If I said you know what? I don’t want to borrow money. By the way, in Eastern Europe, the general mode of thinking, at least when I was here, was, borrowing is a bad idea. Lending is definitely a very bad idea because you’re charging interest. That’s awful. Even borrowing is like, it’s not better, live within your limits. If you are borrowing today to pay for a thing that you could have saved up for tomorrow, I agree with that. I think you should just wait, save, and pay for it. If you’re borrowing for something that you could not ever save up enough, like a university education or a car or a house or many things that are just too expensive to save for, the only way you get access to them is if you borrow money. Which I think, if done intelligently and without tricks, is actually very positive. When we designed the products for Affirm, the question that I asked myself very explicitly was, how can I design products where I am never motivated to do harm to the end-borrower? The reason we don’t charge late fees is exactly what I said in the very beginning. If you go borrow money from a bank, they say, I would love to give you this money. I would love for you to be on time. However, if you’re not on time, I will make more money, because there will be a fee. I think that’s a moral dilemma that’s profoundly difficult. Even if you’re the best bank in the world, you have all the right ideas in your head. One day your shareholders come to you, and they say, how can you make more money? We want you to make more money. One easy way is I can just not remind you of your payments because we have a contract that says that if you are late, I’ll make more money. Maybe I’ll just slow down my reminders a little bit or maybe I’ll change the terms when you’ll see them, so you owe me a little more. Any form of moral pressure on the lender to make more money through basically letting the person fail or letting the person make mistakes, to me was ultimately a slippery slope. When we designed the products, we basically said we always want to benefit when the customer benefits, and we always want to be hurt when the customer is hurting. If the person loses their job and they can’t pay us back, the only consequence for us has to be we don’t get money, because then maybe we’ll invent a way for them to get a job or maybe we’ll find a way to help them take longer. Under no circumstances should we make more money when someone is out of their ability to pay. If you look at every design decision we’ve ever made, it’s very clear on that. I’m very proud of the fact that we have never strayed from that. We’ve never charged $1 of late fees; we’ve never done any of the term changing tricks that banks do all time. As a consequence, I think we are allowing people to engage in buying things that they want to buy, but we’re not telling them, go over when you can’t pay us back. Because if we were to do that, we would literally be saying, let us make less money. We are very much a capitalist profit oriented institution. We have built by design a system where if we push you to borrow more than you can handle, we will be hurt more than you will be. I think I feel very good about our design decisions. Sometimes people ask me, why don’t you charge more or charge late fees? That’s why. I never want to be on the other side of that question of maybe just this one time I’ll make a little bit more. It doesn’t work for our core values.
[00:27:49.500] – Artur Kurasinski
- Nice t-shirt, by the way.
[00:27:52.130] – Max Levchin
[00:27:53.940] – Artur Kurasinski
Affirm Warsaw. That’s my next question. Are you guys looking to hire in Poland? Why Poland? You said that you were thinking about Russia and Ukraine, but why Poland?
[00:28:14.560] – Max Levchin
Poland is an interesting place. Obviously, I’m Eastern European. It’s no secret that Eastern Europe still is a good arbitrage. High quality brains, high quality education, slightly less expensive. As an employer, it’s important. Poland is a special place in a sense that it’s always been Eastern and Western. It’s the first country this side of the Ukrainian border where the characters are Latin, not Cyrillic. People generally speak good English. The education system is very strong and exports talent and skills that are very broadly applicable outside of just the Eastern European ecosystem. It’s large enough where you can actually build teams of more than just engineers. You can have designers and product managers and marketers and analysts and businesspeople. Poland was chosen specifically because we wanted to build a presence here beyond just an outsourced, inexpensive team. I spent the entire day today with our teams, and we’re trying to hire not just engineers, but also product managers. My number one request today was, how can I get more product managers? We’ll definitely be hiring product managers in Poland.
[00:29:50.120] – Artur Kurasinski
It will be very hard.
[00:29:55.590] – Max Levchin
My number one request for all universities worldwide is to create a product manager major. I’ve never been to a school, and I haven’t checked, I don’t actually know if this one is different, but I’ve never been to university where somebody stood up and said, I’m a product management major. It’s always an economics major or a philosophy major or a computer science major, but I plan to do a product when I graduate. It’s such a huge opening. Like, there are no graduate degrees in product management that I’m aware of, which is shocking because it’s such an important job. We will hire whatever your major is, and we’ll train you to. Unlike many companies, we centered in Poland with the idea of creating employees as opposed to contractors. People who are fully compensated not just with cash, but also equity, stock participation in Affirm. We’re definitely very committed to investing more and more in the country.
[00:30:56.000] – Artur Kurasinski
Do you think it’s a good idea to work for you or for any other startups when you feel that you want to be an entrepreneur? Do you understand my question? Of course. Employee versus being an entrepreneur.
[00:31:14.040] – Max Levchin
I have a standard answer to this question, because I get asked that once in a while, more than once in a while. These days, you can get a major in entrepreneurship. When I was in school, it was not a thing yet, but generally speaking, I feel that entrepreneurship is more of a calling. I’m not sure it’s genetic, but it’s definitely a thing that you know you have to do. I started my first company because somebody told me, you should come help me. I’m starting a company, you’re a good engineer, come help me out. I was still at university, and at the time I thought I was going to be a PhD in Computer Science and a professor for the rest of my life. That company failed after twelve months. At the end of that, I knew there was nothing else I’d ever do. I cannot do anything but start companies. It’s an addiction. It’s the only thing that gives me professional enjoyment, whatever the diagnosis. I will keep doing this until I die in the saddle. There’s definitely a moment in time when you know you have to do it. If you’re lucky, you sort of get the same way I do, where you sort of have chances to start up very early on. You realize it’s the only thing you want to do in your life. Plenty of people want to do it but don’t know if they’re ready. The best approximation is you work for a startup, or at least for a company. It doesn’t matter if it’s tiny or well-funded that feels like a startup. For example, I was really just very happy. I spent the entire afternoon meeting with our Polish teams. One after the other, talking about work, but mostly just enjoying the fact that like a tiny little team, seven people in a room, you can have very honest conversations, very to the point, no corporate speak. We have almost 2,700 people, so it’s not a small company anymore. At least in our Polish team and in many of our teams in other parts, including in California, you still have this feeling of it’s a startup. Like anybody can text me in the middle of the night and I will always answer and if it’s a hard problem, I’ll try to help it. If it’s just somebody who wants to complain, I’m always happy to hear them out. You have real engagement all the time, from the CEO all the way down. If you’re ready to start a company, you should do it immediately because it just gets harder as you get old. I used to need 3 hours of sleep and then it turned into five and then six.
[00:34:00.990] – Artur Kurasinski
You need a lot of coffee right now.
[00:34:03.390] – Max Levchin
I drink more coffee than most people. You have more things in life. You have children, you have spouses, you have responsibilities, you have talks you have to give. When you’re really young and there’s nothing, you just work and it’s very enjoyable. If you’re not quite ready, join a startup or join something that feels like a startup. It’s not all amazing and beautiful. A lot of it is just really painful and difficult and you fail a lot, and you fail over and over again. At the end of each failure, you either go I can’t wait to do it again, or you say I’ve had enough. I need safety and security and just a sense of I can go home and forget about work. One of the downsides and upsides of a startup when I go home, it’s not like my job stops. I can’t just say don’t worry about it; I’ll think about it tomorrow morning. Like my phone is buzzing. That means somebody, something’s going out of work, and I have to answer. As a startup you don’t get to have the break that you get in any other context. But if you love what you do, you don’t want a break. You actually want to keep looking on your phone. So, you can find out what it’s like when you’re slightly less stressed working for a startup. If you want to start one and you kind of feel ready, just do it. It’s easier to fail when you’re young.
[00:35:28.810] – Artur Kurasinski
How do you select the co-founders in your company? Do you have a secret recipe? Can you tell us just a little bit about it?
[00:35:35.940] – Max Levchin
The most important thing is integrity. I think over the years I used to have a formula for 75% integrity, 20 percent IQ, five percent skills. Then at some point I said, really smart people can learn anything, so maybe it’s 75 percent integrity and 25 percent IQ. Then I thought, well, IQ is kind of overrated because some people are not necessarily geniuses, but they have really good leadership skills, they can get geniuses to do work for them. So maybe it’s 80 percent integrity. The only thing that matters, if you have complete trust, like if you feel that they will have your back 100% of the time. That’s the most important thing. Obviously, you don’t want to start a company with someone who has no interest in your idea or doesn’t have any skills at all or maybe just cannot speak or write, but ultimately a lot of those things are worth a lot less than you think. They’re very tactical. The strategic thing of importance is, do you believe this person is 100% on your side all the time. The biggest similarity is like getting married.
[00:36:50.570] – Artur Kurasinski
Yeah, that’s right.
[00:36:51.750] – Max Levchin
You’re basically choosing a work spouse. If a company is successful, it might be a decade long work spouse or maybe even longer. So, the other sort of piece of unsolicited advice, it is really hard to do alone. It’s better to do it alone than with a wrong co-founder, but it is very hard to do it on your own.
[00:37:16.210] – Artur Kurasinski
Do you believe that you can actually be successful doing this business alone?
[00:37:23.340] – Max Levchin
It depends on what kind of support system you have. Affirm was co-founded by four people, but one by one they each left to do something else. I’m the only one left and I happen to be very lucky. I met my wife in the first year of PayPal. She was basically very early there and had seen the entire journey and Affirm is several other projects after PayPal. So, there were others in the middle that Slide was one, we don’t talk about Slide so much. It was good financially. I was not nearly as committed to it emotionally, but there are many other projects too. The most important, the most valuable thing a co-founder can do for you is to tell you the truth, even when it’s not nice. When I was working on Slide my wife sat me down and said, you’re working on a company you don’t care about. You’re not going to like hearing this, you’re not going to enjoy this conversation. I can tell you; you are working on something for the last seven years that you are never going to feel great about. You should do something about that. At that moment, I was so mad at her. The reason I tell the story now is because if anybody ever meets my wife, you should tell her that I continuously thank her. I’m so stubborn. I would have worked for another seven years on it before giving up. Instead, I got a chance to sell that and start Affirm which I’m very passionate about and will continue to work on for as long as they’ll have me.
[00:39:08.190] – Artur Kurasinski
What’s the role of the CEO? What is the role of CEO right now, from your perspective? Do you think it’s much more like a person who is telling people what to do or is it inspiring? Especially when you’re dealing with generation Z. What’s your thought about it?
[00:39:24.690] – Max Levchin
One useful truth about being a CEO of any size company – you can never tell people what to do. It doesn’t actually work. Anybody who thinks that they can tell people what to do is kidding themselves. You can sometimes tell people what you would like them to do, and they can tell you to go to help or they can tell you, that’s amazing, let’s do it together. Those are the only two choices. Inspire, lead, show, co-conspire. There are many different ways to create output. Even if in the moment I can tell someone to do what I say, what’s in their head is just you wait until I slam the door in your face. Sometimes you can say, look, trust me, do what I say, because I think I have the right idea and we disagree. But it’s my job to make a decision. That’s the closest thing you can come to as a CEO or as a manager, to tell someone what to do. Ultimately, it’s a credibility game. If you say, look, I need you to do this for me, with me, please trust me. If you’re wrong a few times, they’ll say, why should I trust you? You made mistakes over and over again. If you’re a great leader, you don’t need to say trust me and say, look, we’re doing this. I may be wrong, like I may be leading you in the wrong place, but if I am wrong, we’ll get out of it together. We will find a way. So, inspire or lead is a better choice of action and words than telling people what to do. Traditionally, I used to say this all the time. I think it’s still true even now for me. But the three jobs every CEO has in a startup for sure is to have a vision, like, where are you actually going to go, bring together the best team and make sure you earn a lot of money.
[00:41:20.270] – Artur Kurasinski
Okay, very simple. Do you think this is the best recipe for the startup? Because everyone sitting here can think, okay, so the next day I’ll launch something. Max told me there’s only three things I should care about, but I think it’s maybe just a little bit of a thing to do as a CEO.
[00:41:47.560] – Max Levchin
Depends on how good your team is. For example, if I start a company without technical co-founders, I could say I’m going to choose the programming language and whether it’s on premise or cloud and what frameworks we use and whether it’s microservices or monolith. There are all these decisions. Or you can have the best CTO who’s better than me. I’m not going to choose any of those choices. You decide. I will just make sure we don’t run out of money. So, a great team allows you to delegate the majority of the really difficult decisions. In a startup if you have very little money and you’re trying not to run out, very often a CEO is also the COO and the head of sales and the CTO. You get to do a lot of roles over time if you’re doing the right things more and more of it is just saying, we’re all going over there. The goal is at the end of that road, we’re all going in the right direction together. I will make sure that the team around us is the best team we can possibly gather and raise money until they’re profitable so that we run out. I think it’s actually a pretty close to perfect formula. Reality is though, at 02:00 in the morning, any given night, you can find me telling people, I hate this word in this marketing message, please change it. So, I don’t necessarily practice all of my advice.
[00:43:15.390] – Artur Kurasinski
Let’s get back to reality. The recession and inflation are becoming very tough around the world. Ecommerce based businesses, which you guys are dealing with, are feeling the very serious effect of the economic downturn. What plans do you have at Affirm to weather this period? This looks very bad.
[00:43:40.230] – Max Levchin
I think that is actually where we get to fulfill our mission. So as inflation goes up and the central banks raise interest rates, you will see more jobs lost. People will get laid off and will have to make-do more than they used to. Even if they keep their jobs and have some stability, just costs more to buy the things they need. During the pandemic, the demand for our service quadrupled overnight. Mostly because people were trying to buy everything they needed for their home. So, it was a little bit crazy, but our job is to help people afford things responsibly without late fees, without all the garbage. I feel like the need for Affirm to increase doesn’t make it easier for us to navigate the challenges. Generally speaking, if you’re in a business that more people need in a difficult time, you have better odds of survival than if you’re in a business where people don’t need it anymore. For example, if you’re selling luxury watches, I would be very scared right now, because during a downturn, fewer people need luxury watches. If you are helping people afford couches and shirts and education, you’re probably okay. I sort of prefer when it’s harder for two reasons. I think if you’re not mentally prepared, it’s easier to give up. I feel that I have failed at many, many startups, and I’m old enough where I’ve lived through three or four recessions in the US, so I kind of know that there’s a rainbow at the end, but if you’re just entering the first one, it’s scary. So, I’m hopeful that some of my competitors will say, all right, never mind, I had enough. Give up. So, I know we don’t give up, and I think it’ll be a little bit easier to compete. The way you deal with challenging times, you constrain the things you do. You essentially say, we have limits. Maybe last year, I wanted to hire a thousand more engineers. Now I should be a little more careful and hire somewhat fewer engineers. That means I get to build fewer projects, and I better choose the really, really good ones. Difficulty and downturn forces you to be very focused, and that’s good. My biggest challenge as a CEO and product designer, I’ve never found a product I didn’t want to build. I come up with ideas, and the first thing I need is ten more engineers, and we’ll have that too. So, in a constrained environment where every engineer matters and we only have to work on the really, really important project, it’s a forcing function for me to decide what really matters and what can wait a half a year. I’m sure we’ll build everything, but not all at once.
[00:46:56.110] – Artur Kurasinski
Okay, you guys have offices in San Francisco, right? In Warsaw? So, you’re a global company.
[00:47:06.090] – Max Levchin
San Francisco, Toronto, Chicago, New York, Warsaw. Soon London. Pittsburgh. I think that’s it.
[00:47:20.640] – Artur Kurasinski
Many people work there. What are your thoughts on remote work?
[00:47:30.600] – Max Levchin
When we had to go remote in April of 2020, my wife told me, this is the worst thing that’s ever happened. She’s very social, she loves people, she loves hosting friends, she wants to see her friends, she wants to go out, and I am not. The first day of the pandemic, I had six monitors in my desk and a lock on my door. I told my kids, please don’t disturb me. Daddy’s working. See you later. So, my wife said, you’re living your best life, and I’m miserable. I’m kind of hoping this doesn’t end very soon, because this is great. Then after a while, I started missing the spark of conversation with real people. Maybe I’m just not too old. I need to get used to Zoom, and it’s going to be okay. Then I had my first executive gathering. The pandemic was still going on. We just had our first vaccine, and we finally got together. One person was positive, which was very scary, and now nobody cares. But at the time, we’re like, oh, my God, we all have to go quarantine ourselves in a room somewhere. Even with that sort of scary moment, this is the best thing ever. I missed just talking to people about product ideas in the same room with a whiteboard and having a meal together and drinking a glass of wine and talking about what it’s going to be ten years from now. That was my first kind of like, maybe I don’t love the stuck behind my six monitors quite as much as I thought I would. As we sort of got back to more and more normal, I don’t think it’s possible for us to go back to everybody in the same room ever. When we were just about to go into lockdown in San Francisco, we had 800 people in one office in San Francisco, basically. Now we have fewer than 200 people in San Francisco because lots of people during the pandemic said, I can work from a screen, so it’s expensive to live in San Francisco. Maybe I don’t even like it. I’ll move to Austin, I’ll move to Seattle, I’ll move to Denver. We don’t have an office in Seattle. We don’t have an office in Denver. We have almost 100 people in Seattle. We do not have a shared place there at all, like it’s a We Work just a mine space, like the space that we have in Warsaw. I don’t think we can ever say, all right, everybody has to come back together and come into the office five days a week, but what we can do is create opportunities for people to come together. So, we’ve been doing a ton of gathering. Our San Francisco office on any given day has two or three team meetings where at least half the people are not from San Francisco. They’re flying in from all over the place. I don’t think we’re done figuring out the exact mode, but I think the idea of partially together, partially remote is here to stay, at least for us. I think my friend Elon believes that the only way to work is to do long hours in person.
[00:50:56.330] – Artur Kurasinski
I didn’t want to ask you about Elon but okay…
[00:51:01.210] – Max Levchin
He’s a friend. We don’t agree on everything.
[00:51:04.590] – Artur Kurasinski
Fair enough. My last question. After so much success, what motivates you to keep building Affirm? You can be spending your time on a beach, having your drink. Why go again and establish the startup and go through all the pain again
[00:51:29.110] – Max Levchin
I like the pain. Is that the honest answer? I think entrepreneurship is similar to having a baby. When you just had a baby, the baby does not care about you. It can barely orient itself. It wants to eat and it’s screaming all the time and you sort of think, what have I done? This is not what I signed up for. I thought it was going to be cute and smile a lot and love me. However, after about a year with babies and with startups, it starts to take shape and you have this incredible experience where you get more than you put in. You teach at things, and it makes all kinds of interesting things on its own. After two years it starts talking or maybe making money. Then after five years it’s really impactful and you feel like you’ve changed the world or at least you created one life that’s really making a difference. You kind of go through life where you feel like you’ve created something out of nothing, like it didn’t exist and now it’s suddenly really relevant and amazing, except with babies. So, I now have a 13-year-old and an eleven-year-old. My 13-year-old is kind of a wuss. So, he still wants his papa and wants to sort really need me. My eleven-year-old daughter will move out the day she’s allowed to and probably be done. She’s figured all out, she knows all the answers and she doesn’t need me. I’m too old to have more kids, but I’m never too old to have more startups. So, the experience of taking something that didn’t exist and struggling with it and hating myself for it, why did I sign up for the pain? It’s really similar. It’s all-nighters and the screaming child or the startup that doesn’t make sense, doesn’t work. If it makes it, you have this amazing sense of being relevant. The most important thing entrepreneurs need is the drug that we want. It’s not the pain, it’s the sense of relevance. There are people out there that depend on your product and employees or co-founders that depend on your ideas. As a CEO, your ability to raise money, your ability to find the right team. But this notion of I am relevant to someone, if I disappeared tomorrow, the world would notice is very deeply human need. You want to feel relevant. With kids you get that once per kid. In my case, eleven years old, she doesn’t care. With startups you can have 100. So, I’d rather have startups as my children.
[00:54:15.420] – Artur Kurasinski
I’m done with my questions. It’s now time for your question, guys.
[00:54:23.480] – Questioning person (1)
What kind of pitch would make you want to mentor someone and what kind of values would you be looking for in a person like that?
[00:54:47.330] – Max Levchin
If I’m completely honest, I am so busy these days. Mentorship is very hard. I’m good at asynchronous communication, so if you want to contact me: email@example.com. Full disclosure, it goes to Brooks first, which means that it’s his value filter, and your ideas are safe with him. But the flip side is that he runs the Affirm investing arm. So, if it’s a really good business idea, he will not only pass it on to me, but he’ll also invest in it. It’s a good trade. In my opinion, mentorship is overrated. I think mentorship can be summarized in five or ten really good pieces of advice given at the very right time. You don’t need your professors in a university to hold your hand every day helping you with your homework. That happened in middle school or in high school. By the time you get to a real school, like a university, you’re doing it on your own. But you need someone who has seen it all before to say, that one, that’s not quite right, do that. So, a great mentor isn’t someone who meets with you every month and helps you, pushes you forward. That should have happened a long time ago. No one can help you now. But if you’re working on something really interesting and important and you have a question, a good mentor, somebody can say, oh, in my head, the answer to that question is this, not that. That’s kind of all you need. If the question is interesting, Brooks will send it to me. Or if you’re fond of puzzles, you can guess my email address. I eventually respond to all the good questions, but sometimes eventually takes a long time.
[00:56:45.930] – Artur Kurasinski
Another question. The guy with the white t-shirt.
[00:56:49.690] – Questioning person (2)
I have a question about life. Do you feel safe? People can connect to your network and everyone can Google you,, and do you feel safe about yourself, your family?
[00:57:17.740] – Max Levchin
If necessary, Brooks will tackle you later. He’s very tall and works out every day. I think I live in the happy medium of only being known to nerds. I am not afraid of nerds tackling me or kidnapping me or doing terrible things to me. Maybe that’s naive, but I think I enjoy my quasi stardom where I’m more likely to be stopped in the street with „I have an idea. Please listen to my business pitch” or „I have a computer science question. What do you think?” Those are not scary. Situation like „I would like to take your coat or your wallet” doesn’t happen to me and hopefully will not. For the moment. I feel safe.
[00:58:21.190] – Questioning person (3)
… does this also apply to investors? How much structure do I have for them to get funding from them? Because it is hard to get funding as you said, you have to go to like 150 investors and then get it. But if I have this opportunity, should I look for their value?
[00:58:44.660] – Max Levchin
That’s a great question and the short answer is yes. It’s really important. It’s actually equally important. Think of to take my sort of marriage analogy one step further. Basically, it’s like the parents of your spouse. If you think that you’re marrying into a terrible family, you may be making a mistake. Unless you’re planning to run away with your spouse and never see the parents again. But with investors you have to see them a lot. The reason for it is there are only two real outcomes in a startup environment. Great success and everyone’s happy and all the other outcomes which are basically not good. If it’s working but the investors don’t like you, or it’s working but you need more money, or it’s not working and you want to do something else or it’s working okay and you want to change everything, every one of those decisions requires you to have a very honest, very, very real conversation with your investors. If you don’t trust them to begin with, it’s never going to happen, and the company will fail. If you do trust them and you’re wrong and they don’t actually have integrity, it’s even worse. You will tell them your innermost secret, or your half form plan and they might take advantage of you. So, it’s as important to have faith that your investors have your best interest. One of the things that we were very, very lucky with the Nokia Ventures guys when they funded PayPal, they had extraordinarily high integrity. Of course, when we just met them, all we knew is they had some Eastern European roots and so they were more like us than not. But in retrospect we got so incredibly lucky. We were at the very first board dinner, not even a board meeting. Literally, two weeks after Nokia Ventures invested, Peter and I sat down with the two people from there and said, so this whole idea of cryptographic exchange using Pole Pilots, we think we’re going to change that plan. It’s not working. We fully expected them to say give us back our money. Instead, they’re like, oh we thought we’d get one glass of wine, it looks like we need a bottle, tell us more. We’re just like okay, we’re going to be okay. These guys were on our side. By the way, there’s a very easy way of verifying the answer to what that future looks like when they’re investing in your company. If they’re fixated on the business and the technology and the product and all those things, that’s not the right fixation. The right fixation is you. What they’re doing is they’re asking themselves – are you honest? How good is your integrity? Is your co-founder honest? Do you have a real relationship? Are you really, really good people? If you change your plans and you’re smart and you’re really good people they’ll make money. If you’re not a good people, it doesn’t matter how smart you are, doesn’t matter how good your idea is. If something goes wrong, everybody runs away. So, they’re testing you for the same thing. You’re testing them, and you’ll know very quickly if they’re really probing on, do you have high integrity? That’s the best predictor of them, having high integrity.
[01:0:55.540] – Artur Kurasinski
Okay, maybe from this part of the room.
[01:02:00.560] – Max Levchin
I’ll try to give shorter answers. I always do this, I give long answers and then not enough people.
[01:02:16.310] – Questioning person (4)
Why do you need six monitors?
[01:02:28.610] – Max Levchin
I think the biggest reason was I just never had a set up with six monitors, and I thought it would be really cool. I really only use three now. Initially, when I just started the pandemic, I had this really bad idea that I would be on Zoom basically 24 hours a day. We were all very scared. It’s my first pandemic. I don’t know everybody else, but I have never lived through a pandemic. I read a lot of science fiction as a kid, and so there’s a great novella called „The Machine Stops.” I don’t know if anybody’s read it. It’s from 1914. It’s probably the best prediction of the 2020 pandemic you can possibly imagine. Highly recommend it. I’m sure it’s translated into every language because it’s very old. In it just people live in tiny little cells underground and communicate through some magic technology where they can kind of see each other and they never come out. They all live alone. I thought, maybe we’re now living in the world where the machine stops. I will never leave my room. I thought, well, the one way of fixing that I will have a giant monitor, maybe two, where anyone from Affirm who wants to log in and see me, they can just see me because I’ll always be there on camera. After about two days of that, I decided I could not handle it anymore. So I didn’t need two of those monitors. I like having a monitor where I can see Slack, or something like Slack, where I can just see real time chats from the teams. Then I spent a lot of my time writing, and so having a no distraction screen filled with whatever it is I’m writing is very valuable. So that’s two screens and then a third one for everything else. I use three now.
[01:04:21.960] – Questioning person (5)
Could you tell us about some kind of technological decision? Especially as a CTO of PayPal.
[01:04:39.790] – Max Levchin
The best-known technology decision in the history of PayPal was when X.com, Elons company, and PayPal, my company and Peters, merged. Elon built his on Windows, and I built mine on Unix. We literally arm wrestled over which technology would be this technology for the entire company. You can imagine that I lost. I’m a relatively tiny Ukrainian versus a giant South African Elon. However, I still won because we built PayPal all on Unix. But that was probably the biggest choice. At Affirm we made lots of interesting decisions. One of them was we chose to build our apps primarily natively, although everyone was doing react native at the time because it’s faster to develop essentially a WebView with just slightly faster rendering speed. We thought that we would benefit from its already difficult to build applications to do financial services in real time because you’re constantly going out to dozens of external services. So, if the user interface is not as fast as it possibly can be, you’re just going to pay a penalty in consumer adoption. We chose to do separate Android and iOS development, which at the time was controversial. These days it’s probably a little bit less. We originally built Affirm entirely as a monolith so a single deploy. Which is very fast to deploy when you’re tiny, and then fast forward ten years and you have a giant pile of code that you have to unit test every time you deploy. You have to go to microservices, but it is not like you can just easily peel apart everything. The gradual process to go to more and more hybrid partial models, partial microservices type architecture. I think tactically we may have made better decisions, but I think those were generally the right calls in both directions. At PayPal, we chose C++ as a programming language, which was the dumbest idea ever. In retrospect, it’s a terrible programming framework. It’s a beautiful language, but the actual implementation in the 1990s was awful on Unix doubly so, and yet it was the language we all studied at the university. So, when we started the company, we had 12/15 engineers that all came from the same class at the same university in the same year. All of us just passed C++ exams. Of course, we chose one language. When we started Affirm, I decided that I will go with my favorite programming language, which at the time was Python. Probably still is. So, I picked this time. I’m sure I’m pissing off Ruby fanatics in the audience, but I feel like I once witnessed a debate between Guido and Russum and Larry Wall, who designed Perl. I walk out of the room thinking, there’s only one programming language that I will ever write any code in, and that was definitely not Perl. I know enough Ruby to be dangerous, and I still don’t prefer it at all over Python. Comes with batteries included and everything.
[01:08:04.660] – Questioning person (6)
You definitely have a lot of responsibilities when you are the CEO – running the company and then of course family, traveling between offices. My first question is – how do you manage your time? Because as a student I find it quite hard. My second question is – if you do find free time how do you like to spend it? Do you still find yourself working on personal coding projects or is it more like a CEO work base?
[01:08:38.590] – Max Levchin
I’ll answer backwards. For a while, I was terrified that I would lose my skills as an engineer. My 13-year-old son for a long time was refusing to learn programming because no kid wants to be compared to their parents to the thing that the parent is good at. I’m not sure I’m good at programming anymore, but I used to be pretty good. He knows the history, so he basically said, I don’t want to learn programming because I’ll just be the second fiddle to you. Then one day he got the bug, and then he no longer cared whether he’s good or bad. He just wanted to program. And so now I have programming projects with my son, which is amazing, and what used to be like, hey, could you please give it a try? Is now like, all right, I really can’t code with you tonight because I have some work stuff I have to do, which is really great. So, when I was a student, I was always late at my homework. I was always 15 minutes late to every lecture, and managing time was the worst thing in the world. It turned out that as I got older, it became harder to manage my time, but also became so necessary. I just kind of learned how to live within constraints. So, I wouldn’t be too concerned as a student, it’s your job to be late on your homework and be a mess and stay up too late and then have a hard time waking up with the next lecture. Life will knock sense and see whether you like it or not, so you might as well enjoy it while it lasts. In terms of fun, I found that if I don’t have some physical activity, some kind of a sport, basically every day, I am not as creative. I was always very bad at sports. Growing up in this part of the world, you’re supposed to play football and hockey and something like that. I couldn’t play hockey to save my life. When I moved to the United States, it was the greatest gift because no one was good at football at the time. So, I was suddenly the worst player when I was in Kiev, but I was suddenly not so bad because people around me were terrible. Of course, football or soccer became very popular in America in the last ten years, and now it turns out that I am still terrible. Between then and now, I learned how to ride a bike really fast, and so I try to ride my bike pretty much every day.
[01:11:11.130] – Artur Kurasinski
[01:11:12.210] – Max Levchin
I’ll do indoor, outdoor, anything I can pedal, I will pedal. Except in a hotel gym, it’s very hard because the bikes that they have in hotel gyms are typically so bad, it’s actually just too painful to do it. I am very, very active in my cycling efforts, and so long as I have the time, every weekend I will disappear from my family for six or 7 hours if I can help it. Just somewhere in the mountains on the bike. That keeps me sane. Also, it forces me to be very productive when I get home because my wife has just about had it.
[01:11:49.910] – Questioning person (7)
You mentioned that you’d been failing one company after another. How were your parents about this and your girlfriend?
[01:12:04.310] – Max Levchin
It was my girlfriend in college, who I was 100% sure I was going to marry. I lived with her, we were definitely on that track. Basically, she broke up with me because one night I was doing another all-nighter. Okay, first short introduction – my first three companies were at my university town. After I graduated, I just kind of stuck around. I already had companies during school and had finally graduated, and I just couldn’t afford to go anywhere. So, I just stayed in central Illinois where it’s cheap and had companies there that are also failing. One day she called me and said, are we dating or not? I said we’re dating. She said, well, why are you in the office and I’m home alone? I said, I just need one more all-nighter. She said, and then what? I don’t know. I think maybe this company will not fail. She said, I’ve had enough. This cannot be. And so, by the time I got there the next morning, all my stuff was outside. Fair warning, there’s a real tradeoff between romantic relationships and early-stage startups. There’s some zero sumness to it. That said my now wife was my girlfriend all through PayPal. The only trouble I got into with her was when she said, you’re not working, which I respect, and you’re not with me, which I insist is because you’re doing something else. If that’s something else that is more important than me, I should know. Pretty quickly I realized that’s the one I definitely want to marry, and I learned to optimize my time. If it’s not work, then it’s with her, and everything else was maybe slightly more secondary. So, it is definitely possible to have a romantic relationship in startups. You just have to know exactly what your priorities are and have a girlfriend and boyfriend who is understanding enough to know that sometimes startups consume 110% and there’s nothing you can do about it. My parents were terrified, and my grandmother had two PhDs. My parents all had Master’s or better. I was the first person in my family to suggest that maybe I should drop out of school. My entire academic family sat me down and had an intervention where they said, look, whatever you do, you must have at least one degree. After that, do whatever you want. My grandmother with the two PhDs was literally on her deathbed. She said, look, I’m already dying. If you want to kill me sooner, you can drop out of school. So, I promise that I will not drop out of school, but I think I told her that I will consider getting a Master’s. And I lasted one day in the Master’s program, but I did get a bachelor’s degree. So, grandma, I delivered them my promise. My parents were very scared. The funny thing is that the day we took PayPal public, and I was suddenly no longer extremely poor, I was about to be extremely rich. I called my parents and said, hey, good news, I can buy your house and I am not going to go broke. I think we’re okay. The first phrase from my mom’s mouth was, that is the best news ever: you can finally move back to Chicago and get a PhD. Now, the funny thing is that she still says this to me now. I just saw her last week and she said, so you’re very successful, but no PhD.
[01:16:06.060] – Questioning person (8)
How do you decide to run the first launch of the product? So, for example we might have a product that can be launched in the market with basic functionalities, but in the back of your mind you know like there are some features that if we had more time we could develop it?
[01:16:20.460] – Max Levchin
That’s an easy one. You should always launch. It’s a heuristic in the sense that I know the struggle. I’ve had this exact conversation with myself over and over and over in my own head. 100% of the time when you launch, two things happen. True story when we launched Affirm, so we were lending money on day zero. We never pivoted to the same exact company, same exact concept. I was the principal backer of the company. I had success from PayPal. So, I said, I will fund it and I will fund all the loans myself until we have product market fit. So, until we launched, I was like, no problem. The day we’re about to launch, we sat around and built more features and this and that. Finally, I think we’re ready. Oh, my God. What if tomorrow everyone borrows everything that I committed to this company, and no one ever pays us back? What am I going to do? Two things happened. All the features I thought were very important were not very important. And no one borrowed any money at all. For two years. So, whatever you think you know about your product, you don’t until real people actually try it. Overwhelmingly likely when they try it, they will not like it. It’s possible some will. And they will tell you if you did more of that, we would like it better. That’s the best thing. You can possibly get the feedback from your users telling you, do this, now that is more valuable than anything. So, people tell you, stupid product. I don’t like it. Wrong colors, bad logo, features missing. It doesn’t matter. You know that to be true already. What you want is a little bit of positive feedback. Somebody telling you I would use that if or I’m using this for that purpose that is so much more valuable than anything you can build in a vacuum. Just if you have something that you think is interesting enough or useful enough, launch it and see what happens. By the way, if the worry is what if competitors steal my idea? Lots of people are working on exactly the same idea in the world right now. You’re never working on the one true, unique thing alone that just doesn’t exist. Everyone knows how to code. Everyone has access to the internet. Every idea is just a rehash of an old idea. We did not invent borrowing. We did not invent, I claim to be the grandfather of „Buy Now Pay Later” and of course, „Buy Now Pay Later” was invented in the mid 1500s. So, no idea is brand new. Your version of your idea with feedback from real users is what’s going to make you more defensible. So just launch yesterday.
[01:18:49.190] – Artur Kurasinski
Okay, next question. Maybe from the back, but please, just wait for the microphone.
[01:18:54.590] – Max Levchin
If you ask simpler questions, I will give shorter answers.
[01:18:57.890] – Artur Kurasinski
That’s the challenge.
[01:18:59.470] – Questioning person (9)
My question is actually a little bit more technical. So where do you think the future of software developments lies? Because we’re hearing a lot about local solutions, about artificial intelligence, and data science. Where do you think we should be going? Where will we go?
[01:19:24.060] – Max Levchin
That’s multiple hours worth of conversation. The short answer is I have no idea. I was stunned by how rapidly generative AI went from being a cute trick to being very, very successful. So, if I were doing nothing with my time, I would be spending all my time learning more about GPT and trying to explore what algorithms like the general take on neural networks is the broadest area I would spend my time in. That said, there’s lots of people working on it already. If you’re trying to find something really different and really cool and new. At least I found that most interesting ideas come from theory, not practice. So, I would spend more time reading abstract computer science books, looking for new interesting challenges versus looking at products. Products are always the last thing in the chain. The first thing in the chain is some really abstract idea that gives you inspiration. That’s probably the best I can do in short notice.
[01:20:55.330] – Questioning person (10)
First of all, Affirm has been helping over here as a company supporting Ukrainians within the Ukrainian crisis and every single level the people were uniting. I know that you were donating yourself a lot to support the refugees over here and during this conversation you mentioned the purpose. It seems like Affirm is a purpose driven company. The question is like maybe following up on the previous topic. How do you find the purpose worth fighting, dying and staying overnight for? To build the company of course.
[01:21:30.730] – Max Levchin
I think life is a secret. Actually dying is a bad idea. I recommend against it. I think ultimately the purpose is something you already know. It’s different for everybody. I think for me, 25 years ago, I was very embarrassed because I just took the company public and yet right in front of my girlfriend, somebody denied me credit because they said, your credit score is so bad. I don’t care who you are, you cannot borrow money. My skin turned purple, and I thought, one day I am going to take this embarrassment and turn it into a product and spare the rest of the people that I know and don’t know. Borrowing should not be so ugly. I should not feel embarrassed or ashamed of having access to capital. I was trying to buy a car, which doesn’t matter how wealthy you are, it’s a smart idea to pay for it over time. It was enough of a seed in my brain. The more I learned about credit, the more I learned about borrowing, the more I decided it’s not just me and my stupid little moment trying to buy a nice car. It’s actually a much bigger problem. The industry is built around this notion that if you lose, they will win. I think that’s wrong and broken and should be fixed. Entrepreneurship is about deciding that no matter how big the problem is, you are strong enough to fix it. The real trade is always, I’m going to try, odds are pretty good I’ll fail, but I’m not afraid. If I do win, or if I do succeed, the problem is so big it’s worth fighting for. I think often, it’s very hard to find the tradeoff. If the problem is not something you’ve personally experienced, you can believe in it at the moment. But if it becomes more difficult, if it’s not your personal experience, you start questioning whether you’re fighting for the thing that’s possible to win. I think it’s easy to support Ukrainian refugees because I was once a Ukrainian refugee. It’s easy to support fighting against bad credit practices because I more than once got punched in the face because I was an immigrant with no credit. So, it’s always very personal. I think if you need a list of areas that matter, it’s easy to make energy, food, water, access to capital, access to shelter, basic human needs. There’s always something, somewhere that really makes a difference to a very large group of people. But if it’s not your personal struggle, or at least not your past personal struggle, be prepared for that moment where you ask yourself, it’s not my struggle, why am I fighting so hard? So, it’s easy to fight for something that you personally experienced.
[01:24:45.300] – Questioning person (11)
Last question. Really quick question. Thanks. As the CEO of a publicly traded company, what do you see? Which pressure do you see more from the investors these days? A pressure on growth or pressure on profitability?
[01:24:56.280] – Max Levchin
That’s a great question. Very astute of you. The short answer is both. I literally had a call with an investor who said for a lender, for a financial services company, it’s even more complicated than just growth and profitability. Because if you raise prices, you can have more credit losses because you’re compensated for the risk. So, you can grow, and you just raise prices a little bit. If you’re transparent I don’t have a moral issue raising prices if I honestly tell you what the cost will be. But if you are willing to take on more credit losses, the investors don’t know if you’re doing this because you choose to do so or because you can’t stop it. So, you have to grow, you have to be profitable, and you can’t lose too much money to credit losses, because then you’re signaling that you’re not in control. The pressure I feel is on all three of those dimensions, not just the two that you mentioned. I think that’s why it’s a little perverse, but it’s good for people with the capacity to compete to have a more difficult environment like we have today. I am not worried about being able to meet any of those challenges. I think a lot of my competitors are, and that’s good. I want them to quit.
[01:26:26.960] – Artur Kurasinski
That was the last question. Sorry we run over time. Thank you all for coming today. Max Levchin, CEO of Affirm. Let’s give a big applause.